Press release 23 May 2012
In 2011, insurance customers were looking for security and stability more than ever before and ERGO fulfilled these hopes in the past financial year too. It successfully overcame the challenges posed by the public debt crisis and policy of low interest rates. ERGO life insurers are well equipped, even for a longer period with low interest rates. In the long term the strong market position and a broad product range will open up new growth opportunities for ERGO in the private and company pension market.
Consumers continued to rely on the stability of life insurance policies for old-age provision in 2011. ERGO Lebensversicherung recorded a 16.5 percent rise in new business based on regular premiums during the 2011 financial year, up from 201 million euros to 235 million euros – a very clear statement. During the same period, single premiums fell 15 percent to 870 (1,023) million euros as a result of a cautious underwriting policy. This led to a decline in gross premiums written, down by 5.9 percent to 3.2 (3.4) billion euros . At 51.0 (61.6) percent, classic annuity policies once again represented the most significant pillar of new business. In 2011, the position of company pensions was considerably reinforced and its share in new business accounted for 39.1 (28.1) percent.
15 million euros in benefits paid out every day
At the end of the past financial year the portfolio of life insurer ERGO Lebensversicherung stood at 5.8 (5.9) million contracts, and policies with regular premiums accounted for 2.3 (2.4) billion euros. Last year, the company paid out 3.9 (3.7) billion euros in benefits, which works out to an equivalent of 15 (14) million euros for each working day. These expectable benefits mean a lot to customers, especially in times of uncertainty, which can be demonstrated by the lapse ratio which continues to fall: from 2.8 to 2.6 percent based on existing policies. The ratio was down from 5.3 to 5.1 percent when measured against regular premiums. The acquisition cost ratio fell from 6.3 to 6.0 percent, and the administration expense ratio remained on par with the previous year at 2.7 percent.
Challenges facing the capital market
“The trend on the interest rate markets in 2011 was unprecedented”, stated Dr. Daniel von Borries, Chairman of ERGO Lebensversicherung. “The combination of a strong demand for secure long-term investments and a liquidity surplus to save the banks pushed down interest rates in Germany to a record all-time low.” And it is ultimately all German savers and life insurance customers who are having to bear the brunt of this development. In face of this challenging situation ERGO life insurers were forced to reduce the overall return on interest for 2012 in order to safeguard the reserves and strengthen the risk capacity. “Even if this period of low interest rates were to go on for a long time, we are well equipped to deal with it”, said von Borries. At the end of the financial year the investment portfolio stood at 38.9 (38.8) billion euros. Net investment result amounted to 1.7 (1.6) billion euros, and the net interest return remained on par with the previous year at 4.2 percent.
Victoria Life – new business merely from adjustments
As the ERGO Insurance Group transferred new life insurance business to ERGO Lebensversicherung from 2010 as part of its new brand strategy, new business acquired by Victoria Lebensversicherung amounting to 63 (129) million euros merely stems from increases in existing business. A moderate decline in overall premium income to 1.1 (1.2) billion euros was recorded. The lapse ratio, based on regular premiums, fell from 6.6 to 5.6 percent. On the basis of contracts it remained unchanged at 4.2 percent. Victoria Life managed an insurance portfolio of 1.52 (1.67) million contracts up until the end of the 2011 financial year with regular premiums amounting to 1.0 (1.1) billion euros. The company paid out on average 8.0 (7.0) million euros on every working day. Overall, customers received benefits to the value of 2.3 (1.9) billion euros. The administration expense ratio rose slightly to 3.7 (3.4) percent; by contrast, the acquisition cost ratio fell to 3.4 (5.3) percent.
Transparency in company pensions
The second edition of the brochure “Zahlen, Daten, Fakten – Die betriebliche Altersversorgung“ (Facts, figures and data on company pensions) has appeared at the same time as the annual reports of the ERGO life insurers. Besides ERGO Lebensversicherung and ERGO retirement funds, ERGO Pensionfonds (pension fund) provides company pension schemes too. The brochure summarises the overall development of company pensions provided by ERGO. The quality standards comply with requirements of tried and tested company reports. “Part of ERGO’s mission statement is the transparency of services”, stated Frank Neuroth, member of the ERGO Lebensversicherung Board of Management in charge of company pensions. “The positive response to our initial report on company pensions last year confirms this approach.”
More information
Annual report 2011 ERGO Lebensversicherung AG - PDF file (German version)
Appendix annual report 2011 - PDF file
Annual report 2011 Victoria Lebensversicherung AG - PDF file (German version)
Appendix annual report - PDF file
Company pension brochure - PDF file (German version)
Key figures of ERGO life insurers (based on HGB) 2011
|
ERGO Life |
Victoria Life |
2011 |
2010 |
2011 |
2010 |
| Premium income |
€ billion |
3.4 |
3.6 |
1.1 |
1.2 |
| New business |
€ billion |
1.1 |
1.2 |
0.06 |
0.13 |
| Existing business |
contracts million |
5.8 |
5.9 |
1.5 |
1.7 |
| Paid-out benefits |
€ million |
3.9 |
3.7 |
2.3 |
1.9 |
| Investments |
€ billion |
38.9 |
38.7 |
17.9 |
19.1 |
| Net investment result |
€ billion |
1.6 |
1.6 |
0.7 |
0.7 |
| Net interest return |
% |
4.2 |
4.2 |
3.7 |
3.8 |
| Acquisition cost ratio |
% |
6.0 |
6.3 |
3.4 |
5.3 |
| Administration expense ratio |
% |
2.7 |
2.7 |
3.7 |
3.4 |
| Gross surplus |
€ million |
443 |
623 |
152 |
235 |
| Net income |
€ million |
41 |
47 |
29 |
23 |
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About the ERGO Insurance Group
ERGO is one of the major insurance groups in Germany and Europe. Worldwide, the Group is represented in over 30 countries and concentrates on Europe and Asia. ERGO offers a comprehensive spectrum of insurance, provision and services. In its home market of Germany, ERGO ranks among the leading providers across all segments. 50,000 people work for the Group, either as salaried employees or as full-time self-employed sales representatives. In 2011, ERGO recorded a premium income of 20 billion euros and paid out benefits to customers amounting to 17.5 billion euros.
ERGO is part of Munich Re, one of the world’s leading reinsurers and risk carriers.
More at www.ergo.com
Disclaimer
This press release contains forward-looking statements that are based on current assumptions and forecasts of the management of ERGO Insurance Group. 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.