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Munich Re Says Prostitutes Attended Party for Ergo Agents

Munich Re Unit Says Prostitutes Attended Rewards Party
The headquarters of Munich Re in Munich. Photographer: Guido Krzikowski/Bloomberg

May 19 (Bloomberg) -- A Munich Re unit hosted about 20 prostitutes at a Budapest party to reward the insurer’s high-performing agents, a spokesman said.

The incident in June 2007 was a “clear violation” of company policy, said Alexander Becker, a spokesman for the Ergo Versicherungsgruppe subsidiary, in a telephone interview yesterday. Senior management involved in organizing the event are no longer employed at Ergo, he said.

Ergo hosted the party for about 100 guests at the historic Gellert spa, Handelsblatt reported earlier. Women wore color-coded armbands, the newspaper said, citing unidentified guests, with red for hostesses, yellow for those available for sexual favors and white for women reserved for executives and top agents. After each trip to beds set up near the thermal baths, a woman would receive a stamp on her forearm, the paper reported.

Ergo and other insurers typically sell products such as life, car and health coverage through so-called tied agents, independent brokers or other channels to customers. Such incentive trips for especially successful salespeople “definitely don’t usually proceed the way it’s described” in the German newspaper’s report, Becker said. He declined to comment on the details of the party.

‘Doesn’t Happen Again’

“We have taken the steps necessary to make sure something like this doesn’t happen again,” Becker said.

Munich Re, the world’s biggest reinsurer, fully owns Dusseldorf-based Ergo, Germany’s second-largest primary insurer after Allianz SE. The Budapest party was hosted by an Ergo unit, then known as Hamburg-Mannheimer Versicherungs-AG.

People responsible for the trip, including a Hamburg-Mannheimer board member, left the company before the case was known, spokeswoman Alexandra Klemme said in an e-mail. The unit was rebranded Ergo under a strategy announced in 2009.

Hamburg-Mannheimer’s sales organization, named HMI, is now selling products for the whole Ergo group. It has about 17,000 self-employed agents who sell insurance contracts either on a full-time or part-time basis and get commissions based on the contracts they sell.

On a group level, Ergo’s sales organization employed more than 22,000 full-time sales representatives at the end of last year, according to its website.

HMI is headed by Ludger Griese, who took the helm in July 2007 from sales director Kai Lange, the former brother-in-law of Carsten Maschmeyer, ex-chief executive officer of AWD Holding AG, Germany’s second-biggest financial-services broker. Griese also assumed the responsibilities of HMI chief Ulf Redanz, who left Hamburg-Mannheimer in March 2009.

To contact the reporters on this story: Naomi Kresge in Berlin at nkresge@bloomberg.net; Oliver Suess in Munich at osuess@bloomberg.net

To contact the editors responsible for this story: Frank Connelly at fconnelly@bloomberg.net Edward Evans at eevans3@bloomberg.net

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