Life Insurance: Performance of funds in euros down

Life Insurance: Performance of funds in euros down


The preferred placement of the French becomes less and less remunerative. Indeed, during the year 2020, the net yield rate of management costs in Euros in Life Insurance was between 1.10% to 1.40% against 1.70 in 2019 . Fort is to note that since 2018, interest-in-life interests can not cover inflation. However, in the 2000s, the euro funds guaranteed a yield of 5.30% to the French insurer. It's a fall savings product! Let's look at the causes of lower return on euro funds in 2020.
Performance winners in euros in 2020.

So globally the net return of money management fees in Euros proposed on the market decreased for the year in 2020, counting on average between 1.10% to 1.40% against 1.85 in 2018, the balance sheet is all Similarly satisfying unlike forecasts below 1%.

The best return returns to the Mutuelle Garance whose funds in euros had a net management fee of 2.75% below 3% of the year 2019. After, we can consider as "good rate", the Life insurance in euros proposed by Gaipare (1.90%), ASAC Allianz (1.85%) AGPM (1.70%) and MIF (1.70%).

In the middle category, there are insurance companies such as mutual France, overwhelming yield, AXA and BNP Paribas. They recorded a net efficiency rate of management fees between 1.4% to 2%. At the bottom of the ranking, Societe Generale (0.75%) and Crédit Agricole (0.65%) complete the table.
Funding in euros: fall in bond yield

Generally, life insurance is composed of 80% of the obligations of which 60% from private enterprises and 40% of the state. For years, there has been a drastic decrease in the performance of bonds. In France, the rate of return on (equal obligations of the Treasury) reached -0.13% for the year 2020. Even finding for Germany, renowned for the profitability of its obligations.

In order to support their economies, countries have adopted expansionist monetary policies marked by the incessant lowering of the interest rate. This decline in the interest rate directly involves a decline in bond yield. In 2020, this downward trend was accentuated since the interest rates were at their lowest level since the 2008 financial crisis. The forecasts for 2021 are still worse because it will be the year of economic recovery. But the economic recovery is the worst enemy of the high rates.
Regulation weighs on the return of funds in euros
ACPR: Prudential Supervisory and Resolution Authority

The European Solvency Directive 2 imposes a fairly binding regulatory framework for insurance companies. To cope with the risks, insurers are asked to reduce investment in risky assets. Yet these investments generally give them a good performance.

The Prudential Supervisory and Resolution Authority (ACPR) also requires insurers to increase their reservation as well as the share of provisions for surplus investments to reduce remuneration defects. This decision reduces the investment margin of investment of insurance companies, which mechanically reduces net management costs.
Funds in euros: what alternatives?

It is too early to bury the preferred placement of the French especially since its performance is above other savings products as the yield is 0.75%. In addition, life insurance funds in euros is a safe and guaranteed investment. However, investment in real estate through SCPI turns out to be an option possible. According to the data of the French association of real estate investment companies, the efficiency of the SCPI for 2020 was 4%.

On the other hand if you are attached with life insurance, you can always opt for these four alternatives to the classical Euro Fund: Euro Growth Fund, Dynamic Euros Funds, Funds in Real Estate and Funds in Euro Fidelity.