Given the sustained low interest rate environment and in some instances even further reductions in rates, we are again highly satisfied with the development of our investments as at 31 December 2016. The portfolio of investments under own management stood at EUR 41.8 billion and was thus significantly higher than the comparable level at the end of the previous year (31 December 2015: EUR 39.3 billion). The increase was driven in large measure by positive exchange rate effects – especially associated with the strong US dollar – and higher hidden reserves in the areas of listed equities and private equity, although the primary factor here was a gratifyingly positive operating cash flow.
With interest rates remaining on a low level, ordinary investment income excluding interest on funds withheld and contract deposits fell short of the comparable period at EUR 1,162.0 million (EUR 1,253.4 million), but was exactly in line with our expectations for the year under review.
Net realised gains on investments as at 31 December 2016 comfortably exceeded the previous year’s figure at EUR 206.3 million (EUR 135.8 million). Write-downs increased in the year under review to EUR 76.3 million (EUR 38.7 million). They derived from scheduled depreciation taken on real estate as well as impairments due to temporary price losses on equity markets following the Brexit referendum. Income from assets under own management retreated as anticipated to EUR 1,218.3 million (EUR 1,270.1 million). The resulting annual return (excluding ModCo derivatives) amounted to 3.0% and thus beat the 2.9% target. The figure for the previous year had been 3.5%. Investment income including interest on funds withheld and contract deposits contracted to EUR 1,550.4 million (EUR 1,665.1 million), a decline of 6.9% relative to 2015. Interest on funds withheld and contract deposits totalled EUR 332.1 million (EUR 395.0 million).