French insurers favor bonds as long-term yields rise in 2025
French insurers and pension funds invested €50.4 billion in debt securities in 2025 as long-term yields rose. Banque de France's September 24, 2026 study puts their year-end investments at €3,109 billion, up 5.4 percent.
Fresh inflows favor longer bonds
Net acquisitions reached €91 billion in 2025, against €55 billion in 2024; valuation gains contributed €44 billion, after €38 billion.
Non-money-market funds attracted €42 billion, while money-market funds lost €3 billion.
Direct equity purchases slowed to €1.4 billion from €14 billion, reflecting greater use of funds rather than withdrawal from equity exposure.
Government bonds attracted €23 billion and financial-sector bonds €20 billion; non-financial corporate debt recorded €1.7 billion of net sales.
After looking through fund holdings, bonds represented 55.7 percent of investments, down from 56.6 percent.
Average fixed-rate bond yields increased to 2.39 percent from 2.30 percent as portfolios renewed.
Life-insurance net inflows reached €44 billion, versus €22.8 billion.
A steeper curve rewards maturity
The European Central Bank (ECB) lowered its main policy rate from 4 percent in June 2024 to 2 percent by mid-June 2025.
Yet French and German ten-year sovereign yields rose 35 and 45 basis points during 2025, reaching 3.56 and 2.81 percent.
France's ten-year/two-year spread widened from 91 to 127 basis points, increasing longer bonds' appeal.
Rising yields also imposed €8.5 billion of debt-security valuation losses.
The study covers 445 insurers and 23 pension funds; revised fund look-through methods make 2024 and 2025 comparable, but not strictly comparable with the previous publication.
Higher income carries valuation costs
Portfolio renewal improved income, but sovereign bond valuation losses deepened.
Excluding unit-linked assets, total unrealized gains remained positive at 4.5 percent, while sovereign bonds contributed minus 3.6 percent.
Liquidity remained near 50 percent for life insurers and pension funds, and high-yield bonds held at 2 percent.