Life insurers saw inflows tumble by almost a fifth
Luxembourg life insurance companies collected almost 18% less in premiums last year compared to 2019, raking in sales of some €15 billion, the insurance sector regulator Commissariat aux Assurances (CAA) said on Wednesday.
The first quarter of this year had already shown a rebound in activity, with premiums growing faster than what is typical for this time of the year.
“Increased activity might point to last year’s investments having been postponed, hence I am optimistic about the life insurance business,” CAA head Thierry Flamand said at a press conference.
The unit-linked business - which offers insurance wrappers for investments which wealthy clients use to optimise taxes - dropped by only 11%, while traditional life insurance policies tumbled by more than a quarter.
“In a low-interest market, companies are deliberately pulling out of traditional products while the main sales focus is on unit-linked products,” CAA head Thierry Flamand said at a press conference.
The coronavirus pandemic was the main cause of the drop in the unit-linked business - where clients generally come from abroad - because it had been more complicated to negotiate these often large policies, Flamand said.
“From our discussions with market participants, we see that the drop in sales came mainly from restricted access to distribution networks like brokers and private banks as they had limited capacity to reach clients,” Flamand said.
Premium collection is not directly related to profitability, which "depends on the existing stock [of policies] and not new business,” said Flamand.
Profits in the sector expanded by 3.8% to a total of €1.35 billion, a level above the average of the last decade.
The cumulative balance sheet of the insurance sector in Luxembourg stood at €312 billion at the end of last year, of which €221 billion worth of assets were in life insurers. Most clients of the insurance wrappers come from abroad.
Non-life companies withstood the pandemic, growing sales by almost 5% in 2020 compared to the year earlier.
“It’s too early to say how the non-life sector will finish this year, but so far the results have been decent,” said Valérie Scheepers from the CAA's executive committee. "(But) there have already been some floods, and natural disasters in general weigh the heaviest on the industry performance," she said.
The industry added almost 540 new jobs, and was employing 12,230 people at the end of last year.