Battered insurer

Ergo Places Faith in Former Rival

Is Markus Riess, Ergo's new CEO, a knight in shining armor?
  • Why it matters

    Why it matters

    Mr. Riess had a proven track record at rival Allianz, and analysts hope he can rapidly improve lackluster profits and growth.

  • Facts


    • Ergo’s image suffered greatly in the wake of a scandal involving sex trips to Budapest, as well as various accounting failures.
    • Despite stronger foreign operations, premium revenues in Germany have declined in several segments.
    • Ergo expects profits to decline by €400-500 million in 2015.
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Markus Riess developed his skills as a soccer striker at an early age. He grew up in Paderborn, a provincial city in the northwestern German region of Westphalia, where there isn’t much to do for children and adolescents. He and a few school friends built two soccer goals in a meadow, which became their soccer pitch.

“We played soccer outside after school for years,” Mr. Riess, now 49, said a few months ago at a match between FC Bayern and Mönchengladbach in Munich’s Allianz Arena. He was determined to win and usually tried harder than the other players.

A different kind of match began on September 16, but one where Mr. Riess will urgently need his skills as a top scorer. That’s when the former head of the German operations of insurance giant Allianz will move to Düsseldorf, where he has assumed the top spot at his previous direct competitor, Ergo Insurance.

Ergo has had a massive image problem since 2011, when it was revealed that the subsidiary of the world’s largest reinsurer, Munich Re, rewarded successful agents by sending them on sex trips to Budapest.

But that is far from its only problem. Ergo’s business is also doing poorly, especially now that ongoing low interest rates in Europe have led to a sharp decline in the lucrative life insurance business.

In addition, a rapidly accelerating trend toward digitization creates enormous challenges for sales. Unlike Allianz, the world’s market leader, Ergo took too long to react to changes in the market.

This is why the insurer, with €18 billion ($20.5 billion) in premium revenues, 28,000 salaried employees and 15,000 full-time agents, is is serious need of restructuring . Many believe that Mr. Riess, who is leaving Allianz’s German operations in solid condition, stands a good chance of bringing change to Ergo as well.

“If you look at what he’s done at Allianz Deutschland, it’s clear that Rieß will make important changes,” said JP Morgan analysts Michael Huttner and Rahul Parekh in London.

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