Total rate of return from ERGO life insurers almost constant in 2018

Media Information, 15.12.2017

The life insurance companies belonging to the ERGO Group are to maintain their current total rate of return for classic life insurance products at an almost constant level in 2018. While this will remain unchanged compared with the previous year at Victoria (2.05 percent) and ERGO Direkt (2.75 percent), ERGO Leben is to adjust its total rate of return by 0.2 percentage points to 2.05 percent. In the case of older generations of policies with higher guaranteed interest rates, ERGO will be reducing the terminal bonus. In this way, ERGO is responding to the continually challenging capital investment environment.

During 2017, the European Central Bank has once again continued its expansionary monetary policy and adhered to a low base interest rate. No changes in these key market parameters are to be expected in the short term. Stock market performance is generally positive, but stable and reliable returns, for instance on government bonds, still remain low. In this low interest rate environment, classic life insurances with guaranteed rates of interest remain under pressure, these being dependent on such secure and long-term interest-bearing investments.

"'The EZB´s monetary policy has again relied on purchasing bonds and maintaining a low level of base interest rates throughout 2017. Coupled with the situation on the capital markets, it is extremely important to find a prudent balance between risk and return for our customers. As an insurer, we navigate cautiously in line with our company´s secure and long-term investment policy," says Michael Fauser, Chief Executive Officer at ERGO Lebensversicherung AG. "As before, our ERGO life insurers still hold strong and sound capital investments. Which is why, except for a minor adjustment at ERGO Life, policyholders´ bonuses will remain constant in 2018."

In the case of policies with higher guaranteed rates of interest, the terminal bonus is to be adjusted.

Total rates of return in detail:

ERGO Life. ERGO Lebensversicherung will be setting a current interest rate of 2.05 percent for 2018. Added to this will be 0.3 percent accruing from the terminal bonus and the basic share in the valuation reserves. This will result in a total rate of return of 2.35 percent.

Victoria Life. The current interest rate at Victoria Leben will total 2.05 percent in 2018, as in the previous year. Customers will receive an additional 0.3 percent from the terminal bonus and their basic share in the valuation reserves. The total rate of return will therefore amount to 2.35 percent.

ERGO Direkt. ERGO Direkt life insurance will be maintaining a constant current rate of interest of 2.75 percent in 2018. Customers will receive 0.25 percent of their terminal bonus. The total rate of return will therefore remain unchanged compared with the previous year at 3.0 percent.

Explanatory notes on the total rate of return
Each year, insurers calculate their returns on invested capital and other sources of profit. Customers receive a share of the surplus. In this connection, insurers determine the relevant current interest rate and, if applicable, a share of the terminal bonus for their customers at the end of each year. Together, these give rise to the total rate of return. In the case of many tariffs, this also includes a basic share of the valuation reserves.

Existing customers receive at least the guaranteed interest rate prevailing at the time the contract was closed.

Insurers duly notify the Federal Financial Supervisory Authority (BaFin) regarding allocation of the surplus.

For further information, please contact:

Tina Kunath

Media Relations

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

About the ERGO Group AG

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. Within the group, three entities manage domestic and international business, as well as digital and direct business (ERGO Deutschland, ERGO International and ERGO Digital Ventures). About 44,000 people work for the Group, either as salaried employees or as full-time self-employed sales representatives. In 2016, ERGO recorded a premium income of 17 billion euros and rendered benefits to customers of 16 billion euros. ERGO is part of 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 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.