France borrows at 4.7% over 10 years: is your life insurance at risk?

OAT at its highest since 2008: what impact on euro funds?

On September 25, the yield on the 10-year OAT, the benchmark bond of the French state, stood at 4.728% compared to about 3.57% twelve months earlier.

This surge is partly explained by the international context: the war in Iran is driving up oil prices and forcing central banks to tighten their monetary policy. However, France is also experiencing a deterioration specific to itself. On September 18, the spread with the German rate exceeded 100 basis points for the first time since 2012, and France is now borrowing more expensively than Italy.

Yield of the French bond over 10 years -- Source: Investing.com

For euro funds in life insurance, a placement held by millions of savers, this rise in rates is primarily good news. Insurers keep most of their bonds until maturity and reinvest new flows at more rewarding yields.

Insurers can also rely on safety cushions. The provision for profit-sharing, money set aside in good years, reached 4% of the outstanding amounts by the end of 2025 according to the ACPR.

Debt crisis and Sapin 2 law: the risk to know

The point of fragility lies in the stock of old bonds. Euro funds remain highly exposed to public debt, which represents about 26% of their investments according to data compiled by the iFRAP Foundation. And by the end of 2025, 59% of insurers' bonds were still yielding less than 3%.

With an OAT above 4.7%, euro funds, which yielded an average of 2.63% in 2025 according to the ACPR, are becoming less attractive. If many savers withdrew their money at the same time, insurers would have to sell these old bonds before maturity. As their prices fall while rates rise, they would sell at a loss.

This scenario would become more likely if public finances continued to deteriorate. Public debt reached €3,600 billion by the end of March 2026, or 119% of GDP. The government aims for a deficit of 5% of GDP in 2027, down from 5.4% expected this year, which implies an effort of about €54 billion to be voted by an Assembly without a majority.

Markets fear a vicious circle: higher rates increase the burden of interest, which deepens the deficit and pushes investors to demand even higher rates.

The Sapin 2 law was designed to prevent a crisis of this type from causing a rush on life insurance. Adopted in December 2016, its Article 49 expanded the powers of the High Council for Financial Stability (HCSF), chaired by the Minister of Economy and which includes, among others, the Governor of the Bank of France.

In the event of a "serious and characterized threat" to financial stability, the HCSF can limit or suspend redemptions, arbitrations, advances, and payments on insurers' contracts.

The blocking of redemptions lasts a maximum of 3 months and can only be renewed once, for a total of 6 months. The savings remain in the contract, but the saver can no longer withdraw them during this period.

In light of this observation, one question arises: is there an asset that no government can restrict access to?

Bitcoin, considered by many as digital gold, meets this criterion. As long as it is kept in self-custody, meaning on a digital wallet that you own, your BTC does not go through any centralized entity and no administrative decision can freeze them.

This is one of the reasons why more and more savers around the world are investing in Bitcoin. In addition to being an asset uncorrelated with traditional finance, its supply is capped at 21 million units and no central bank can create more to finance a deficit.

Sources: Bank of France, ACPR

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