Average Provision for Profit Sharing (PPB) in life insurance is at 4.45% by the end of 2023, down from 4.85% in 2022. Total profit-sharing provisions reached 61.05 billion euros, decreasing from 71.4 billion euros. Disparities among insurers exist, with Crédit Agricole’s Spirica at 1.48% and Sogécap at 6.75%. Insurers must return 85% of profits within eight years, but benefits vary for savers due to collective fund arrangements, making comparisons essential for optimal choices.
Understanding the Average PPB in Life Insurance for 2023
According to recent estimates by Good Value For Money, the average Provision for Profit Sharing (PPB) among life insurers has been calculated at 4.45% by the end of 2023. This figure shows a decrease from the previous year’s 4.85%, highlighting the evolving dynamics of the life insurance market.
The total profit-sharing provision for life insurance reached an impressive 61.05 billion euros at the close of 2023, a decline from 71.4 billion euros in 2022. Insurers utilized approximately 9 billion euros of this PPB to bolster the yield rates of euro funds provided last year.
The PPB is primarily financed through interest accrued from bonds held within euro funds, as well as profits generated from stocks and real estate investments. This reserve is crucial as it helps to stabilize the returns on euro funds, ensuring that savers are protected from potential drops in rates associated with government and corporate bonds, which predominantly make up euro funds.
Disparities Among Insurers: Who Stands Out?
While the average PPB sits at 4.45% at the end of 2023, notable differences exist between various insurers. For instance, the PPB for Crédit Agricole’s insurance subsidiary, Spirica, is estimated at just 1.48%, whereas Sogécap (Société Générale) boasts a significantly higher PPB of 6.75%.
This discrepancy illustrates that having a substantial reserve does not guarantee competitive yield rates on euro funds. Take, for example, the mutual group Garance, which, despite having a PPB of only 0.51%, managed to deliver one of the best yields last year, achieving a rate of 3.50%.
It’s important for savers to remain informed about these figures in order to make educated decisions regarding their life insurance options.
The Implications of PPB on Savers
While insurers are not mandated to return the profit share to savers annually, they are required to return at least 85% of these profits within a maximum of eight years. This means that any profit set aside at the end of this year must be distributed to savers by 2032.
However, it’s essential to note that not every saver will benefit equally from the PPB. The provision is tied to a collective euro fund rather than specific contracts, resulting in varying remuneration across different contracts. Consequently, not all savers may enjoy the advantages of the reserved funds held by their insurer.
To secure the best life insurance offers, it’s advisable to compare various options available in the market.