Life insurance: are mutual insurance contracts better than those of insurers?

Life insurance: are mutual insurance contracts better than those of insurers?
Life insurance: are mutual insurance contracts better than those of insurers?

© Capital

– Mutual insurers have done well on the life insurance market in 2023.

A simple glance at the 2023 ranking of euro fund returns and the observation is obvious. Mutuals held the upper hand last year. While the average performance of euro funds – the guaranteed capital vehicles of life insurance – rose to 2.60% in 2023 according to the insurance watchdog, the ACPR, mutual insurers show higher returns : 3.75% for Ampli mutualiste (on its Ampli life insurance contract), 3.70% for La France mutualiste (Actévolution 2), 3.50% for Garance (Garance évolution), 3.30% for Carac (Carac wealth savings) or 3.10% at MACSF (RES).

Better than most of their competitors. And in particular that bancassurances, these banks which, via their network, market insurance products. Players who, however, have not been unworthy, with 3.50% for the best contracts of Oradea vie (Société Générale), 3% at BNP Paribas Cardif, 3.17% excluding bonus at Crédit Agricole or even 2.50% excluding bonuses at BPCE (Popular Bank, Savings Bank).

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One reason in particular explains this above-average performance for mutuals, according to Cyrille Chartier-Kastler, founder of the Good Value for Money site: their governance. Mutuals being non-profit organizations managed by an elected board of directors, “their results are therefore capitalized and are not partly redistributed to shareholders”, he explains. This much performance is thus invested in the general assets of the mutual, that is to say its financial portfolio (made up of bonds, shares, real estate, etc.), and which contributes to the differential of return in favor of the mutual fund of mutual actors.

More diversified, and therefore more efficient, euro funds

And thanks to this surplus gained compared to insurers, mutual societies can add more risky assets to their portfolio: more stocks, real estate and high-yield bonds. Diversification synonymous with outperformance, while euro funds are traditionally composed mainly of low-risk, and therefore low-remuneration, assets. According to the Good Value for Money website, at the end of 2022, a euro fund “classic” was thus composed of 76.5% bonds, almost exclusively at fixed rates (87.1%). Less risky bonds, because they guarantee the payment of the same interest throughout their lifespan.

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Conversely, the euro fund of a mutual fund like MACSF was, for example, made up, at the end of 2023, of 56% fixed rate bonds and 10% variable rate bonds. A general asset which also gives pride of place to unlisted shares (9%), more risky than listed shares, which only represent 5% of its portfolio, compared to 9.2% for the average euro fund.

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