French life insurers’ profits expected to decline by around 5%

Written by Adam Cadle

22/04/2020

French life insurers’ profits are expected to decline by close to 5% in 2020 as a result of a decline in equity markets which has reduced the amount of outstanding reserves for unit-linked products.

Moody’s said “since insurers’ remuneration consists mostly of fees proportional to unit-linked reserves, the decline will affect insurers’ revenues and profits”.

“Weak equity markets will also make it more difficult for insurers to grow their unit-linked business in the coming years,” it added.

“The industry aims to increase sales of unit-linked savings policies, which leave investment risk with the customer, to reduce its dependence on savings products offering guaranteed rates of return. These will become less profitable in the low interest rate era.”

Unit-linked products accounted for 36% of French insurers’ total life premiums in February 2020.

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