|in EUR million||2016||+/-|
|Ordinary investment income1||1,162.0||-7.3%||1,253.4||1,068.4||1,041.3||1,088.4|
|Result from participations in associated companies||9.1||-52.5%||19.2||1.0||12.5||10.4|
|Realised gains / losses||206.3||+51.9%||135.8||182.5||144.2||227.5|
|Depreciation, amortisation, impairments2||76.3||+97.1%||38.7||27.7||19.4||21.7|
|Change in fair value of financial instruments3||26.1||0.9||(33.3)||(27.1)||89.3|
|Net investment income from assets under own management||1,218.3||-4.1%||1,270.1||1,095.8||1,054.5||1,300.2|
|Net investment income from funds withheld and contract deposits||332.1||-15.9%||395.0||376.1||357.3||355.5|
|Total investment income||1,550.4||-6.9%||1,665.1||1,471.8||1,411.8||1,655.7|
|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. Although the year under review was another challenging one owing to continued low interest rates and a global economic trend influenced by a range of uncertainties and risks, we were spared defaults in our fixed-income portfolio and – even in the aftermath of the unexpected outcome of the Brexit referendum halfway through the year – were compelled to take only moderate temporary impairments in our equity portfolio. Our exposures to the credit risk, emerging markets and private equity were also rewarded by the good performance of these markets. This is similarly true of the real estate sector. Ordinary investment income excluding interest on funds withheld and contract deposits delivered a gratifying performance to reach EUR 1,162.0 million (previous year: EUR 1,253.4 million). While it fell short of the previous year’s level, it entirely lived up to our expectations. The challenging interest rate environment is increasingly making itself felt here, along with the elimination of the positive special effect from life and health reinsurance in the previous year. We were nevertheless able to partially make up for the diminished potential returns associated with the protracted low interest rate level through stronger income from dividends.
Net realised gains on disposals totalled EUR 206.3 million (EUR 135.8 million) and were in large measure attributable to regrouping moves as part of regular portfolio maintenance, the streamlining of our private equity portfolio through the sale of older exposures as well as internal capitalisation and financing measures within the Group. Gains were also realised in connection with the adjustment of the rating structure of our fixed-income portfolio (see here also the subsection on investments in the 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 positive fair value changes recognised in income of EUR 0.5 million (-EUR 26.1 million). Altogether, the positive changes in the fair values of our financial assets recognised at fair value through profit or loss amounted to EUR 26.1 million (EUR 0.9 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 76.3 million (EUR 38.7 million) were taken, thereof EUR 30.1 million (EUR 1.9 million) on equities – primarily on account of lower prices following the Brexit decision. These write-downs have, however, to a large extent since been opposed by a reversal, which has correspondingly increased the valuation reserves. Impairments of EUR 11.7 million (EUR 5.9 million) were recognised on alternative investments. The write-downs taken on fixed-income securities amounted to just EUR 0.7 million (EUR 2.8 million). Scheduled depreciation on directly held real estate rose to EUR 28.9 million (EUR 23.7 million), a reflection of the further increase in our involvement in this sector. These write-downs contrasted with write-ups of altogether EUR 0.3 million (EUR 0.6 million).
Our investment income (including interest and expenses on funds withheld and contract deposits) came in below the previous year’s level at EUR 1,550.4 million (EUR 1,665.1 million); bearing in mind the low interest rate level, the maturity and currency matching of liabilities and the elimination of positive effects from the previous year, it is nevertheless thoroughly satisfactory and indeed even somewhat better than our expectations. Income from assets under own management accounted for an amount of EUR 1,218.3 million (EUR 1,270.1 million). This produces a return on investment of 3.0%, which is also slightly higher than our target of 2.9%. The primary drivers here were our exposures to high-yield bonds and private equity as well as our investments in emerging markets, which generated somewhat stronger income than originally forecast. Interest on funds withheld and contract deposits decreased to EUR 332.1 million (EUR 395.0 million).