Munich Re to launch buy-out of Ergo minorities

Moving to streamline its primary insurance operations, Munich Re is to make a compulsory offer to buyout minority shareholders in its Ergo life, health and general insurance business unit. This action has been made possible by the purchase of Ergo shares from German bank HypoVereinsbank, a move that increased Munich Res stake in Ergo from 94.7 percent to over the 95 percent threshold required for compulsory minority buyouts.

Moving to streamline its primary insurance operations, Munich Re
is to make a compulsory offer to buyout minority shareholders in
its Ergo life, health and general insurance business unit.

This action has been made possible by the
purchase of Ergo shares from German bank HypoVereinsbank, a move
that increased Munich Re’s stake in Ergo from 94.7 percent to over
the 95 percent threshold required for compulsory minority
buyouts.

Nikolaus von Bomhard, chairman of Munich Re’s
board of management, explained that full control of Ergo will
result in a significant simplification of shareholding structures,
save costs, and further facilitate group-wide cooperation.

Ergo’s minority shareholders will receive an
as yet-to-be announced cash amount for their shares.

News of Munich Re’s buyout of Ergo minorities
came five days after an announcement that it was to restructure
Ergo’s operations in its home market, Germany.

Key elements of the restructuring are the
closing of Ergo’s Victoria Lebensversicherung (Victoria) unit to
new life business in 2010 and the channelling of all new life
insurance business through its Hamburg-Mannheimer Versicherungs
(HMV) unit which will be rebranded under the Ergo name.

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No brand changes were announced for Ergo’s
other major divisions, the health insurer DKV and legal expenses
insurer DAS.

Ergo, created in July 1997 out of an
equal-partner merger between Victoria and HMV, reported total
assets of €133 billion ($200 billion) and total shareholders equity
of €3.7 billion at the end of 2008.

In the first nine months of 2009, Ergo
reported total premium income of €14.28 billion of which life
insurance contributed €5.7 billion, up 14 percent compared with the
first nine months of 2008.

German life premium income in the first nine
months of 2008 totalled €4.24 billion and international life
premium income €1.46 billion.

In the first nine months of 2009, Munich Re
reported gross written reinsurance premium income of €18.73
billion, up 15.5 percent compared with the same period in 2008.

Life and health reinsurance premium income
surged 35.3 percent to €7.01 billion while property and casualty
business was up 6.2 percent at €11.72 billion.