Financial position of life segment

Financial position of life segment

Investiments

(in € million)31.12.2014Impact (%)31.12.2013Impact (%)
Equity instruments 12,983 4.1% 13,234 4.7%
Fixed income instruments 286,056 89.2% 242,233 86.6%
  Bonds 261,255 81.5% 219,992 78.6%
  Other fixed income instruments 24,801 7.7% 22,241 8.0%
Land and buildings (investment properties) 9,881 3.1% 9,649 3.4%
Other investments 5,039 1.6% 4,389 1.6%
  Investments in subsidiaries, associated companies and joint ventures 4,282 1.3% 3,483 1.2%
 Derivatives -71 0.0% 414 0.1%
  Other investments 829 0.3% 492 0.2%
Cash and cash equivalents 6,624 2.1% 10,219 3.7%
General accounts investments 320,583 100.0% 279,724 100.0%
Investment back to unit and index-linked policies 67,707   59,116  
Total investments 388,290   338,840  

At 31 December 2014 total investments of the life segment increased compared to 31 December 2013, amounting to € 388,290 (+29.14%). Group investments amounted to to € 320,583 million (+ 14,61%), and linked policy investments totalled 67,707 million (+14.53%).

The exposure to fixed income instruments increased to 89,2% (86.6% at 31 December 2013) while, despite a slight increase in absolute terms, the weight of equity instruments decreased to 4.1% (4.7% at 31 December 2013). Real estate investments remained stable, while their weight decreased from 3.7% to 3.3%. The weight of cash and cash equivalents decreased further to 2.1% (3.7% at 31 December 2013).

With respect to the bond investment portfolio, the exposure to government bonds increased at € 150,538 million (€ 122,274 million at 31 December 2013), the impact of this asset class increased at 57.6% (55.6% at 31 December 2013). The trend is primarily due to the increase in value of investments during the year.

The corporate component also increased to € 110,717 million (€ 97,718 million at 31 December 2013) with a slight decrease on incidence at 42.4% (44.4% at 31 December 2013). The growth was attributable to net acquisitions made in the year with the aim of diversifying the overall bond portfolio. The growth was attributable to the increase in the value of investments and, to a lesser extent, to the net purchases made during the year.

Finally, the average duration of the bond portfolio was 8.2 years (7.3 years at 31 December 2013), consistently with ALM Group strategy.

31.12.201431.12.2013
Current return (*) 3.6% 3.8%
Harvesting rate 0.6% 0.6%
P&L return 4.5% 4.4%

(*) Net of depreciation of the period

The current return on investments in the life segment recorded a modest decline in all asset classes from 3.8% in 31 December 2013 to 3.6%, with revenues amounting to € 10,907 million (€ 10,517 million at 31 December 2013).

The contribution to the result of the period from harvesting operations remained stable at 0.6%, benefitting from the improvement in all components.

Life segment insurance provision

LIABILITY TOWARDS POLICYHOLDERS

Without taking into account deferred policyholders liabilities, the insurance provisions and financial liabilities of the life segment amounted to € 347,183 million; an increase on a comparable basis of 6.9% which reflects both the increase in reserves for the traditional portfolio (+5.2% on a comparable basis), and the linked portfolio (+14.5% on a comparable basis), due to the combined effect of cash inflows and the recovery of financial markets.

Finally, deferred policyholders liabilities increased to € 25,300 million (€ 3,999 million at 31 December 2013), due to the increases in the value of investments, particularly in the bond component.