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Net investment income
in EUR million20132012
1.1. – 31.3.1.4. – 30.6.+/ -
previous year
1.1. – 30.6.+/ -
previous year
1.4. – 30.6.1.1. – 30.6.
Ordinary investment income246.1257.5-6.0%503.6-5.3%273.8532.0
Result from participations in associated companies1.15.26.2+81.0%1.63.4
Realised gains/losses34.849.7+64.7%84.5+24.3%30.268.0
Appreciation0.20.1-68.1%0.3-49.7%0.30.5
Impairments on investments13.25.2-2.4%8.4-32.8%5.312.5
Unrealised gains/losses23.3(40.8)-50.0%(37.5)(81.6)2.9
Investment expenses21.325.9+13.9%47.2+14.7%22.841.2
Net investment income from assets under own management260.9240.5+22.5%501.4-9.3%196.3553.2
Net investment income from funds withheld93.893.7+29.2%187.5+20.0%72.6156.3
Total investment income354.7334.3+24.3%689.0-2.9%268.8709.5
Net investment income
in EUR million20132012
1.1. – 31.3.1.4. – 30.6.+/ -
previous year
1.1. – 30.6.+/ -
previous year
1.4. – 30.6.1.1. – 30.6.
Ordinary investment income246.1257.5-6.0%503.6-5.3%273.8532.0
Result from participations in associated companies1.15.26.2+81.0%1.63.4
Realised gains/losses34.849.7+64.7%84.5+24.3%30.268.0
Appreciation0.20.1-68.1%0.3-49.7%0.30.5
Impairments on investments13.25.2-2.4%8.4-32.8%5.312.5
Unrealised gains/losses23.3(40.8)-50.0%(37.5)(81.6)2.9
Investment expenses21.325.9+13.9%47.2+14.7%22.841.2
Net investment income from assets under own management260.9240.5+22.5%501.4-9.3%196.3553.2
Net investment income from funds withheld93.893.7+29.2%187.5+20.0%72.6156.3
Total investment income354.7334.3+24.3%689.0-2.9%268.8709.5

While the yield level on US treasury securities and on German, French and UK government bonds remained broadly unchanged for a long period during the first half of the year, fixed-income securities issued by these countries began to see yield increases – sometimes markedly so – from the middle of June onwards, especially in the medium and longer durations. The picture as regards countries with higher risk premiums – presently the focus of so much attention – was a mixed one: while Spanish and Irish bonds continued to recover, Italian and Portuguese sovereign bonds recorded increases in yields, above all in the medium duration segment.

Credit spreads in the area of European and US corporate bonds, on the other hand, largely remained stable across most rating classes. Corporate bonds from emerging markets, however, saw a widening of risk premiums in some areas. In total, the unrealised gains on our fixed-income securities decreased to EUR 973.5 million (EUR 1,714.6 million). Despite this, our portfolio of assets under own management contracted only slightly to EUR 31.6 billion (EUR 31.9 billion).

Owing to the sustained low level of interest rates, ordinary investment income excluding interest on deposits was lower than in the corresponding period of the previous year at EUR 503.6 million (EUR 532.0 million); this comparatively moderate decrease can be attributed principally to the enlarged average investment portfolio, although the appreciable expansion of the corporate bonds asset class over the past two years is also a factor here. Interest income on funds withheld and contract deposits increased to EUR 187.5 million (EUR 156.3 million).

Impairments of altogether just EUR 8.4 million (EUR 12.5 million) were taken. This includes impairments of EUR 2.3 million (EUR 4.8 million) on alternative investments; no impairments were recognised on equities (EUR 2.2 million). Scheduled depreciation on directly held real estate rose to EUR 6.1 million (EUR 5.2 million), a reflection of our greater involvement in this area. The write-downs contrasted with write-ups of EUR 0.3 million (EUR 0.5 million).

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 period under review gave rise to unrealised gains of EUR 0.8 million (EUR 10.8 million) recognised in investment income. The inflation swaps taken out in 2010 to hedge part of the inflation risks associated with the loss reserves in our technical account have produced unrealised losses in the year to date of EUR 39.7 million (-EUR 9.9 million) recognised in investment income. The changes in their fair values are recognised in income as a derivative pursuant to IAS 39. In economic terms we assume a neutral development for these two items over time, and hence the volatility that can occur in specific quarters reveals nothing about the actual business performance. Altogether, the unrealised losses on our assets recognised at fair value through profit or loss amounted to EUR 37.5 million, contrasting with unrealised gains of EUR 2.9 million in the comparable period.

The net balance of gains realised from the sale of securities stood at EUR 84.5 million (EUR 68.0 million); it can be attributed primarily to regrouping within our fixed-income holdings as part of regular portfolio management.

While our net investment income fell short of the previous year owing to the contraction in ordinary income and unrealised gains, it was still pleasing in the face of a capital market climate that remains challenging. It amounted to EUR 689.0 million (EUR 709.5 million) in the period under review, equivalent to an annualised average return (including effects from derivatives) of 3.2% for our portfolio of assets under own management. Excluding the unrealised effects from the ModCo derivative and our inflation swaps, the figure stands at 3.4% and is hence within the range of our expectations for the full year.

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