Our investments: handling capital with care

The principles of sustainability also apply to investments made for the ERGO Group. We take account of this responsibility by prudent and far-sighted investment management supported by a sophisticated controlling system.

Maximum security for customers

An orientation framework for our sustainable investment strategy across the Group is provided by the General Investment Guidelines drawn up by our parent company Munich Re and the Principles for Responsible Investments (PRI) which we signed up to in 2006. The primary objective of our investment management is to be in a position to meet our commitments to customers at all times. The following objective applies to all lines of business: maximum security for the investors. The investment strategies are based on the differing insurance benefits. For example, in a traditional life insurance the guaranteed benefits must be generated alongside the bonus, whereas health insurance demands the ability to pay ongoing costs and making provision to pay for any higher health benefits as customers get older. We therefore need to ensure in all lines that the maturities for our investments match the terms for our commitments. At the same time, we support customers who want to invest their money sustainably. If they take out a unit-linked annuity insurance, for example, they are able to select a sustainable fund for their provision.

Managing commitments strategically

MEAG, the joint asset manager of ERGO and Munich Re, manages the investments of ERGO. The company is one of the major investors in the European finance sector. A comprehensive, joint controlling system operated by ER-GO and MEAG ensures that we meet the commitments to our customers over the long term. A dedicated early-warning system at the ERGO Group monitors compliance with the mandate specifications to MEAG every day. This also takes account of the investment categories, quality and limits.

ERGO invests more than half of the premiums received from customers in companies that take account of economic, ethical and environmental aspects. These companies are successful while taking care of the environment and the community. We invest in shares and corporate bonds which are listed in sustainability indexes. Government bonds are also reviewed using sustainability criteria. All the other public institutions issuing interest-bearing investments, such as government companies, institutes or issuers of covered bonds are checked independently.

Our sustainable investment strategy enables us to ensure that ERGO is able to meet its commitments to its customers today, tomorrow and in the future. This strategy also allows us to achieve appropriate returns. In order to attain this objective, we take a very refined and forward-looking approach to risks. And because sustainable investments entail fewer risks over the long term than other types of investment, we factor in environmental and social standards, compliance with rules of conduct in corporate governance, and avoidance of environmental pollution. We believe that investing sustainably pays off for customers of ERGO over the long term.

Holger Kerzel, MEAG Managing Director | Portfolio management for shares and other equity investments