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)
| Company | Own funds | PPE benefit | Percentage of own funds made up of PPE | Solvency 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]