Investment performance

Ordinary investment income surpassed the previous year at EUR 880.5 million (EUR 810.5 million) even though interest rates were lower overall. This was due to the growth in assets under own management, which was attributable to both positive cash flows from the technical account and the development of the market.

Impairments of just EUR 16.6 million (EUR 141.4 million) had to be taken on investments. They decreased sharply on fixed-income assets to EUR 7.9 million (EUR 45.4 million). A volume of EUR 7.7 million (EUR 92.6 million) was attributable to alternative investments – principally private equity funds. Owing to the broadly upward market trend, write-downs of a mere EUR 0.6 (EUR 3.2 million) were taken on equities.

Thanks to increased fair values, these write-downs contrasted with write-ups of EUR 24.1 million (EUR 9.3 million) on fixed-income securities and funds that had been written down in prior periods. The attractive market climate enabled us to realise net gains of EUR 162.0 million (EUR 113.0 million) on disposals. Unrealised losses on our asset holdings measured at fair value through profit or loss amounted to EUR 39.9 million, contrasting with an unrealised gain of EUR 100.6 million in the previous year. The bulk of this amount (EUR 31.2 million) derived from the performance of inflation swaps taken out to hedge inflation risks associated with the loss reserves in our technical account. The balance of our deposit interest and expenses was sharply higher at EUR 316.4 million (EUR 276.8 million).

We were thus able to boost our net investment income by 12.4% to EUR 1.3 billion (EUR 1.1 billion) – first and foremost thanks to the increased current investment income and the considerably lower volume of write-downs.

The portfolio of fixed-income securities excluding short-term investments climbed again to EUR 21.4 billion (EUR 19.7 billion), principally due to inflows of cash from the technical account and the market development. New investments were made predominantly in corporate bonds and public-sector covered bonds (Pfandbriefe) as well as asset-backed securities. Hidden reserves for available-for-sale fixed-income securities recognised in shareholders’ equity totalled EUR 268.4 million (EUR 252.3 million). The spread of asset classes shifted as planned towards corporate bonds, while the share of government and semi-government bonds was reduced. The quality of the bonds – measured in terms of rating categories – was maintained on a consistently high level. The proportion of securities rated “A” or better stood at 91.0% (91.7%) in the year under review.

We held a total amount of EUR 2.0 billion (EUR 1.8 billion) in short-term assets and current assets at the end of the year under review. Funds withheld by ceding companies amounted to EUR 12.6 billion (EUR 10.8 billion).

Holdings of alternative investments remained on a broadly stable level. As at 31 December 2010 an amount of EUR 469.3 million (EUR 375.3 million) was invested in private equity funds, a further EUR 155.0 million (EUR 353.2 million) in high-return bond funds and loans as well as CDOs, and altogether EUR 149.7 million (EUR 108.6 million) in structured real estate investments. The uncalled capital with respect to the aforementioned alternative investments totalled EUR 272.6 million (EUR 328.8 million).

In the year under review we consistently pursued our strategy of investing more heavily in real estate. To this end, various properties were acquired in Germany and the United States, and further projects are under review; the real estate allocation will therefore keep rising steadily as planned, and currently stands at 1.9% (1.2%).