Le Revenu forecasts an average rate in 2022, for life insurance contracts in euros awarded by the editorial staff, of 1.7%, or 0.4 points more than the market as a whole. Yields would be stable compared to 2021.
This is a surprise noticed by some savers: in 2021, funds in euros – these secure life insurance funds – delivered, on average, all contracts combined, a rate of return of +1.30%, exactly at the same level as in 2020, as revealed by the France Assureurs federation, this Thursday, March 30. Market observers were instead expecting the rate of return to drop to 1.10% on average.
Up to +1.70% average rate for the Revenue Gold Trophies in 2021
Selected in particular for the good performance of their funds in euros, the Trophées d’Or 2022 du Revenu contracts (the list of which has just been unveiled) saw the rate for funds in euros climb, on average, to +1.70% in 2021 for our selection of the ten best funds in euros accessible without unit-linked conditions.
Finally, in 2021, funds in euros have done fairly well. But what will be the fate of these guaranteed products in 2022, the rates of return of which will be announced at the end of the year, or even at the beginning of 2023?
Towards stable euro fund rates in 2022
In 2022, the euro funds awarded by Le Revenu should return + 1.7%, against + 1.3% on average for all life insurance contracts on the market. Several reasons go in the direction of a stability of the performance of the funds in euros. Explanations of Revenue.
First, the rise in the Livret A rate to 1% on 1er last February sharply revived competition with funds in euros. Those less well off (some contracts only served a 0.50% rate of return in 2021!) will no doubt be forced to make an effort from a commercial point of view by dipping into the famous provision for profit sharing (or “PPB) if necessary to boost performance. It should also be remembered that the interest of the fund in euros is subject each year to social security contributions of 17.2%, while the rate of the Livret A is net of taxation or social security contributions.
Then, the situation changed a lot on bond rates. For several years, the continuous decline in bond rates for government bonds, the main asset class in which insurers place money from euro funds, has weighed heavily on the performance of life insurance. The rates had even become negative! Today, the rise in bond rates, in particular government bonds (the 10-year OAT reached +1% at the end of March 2022), suggests better prospects for the years to come.
Insurer reserves at their highest
Finally, insurers keep strong reserves. According to the latest figures from France Assureurs, in 2021, all of the reserves and latent capital gains of insurers have remained riveted for three years above the 20% of provisions (precisely 21.7% in 2021). PPB alone reached a record level of 5% of life insurance outstandings in 2021. However, since 2020, having a high level of PPB allows insurers to place a (small) part of the fund in euros in risky assets (private equity, shares, etc.) and to take advantage, if necessary, of the rise in the financial markets.
Unfortunately, this picture is heavily clouded by the return of inflation. From +1.6% in 2021, annual inflation rose to +4.5% at the end of March 2022, a rate that it could follow throughout 2022, weighing heavily on the performance of the fund in euros.
Diversify according to the 80-20 and 60-40 strategies of Income
Thus, apart from specific situations (need for short-term money for a real estate project, for example, or advanced age of the insured), diversifying your life insurance contract becomes a common sense strategy. Be careful, favor a gradual entry into the units of account (via scheduled payments or progressive arbitration) with an objective, in the long term, of 20% of units of account (prudent profile) or 40% (balanced profile).
In 2021, the model allocations of the Income on the Trophées d’Or contracts made it possible, on average, to deliver a return of +5.6% for the 80-20 strategy and +9.4% for the 60-40 strategy, i.e. more than times more than a savings invested solely in funds in euros.
We will inform you throughout the year of the performance of these ideal allocations and of any trade-offs to be made in 2022.