N° 33 : Position of the main French insurers in 2013

As regards life insurers, net inflows become positive again (EUR 5.1 billion) after outflows of EUR 8.1 billion in 2012. These strong performances were also reflected in profits, which rose by 20%. Their return on equity (ROE) also increased by 1.3 percentage points to reach 9.9%. Their solvency margin coverage ratio remained stable at 301%. Moreover, economic wealth in the accounts improved significantly compared with the level of 2008-2011.

These positive developments should nevertheless be put into perspective since return on investment (ROI) continued to slide to reach 3.6%. This development weighed on insurers’ financial margins. The spread between their ROI and their distribution ratio narrowed from 93bp in 2006 to 57bp in 2013. Their operating margins deteriorated because their acquisition costs also rose in 2013.

The increase in the turnover of non-life insurers, for their part, slowed to 2.3% from 3% in 2012. Their direct business turnover stood at EUR 58.3 billion in 2013. This slowdown can be ascribed to contrasting developments in the different categories. In particular there was a contraction in turnover in the transport and construction insurance sectors while the car insurance sector saw a sharp slowdown. The overall combined ratio deteriorated slightly from 96.9% to 97.6 %.

This slight deterioration in technical margins was however offset by the improvement in financial margins over the same period, as illustrated by the financial rate of return that increased from 2.36% to 3.21%.The net income to premiums ratio rose sharply to 4.4% at end-2013, against 2.2% in 2012. Their ROE increased by 3.4 percentage points to 6.8%. The brighter market conditions also led to an improvement in the solvency margin coverage ratio that rose to 532% (up 15 percentage points).