Responsible and sustainable asset management
When our customers entrust us with their money, they also confer a great deal of responsibility on us. We live up to this responsibility thanks to our forward-looking investment management strategies and a sophisticated management and monitoring system, the central aim of which is to give investors as much security as possible.
It’s a characteristic of insurance that customers first pay premiums but the insurer only at some future time may be required to pay out monetary benefits. Consequently, our investment management focusses first and foremost on ensuring that we are able to meet our commitments to our customers at all times, both now and in the near and distant future. We invest with great motor and with the long term very much in mind. After all, we owe the customers who place their trust in us security and peace of mind in our ability to deliver, regardless of whether the environment is one of stability or uncertainty. This means we bear a great deal of responsibility – responsibility which requires us to think, plan and act for the long term above all other considerations.
Since insurance benefits differ in the various business segments, we adjust our investment strategies accordingly. In life insurance, for instance, the investment must have generated at least the value of the benefits guaranteed to the customer by the time the policy matures. In health insurance, we need to be able to cover ongoing costs and make provisions for potential higher expenditure as the customer ages. When it comes to accident, car or personal liability insurance, the principal concern of our investment strategies is to avoid risks in order to ensure that the company is always able to pay out benefits in case of claims. Whatever the business segment question, we need to make sure that the duration of our investments correspond to those of the commitments we have made to our customers.
Minimising risks by ensuring a wide spread of investments
In order to achieve this, we need predictable returns on our investments. We predominantly invest in fixed-interest securities such as government bonds, covered bonds (Pfandbriefe) or loans. Further, we invest in a range of debtors such as governments, banks and industrial companies, as well as investing in real estate and, to a very small extent, in shares, the overwhelming majority of which come from Europe. This wide spread of investments reduces potential risks to a minimum.
Most of ERGO’s investments, which amount to a total of over EUR 100 billion, are largely managed by MEAG, the asset manager of ERGO and Munich Re. MEAG is one of the biggest investors active in the financial sector in Europe. MEAG’s experts take a risk-controlled approach to investment, with the primary aim of generating above-average value increases in the long term. MEAG’s portfolio management strategies prioritise sustainable investment and are characterised by a thorough and detailed investment process and a distinct capital market experience.
A sophisticated management and monitoring system, run jointly by ERGO and MEAG, ensures that we are able to meet our commitments to our customers in the long term. Principal decisions are made at individual insurer’s level, i. e. life, property-casualty or health insurers. Based on these guidelines, ERGO’s Strategic Asset Allocation team, advised by MEAG, draws up mandates for investments that take into account all requirements of tax, accounting and regulatory legislation. The experts from MEAG assess the overall economic situation, the figures from the capital market and the range of investment opportunities on offer, and select investments in accordance with their mandates. ERGO Group has an early warning system which monitors compliance with these instructions in all respects, including investment categories, quality and boundary figures, on a daily basis.
Socially responsible investment
Our investments in shares and bonds are based on the principles of sustainability which are laid down in Munich Re’s General Investment Guidelines (GIG) and in force across the Group. ERGO invests a large part of its customers’ money in companies who take economic, ethical, social and environmental issues into account. We also assess the level of sustainability demonstrated by public-sector and government bonds and the issuers of covered bonds (Pfandbriefe).
Our asset manager MEAG operates in accordance with guidelines we have specified to the end of ensuring our investments continuously meet our sustainability requirements. The fact that 80 percent of our share and bond portfolios consist of investments meeting sustainability criteria underlines the success of this policy.