Life Insurance: Why Euro Funds Showed Signs of Weakness in May
In 2024, life insurance regained its position as the French people’s favorite savings product, according to the 10th edition of the Amphitéa–Cercle de l’Epargne survey.
However, May was a relatively quiet month, with another outflow of funds, indicating that the situation has not yet fully returned to normal.
Euro-denominated funds showed signs of weakness in May
In May, life insurance recorded net inflows of 1.5 billion euros, down from 3.4 billion euros in April but higher than the -1.7 billion euros recorded in May 2023. This marks the fifth consecutive month of positive net inflows, exceeding the average for the past ten years (0.7 billion euros).
In May, net inflows into unit-linked funds were positive at 2.4 billion euros. However, after three months of positive net inflows, euro-denominated funds saw net outflows of 900 million euros.
Since the beginning of the year, net inflows into life insurance have totaled +14.2 billion euros, which is 11.9 billion euros more than during the same period in 2023.
Gross contributions are down
In May 2024, life insurance premiums totaled 12.7 billion euros, a sharp decline from previous months (16.5 billion euros in April and 15.6 billion euros in March), but higher than the figure for May 2023 (10.2 billion euros).
From January through May, contributions totaled 77.4 billion euros, an increase of 11.2 billion euros compared with the same period in 2023 (+17%). The share of unit-linked plans was 37%, down from the 2023 average (41%).
Stabilization of Benefits and Buyouts
In May, benefits totaled 11.1 billion euros, down 0.8 billion euros from May 2023 and lower than the 13.2 billion euros recorded in April 2024. Year-to-date, benefits have reached 63.2 billion euros, down 1% from last year.
Assets under management are nearing 2,000 billion euros
Assets under management totaled 1,971 billion euros at the end of May 2024, up 4.2% year-over-year. Unit-linked products now account for 29% of total assets under management.
A Changing World
After two difficult years, the life insurance market has begun to rebound since the start of the year, driven by improved returns on euro-denominated funds, a strong stock market, and the end of the inflationary trend. According to the latest Amphitéa–Cercle de l’Epargne survey, life insurance has once again become the most attractive investment in the eyes of the French (61% positive responses), ahead of the Livret A savings account (60%) and the Retirement Savings Plan (57%). Life insurance is also benefiting from the decline in the real estate market over the past several months.
However, with the dissolution of the National Assembly announced by the President of the Republic on June 9, savers may choose to err on the side of caution and favor liquid investments such as regulated savings accounts. The stock market’s reaction to this announcement and the resulting political, economic, and fiscal uncertainties are prompting the French to exercise caution.
