Fundamentally, life insurance in its current form is not viable

We look at the case of France. We begin by gauging expected future returns for life insurers’ euro funds given their asset structure and the outlook for interest rates and returns on other asset classes; Very low returns will encourage life insurers to diversify more into equities and real assets (real estate, infrastructure, private equity); but this diversification will sharply increase life insurers’ required level of capital; If life insurers need a lot of capital, then given the required return on capital, the cost of intermediating savings through life insurance will become high and life insurers will no longer be competitive intermediaries of savings compared with alternatives that require little capital (investment funds, etc.); It is important to understand that the source of the problem is the regulators’ determination to guarantee the security of savings and the absence of risk for savers. This requires a large capital buffer, leading to a high cost of intermediation that is all the less acceptable as the return on assets is low, given the low bond yields (the return on assets, from which the necessary remuneration of equity is deducted, becomes very low) .