The ball of insurers in participatory loans is launched

Let’s go. After several months of waiting for the Brussels agreement and building the participatory loan scheme, insurers have launched hostilities. Axa unsheathed the first, Thomas Buberl, its managing director, promising Friday morning a contribution of between 1.5 billion and 2 billion euros. An envelope close to that of CNP Assurances, which will contribute 1.5 billion euros to the system. Next come BNP Paribas Cardif, which specifies that it wants to devote one billion euros to participating loans, and Société Générale Assurances, whose investment will be of the order of 800 million euros. Finally, AG2R La Mondiale explains that it is working on an envelope of between 100 million and 200 million euros at this stage, depending on the appetite of issuers and the finalization of the conceptual framework. In total, it is almost 5.5 billion euros that the insurers questioned by L’Agefi are already ready to put on the table for participatory loans (out of a total of 14 billion planned by Bercy).

Safeguards
against the limits of the device

These announcements reflect the progress of discussions concerning the criticisms made by insurers on the device. Very quickly, Laurent Dunet, Deputy Managing Director of Societe Generale Assurances, made the success of participating loans conditional on “Risk monitoring and necessary capital“. Groupama, which did not wish to comment on the dedicated envelope, like Generali, criticized the asymmetry of information between the bancassurers, who will be the originators of the funds and the distributors of the loans, and the insurers. At the beginning of March, Florence Lustman, President of the French Insurance Federation, thus conditioned the success of these tools on three points: selection, governance and prudential management.

It would appear that the recent discussions have achieved their objectives. “It is premature to speak of finalizing the conceptual framework. However, safeguards were discussed in terms of rate of return, alignment of interest with banks and measurement of the link between risk and return. These risk limits incorporate parameters such as sectors of activity, ratings, assessment of risks for a company. It is in no way a question of replacing EMPs but of providing support to the equity capital of SMEs and mid-cap companies, in an approach of diversification and risk control.», Explains David Simon, member of the group management committee of AG2R La Mondiale in charge of investments, finance and risks.

An interesting investment
but without preferential treatment

Above all, it is an attractive investment for insurers. “The product will most likely be of type investment grade. The yield is attractive but it implies total illiquidity over eight years“, Thus indicated Olivier Guigné. The net return must reach 2% while insurers will benefit from the State guarantee up to 30%. “We will trust the banks to play their role, as the insurers play theirs. We are not, however, intended to claw back what bankers would not want in terms of funding. Insurers should not systematically follow bankers, but should be complementary, in the service of financing the economy», Warns David Simon.

However, these investments will not enjoy preferential treatment from the supervisory body of French insurers (ACPR). In a document sent to insurers at the start of the week, the latter recalls the Solvency 2 framework which will govern the prudential approach to participating loans. He writes for example that “Securities should be treated in the same way as conventional loans and bonds»For the calculation of the Solvency Capital Requirement.