French insurers' revenues back on the rise - industry body

PARIS Thu Jan 30, 2014 12:55pm EST

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PARIS Jan 30 (Reuters) - Revenues in the French insurance industry rose 4 percent in 2013 after a turnaround in demand for life policies that had been weakened by uncertainty over their taxation and as household budgets were tightened, the FFSA insurance association said on Thursday.

The report bodes well for results from leading life insurers like CNP Assurances and AXA, which dominate the 1.5 trillion-euro ($2.1 trillion) market in France.

French insurers saw their sales increase to 189 billion euros in 2013 from 181 billion euros in 2012, with inflows into life insurance contracts swinging to 11 billion euros after a 6 billion-euro outflow the previous year.

That compared with a 5 percent revenue decline in 2012 and a 9 percent decline in 2011.

Life insurance had proved a popular savings product for the French due to a favourable tax treatment and is starting to win back investors who had recently preferred to keep their money in more liquid and tax-free regulated bank deposit accounts known as Livret A after President Hollande threatened a new tax on life policies.

But Hollande announced recently that the government would not now even review the tax regime for life policies until the end of his term in 2017.

"It seems that people can see again where it (life insurance) is going over the longer term," said Jean-Francois Lequoy, general director at the FFSA, who is to head the insurance business at Natixis, France's fourth-largest bank.

"The recent data show that Livret A collects less and less money," he said.

Also a relaxing of rules allowing insurers to devote up to 5 percent of their balance sheets to corporate loans resulted in a 11 percent rise last year in overall investments in small- and mid-sized companies (SMEs) to 46.6 billion euros ($63.58 billion).

"These assets are less liquid and their capital charge will be higher than those for bonds, but it is up to the insurers to manage the trade-off between more return and supporting more capital requirement," said Lotfi Elbarhdadi, an analyst at Standard and Poor's, referring to investment in assets such as loans to mid-market enterprises.

Meanwhile the European Insurance and Occupational Pensions Authority (EIOPA) plans capital adequacy stress tests on the insurance sector in the spring that will be based on the EU's new Solvency II rules.

Lequoy said that French insurers' capital positions were at a comfortable level in relation to the new rules.

French insurers are due to publish their results for last year in late February. ($1 = 0.7329 euros) (Reporting by Maya Nikolaeva; Editing by Greg Mahlich)

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