PARIS, Oct 14 (Reuters) - French life insurers have not cut their payouts enough in light of how little their assets are earning at currently record low interest rates, the head of the French central bank warned on Friday.
Speaking as the head of the ACPR financial sector regulator at an insurance conference, Francois Villeroy de Galhau said that life insurers had on average trimmed their annual payouts last year by a quarter of a percentage point.
But that was not enough as treasury bond yields had fallen much more, leaving insurers paying clients more than they were earning on bonds, Villeroy said.
“I would therefore urge insurers once again to show moderation and to be realistic when setting rates of return on euro-denominated life insurance policies for 2016,” Villeroy said.
Thanks to a favourable tax treatment, life insurance contracts are French retail investors’ savings vehicle of preference with on average 24,000 euros ($26,882) per habitant in a contract.
$1 = 0.8928 euros Reporting by Leigh Thomas; editing by Michel Rose