H2O investors forced to take their troubles patiently

Posted on Oct 26, 2020 at 6:43 PMUpdated Oct 26, 2020 6:50 PM

Life insurance savers exposed to funds in the turmoil of management firm H2O AM are in the midst of the ford. Since mid-October, they can once again have access to a large part of their savings placed in these media, ie 8.3 billion euros in total. And many of them have already withdrawn their money: the outflows amount to nearly 550 million euros in the six days following the thaw of the funds, or more than 6% of the outstanding amounts concerned, according to provisional data by Morningstar.

However, two weeks after the end of the suspension of funds, savers must take their time patiently to hope to get their hands on the sums that remain blocked for having been invested in illiquid assets (1.6 billion euros, i.e. 16% of outstandings). ” No transaction can be carried out on funds denominated ‘Side Pocket‘”, Where these assets were confined, warns the insurer Spirica (Crédit Agricole Assurances) on its website.

Blocked transactions

Transactions on this medium are blocked until its total liquidation. », Warns Generali. In certain cases, the client may proceed to a “securities settlement” and directly recover the units of ring-fenced funds. Oradéa, the subsidiary of Societe Generale specializing in the distribution of life insurance through independent wealth management advisers, sent a letter to its clients at the end of last week to the same effect.

This blockage is no longer a surprise because these assets, now managed in “run-off”, must be gradually liquidated by H2O. This process should end in June 2021, according to the Natixis subsidiary. But the success of the sales of the assets concerned, which have already experienced difficulties on several occasions, remains uncertain. And questions are now being asked about certain purchase-resale transactions which form a large part of the assets placed in the “side pockets”.

Two insurers stand out: CNP Assurances and Natixis Assurances. Unlike their competitors, they offer their customers to buy back units of account in illiquid funds, based on monthly valuation estimates communicated by H2O. ” The corresponding shares of these funds will then be carried by our general assets. », Indicates CNP, recently married to La Banque Postale and who seems determined to help its customers to get out of H2O funds.

Withdrawals of 550 million euros in six days

From H2O’s point of view, the withdrawals of nearly 550 million euros observed on liquid funds in six days are reassuring news. ” This testifies to the excellent partnerships that H2O has forged over the years with our investors. “Welcomed the management shop. She could fear a hemorrhage similar to that of the summer of 2019, when she had suffered several billion euros of outings in a week. This time, the pace seems more moderate.

Certain institutions may also choose to spread withdrawals in order to escape the “swing pricing” policy in place at H2O: when withdrawals are too large over a day, withdrawals are made at a discount. In addition, investors may take time to react. And within life insurance envelopes, there may be a delay of several days between the order being placed by the client and its actual implementation.

In the meantime, the distribution channels for H2O funds are shrinking. Many insurers, embarrassed by H2O’s difficulties, have already decided, like Crédit Agricole Assurances or BNP Paribas Cardif, to block new payments on liquid media, while maintaining the possibility of withdrawals. This is particularly the case of Oradéa, which informed its customers last week.

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