Large insurance activities to support French banks through COVID-19

Written by Adam Cadle

08/06/2020

Bank-owned French insurance businesses deliver higher profitability than other insurers and therefore entered the COVID-19 crisis with solid Solvency II capital ratios, which will enable them to easily absorb the impact from falling asset prices, Moody’s has said.

The insurance subsidiaries of banking groups hold 50% of the life insurance market and 5% of the P&C market, as measured by gross written premiums. In total, they sell 45% of all French insurance premiums a much higher figure than in other Western European countries. Latest figures published by Moody’s said that French banking groups derived 17% of their pretax profits from insurance activities in 2019, up from 16% five years earlier.

“Some non-life segments will benefit from lower insurance claims during the economic and social shutdown,” it added.

French banks are aiming to expand their non-life insurance activities. Penetration into non-life lags life insurance. As yet only Credit Mutuel Alliance Federale has a relatively balanced business mix. The mutualist bancassurers (Credit Mutuel, Credit Agricole and BPCE) have larger insurance segments relative to size3 than BNP Paribas and Societe Generale. BPCE lags its mutualist peers but is developing an in-house insurance capability after terminating a life insurance distribution agreement with CNP Assurances.

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