While interest rates are zero or even negative, it is no longer possible to guarantee savers positive and risk-free returns.
This is an earthquake that is preparing for French savers. Life insurance contracts offering guaranteed capital are under threat.
The signal comes from insurer Generali, but all (even if they do not say it loudly) share the same diagnosis. While interest rates are zero or even negative, it is no longer possible to guarantee savers positive and risk-free returns. This is the whole model of life insurance that is now threatened. But life insurance is 40% of the total savings of the French and 1.700 billion euros. 38 million French people have one or more life insurance policies. The French love because the vast majority of these contracts are called "in euros", that is to say with a guaranteed capital. This is precisely what is threatened today.
Clearly, we will have to accept more risks?
Yes, since capital-guaranteed life insurance contracts are essentially invested in government bonds, which today do not earn anything. Rates are zero and even mostly negative. It is impossible for insurers or banks to guarantee capital. Hence Generali's decision to tell his clients: invest elsewhere, for example in equity investments, even if it's a little riskier. It is in a way the end of the risk-free savings that is taking shape for millions of French people. After all, so much the better if the savings of the French go more towards the companies and less towards the debt of the State. But we will have to accept more risk and millions of savers are not ready.