Greece is one of the key markets for the Ergo Group, according to its chairman, Dr Markus Riess, who stresses that Ergo is one of the few insurance groups that has invested in Greece during the crisis.
In this interview with Kathimerini, Riess highlights the fact that following the completion of the ATE Asfalistiki (ATE Insurance) takeover, Ergo Hellas, as a leader in Greece’s insurance market, will strengthen its presence through organic growth while simultaneously exploring possibilities for new portfolio acquisitions in the industry.
What are your plans for your Greek subsidiary following the takeover of ATE and to what extent are you considering the possibility of further takeovers in the Greek market?
Ergo Hellas is a success story for our international activities in the field of general insurance. It has been posting excellent results and steady growth for over a decade and this is the result of a substantial and systematic group effort. Our Greek subsidiary has achieved its goals at every level without losing focus of its main target, which is profitable growth. As you are aware, we are one of the few insurance groups that have invested during the difficult times for the Greek economy and we are a leader in the general insurance market following the takeover of ATE Asfalistiki. We have strong associations – the network of associates and Piraeus Bank – and our target is organic growth. We simultaneously believe in the potential of the Greek insurance market and especially in the capabilities of our local team; management in Greece can accordingly explore potential opportunities for portfolio acquisitions. By taking advantage of its leading position in the market, Ergo Hellas has the potential to influence the industry’s growth, to decisively contribute to the growth of insurance consciousness in Greece and to also contribute to improving insurance penetration in the country.
One of the growing categories in the Greek insurance market is the health sector. Taking into consideration your strong position in health in other European countries, are you considering expanding your activities in this sector in Greece?
The Ergo Group has a strong presence in the health sector in large markets such as Germany and Spain, as well as markets outside Europe, such as India. The group has significant expertise in the branch, having developed a portfolio of 6 billion euros and 8.6 million clients worldwide. Our target is to capitalize on the group’s experience in the sector and to offer products that are tailored to the needs of the local market. The health sector is a growing branch in all major economies, including the Greek market, and I hope that we will soon be able to also develop this activity in Greece. The low penetration by private insurance in Greece compared to other countries is something we see as an opportunity. Ergo Hellas has upgraded its role with the takeover of ATE Asfalistiki to the extent that ATE Asfalistiki has a noteworthy portfolio in this sector, as well as an organized network of corporate sales with growth potential. Accordingly, Ergo Hellas, as a member of a group with significant activity in the life and health sector and a high level of specialization, has the potential to capitalize on the group’s expertise and to seek to further extend its position in this sector.
What is your opinion on the creation of a Pan-European life insurance product, as suggested by the European Commission?
It is an interesting prospect because European citizens move around the union and work in different European countries throughout their life. The problem, however, is that every European country has a different regulatory framework and this leads to a fragmented market. This implies that the offering of a single insurance product also depends on the harmonization of our systems, and even though the intention to create a Pan-European insurance product in the health sector is desirable, the reality is that we are still far from this prospect.
What are the trends in the sector of guaranteed life plans following the promotion of new products on the German market that are linked to financial indicators?
We are confronted with a difficult macroeconomic environment in the life sector and specifically in the pension sector, which is defined by an expansionary monetary policy that cannot support the supply of products with guarantees in the long term. The group’s policy is to provide insurance products that guarantee the principal and combine the feature of greater participation by the insured person in financial indicators. The group recently introduced new life insurance products in Germany that invest in financial markets through investment funds and indices and allow the insured to flexibly select the composition of investments in their portfolio, which may be stocks in the USA, fixed income securities in developing markets, etc. One key advantage of these products is the capacity to change the composition of the portfolio, even daily, at an extremely low cost.
What is intended by the group’s decision to transfer the life portfolio with guarantees onto the platform that is being jointly designed with IBM?
Our decision to transfer 6 million traditional life insurance policies in Germany onto a new IT platform, which we are building together with IBM, is an important step for us in order to create a higher efficiency in the policy administration. Another significant thing is that we expect to provide this service not only for the products of the Ergo Group’s companies, but also for products of other insurance companies outside the group. For this, we have agreed to set up a joint venture with IBM this year.
The Ergo Group has announced an extensive restructuring plan. What are its key features and at what stage is its implementation?
The restructuring plan we have announced is based on three main pillars. To firstly strengthen our position in local markets where Ergo plays a leading role, such as Greece, Poland and Austria; secondly, to strengthen our presence in countries whose macroeconomic environment is rapidly growing, such as China and India; and thirdly, to strengthen our presence in sectors with international scope, such as travel cover and providing legal protection, namely sectors with globalized characteristics. Within the context of the restructuring plan, we are promoting the transformation of the group in the new digital environment by introducing the capacity for online/digital insurance, initially for the motor sector in Germany and Austria. We are investing in the digital future to create the conditions for effectively approaching tomorrow’s clients and our target is that every product with the Ergo name may be purchased online by both our commercial customers, as well as individuals.