|in EUR million||2017||+/- previous year||2016||2015||2014||2013|
|Ordinary investment income 1||1,289.0||+10.9%||1,162.0||1,253.4||1,068.4||1,041.3|
|Result from participations in associated companies||16.0||+75.9%||9.1||19.2||1.0||12.5|
|Realised gains / losses||377.1||+82.8%||206.3||135.8||182.5||144.2|
|Depreciation, amortisation, impairments 2||71.9||-5.8%||76.3||38.7||27.7||19.4|
|Change in fair value of financial instruments 3||38.6||+48.0%||26.1||0.9||-33.3||-27.1|
|Net investment income from assets under own management||1,539.0||+26.3%||1,218.3||1,270.1||1,095.8||1,054.5|
|Net investment income from funds withheld and contract deposits||234.9||-29.3%||332.1||395.0||376.1||357.3|
|Total investment income||1,773.9||+14.4%||1,550.4||1,665.1||1,471.8||1,411.8|
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 thoroughly satisfied with the development of our investments. While the year under review was again a challenging one in view of the sustained low interest rate level and global economic movements driven by a range of uncertainties and risks, we had virtually no impairments to recognise in our equity portfolio or fixed-income securities. Our exposures to the credit risk and emerging markets were also rewarded with a good performance in these sectors and delivered stable results. This is similarly true of our private equity and real estate holdings, the income from which – thanks to their higher weighting in our portfolio – helped to push our ordinary investment income (excluding interest on funds withheld and contract deposits) to a very gratifying EUR 1,289.0 million, a level that once again improved on the previous year (EUR 1,162.0 million). Despite the difficult interest rate environment, our returns on fixed-income securities even came in slightly higher than in the previous year.
Net realised gains on disposals totalled EUR 377.1 million (previous year: EUR 206.3 million) and can be attributed in part to regrouping moves in the context of regular portfolio maintenance but primarily to the liquidation of our portfolio of non-strategic listed equities at the end of the third quarter. We report further on this in the following section “Financial position and net assets” under the subsection “Investments”.
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 3.7 million (EUR 0.5 million). Altogether, the positive changes in the fair values of our financial assets recognised at fair value through profit or loss amounted to EUR 38.6 million (EUR 26.1 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 71.9 million (EUR 76.3 million) were taken. The impairments were attributable in an amount of EUR 15.6 million (EUR 0.0 million) to two real estate properties in the United States. Equities accounted for an amount of EUR 3.7 million (EUR 30.1 million). Impairments of EUR 8.4 million (EUR 11.7 million) were recognised on alternative investments. The write-downs taken on fixed-income securities amounted to just EUR 0.3 million (EUR 0.7 million). Impairments were also taken on our portfolio of equity investments in an amount of EUR 10.4 million (EUR 1.9 million). Scheduled depreciation on directly held real estate rose to EUR 31.0 million (EUR 28.9 million), a reflection of the further increase in our involvement in this sector. These write-downs contrasted with write-ups of just EUR 0.9 million (EUR 0.3 million).
Despite the challenging interest rate environment, we were able to generate investment income of EUR 1,773.9 million that was clearly in excess of the comparable period (EUR 1,550.4 million) on the back of stronger ordinary income from real estate and private equity as well as higher realised gains. Income from assets under own management accounted for EUR 1,539.0 million (EUR 1,218.3 million), producing an average return (including effects from ModCo derivatives) of 3.8%. We thus clearly beat the 2.7% goal that we had originally set ourselves for the full financial year and comfortably outperformed the minimum target return that we had revised upwards to 3.0% in the fourth quarter. This can be attributed first and foremost to the substantial gains realised on the liquidation of our portfolio of non-strategic listed equities, but was also made possible by the pleasing ordinary income booked from private equity and real estate funds, which came in higher than anticipated.