Capital markets once again proved to be difficult and challenging in 2018. With this in mind, we are thoroughly satisfied with the development of our investments as at 31 December 2018. Our portfolio of investments under own management grew to EUR 42.2 billion (31 December 2017: EUR 40.1 billion). Exchange rate effects and the issuance of a bond in the second quarter more than offset the valuation declines on fixed-income securities. The operating cash flow of more than EUR 2 billion is a pivotal factor in the portfolio growth.
Despite the low level of interest rates, ordinary investment income excluding interest on funds withheld and contract deposits came in slightly higher than the previous year at EUR 1,321.7 million (EUR 1,289.0 million).
Net realised gains on investments as at 31 December 2018 contracted sharply from EUR 377.1 million to EUR 127.7 million. They reverted to a normal level after the liquidation of our equity portfolio in the previous year. The impairments taken in the year under review were again only minimal.
Income from assets under own management fell by 14.1% to EUR 1,322.0 million (EUR 1,539.0 million). The resulting annual return stood at 3.2% (3.8%), compared to our forecast figure of 2.7%. We beat our guidance above all because the interest rate level in the USD area rose more sharply than anticipated in the course of the year under review, hence enabling us to generate very pleasing growth in our interest income. As a further factor, we had based our guidance on rather conservative distribution assumptions with regard to our investments both in private equity and the real estate sector. Investment income including interest on funds withheld and contract deposits declined to EUR 1,530.0 million (EUR 1,773.9 million), a decrease of 13.7% relative to the previous year. Interest on funds withheld and contract deposits totalled EUR 208.0 million (EUR 234.9 million).