ERGO Vorsorge Leben, the ERGO Group’s life insurance provider, is adjusting its current total rate of return for 2021. Similarly, ERGO Leben and Victoria Leben, the two companies responsible for traditional life insurance products, are to adjust their overall rates of return from last year.
“In light of constant low interest rates, the ERGO life insurance companies, after years of constant overall rates of return, will make a slight downward adjustmemnt to the distribution of profits for 2021,” said Michael Fauser, Chairman of the Board of Management of ERGO Vorsorge. “In doing so, we are following the current market trend, while at the same time offering our customers an attractive interest rate in the new year.”
Total rates of return in detail:
ERGO Vorsorge Leben: ERGO Vorsorge Lebensversicherung will be setting a current interest rate for 2021 of 2.35%. Added to this will be 0.2% from the terminal bonus and the basic share in valuation reserves. This brings the overall rate to 2.55%.
ERGO Leben: ERGO Lebensversicherung will be setting a current interest rate for 2021 of 2.00%. Added to this will be 0.25% from the terminal bonus and the basic share in valuation reserves. This makes the overall rate 2.25%.
Victoria Leben: The current interest rate for 2021 at Victoria Leben will be 2.00%. Customers will also receive 0.25% from the terminal bonus and their basic share of the valuation reserves. The overall rate of return is therefore 2.25%.
“ERGO remains a reliable and financially strong partner for its customers,” said Michael Fauser. “This is again underlined by ERGO Vorsorge’s high solvency ratio of 520%, which is exceptionally high when compared with the market average, and its best ever credit rating of AA from rating agency Assekurata.”
With its life insurance companies, ERGO continues to follow an optimal investment strategy that is tailored to the business model in each case, in order to ensure a durable and attractive rate of interest by generating suitably high current income. Alongside long-term, high-quality investments, the Group strategists rely on diversification in the form of foreign currency bonds. In addition, ERGO is expanding its commitment to sustainable infrastructure financing in segments such as wind power, district heating and rail networks, and also in real estate financing. ERGO Vorsorge Leben is also making increased use of the return opportunities on the equity markets.
Background to overall rate of return
Each year, insurers calculate their earnings from investments and other profit sources. Their customers receive a share of the profits. At the end of each year, the insurers decide on the running yield and whether any maturity bonus will be paid out to their customers. Taken together, this constitutes the overall rate of return. In many policies, the bonus also includes a share of the valuation reserves.
Existing customers are paid at least the interest rate guaranteed at the time their policy was signed.
The distribution of the bonuses is reported by the insurers to the German Federal Financial Services Authority (BaFin).
