ERGO life insurers to maintain profit distribution rates

ERGO Vorsorge, the ERGO Group’s life insurer, is to maintain last year’s profit distribution rates in 2020. ERGO Leben and Victoria Leben, the two companies responsible for traditional life insurance, will also keep rates stable.

“Despite persistently low interest rates, the ERGO life insurance portfolio remains strong, thanks to our prudent and sustainable investment policies. This has enabled us to maintain policyholders’ bonus rates in 2020”, says Michael Fauser, CEO of ERGO Vorsorge Lebensversicherung AG.

ERGO has developed an optimal capital investment strategy tailored to the respective business model in order to guarantee a sustained return through sufficiently high current income. In addition to long-term investments with a high credit rating, the investment strategists focus on diversification via foreign currency bonds. ERGO is also expanding its involvement in sustainable infrastructure financing such as wind power, district heating and rail networks, as well as in real estate financing. In addition, ERGO Vorsorge Leben is increasingly exploiting the yield opportunities on the stock markets.

ERGO Vorsorge Leben: ERGO Vorsorge life insurance has set the 2020 running yield at 2.55 percent, plus 0.2 percent as a maturity bonus and share of the valuation reserves. This brings the overall rate to 2.75 percent.

ERGO Leben: ERGO life insurance has set the 2020 running yield at 2.05 percent, plus 0.3  percent as a maturity bonus and share of the valuation reserves. This brings the overall rate to 2.35 percent.

Victoria Leben: The running yield at Victoria Leben is to remain at last year’s rate of 2.05 percent in 2020. Policyholders will also receive 0.3 percent as a maturity bonus and share of the valuation reserves. The overall return is thus 2.35 percent.

Explanation of the policyholder bonus:
Every year, insurers calculate the earnings from their investments and other profit sources, and then pass on a share to their policyholders. At the end of each year, the insurers decide on the running yield and whether any maturity bonus will be paid out to their customers. Taken together, this constitutes the overall policyholders’ bonus. In many policies, the bonus also includes a share of the valuation reserves.

Existing clients are paid at least the interest rate guaranteed at the time their policy was signed.

The distribution of the bonuses is reported by the insurers to the German Federal Financial Services Authority (BaFin).