|in EUR million||2018||+/- previous year||2017||2016||2015||2014|
|Ordinary investment income 1||1,321.7||+2.5%||1,289.0||1,162.0||1,253.4||1,068.4|
|Result from participations in associated companies||5.0||-68.9%||16.0||9.1||19.2||1.0|
|Realised gains / losses||127.7||-66.1%||377.1||206.3||135.8||182.5|
|Depreciation, amortisation, impairments 2||52.7||-26.6%||71.9||76.0||38.7||27.7|
|Change in fair value of financial instruments 3||31.2||-19.2%||38.6||26.1||0.9||-33.3|
|Net investment income from assets under own management||1,322.0||-14.1%||1,539.0||1,218.3||1,270.1||1,095.8|
|Net investment income from funds withheld and contract deposits||208.0||-11.5%||234.9||332.1||395.0||376.1|
|Total investment income||1,530.0||-13.7%||1,773.9||1,550.4||1,665.1||1,471.8|
1 Excluding income and expenses on funds withheld and contract deposits
2 Including depreciation / impairments on real estate
3 Portfolio at fair value through profit or loss and trading
We are highly satisfied with the development of our investments. While the year under review was once again a challenging one in view of the continued low level of interest rates and global economic movements driven by a range of uncertainties and risks, we were nevertheless compelled to recognise only a minimal volume of impairments. We were able to outperform our targets despite quite appreciable portfolio regrouping in support of financing measures in life and health reinsurance, the tax reform in the United States, issuance of a senior bond and our amended strategy. Nor were we held back by a decrease in reserves due to USD interest rate hikes and widening credit spreads. Our exposures to emerging markets were also rewarded by the good performance of these markets and delivered stable earnings. This was again true of the real estate sector as well, the income from which – driven by the higher weighting in the portfolio – helped to push our ordinary investment income (excluding interest on funds withheld and contract deposits) to a very pleasing EUR 1,321.7 million, a level roughly on a par with the previous year (EUR 1,289.0 million). The partial reduction of our credit risk exposures in the course of the year proved advantageous as spreads widened towards year-end. Despite the difficult interest rate environment, our returns on fixed-income securities came in on a gratifying level that even surpassed the previous year. We were thus able to very comfortably make up for the dividend income lost after the liquidation of our equity portfolio in the previous year.
Net realised gains on disposals totalled EUR 127.7 million (previous year: EUR 377.1 million). The sharp decline can be attributed to the exceptionally high income realised in the previous year from the liquidation of our portfolio of listed equities. It also reflects the fact that we recognised not inconsiderable hidden charges in connection with our portfolio regrouping moves due to the steeper US yield curve. We were nevertheless able to more than offset this through attractive gains realised on the disposal of high-yield bonds. As a further factor, we benefit from rising interest rates in our reinvestment activities. We report further on this in the following section “Financial position and net assets”.
We recognise a derivative for the credit risk associated with special life reinsurance treaties (ModCo) under which securities deposits are held by cedants for our account; the performance of this derivative in the year under review gave rise to negative fair value changes recognised in income of EUR 11.9 million (positive changes of EUR 3.7 million). Altogether, the positive changes in the fair values of our financial assets recognised at fair value through profit or loss amounted to EUR 31.2 million (EUR 38.6 million). The principal items recognised here are various derivative financial instruments relating to the technical account or taken out as currency or interest rate hedges as well as fixed-income assets for which the fair value option provided by IAS 39 was applied.
Impairments and depreciation totalling EUR 52.7 million (EUR 71.9 million) were taken. An impairment loss of EUR 15.3 million (EUR 8.4 million) was recognised on alternative investments. The write-downs on fixed-income securities amounted to just EUR 0.5 million (EUR 0.3 million). Impairments were also taken on our real estate portfolio in a volume of EUR 2.9 million (EUR 18.0 million). Depreciation on directly held real estate increased to EUR 34.0 million (EUR 31.0 million), reflecting the further increase in our involvement in this sector. These write-downs contrasted with write-ups of EUR 3.6 million (EUR 0.9 million).
Despite reduced income from funds withheld and contract deposits as well as lower realised gains, we were thus able to generate very healthy investment income of EUR 1,530.0 million (EUR 1,773.9 million). Key drivers here were the pleasing rise in ordinary income booked on fixed-income securities as well as very good earnings from real estate and private equity. Income from assets under own management accounted for EUR 1,322.0 million (EUR 1,539.0 million), producing an average return (excluding effects from ModCo derivatives) of 3.2%. We thus clearly beat our originally anticipated 2.7% target.