Munich Re unit to dismiss 1,800 workers in restructuringReprints
Munich Reinsurance Co.'s ailing primary insurance unit, ERGO Insurance Group, said Wednesday that it plans to lay off 1,800 employees as part of a $1.1 billion restructuring plan.
The plan, which is scheduled to be completed by 2020, also includes exiting 18 locations in Germany and bulking up its digital capabilities, Duesseldorf, Germany-based ERGO said in a statement on its website. The company said it is targeting gross cost savings of roughly €540 million ($600.2 million).
“By 2021 at the latest,” the company said, “ERGO expects annual net profits of over €500 million ($555.8 million), thus making a sustainable contribution to the result of its owner Munich Re.”
ERGO, which underwrites both property/casualty and life and health insurance businesses, said next year it will launch a stand-alone digital company for customers who conduct their insurance affairs exclusively online. The first product will be auto insurance.
Last month, Munich Re reported a lower first-quarter profit, partly due to troubles at ERGO, which posted a first-quarter loss.
At that time, Munich Re Chief Financial Officer Jorg Schneider said in a statement that it was unlikely that ERGO would post a profit for the 2016 year, in part because of high costs related to the new strategy program at the unit.