Life insurance: why such performance differences between euros funds?

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The yields of the guaranteed capital support for life insurance confirm the current good health of Euros funds. But the performances vary significantly between market players. The explanations of Catherine Baudeneau, member of the management committee of the Altaprofits broker.

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As every year, the months of January and February were marked by the announcements of the rate of return of funds in euros. 2024, with an average rate which should be 2.50%, confirmed the upturn already observed in 2023 (average rate at 2.60%), with however still significant differences between the lowest rates and higher. If the evolution of guiding rates partly explains that of the rate of return of funds in euros, it is not the only cause.

Euros funds are the subject of a real diversified investment strategy

Between 2010 and 2020, the rates served on euros in euros experienced a continuous drop, going from an average of 3.40 % in 2010 to 1.30 % in 2020 and 2021. In this constant drop period, insurers have undertaken to diversify the composition of their funds in euros to seek other performance engines than obligations. Thus, they have implemented a real diversification strategy. Besides an bond pocket which varies from around 50 to 75%, the funds in euros today integrate real estate, shares and on the unduized.

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The bond pocket itself has been the subject of an investment strategy between sovereign bonds and business bonds, with varied yield /risk couples between investment grade and high yield for the latter. Thus, the rate served closely depends on the quality of the investment strategy of each insurer, but not only.

The evolution of rates remains a major issue, but its impact can be controlled

If the guiding rates have a definite impact on the yield of funds in euros by their majority exposure to obligations, insurers have two levers to manage this impact: the first, the bonus offers, was widely used in 2023 and 2024. These offers allowed insurers to collect massively at the time of raising the rates to set up rereading strategies (invest in bonds with higher yields than the rest of the portfolio for a global positive impact). The second is the provision for benefits (PPB), a mechanism supervised by the Insurance Code. Insurers are required to donate to the insured at least 90% of the technical profits and 85% of the financial profits made. Insurers thus have a room for maneuver each year to feed (with an obligation to repair within 8 years) or on the contrary to draw from the PPB and thus smooth the performance over time.

Thus, the rate served also depends on the political choices of the insurer: short -term commercial policy to stimulate collection during high rate period, and reserve strategy in the long term to build a damping cushion.

The richness of the unit supply allows you to build allowances for all profiles

While we are today at the start of an expected cycle of drop in rates, it is difficult to anticipate what will be its impact on the yields served for funds in euros for 2025 and the following years, having regard to the points discussed more high. Bonification offers are already communicated at least for the payments which will be made in the 1st half, sometimes reintroducing conditions in unit account, a sign that the time is well for diversification. Good news: the richness of the financial offer of life insurance contracts today makes it possible to build allowances for all profiles. UCITS, ETF, VIFS securities, bond funds, real estate supports … The choice is large. The Private Equity, carried out in particular by the Green Industry law, which encourages investment in unlisted companies, continues its development in life insurance, aimed at a higher return in return for increased risk.

As for profiles wishing to access the financial markets while mastering their risk, they will be able to turn to structured products, the offer of which continues to widen. A range of possibilities all the more interesting in this context of level normalization.