Nature of risks associated with insurance contracts and financial instruments

Management of concentration risks

A broad mix and spread of individual asset classes is observed in order to minimize the portfolio risk. The concentration risk is limited by the investment guidelines and constantly monitored; overall, it is comparatively slight, even though bank mergers – in particular – result in appreciable increases in concentrations. What is more, the extent to which investments may be made in more heavily risk-exposed assets is restricted.

Overall, the measurement and monitoring mechanisms described here result in a prudent, broadly diversified investment strategy. This is reflected in the fact that within its portfolio of assets under own management the Group’s exposure to government bonds and securities issued by semi-governmental entities of the so-called PIIGS states amounts to altogether EUR 1.5 billion on a fair value basis; this corresponds to a proportion of 2%. The amortized costs and fair values of the bonds issued by the affected states as at the balance sheet date were as follows:


Issuer


thereof issuer country

= investor country

Amortized cost

Fair value

Amortized cost

Fair value

Figures in EUR million

       

Portugal

77

70

Ireland

299

233

3

3

Italy

466

455

329

322

Greece

155

111

Spain

674

611

2

2

Total

1,671

1,480

334

327

No impairments had to be taken on these holdings. There is currently no risk of default here on account of bailout mechanisms existing on the European level (Eurozone safety net).