The Luxembourg insurance supervisor (CAA) reports record inflows from France in 2024 for Luxembourg life insurance, reaching €13.9bn, up 56.3% year on year. Does this indicate that French entrepreneurs and wealthy families are unsettled by political turbulence at home?
That said, it is not the only factor. We serve high-net-worth clients who think in terms of diversification. Their wealth is large enough for cross-border allocation to be an entirely rational consideration, and Luxembourg is one of the places they look to.
Lastly, as far as I know, life insurance inflows in France are also performing well. I do not think we can talk about a massive shift from France to Luxembourg. Luxembourg’s total inflows this year may reach around €30bn, whereas the French life market is around €200bn or more. These are vastly different scales. We may be capturing slightly more than usual, but we are nowhere near draining the French market.
Italy is another key market for wealth life insurance. How is this highly competitive market evolving compared with Ireland?
A. D. - “Italy is indeed the second most important market for life insurance. The momentum in 2025 was less robust than in France. In other years, Italy has been more dynamic; the market moves in cycles. The regulatory and tax environment has not been particularly favourable to life insurers, especially Luxembourg-based ones. Some fiscal measures introduced by the Italian authorities have reduced the attractiveness of the market.
Another factor is that, while we saw significant outflows from Italian life portfolios in 2022 and 2023, Italian clients have recently tended to keep their wealth in Italy. This may reflect stronger confidence among Italian policyholders in their domestic environment.
Turning to international non-life: how is Western Europe performing at the end of 2025? How are your corporate clients reacting?
The [non-life] market has entered a phase of normalisation.
Our business is international by definition. The major Western European markets account for over half of the premiums underwritten by the property and casualty and specialty players based in Luxembourg. In this regard, we have similarities with the life sector. There is no real fluctuation linked to political movements. Most of our clients operate in regions with both opportunities and risks, and it is those risks they want to protect against. They come to us for bespoke solutions because their own activities and exposures are exceptional and require tailored coverage.
Take the aerospace industry, which has been very visible in the news in recent months, including in Luxembourg. We have seen mergers, the pooling of expertise to build a European aerospace industry, and discussions on how to anticipate tomorrow’s geopolitical risks in space and satellite operations. All these developments create new insurance needs, and that is where we intervene.
International non-life premium growth in Luxembourg has been spectacular, up 150% since 2020. Are we now seeing a return to more normal growth levels of 4 to 5% in a mature market like Europe?
J. D. - “Yes, clearly. Looking at the 2024 figures published by the CAA, the market has entered a phase of normalisation. This is not a decline or a slowdown. The 2018-2021 period was when most players arrived following Brexit to benefit from Luxembourg’s stable and cross-border financial ecosystem. That boom has now shifted to normal growth. The market grew by 2% in 2024. We can expect single-digit growth unless new companies decide to relocate to Luxembourg.
We are also entering a phase of softening premium rates, which will lead to mergers, acquisitions and consolidation among insurers and brokers. Market concentration has already begun.
Margins under pressure
Compliance requirements in areas such as AML, governance and reporting keep rising and are becoming a drag on profitability. Is there a difference in approach between a French and an Anglo-Saxon group?
A. D. - “We must comply with regulation; there is no difference in that respect. It is burdensome, of course, but it is the direction of travel. Societal expectations are increasing--transparency of financial flows, anti-money laundering, fraud prevention--and regulation is tightening accordingly. We must adapt.
What is certain is that this leads to a very substantial increase in what I call the regulatory cost. Faced with this Himalaya of requirements, and especially the volume of data to manage, my preferred response is industrialisation and automation, backed by heavy investment. Relying solely on manual processing is not viable in the long term.
J. D. - “I agree with Alexandre on the fact that we operate in a regulated industry, which creates trust and stability. In terms of approach, Anglo-Saxon groups tend to show more pragmatism in dealing with regulatory demands. Our aim is not to suffer regulation but to anticipate it and approach it realistically.
Compliance has a cost, and flexibility too, which affects competitiveness and margins in life insurance. What is your view at Cardif?
A. D. – “Beyond Cardif, we should recognise that Luxembourg life insurance remains highly attractive. For a certain client segment, it continues to offer many advantages, tied to the ecosystem and the country’s stability.
However, regulatory costs are rising sharply. I would also add that other countries are evolving their product frameworks. They are not always allowing Luxembourg to take the lead. We talk less about this because the discussion is dominated by political and economic turbulence, but France, for instance, has recently updated its legislative and regulatory framework, allowing more flexibility in several product areas, including through the Green Industry Law.
We cannot afford to rest on our laurels. We must stay alert to what is happening elsewhere, adapt continuously and keep pace with market developments.
In its latest annual report, the CAA refers to anaemic profitability in recent years for products targeting wealthy clients. Cardif’s profitability has followed a downward trend. Is this the new normal?
A. d. - “What I can say is that my group, BNP Paribas, monitors my company's financial performance extremely closely. It must meet shareholder expectations. Profitability is obviously crucial, and we must ensure it continues to improve and remains satisfactory. It is an ongoing priority.
Profitability is obviously crucial. It is an ongoing priority.
Competition is driving prices down in cross-border life. Are current prices aligned with the services you provide?
A. D. - “If clients choose Luxembourg life insurance, it is because they are broadly satisfied with the value for money. The real question is whether we are sufficiently disciplined on pricing. With a sophisticated and well-advised client base that actively plays providers against each other, price pressure is naturally very strong.
Life insurance faces fierce competition from Ireland, particularly in Italy but also in Spain and Portugal. Ireland enjoys significant tax advantages over Luxembourg, notably on corporate tax and VAT. Can Luxembourg keep up?
A. D. - “Ireland does have a significant fiscal advantage. However, from a legal certainty perspective, Luxembourg is perceived as somewhat stronger. Each jurisdiction has strengths and weaknesses, but we must remain vigilant and able to adapt. Ireland is extremely agile and highly innovative.
In non-life, do Luxembourg’s advantages suffice to keep you committed to the market despite structural disadvantages such as labour costs, housing and the challenge of attracting talent?
J. D. - “For most of the international non-life community, establishing a presence in Luxembourg involved considerable investment. But it also delivered substantial benefits. For many of us, the objective is to build strong local connections, integrate fully into the Luxembourg ecosystem and continue operating here for the same reasons that brought us in the first place.
One key point is that other European countries are constantly trying to attract our companies and capital, offering different advantages. Labour markets in Paris, Brussels, Frankfurt or Dublin have attributes that Luxembourg cannot always match. Ensuring the long-term sustainability of our market is closely linked to talent attraction. Companies locate where expertise clusters exist. Luxembourg has succeeded in creating such hubs in key functions like compliance, risk and finance. We now need to expand that foundation to strengthen expertise and remain competitive against major cities.
Growth strategy
In life insurance, how can you outperform competitors and attract new clients and larger portfolios?
A. D. - “It is a multi-dimensional strategic exercise. First, the product range: we have deliberately chosen to keep a very broad universe of eligible funds. Second, geographical scope: we aim to be among the most widely open. Third, financial performance in some products, such as euro funds, is managed directly by the insurer.
Another element is the acceptance of different asset types. Are we able to process all asset classes, especially private assets and private equity? Managing private equity within a life insurance contract requires specific expertise, robust operational chains and close coordination with custodians and asset managers.
Beyond product features, there is what I call service quality: turnaround times, how files are handled and the level of support offered, including wealth structuring and legal services. For mobile clients, tailoring contract design to ensure continuity when they relocate is essential. It is a sophisticated advisory service that not all insurers offer to the same degree.
Same question for non-life: where are your growth levers?
J. D. - “To ensure our business continues to grow profitably, especially when the market is softening (i.e., becoming less favourable for insurers), it is essential for us to maintain disciplined underwriting practices and to be precise in how we assess and manage the risks we insure.
I agree with Alexandre on product strategy, but innovation plays an even bigger role for us. We need to be more attuned to client needs. For instance, some clients are exposed to significant war risks in certain regions and find themselves with very limited options. Insurers must sit down with brokers and think about how to help clients keep operating in hostile environments by designing appropriate solutions.
The third area is operations. A company like ours, Convex, created in 2019 with no legacy constraint, can build an insurer 2.0 operating model. We can design and adapt our internal processes more intelligently and make roles clearer and more engaging for our teams. This allows us to control internal cost pressures more effectively than older players born from multiple mergers.
Retail business is not the natural direction for Luxembourg.
Given competitiveness, automation and industrialisation issues, what is the future of tailor-made services in both life and non-life?
A. d. - “In life insurance, much of Luxembourg’s added value lies in its ability to adapt products to clients facing changing environments, particularly mobile high-net-worth clients. I do not believe this expertise can be automated. This type of service will remain tailor-made, delivered by human specialists.
Automation can still occur elsewhere in the value chain. In compliance and AML, given the sheer volume of data, we must embrace intelligent automation to free resources for additional services. Legal teams can also automate routine tasks such as research and document review, although the final decision remains human.
Full automation from advisory duties to administration may be possible for simple products, but that is not where Luxembourg’s real added value lies. For ultra-wealthy clients, advice will remain highly personalised and delivered face-to-face.
This ties into the debate on lowering the wealth entry threshold. Should such bespoke services be offered to mass affluent clients?
A. D. - “Moving Luxembourg life insurance downmarket is not, in my view, the country’s core business. I remain sceptical. To exaggerate slightly, a Luxembourg life insurance contract for €50,000 is not particularly meaningful. For someone with €50,000 to invest, the domestic life insurance market, in France for example, provides multiple well-functioning options. I struggle to see what they would gain by coming to Luxembourg.
For someone with a high level of wealth, €10m or more, the issues of mobility, diversification and asset strategy fully justify choosing Luxembourg. At around €500,000, the discussion can be relevant, and we do serve that segment. But retail business is not, in my view, the natural direction for Luxembourg.
And in non-life, what is the future of tailor-made?
J. D. - “Tailor-made is part of our DNA and is exactly what our clients expect. Given the macro factors affecting our business--growth, inflation and interest rates--bespoke underwriting and support become even more important.
Luxembourg has always positioned itself on high value-added solutions and has successfully differentiated itself this way. This is a strength we must continue to build on. We are not seeking to become a mass risk insurer, as that would reduce the business to simple risk mutualisation. Tailor-made solutions allow us to go much further and respond directly to what our clients experience worldwide.”
From aerospace to pandas
Convex Group is an international specialty/property & casualty insurer and reinsurer, created in 2019 to handle complex risks for global clients. Convex’s work spans, among other areas, insuring aerospace manufacturers and racehorse owners and facilitating the transport of Chinese giant pandas. The group employs around 500 people, with Convex Europe headquartered in Luxembourg (with seven full-time staff) and a London branch with about 200 employees.
Bespoke solutions, softer returns
Cardif Lux Vie, owned by BNP Paribas, is a Luxembourg life insurer offering savings and protection solutions for the domestic market as well as for high-net-worth clients active internationally. For these clients, the company develops bespoke and sustainable open-architecture offers through an extensive network of partners. The insurer reported a €37.9m result in 2024, an 8.9% year-on-year fall, and had 332 staff.
