MUNICH—Munich Reinsurance Co. has increased its ownership in ERGO Insurance Group A.G. to more than 95% and plans to buy the entire operation in a move that will force minority shareholders to sell their stakes.

ERGO, based in Dusseldorf, Germany, makes up most of Munich Re’s primary insurance operations. In a statement on Wednesday, Munich Re said it had acquired additional shares in the group from Bayerische Hypo- und Vereinsbank A.G., bringing its holdings in ERGO to more than 95%.

Munich Re said it plans to execute a “squeeze-out” to purchase the remainder of the company. A squeeze-out is a tactic whereby German law allows an owner of more than 95% of a company to buy the remaining shares at a fair price.

“The squeeze-out that is now possible at ERGO will result in significant simplification of shareholding structures, save costs, and further facilitate group-wide cooperation within Munich Re,” said Nikolaus von Bomhard, chairman of the reinsurer’s board, in the statement.

Munich Re said minority shareholders will receive “appropriate cash compensation for their shares. This will be determined by Munich Re on the basis of a company valuation and will total at least the weighted average ERGO share price for the last three months prior to today’s date,” the statement said.

The buyout comes after ERGO’s recent announcement that it is rebranding its operations and merging some insurers.