Investments
Market development
| Net investment income | Figures in EUR million | |||||
|---|---|---|---|---|---|---|
| 2011 | +/- previous year |
2010 | 2009 | 2008 | 2007 | |
1 Excluding expenses on funds withheld and contr act deposits
2 Including depreciation/impairments on real estate
3 Portfolio at fair value through profit or loss and trading |
||||||
| Ordinary investment income1 | 966.2 | +9.7% | 880.5 | 810.5 | 829.8 | 859.0 |
| Result from participations in associated companies | 3.1 | -20.0% | 3.9 | (5.0) | 4.2 | 11.0 |
| Realised gains/losses | 179.6 | +10.8% | 162.0 | 113.0 | (113.6) | 174.3 |
| Appreciation | 36.8 | +35.1% | 27.2 | 20.1 | — | — |
| Impairments on investments2 | 31.0 | +30.3% | 23.8 | 142.5 | 480.4 | 72.0 |
| Unrealised gains/losses3 | (38.8) | -2.8% | (39.9) | 100.6 | (119.7) | (18.8) |
| Investment expenses | 70.3 | +4.3% | 67.4 | 53.1 | 41.4 | 52.0 |
| Net investment income from assets under own management | 1,045.5 | +10.9% | 942.5 | 843.6 | 78.9 | 901.6 |
| Net investment income from funds withheld | 338.5 | +7.0% | 316.4 | 276.8 | 199.6 | 220.1 |
| Total investment income | 1,384.0 | +9.9% | 1,258.9 | 1,120.4 | 278.5 | 1,121.7 |
Capital markets in 2011 were heavily overshadowed by the global debt crisis and the responses of the various central banks. In the area of fixed-income securities risk premiums on corporate bonds increased for the most part in both US and European markets as the year progressed. The resulting negative fair value effects for our portfolio were, however, more than offset by the yield declines during the year on German government bonds and US treasuries across virtually all maturity segments. Movements in fair values for debt securities issued by semi-governmental entities were also very gratifying in wide areas. Bonds issued by countries on the Eurozone periphery, by contrast, recorded sometimes substantial risk premiums. The performance of a portfolio of fixed-income securities was therefore heavily dependent on its exposure to corporate bonds and countries on the Eurozone periphery. Overall, the fair values of our fixed-income portfolio developed very favourably, hence causing unrealised gains to rise sharply. The US Federal Reserve left key interest rates unchanged at 0% to 0.25% during the year under review. The European Central Bank, on the other hand, reduced key interest rates to 1% in the second half of the year after making initial rate hikes and supported the European bond market by buying up government bonds.
The return on ten-year German government bonds declined from 3.0% to 1.8% in the course of the year. A comparable trend was also observed for US treasury bonds, with a marginally more marked decrease from 3.3% to 1.9%. Bonds issued by some European countries carried substantial risk premiums, especially in the second half of the year, leading to a patchy and volatile yield environment in Europe.
The picture on equity markets was a mixed one. The losses seen in March in response to the nuclear disaster in Japan were initially made good. In the second half of the year, however, a more depressed sentiment took hold again. Whereas the DAX recorded a loss of 15% for 2011, the US Dow Jones Index put on 5%.
After showing strength at the beginning of 2011, the euro remained virtually unchanged year-on-year against the US dollar, pound sterling and Canadian and Australian dollar.