ERGO Lebensversicherung lowers policyholder bonus 2017

Press release 6 December 2016

Following two years of stable overall interest return for traditional life insurance products, ERGO Group’s life carriers adjust the policyholder bonus 2017. With this decision, ERGO Lebensversicherung AG reacts on the continued low interest rate phase on capital markets and lowers the overall policyholder bonus by 0.45 percentage points to 2.6 percent. At the same time, ERGO reduces the terminal bonus for older tariff generations with a higher guaranteed interest rate.

The traditional life insurance with guaranteed interest rates continues to be under pressure in the sustained low interest rate environment. The European Central Bank lowered the base rate in March 2016 to zero percent. In June 2016, the return of a ten-year federal bond fell to zero percent for the first time and temporarily even became negative. At the end of October, the European Central Bank confirmed their plans to hold on to their monetary policy. Consequently, there is no prospect of an end of the low interest rate phase. The product life insurance depends on secure and long-term interest-bearing investments, and therefore is especially affected by capital market developments. In its report on financial stability 2016, the Bundesbank recommended additional risk buffers to secure life insurer’s guarantees due to the high uncertainty of future developments.

“ERGO’s life insurers have strong and resilient investments. However, we have to ensure today that customers will benefit from our stability in the future, too”, says Michael Fauser, Chairman of the Board of Management of ERGO Lebensversicherung AG. “The current situation on capital markets and the projected future developments require an adjustment of the policyholder bonus in 2017.”

With the declaration of policyholder bonus, ERGO consequently pursues its security-oriented policy which also includes equal profit participation of different tariff generations of savings products. To achieve a balance, the terminal bonus for policies with higher guaranteed interest rates will be adjusted.

Total policyholder bonus in detail:

ERGO Life. The guaranteed interest rate plus current interest rate at ERGO Lebensversicherung will amount to 2.25 percent in 2017. With a terminal bonus and basic participation in valuation reserves of 0.35 percent, the total policyholder bonus comes to 2.6 percent.

Victoria Life. Guaranteed interest and current interest rate will be in total 2.05 percent in 2017. Customers also receive 0.35 percent from terminal bonus and basic participation in valuation reserves. Total interest return is thus set at 2.4 percent.

ERGO Direkt. ERGO Direkt Lebensversicherung fixes the sum of guaranteed interest and current interest rate 2017 at 2.75 percent. Customers will receive an additional 0.25 percent of terminal bonus. Overall interest return including terminal bonus will be at 3.0 percent.

The total interest return
Annually, insurers determine their returns from investments and other profit sources. Customers participate in the profits. At the end of each year, insurers decide upon the current interest rate and if appropriate, on a terminal bonus for their customers. Together, they constitute the total interest return. A basic participation in valuation reserves is also included in many tariffs.

Life insurers are required to report the bonus allocation to the German Federal Financial Supervisory Authority (BaFin).

Existing customers are offered at least the guaranteed interest rate laid down in their policy.

For further information, please contact:

Media Relations
Tina Kunath

Tel +49 211 477-2324
Fax +49 211 477-3113

About ERGO Lebensversicherung
With premium income of 4.0 billion euros and capital investments of more than 39 billion euros in 2015, ERGO Lebensversicherung is one of the leading suppliers on the German market. It offers varied products with individual solutions for private and company pensions, wealth formation and income security for private and corporate customers. The company, previously known as Hamburg-Mannheimer, is the largest life insurer within the ERGO Group and can look back on more than one hundred years of experience.
ERGO Lebensversicherung is a member of the ERGO Group which, in turn, belongs to Munich Re, one of the world’s leading reinsurers and risk carriers.
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This press release contains forward-looking statements that are based on current assumptions and forecasts of the management of ERGO Lebensversicherung. Known and unknown risks, uncertainties and other factors could lead to material differences between the forward-looking statements given here and the actual development, in particular the results, financial situation and performance of our Company. The Company assumes no liability to update these forwardlooking statements or to conform them to future events or developments.

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