Net investment income
Development of net investment income
| 2008 | 20071) | 2006 | 2005 | 2004 |
Figures in EUR million |
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Ordinary investment income | 3,067 | 2,853 | 2,544 | 1,666 | 1,393 |
thereof current income from interest-bearing securities | 2,490 | 2,345 | 1,869 | 1,177 | 864 |
thereof income from funds held by ceding companies | 330 | 251 | 283 | 372 | 410 |
Profit from shares in associated companies | 3 | 10 | 5 | 3 | — |
Realized net gains on investments | 149 | 245 | 169 | 234 | 441 |
Write-ups/write-downs on investments | –1,369 | –218 | –64 | –36 | –48 |
Unrealized net gains/losses on investments | –78 | –64 | –15 | 34 | 23 |
Other investment expenses | 162 | 124 | 123 | 67 | 65 |
Net investment income | 1,610 | 2,702 | 2,516 | 1,834 | 1,746 |
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The sharp decline of 40% in net investment income was attributable to high losses on disposals and value adjustments on the equity portfolio as well as reduced gains on disposals. Ordinary investment income nevertheless climbed by a significant EUR 214 million to EUR 3.1 billion, principally due to the increase in the portfolio of fixed-income securities and loans – which more than offset the effect of the decline in interest rates.
On balance, a profit of EUR 149 (245) million was generated in the 2008 financial year from the disposal of investments as part of proactive asset management. This figure includes losses from equity investments of around EUR 346 million, contrasting with profits of EUR 322 million generated in the previous year. This was opposed by profits from the liquidation and closing out of hedges (equities, foreign exchange) and other derivative positions in an amount of EUR 422 million as well as profits on disposals of fixed-income securities amounting to EUR 75 (–102) million.
The crisis on capital markets also led to a sharp deterioration in the net balance of write-ups and write-downs. This can be attributed in particular to the considerable falls in share prices, which were only partially offset by the use of derivative financial instruments. We took impairments in income of EUR 1.1 billion on our equity portfolio. This effect was alleviated by opposing changes in the value of equity hedges and other derivative positions in an amount of EUR 191 million recognized in income.