ERGO CEO Markus Rieß skizziert die Lage im Unternehmen

I always preface my personal assessment of the strategy program. I told some of you that I would form a final opinion in 2018 on whether what we set out to do could realistically work. And now I am personally fully convinced that it will work. The program remains ambitious. We had a nice interim success in 2018. In summary, it is going better than expected. We must be respectful that two very ambitious years lie ahead, but my personal assessment is that we will achieve it, and the ERGO strategy program will be successfully completed by the end of 2020.

Let's look at the numbers. I won't read them all out, especially since most of you know them. Interestingly, we have achieved all financial key figures at or better than the range we set. I would add that on the investment side, because these are cumulative values, in the 2018 slice we actually spent 91% of the planned investments. This addresses the concern about whether we can manage the investment program. In the first two years we couldn't invest as much, but now the figure is 91% in the past year, showing that the transformation machine is running at full speed. Regarding cost savings, I would add that besides the 174 million you know and which have already been discussed, an additional 30 million were achieved here to date from the international cost reduction program, so that overall we have a positive effect of over 200 million from cost savings. These are sustainably secured, and cost discipline remains.

Important on this slide—I'll go into many things shortly—is the basis for growth. Cost reduction and profitability are one thing, but after largely completing this step, we must maintain cost discipline and lay the foundation for continued growth. In this context, we are particularly looking at sales productivity. Sales productivity increased by 20% in the 2018 slice, so over three years we are talking about a 25% increase. I won't conceal that the first quarter of 2019 also looks good in sales, so I can really say that the decisive consolidation and merger of sales channels have worked. Cost savings are there, and sales productivity too. That makes me confident that we will achieve our goals at the end of the day. In life insurance, 2018 was the first year we had new life products on the market. They developed well. In December we launched the new funeral expense policy, so I expect this trend to accelerate further in 2019. I want to say that in life insurance, ERGO is back with competitive and good products, and you notice that when you talk to the sales force or look at the corresponding results.

All this together is, from my perspective, extremely positive on the financial side and leads us to say it went better than expected. Let's move to the qualitative side. We have four elements we consider particularly important. Regarding digitalization, I'll focus on the 2020 ambition: intermediary productivity must continue to rise. Today we have per capita productivity higher than in the last twelve years, and before that we have no statistically reliable data. So productivity has never been as high as it is now compared to the last ten to twelve years. Nevertheless, it must continue to rise, and I believe we have a good basis with the new life product and the ongoing modernization of the property-casualty policy. Cost structure: we have already achieved a lot, 174+30, but we want to show almost 400 million in cost savings by the end. We are on track, ahead of schedule both in Germany and internationally. But there is still work to be done. Focus on the IT landscape: you know the topic of separating legacy systems and the cooperation project with IBM to build a new IT solution for our existing legacy systems. That will continue to drive us. We will bring the first tranche on the road in about twelve months; it will take a few more years to complete, but it is on track. We have made good progress on legacy systems: 44 of the initially planned 59 systems have already been decommissioned. Some are smaller, but for example, in auto insurance in Germany we introduced a new policy administration system with seven million contracts migrated in 2018, with much better rating capabilities. These are things that show progress, but I must also say that this must continue, and it will. On the product side, we have modularized products and are simplifying them further, making them online and offline capable. Our retail business model is the hybrid customer, i.e., a uniform online and offline integration across the entire product world. We are making good progress: currently 75% of our products can be purchased online, which is the technical prerequisite for full online and offline integration. We are working on the remaining 25%. Now to the question of digitalization. I want to emphasize what Mr. Wenigen said in his contribution, which I fully support: at ERGO, we must not create side shows with acquisitions in digitalization; we will only win if we can fully digitalize our entire business model. There are many terms that everyone defines and interprets differently, so we must be careful to interpret them correctly. I would like to share with you how we approach this. I have divided it into five individual topics. First, it is about enabling new technologies and innovations. This includes small things like working with voice, first AI and robotics applications, setting up our IT governance internationally so that not every country develops its own CRM system, and investing in people for the digital transformation. We have 200 experts in our digital centers in Warsaw and Berlin, about one third external, who can develop digital solutions on demand at high speed. Then it is important that we not only discuss business models but consciously do three things equally: first, digitally improve current business models. Our hybrid customer model requires a uniform offering across our various risk carriers, modern CRM technology. We introduced this year; the first 100,000 customers have already been addressed via a CRM system and informed through campaigns. Portals: we now have 30% more portal users, nearly 900,000. We will overcome fragmentation with our so-called one website, integrating products from ERGO Direkt, SV, and DKV into a unified view, so we have one digital customer interface. We will soft-launch in April and fully roll out in Q2. Combined with the portal, this gives us a modern digital infrastructure. But that is all current business model. Then we have deliberately disruptive business models, mainly revolving around our purely digital player, Xvi. We now have 50,000 policies with 80,000 risks at Next. It is still an experiment with potential. The progress is good. We are beginning internationalization; we are preparing a soft launch in Austria, and we will bring a second product in Germany in 2019. Then we try to position ourselves in new business models, keyword ecosystems, though I am cautious with that term because everyone has a lot of interpretation leeway. We are trying on the mobility side; it is not easy to find a role as an insurer that makes sustainable money. We have set up a dedicated infrastructure and invest through our corporate venture capital infrastructure from the reinsurance side in corresponding startups. And all this only works if it is based on a digital culture and mobile and new ways of working. You see our areas: digital factory, communication formats like our 'Jennings', and targeted employee programs under our slogan 'Transformation ERGO'. I believe this underscores the group's claim to digitalization, and these are the initiatives we are trying to bring forward at ERGO.