Investment result

Ordinary investment income fell slightly short of the previous year at EUR 810.5 million (EUR 829.8 million). This was due to lower reinvestment yields than those attainable in the course of the previous year.

The balance of our deposit interest and expenses was sharply higher at EUR 276.8 million (EUR 199.6 million).

Write-downs of EUR 141.3 million (EUR 479.9 million) were taken on securities. Of this total amount, EUR 92.6 million (EUR 26.9 million) were attributable to alternative investments – principally private equity and real estate funds. Owing to the minimal holding of equities, write-downs of a mere EUR 3.2 million (EUR 356.1 million) were taken here. In the area of fixed-income assets they were halved to EUR 45.4 million (EUR 96.9 million).

In light of increased fair values, these write-downs contrasted with write-ups of EUR 20.1 million (previous year: –) on fixed-income securities and funds that had been written down in prior periods. Net gains of EUR 113.0 million were realised on disposals, as against a net loss of –EUR 113.6 million in the previous year. Unrealised gains on our asset holdings measured at fair value through profit or loss amounted to EUR 100.6 million, contrasting with unrealised losses of –EUR 119.7 million in the previous year. The positive development can be attributed primarily to the derivatives embedded in US life reinsurance contracts.

We were able to substantially boost our net investment income to more than EUR 1.1 billion (EUR 278.5 million) thanks first and foremost to the development of unrealised gains and the considerably lower volume of write-downs.

The portfolio of fixed-income securities climbed again to EUR 19.7 billion (EUR 17.9 billion), first and foremost due to inflows of cash from the technical account. The funds were invested predominantly in government bonds and corporate bonds. Yet we also tapped into opportunities that opened up in the area of asset-backed securities. Hidden reserves for fixed-income securities recognised in shareholders' equity totalled EUR 252.3 million (EUR 101.7 million). This increase was also similarly reflected as an increase in the shareholders' equity recognised in the balance sheet. The spread of asset classes naturally shifted towards sovereign risks at the expense of semi-governmental bonds owing to the numerous state guarantees invoked in the public financial sector. 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 – at 91.7% – was slightly lower than in the previous year (92.9%).

We held a total amount of EUR 1.8 billion (EUR 1.2 billion) in short-term assets and current assets at the end of the year under review. Funds withheld by ceding companies amounted to EUR 12.2 billion (EUR 9.6 billion).

Holdings of alternative investments remained on a broadly stable level. As at 31 December 2009 an amount of EUR 375.3 million was invested in private equity funds, a further EUR 353.2 million in high-return bond funds and loans as well as CDOs and altogether EUR 108.6 million in structured real estate investments. The uncalled capital with respect to the aforementioned alternative investments totalled EUR 328.8 million.

In the year under review we continued our strategy of investing more heavily in real estate. Various properties have already been acquired in Germany and the United States, and further buildings are under review; the real estate allocation will therefore keep rising steadily as planned, and currently stands at 1.2%.