LONDON, Dec 16 (Reuters) - German reinsurer Munich Re’s insurance unit Ergo will stop offering new life insurance policies in Belgium due to falling profits and plans to cut around 200 jobs, it said on Friday.
Prolonged low interest rates in Europe have made it hard for life insurers to earn sufficient investment returns to match the payments they need to make on long-term savings products.
“New contracts sold in recent years are not profitable in the current context of sustained low interest rates,” Mark Lammerskitten, CEO of ERGO Belgium, said in a statement, adding that ERGO Belgium was competing with “large established banks and broker organisations that are able to reach more scale and cost effectiveness”.
ERGO Belgium plans to cut around 200 jobs, and ERGO Group will increase ERGO Belgium’s capital by more than 300 million euros ($313.77 million), the statement added.
$1 = 0.9561 euros Reporting by Carolyn Cohn; Editing by Maria Sheahan