Insurance undertakings in France: investment developments in 2016

Samuel Slama and Hector Toubon

Quarterly selection of articles - Bulletin de la Banque de France, 2017, issue 48, 23-34

Abstract: With a total of EUR 2,543 billion in investments held by insurance firms that are subject to the Solvency II regime (see the glossary in the appendix) at the end of 2016, France has the euro area's leading insurance market. Insurers are faced with two major challenges that influence their investment behaviour. First, the historically low interest rates are gradually diluting the financial return on their investments due to the reinvestment of liquidities in extremely low-yield bonds. This environment can encourage life and composite insurance undertakings to seek additional returns from alternative sources in order to guarantee satisfactory revaluation rates for their clients. Second, determining Solvency II capital requirements involves calculating economic losses based mainly on the market risk associated with the investments held. This encourages more active investment management. As this study points out, insurers are gradually adjusting the structure of their portfolios, as their investments are essentially made up of held-to-maturity redeemable securities. 2016 witnessed a lengthening of residual maturities of fixed-rate debt securities and increased efforts to diversify assets.

Keywords: insurance; investments; low interest; rates; Solvency II; look-through approach (search for similar items in EconPapers)
JEL-codes: G22 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://publications.banque-france.fr/sites/defaul ... es-no-48.pdf#page=23 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bfr:quarte:2017:48:02

Access Statistics for this article

More articles in Quarterly selection of articles - Bulletin de la Banque de France from Banque de France Banque de France 31 Rue Croix des Petits Champs LABOLOG - 49-1404 75049 PARIS. Contact information at EDIRC.
Bibliographic data for series maintained by Michael brassart ().