COMMENT: French life insurers and their €37bn Christmas present

Published in: Risk management, Corporate strategy, Capital management, Regulation, Solvency II, UK, Rest of Europe, SFCR

Companies: Crédit Agricole, Predica, Spirica.

As Christmas presents go, it was a good one.

On 24 December 2019, France signed into law a measure that would allow life insurers to count 70% of their profit-sharing provision towards their solvency.

At the stroke of a pen, some €37bn ($44bn) of surplus funds were created, according to analysis of 33 firms by Insurance Risk Data, the database arm of InsuranceERM.

The effect on the French insurers’ solvency ratios was huge. On average, it boosted their ratios by almost 45 percentage points – with one firm, GMF Vie, enjoying a 156 percentage-point boost.

The largest firms benefitted the most. More than €10bn was added to Crédit Agricole’s group own funds, from its subsidiaries Predica and Spirica.

For each firm, the provision pour participations aux excédents (PPE) represented 17% of own funds at the 2019 year-end, on average. For a handful of firms, it was nearer 30%.

As we reported last year, the decision was not without controversy. The profit-sharing provision exists to smooth policyholder returns, not provide funds that could bail out an insurer in financial trouble. On the other hand, it brings the French into alignment with practices in the UK and Germany.

With the law being signed so close to the 2019 year-end, the PPE’s influence on the solvency of insurers was not crucial. All the firms analysed would have been solvent without the PPE’s contribution. But in 2020, management will be able to take actions to free up other surpluses, and the contribution of the PPE could become very significant.

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Table 1: The effect of PPE on own funds and solvency ratios (€ million)

CompanyOwn fundsPPE benefitPercentage of own funds made up of PPESolvency capital requirement (SCR)SCR ratio (with PPE)SCR ratio (without PPE)Percentage point difference in SCR ratios
AG2R La Mondiale 13,416 2,250 16.8% 6,080 221% 184% 37%
Ageas France 366 28 7.7% 200 184% 169% 14%
Allianz Vie 6,170 972 15.8% 3,085 200% 168% 32%
APICIL Epargne 575 29 5.0% 225 256% 243% 13%
Areas Vie* 189 24 12.7% 90 209% 182% 27%
Assurances du Credit Mutuel (ACM) Vie 10,427 3,234 31.0% 3,407 306% 211% 95%
Aviva Epargne Retraite 1,550 56 3.6% 695 223% 215% 8%
AXA Assurance Vie Mutuelle 2,238 46 2.1% 852 263% 257% 5%
AXA France Vie 9,348 408 4.4% 5,851 160% 153% 7%
BNP Paribas Cardif 16,364 5,039 30.8% 8,249 198% 137% 61%
CARAC° 1,467 296 20.2% 666 220% 176% 44%
CNP Assurances 34,800 9,100 26.1% 15,300 227% 168% 59%
Credit Agricole (Predica & Spirica) 34,561 10,026 29.0% 13,157 263% 186% 76%
France Mutualiste 1,276 134 10.5% 597 214% 191% 22%
Generali Vie S.A 8,791 874 9.9% 3,804 231% 208% 23%
Generation Vie 142 15 10.6% 91 156% 140% 16%
GMF Vie 2,986 832 27.9% 533 560% 404% 156%
Groupe le Conservateur* 388 53 13.6% 175 222% 191% 30%
HSBC Assurances Vie 1,963 596 30.4% 788 249% 174% 76%
La Securite Familiale 48 5 10.5% 15 315% 282% 33%
MAAF Vie 1,533 323 21.1% 328 467% 369% 98%
MACSF 3,759 682 18.2% 1,536 245% 200% 44%
MAIF Vie 951 270 28.4% 406 234% 168% 66%
Matmut 2,303 44 1.9% 1,115 207% 203% 4%
MIF 635 77 12.1% 241 263% 232% 32%
Milleis Vie 356 111 31.1% 169 211% 145% 66%
MMA VIE 2,878 677 23.5% 726 396% 303% 93%
Neuflize Vie 626 127 20.3% 423 148% 118% 30%
Oradéa Vie 142 22 15.5% 97 146% 124% 23%
Prevoir Vie 948 88 9.3% 315 301% 273% 28%
SAF BTP Vie 515 50 9.7% 175 294% 266% 28%
Swiss Life Assurance et Patrimoine* 2,212 360 16.3% 1,297 171% 143% 28%
Unofi Assurances 733 260 35.4% 271 270% 174% 96%
TOTAL 164,654 37,108          
AVERAGE     17.0%       44.6

Source: Company SFCRs analysed by Insurance Risk Data. Notes: * PPE estimated from change in solvency ratios; ° CARAC included an estimate for the effect of PPE on its own funds and solvency, but did not report this as its actual solvency condition

Insurance Risk Data

The table above was produced with data gathered from solvency and financial condition reports (SFCRs) collated by Insurance Risk Data and analysed by Cherise Veerasawmy and Christopher Cundy.

Insurance Risk Data combines European insurers' financial and regulatory filings, including the Solvency II SFCR disclosures, into a single, comprehensive and user-friendly database. It is ideal for market/peer/prospect analysis, research and benchmarking.

To find out more about Insurance Risk Data, please email [email protected]