Munich Re’s insurance unit, Ergo Versicherungsgruppe, plans to increase international premiums by more than a fifth over the next five years on sales in Asia and eastern Europe.
“We aim to increase international premiums to more than 5 billion euros ($6.8 billion) by 2018,” Jochen Messemer, 47, management board member responsible for the insurer’s international operations, said in a telephone interview from Dusseldorf, Germany yesterday. “The trend toward rising demand for insurance products in Asia and eastern Europe remains unchanged.”
Ergo, Germany’s second-biggest insurer after Munich-based Allianz SE, generates about 20 percent of its premiums from outside its home market. The Dusseldorf-based company’s international unit is focusing on eastern Europe and Asia and expects operating profit excluding one-time items to reach about 180 million euros in 2018, Messemer said. Premium income is expected to grow 6 percent to 8 percent annually over the period, he said.
“I don’t expect the recent economic challenges, especially in India, to have a material effect on the growth of our business,” Messemer said.
Developing-nation currencies were in the midst of their biggest slide in five years until last month on speculation the U.S. will scale back monetary stimulus, drying up funds that were chasing higher-yielding assets. The Indian rupee touched a record low last month.
The company’s five-year premium target excludes any increase of stakes in existing joint-ventures and investments and future acquisitions, Messemer said. The international business accounted for 4.1 billion euros of Ergo’s 18.6 billion euros of premiums last year.
Ergo will “closely examine” opportunities to buy insurers with annual premium income of about 200 million euros in Southeast Asia and eastern Europe, though won’t pursue large takeovers such as Allianz’s 684 million-euro acquisition of Turkey’s Yapi Kredi Sigorta AS in March, Messemer said. The former partner at McKinsey & Co. joined Ergo in 2004.
The company raised its stake in Vietnamese property and casualty insurer Global Insurance Co. to 35 percent in August after buying 25 percent in 2011.
India may become Ergo’s biggest international market by premium income by 2020, Messemer said. Ergo has a minority stake in it’s Indian subsidiary as the country limits foreign ownership of insurers to 26 percent. It sells property and casualty insurance with Mumbai-based Housing Development Finance Corp. and plans to provide life insurance through a joint- venture with Avantha Group next year.
“We want to grow our business in India and China organically,” Messemer said.
In China, Ergo started selling life insurance in September with joint-venture partner Shandong State-Owned Assets Investment Holdings Co. in the Shandong province.
Ergo International’s own figures differ from those reported by parent company Munich Re, the world’s biggest reinsurer, because of different consolidation methods.
Editors: Jon Menon, Steve Bailey