Investment yield

Investment yield designates the income generated by the asset portfolio backing an insurer's technical reserves and equity. It is one of the two main profit sources of the insurance model, alongside the technical underwriting result. The time lag between premium collection and claim settlement allows the insurer to invest considerable sums, whose financial income complements, or even offsets, a sometimes loss-making technical result. The level of interest rates therefore strongly influences overall profitability: a long period of low rates compressed yields and constrained life insurers in particular, while the rise in rates restored part of this financial margin. For the analyst, distinguishing the contribution of the technical result from that of investment yield is essential to assess the durable quality of profitability, an insurer depending too much on financial income being vulnerable to a reversal of markets or rates.

A P&C insurer showing a combined ratio slightly above one hundred can remain overall profitable thanks to its investment yield.

investment yield, rendement des placements, produits financiers