Return on investment

Return on investments - non-life segment
 
Current return Harvesting rate P&L return Comprehensive return
 
31.12.2011 31.12.2010 31.12.2011 31.12.2010 31.12.2011 31.12.2010 31.12.2011 31.12.2010
Fixed income instruments 3.9% 3.8% -0.9% 0.8% 3.0% 4.6% 1.2% 3.2%
Equities and equity-like investments 2.8% 2.6% -6.0% -0.2% -3.2% 2.4% -7.9% 0.8%
Real estate investments 8.6% 8.7% 2.5% 2.3% 11.1% 11.0% 11.1% 11.2%
Other investments 1.9% 2.9% 1.6% -1.0% 3.5% 1.9% 3.5% 1.9%
Total investments 4.3% 4.4% -0.7% 0.7% 3.8% 5.3% 2.2% 4.3%

While the current return on total investments in the non-life segment remained substantially stable compared to 31 December 2010 at 4.3%, there was a deterioration in the contribution to the result of the period of harvesting operations, which amounted to -0.7% (0.7% at 31 December 2010) due to the greater impairment losses recognized on Greek bonds and the decrease in net realized gains earned by the Group in this segment.

The comprehensive return, which includes in addition to the current return the changes in value of the period through both profit or loss and equity, amounted to 2.2% (4.3% at 31 December 2010) due to the decline in value of equity and bond portfolios recognized in particular in equity in the second half of the current year.

With reference to the bond portfolio, thanks to the investment activity aimed to substain an adequate level of portfolio liquidity ensuring, at the same time, adequate coupon returns, the current return remained substantially stable at 3.9% (3.8% at 31 December 2010). By contrast, the contribution of the harvesting rate was negative, going from 0.8% at 31 December 2010 to -0.9%, due mostly to the increase in impairment losses, which were mainly related to Greek sovereign bonds and the decline in the Group's net realized gains.

Also the comprehensive return on the bond portfolio, which includes current return and changes in value of the period recognized through profit or loss and equity, declined to 1.2% (3.2% at 31 December 2010). The above performance was affected by the decline in value of the bond portfolio recognized in equity for both corporate bonds, especially in the third quarter due to the widening of spreads, and the government bonds, chiefly in the fourth quarter of the year owing to the intensification of the crisis involving the bonds of the countries of the Euro Area with a high public sector debt, and Italian bonds in particular.

The current return of the equity portfolio also increased, rising from 2.6% at 31 December 2010 to 2.8%, whereas there was a decrease in the contribution to the result of the period due to harvesting operations, which amounted to -6.0% (-0.2% at 31 December 2010), owing to the deterioration of all components of the index, and in particular the decline in net realized gains earned due to the bear stock market performance, particularly in the third quarter of the year. There was also a decrease in the comprehensive return, which includes in addition to the current return but also the changes in value of the period recognized through both profit or loss and equity, to -7.9% (0.8% at 31 December 2010), owing to the considerable decline in equity prices in the third quarter, only partially offset by the recovery witnessed in the fourth quarter of 2011.

The contribution of current return of real estate investments to the result of the period remained substantially stable at 8.6% (8.7% at 31 December 2010). Finally, the return from realized gains, net of depreciation and impairment losses for the period (harvesting rate), was mainly stable, amounting to
2.5%.

Operating income from investments
(€ million) 31.12.2011 31.12.2010 Fourth quarter
2011
Fourth Quarter
2010
Business performance of non - life segment 1,120.3 1,196.1 272.5 303.0
Net operating income from financial instruments at fair value through profit or loss 40.7 43.8 16.5 13.4
Net operating income from other financial instruments 1,079.6 1,152.3 256.0 289.6
Interest income and other income 1,590.3 1,634.2 405.1 424.3
Interest expense on liabilities linked to operating activities -198.4 -155.5 -66.6 -36.2
Other expenses from other financial instruments and land and buildings (investment properties) -312.3 -326.4 -82.5 -98.5
Non-operating income from investments  
 
 
 
Net non-operating income from financial instruments at fair value through profit or loss -34.2 37.4 -6.0 0.1
Net non-operating income from other financial instruments -409.0 31.0 -8.8 78.9
Net realized gains on other financial instruments and land and buildings (investment properties) 243.8 412.3 149.5 166.5
Net impairment losses on other financial instruments and land and buildings (investment properties) -652.8 -381.3 -158.3 -87.6
AttachmentSize
P&C investment strategy and yields66.24 KB
Investment yields62.88 KB
P&C operating ration on investments64.08 KB