Interim / Quarterly Report • Nov 22, 2016
Interim / Quarterly Report
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This is a convenient translation of the German Report. In case of any divergences, the German original is legally binding.
| Consolidated balance sheet | 6M 2016 | FY 2015 | |
|---|---|---|---|
| Total assets | € bn | 75.0 | 74.1 |
| Capital investments | € bn | 48.2 | 47.0 |
| Financial assets available for sale | € bn | 25.5 | 24.3 |
| First tier loans and advances to institutional investors | € bn | 15.3 | 15.7 |
| Building loans | € bn | 23.9 | 24.3 |
| Liabilities to customers | € bn | 25.4 | 25.3 |
| Technical provisions | € bn | 34.1 | 32.9 |
| Equity | € bn | 3.8 | 3.6 |
| Equity per share | € | 40.32 | 38.68 |
| Consolidated profit and loss statement | 6M 2016 | 6M 2015 | |
| Net financial result (after credit risk adjustments) | € mn | 876.1 | 1,173.1 |
| Premiums/contributions earned (net) | € mn | 1,997.6 | 1,900.6 |
| Insurance benefits (net) | € mn | –1,998.1 | –2,156.0 |
| Earnings before income taxes from continued operations | € mn | 180.6 | 184.1 |
| Consolidated net profit | € mn | 121.0 | 144.1 |
| Total comprehensive income | € mn | 211.3 | 14.6 |
| Earnings per share | € | 1.28 | 1.51 |
| Other information | 6M 2016 | FY 2015 | |
| Employees (domestic)1 | 6,830 | 6,907 | |
| Employees (Group)2 | 8,528 | 8,763 | |
| Key sales figures | 6M 2016 | 6M 2015 | |
| Group | |||
| Gross premiums written | € mn | 2,258.4 | 2,172.2 |
| New construction financing business (including brokering for third parties) | € mn | 2,555.4 | 2,751.2 |
| Sales of own and third-party investment funds | € mn | 195.1 | 169.6 |
| Home Loan and Savings Bank | |||
| New home loan savings business (gross) | € mn | 7,641.4 | 7,294.6 |
| New home loan savings business (net) | € mn | 6,049.0 | 5,311.6 |
| Life and Health Insurance | |||
| Gross premiums written | € mn | 1,191.0 | 1,116.4 |
| New premiums | € mn | 368.9 | 292.3 |
| Property/Casualty Insurance | |||
| Gross premiums written | € mn | 1,073.1 | 1,044.6 |
| New premiums (measured in terms of annual contributions to the portfolio) | € mn | 120.1 | 124.7 |
| 1 Full-time equivalent head count. |
2 Number of employment contracts.
Following above-average growth at the start of the year, the Deutsche Bundesbank is now predicting somewhat lower growth for the remainder of the year, with a rise in gross domestic product in the second quarter.
The most important support for the economy continued to be the dynamic consumer demand of private households. The manufacturing sector showed more modest development. Given historically low mortgage interest rates and continuing high need for housing in conurbation areas, the construction sector saw lively demand for properties and a high level of building activity. From the standpoint of the W&W Group, in particular the historically above-average income trends for private house-holds and the dynamism of the residential construction sector therefore presented a favourable macroeconomic environment.
The economic outlook for Germany in 2016 remains generally favourable. The Federal Government is fore-casting economic growth of 1.7% for the year as a whole. However, the surprising decision by the UK to leave the European Union (EU) is likely to result in moderate dampening of growth on account of the resulting uncertainty in the coming months. The medium- and long-term effects of "Brexit" will ultimately depend on whether European politicians will be able to manage this process in a constructive manner.
The most important support for growth in the German economy continues to be private consumption. Income that is available in real terms has grown. As a result, private households have considerably more financial latitude. The development of the industrial sector is coming under pressure from the disappointing trends in export business. Companies have therefore long been somewhat reluctant to make investments. But positive business prospects of domestically oriented companies and greater utilisation of capacities are pointing to an upturn.
Government outlays designed to deal with the influx of refugees will have a positive impact on growth. The construction sector, particularly residential construction, will likewise gain momentum from this, as well as from the positive environment resulting from persistently low interest rates and very positive trends in household income. The major drags on the economy in 2016 and 2017 will be significantly greater imports as a consequence of high domestic demand, the current economic weaknesses in important emerging countries, and the anticipated effects from the pending exit of the UK from the EU.
Following the announcement by the European Central Bank (ECB) in March that it would enact further expansive monetary policies, German bonds tended to move sideways in April and May. For instance, the yield on two-year German government bonds moved in a narrow range around –0.5%. The yield on 10-year German government bonds fluctuated between 0.1% and 0.3%. But starting in June, the financial markets became more nervous in advance of the June 23 referendum in the UK on an exit from the European Union (EU). Investors primarily bought solid German government bonds. This trend grew stronger as, to the surprise of the financial markets, it became apparent that the British had in fact decided to leave the EU. The initial reaction on the bond markets was a brief fall in the yield on two-year German government bonds to less than –0.7% and on 10-year bonds to less than –0.1%. The yield on two-year German governments ended up at –0.66% at the close of the first half of the year. Compared with year-end 2015, yields on two-year bonds thus declined by 31 basis points. For 10-year bonds, the decline was 76 basis points.
Following a fall in prices at the start of the year and a recovery in February and March, European equity markets moved sideways for much of the second quarter. For example, the Euro STOXX 50 fluctuated around 3,000 points, and the DAX around the psychologically important threshold of 10,000 points. Then in June, investors become more nervous with the approach of the June 23 referendum in the UK about the country's remaining in the EU. A sell-off resulted, with the DAX, for instance, falling to 9,500 points in mid-June. Predictions shortly before the vote that the UK would remain in the EU then resulted in sharp price rises, with the DAX once again climbing to 10,250 points. This made the disappointment on the equity markets all the greater when it was announced that the British had in fact voted to leave the European Union. Led by financial stocks, prices collapsed, with the DAX briefly falling below 9,300 points. Despite moderate recovery on the equity markets, which took place at the close of the reporting period, the DAX ended the first half of 2016 at 9,680 points. This meant that it was 2.8% below the comparable figure for the end of March and 9.9% below the figure for year-end 2015.
At the start of the second quarter, W&W stock moved sideways – similar to the situation for the market as a whole – and was generally quoted in the range of €18 to €19.
Due to pessimistic market expectations and the upcoming EU referendum in the UK, the stocks of banks and other financial services providers in particular came under pressure. As a result, W&W stock also suffered from increasing risk aversion on the part of investors and fell from €19 to €17. Owing to the record consolidated net income posted for the 2015 financial year, the Annual General Meeting on 9 June resolved to increase the dividend to €0.60/share (previous year: €0.50/share). Very positive company news and the renewed increase in the outlook for the year were unfortunately unable to overcome the generally negative market sentiment. In addition, the price took a hit of €0.60 following the dividend distribution (ex dividend).
After the result of the UK referendum, which the equity markets viewed as disappointing, W&W stock briefly fell below the €16 mark, but proved to be considerably more stable than the stocks of other financial services providers, whose prices suffered much more substantially. By the end of June, the stock had once again risen to €16.25. The stock price also recovered further after the cut-off date. Taking into account the dividend payment made,
performance was –9.4% for the second quarter of 2016 and –15.5% for the first half of 2016.
The continuing environment of low interest rates is the predominant factor for the financial services industry in the current financial year as well. According to the Association of Private Bausparkassen, gross new business volume in the first half of 2016 was roughly €51 billion (previous year: roughly €56 billion) lower than in the comparable period for the previous year. New business in private residential financing declined in the first half of 2016. Private households took out roughly €117 billion (previous year: roughly €122 billion) in building loans. Whereas the first quarter closed up by 3%, total volume of private residential financing in the second quarter declined by 4%. Following the strong increase in the previous year, market volume nevertheless continued to range at a high level. The main drivers were mortgage interest rates, which remained very affordable. Building permits and building completion numbers thus rose steadily. Rising property prices at sought-after locations likewise contributed to the growth. The good financing conditions also led to existing properties changing hands more frequently, as well as to upgrade and renovation work. By contrast, the market suffered somewhat from bottlenecks in the supply of existing properties and at many locations from a lack of building and trade capacities. This was accompanied by the initial effects of the German Directive on Residential Property Loans (Wohnimmobilienkreditrichtlinie). The directive aims to ensure that private buyers of property will be able to service their loans until repayment in full. Guaranteeing this long-term ability to pay can in some cases make it more difficult to lend to certain groups.
As a result, we anticipate for 2016 that the market for private residential construction financing will remain on the same level.
According to calculations by the German Insurance Association (GDV), life insurance companies and pension funds saw new premiums fall during the first half of 2016 by 11.8% to €14.5 billion (previous year: €16.4 billion). The slight rise in new business with payment of regular premiums was unable to offset the substantial decline in new business against a single premium. Gross premiums written fell year on year by 4.6% to €43.4 billion (previous year: €45.5 billion).
In property/casualty insurance, premium revenues showed growth similar to that in 2015. The GDV expects that the year will close up by about 2.7% compared with the previous year. In addition to a constant development of the quantity structure, the expected development is based on premium adjustments in several important business lines. Claims development was influenced by a series of extreme weather events in May and June.
In July 2016, Standard & Poor's (S&P) again confirmed all ratings of the W&W Group with a stable outlook. Thus the core companies of the W&W Group continue to have a rating of A– while the holding company Wüstenrot & Württembergische AG has a BBB+ rating.
The risk management of the W&W Group continues to be classified as "strong", the category to which it was raised in the previous year.
Consolidated net profit for the first half of 2016 came in at €121.0 million (previous year: €144.1 million), which is in line with expectations.
W&W continued to tenaciously implement the growth programme W&W@2020 during the first half of 2016.
Key product innovations included the new "Wohnsparen", a reinterpretation of home loan savings, and "IndexClever" life insurance, which combines the security and advantages of classic life insurance with the opportunities afforded by modern asset-management strategies. Current and potential customers can now apply online for a home loan savings contract, making it simpler and easier to conclude a contract for this core product online.
Classic products in the area of private annuity insurance will henceforth be offered to only a limited extent on account of very low interest rates. An exception to this are occupational pension schemes.
Customer service was further expanded, including with a service app that allows invoices to be submitted to our health insurance in a secure, paperless fashion. We made
systematic use of emerging new opportunities, such as those resulting from the amendment of the German Act on Home Loan Savings Banks (Bausparkassengesetz). The home loan savings bank will in future be offering construction financing with 100% loan-to-value ratio.
In addition, all construction loans are in future to be processed centrally at the home loan savings bank. The project is still subject to approval by the supervisory authorities. Implementation will lead to considerable advantages in the Group, such as the elimination of interfaces and the simplification of IT processes. Thus, going forward, Wüstenrot Bank AG Pfandbriefbank will be able to concentrate fully on its role as a digital bank for retail customers, with products in the area of accounts, card services, fund brokerage, and online activities.
The sale of the Czech property-insurance and life-insurance business was completed on 4 January. This further streamlined and optimised Group structures. The premium volume of the companies concerned amounted to less than 1% of the Group's total premium revenues.
At €180.6 million, pre-tax income came in at the level of the previous year (€184.1 million). Tax expenses rose to €59.6 million (previous year: €39.9 million). As at 30 June 2016, consolidated net profit after taxes stood at €121.0 million (previous year: €144.1 million).
| in € million | 1/1/2016 to 30/6/2016 |
1/1/2015 to 30/6/2015 |
|---|---|---|
| Home Loan and Savings Bank segment | 33.1 | 20.0 |
| Life and Health Insurance segment | 18.1 | 18.9 |
| Property/Casualty Insurance segment | 56.3 | 73.3 |
| All other segments | 70.5 | 94.8 |
| Consolidation across segments | –57.0 | –62.9 |
| Consolidated net profit | 121.0 | 144.1 |
Net financial income fell to €876.1 million (previous year: €1,173.1 million). The weak development on the equity markets, including as a consequence of the "Brexit" referendum, led to higher impairment expenses and to a decline in the development of investments for unit-linked life insurance policies.
The W&W Group also made investments in foreign currency in order to be able to exploit attractive yield opportunities for its customers. The associated exchange-rate risks are extensively hedged. In view of the rising price of the euro during the first half of 2016 (during the same period last year, the price was falling), net income from investments in foreign currency deteriorated (AfS und Forderungen wird noch eingefügt). By contrast, profits were generated from currency derivatives related to hedges of these investments. The effects on individual results were therefore largely offset.
Net earned premiums rose by €97.0 million to €1,997.6 million (previous year: €1,900.6 million). Both property/ casualty insurance and life and health insurance saw increases.
Net insurance benefits fell by €157.9 million to €1,998.1 million (previous year: €2,156.0 million). Despite storms in the spring, claims development in property insurance was once again very good. In addition, the provision for unit-linked life insurance policies decreased as a consequence of the development in the value of the underlying investments.
General administrative expenses declined by €8.7 million to €533.0 million (previous year: €541.7 million) as a result of continued tenacious cost management. Due to a lower headcount, personnel expenses declined despite collectively bargained salary increases. We are on plan with regard to the implementation of our annual productivity target of 5% p.a.
In contrast to the previous year, consolidated net income did not benefit from the relief afforded by one-off tax effects.
As at 30 June 2016, total comprehensive income stood at €211.3 million (previous year: €14.6 million). It consists of consolidated net profit and other comprehensive income (OCI).
As at 30 June 2016, OCI stood at €90.3 million (previous year: €–129.6 million). Interest rates fell during the reporting period, whereas they were still rising during the same period last year, particularly in the longer maturity bands.
OCI was essentially shaped by two effects: First, the actuarial assumptions underlying the pension commitments were adjusted to conform to market conditions. As a result, the actuarial interest rate used to measure pension commitments fell from 2.0% as at 31 December 2015 to 1.25%. After additions to the provision for premium refunds and to deferred taxes, this resulted in an unrealised loss of €–162.9 million (previous year: €98.4 million).
Unrealised net income from financial assets available for sale is the second noteworthy effect. After additions to the provision for premium refunds and to deferred taxes, it amounted to €267.7 million (previous year: €–211.3 million). These measurement gains, which are recognised directly in equity, were the result of the decline in interest rates since the start of the year and the associated interest rate-related increase in prices of bearer instruments.
Home Loan and Savings Bank segment Segment net income stood at €33.1 million (previous year: €20.0 million).
New home loan savings business increased significantly during the first half of the year. The segment's total assets amounted to €34.1 billion (previous year: €35.1 billion).
Gross new business in terms of total home loan savings contracts rose by 4.8% to €7.6 billion (previous year: €7.3 billion). Net new business (paid-in new business) rose even more strongly to €6.0 billion (previous year: €5.3 billion). In contrast to the development on the market, the home loan savings bank achieved growth in both gross and net new business and thus increased its market shares.
New construction financing business fell to €1,277.9 million (previous year: €1,456.0 million) as a result of focusing on more profitable offers and the initial effects of the German Directive on Residential Property Loans (Wohnimmobilienkreditrichtlinie). The follow-on lending included in this figure amounted to €209.5 million (previous year: €271.6 million). New lending business came in at €1,068.4 million (previous year: €1,184.4 million).
| New business key figures | |||
|---|---|---|---|
| 1/1/2016 to 30/6/2016 |
1/1/2015 to 30/6/2015 |
Change | |
| in € million | in € million | in % | |
| Gross new business | 7 641.4 | 7 294.6 | 4.8 |
| Net new business | 6 049.0 | 5 311.6 | 13.9 |
| New construction financ ing business (approvals) |
1 277.9 | 1 456.0 | –12.2 |
Segment net income rose by €13.1 million to €33.1 million (previous year: €20.0 million), which was mainly attributable to the increase in net financial income.
Net financial income in the Home Loan and Savings Bank segment reached €240.4 million (previous year: €209.3 million). It was shaped in particular by the strategy-compliant reduction of the portfolio at the Pfandbriefbank, the elimination of legacy plans in the home loan and savings area, and the prolonged phase of low interest rates.
Interest rate risks are hedged as part of managing the interest book, on the one hand for financial instruments and, on the other, to neutralise the offsetting effect on net income from discounting the provisions for loan savings business (bonus provisions). During the first half of
2016, interest rates once again fell considerably compared with the prior-year period, particularly in the mediumand long-term maturity areas.
General administrative expenses decreased slightly by €0.9 million to €187.3 million (previous year: €188.2 million). The reduction of personnel expenses by €4.7 million was nearly completely offset by increased material costs. This was mainly due to higher contributions to the deposit guarantee scheme, which for the first time was determined on the basis of the calculation methodology that has been harmonised on the European level.
Tax expenses rose to €16.0 million (previous year: €4.3 million). This was due to higher segment pre-tax income and lower deferred tax effects.
Life and Health Insurance segment Segment net income stood at €18.1 million (previous year: €18.9 million). New premiums for life and health insurance increased significantly. The segment's total assets increased to €34.2 billion (previous year: €33.0 billion).
As at 30 June 2016, new premiums for the Life and Health Insurance segment stood at €368.9 million (previous year: €292.3 million). Single-premium income rose to €322.5 million (previous year: €240.1 million). New regular/continued premiums reached €46.4 million (previous year: €52.2 million).
Gross premiums written increased to €1,191.0 million (previous year: €1,116.4 million), mainly as a result of higher single-premium income.
| 1/1/2016 to 30/6/2016 |
1/1/2015 to 30/6/2015 |
Change | |
|---|---|---|---|
| in € million | in € million | in % | |
| New premiums | 368.9 | 292.3 | 26.2% |
| Single premiums, life | 322.5 | 240.1 | 34.3% |
| Regular/continued premiums, life |
42.8 | 47.7 | –10.3% |
| Annual new premiums, health |
3.6 | 4.5 | –20.0% |
At €18.1 million, segment net income came in similar to the level of last year (€18.9 million). The decline in net financial income was able to be offset through lower net insurance benefits and the rise in net other operating income.
The decline in net financial income in the Life and Health Insurance segment by €269.6 million to €592.8 million (previous year: €862.4 million) was clearly shaped by the volatile developments on the equity markets. The main causes were declining net income from investments for unit-linked life insurance policies and higher impairments. Net income from disposals once again came in at a high level. This also served to hedge obligations to our customers. In addition, the results for the individual categories include currency effects, which had a slightly positive impact on net financial income.
Net income from investment property rose by €9.6 million to €38.8 million (previous year: €29.2 million). This was mainly due higher gains from disposals. Rental income trended downward as a consequence of numerous disposals during the course of 2015.
Net earned premiums increased to €1,214.2 million (previous year: €1,121.5 million) as a result of higher single premium income and the termination of a reinsurance contract in 2015.
Net insurance benefits stood at €1,583.7 million (previous year: €1,731.1 million). Benefits to customers continued to be secured through the regular increase of the additional interest reserve. At €231.8 million, additions exceeded the prior-year level (€191.3 million), which was already high. The interest rate reserve (including interest rate reinforcement) thus now totals €1,541.0 The provision for unitlinked life insurance policies de-creased as a result of weak performance by the underlying investments. By contrast, additions to the provision for premium refunds increased. The reinsurers' portion of insurance benefits decreased as a result of a reinsurance contract that was terminated in 2015.
General administrative expenses in the Life and Health Insurance segment came in at €129.7 million, similar to the previous year's level (€129.1 million).
The net other operating loss amounted to €–38.4 million (previous year: €–56.2 million). The main reason for this was the elimination of the negative impact on income from a reinsurance contract that has now been terminated.
Property/Casualty Insurance segment Segment net income stood at €56.3 million (previous year: €73.3 million). New business in the Property/Casualty Insurance segment declined slightly. Total assets stood at €4.5 billion (previous year: €4.2 billion).
New business decreased slightly to €120.1 million (previous year: €124.7 million). The decline was attributable to the motor business line. By contrast, clear increases were achieved in the corporate customers business line. Overall, new business came in slightly above plan.
Gross premiums written increased further by €28.5 million to €1,073.1 million (previous year: €1,044.6 million).
| New business key figures | |
|---|---|
| 1/1/2016 to 30/6/2016 |
1/1/2015 to 30/6/2015 |
Change | |
|---|---|---|---|
| in € million | in € million | in % | |
| New business | 120.1 | 124.7 | –3.7% |
| Motor | 90.4 | 96.4 | –6.2% |
| Corporate customers | 16.8 | 14.8 | 13.5% |
| Retail customers | 12.9 | 13.5 | –4.4% |
Segment net income fell to €56.3 million (previous year: €73.3 million). In this regard, the decline in net financial income could not be completely offset by the underwriting result, which was once again good. Some categories contained high currency results that nearly offset one another.
At €15.2 million (previous year: €68.5 million), net financial income fell considerably. The main causes were a net loss on disposals and higher impairment expenses.
Net earned premiums continued to trend positively. They rose by €17.5 million to €669.3 million (previous year: €651.7 million). Growth was achieved in all business lines.
Net insurance benefits fell by €3.1 million to €344.9 million (previous year: €348.0 million). Losses due to acts of nature totalling €48.7 million, gross, were recorded in the first half of 2016 (previous year: €33.7 million) as a result of such storms as "Neele", "Frederike" and "Elvira". Despite these high losses due to acts of nature in the second quarter and premium growth, insurance benefits declined. This positive trend in the insurance portfolio is ultimately due to a sustainable, risk-conscious underwriting policy. The combined ratio (gross) was therefore once again very good, coming in at 90.0% (previous year: 90.9%).
General administrative expenses decreased significantly by €7.1 million to €165.2 million (previous year: €172.3 million). Both personnel expenses and material costs fell.
Net other operating income amounted to €16.0 million (previous year: €2.3 million). This contains currency gains from technical provisions, which were offset by losses in the financial result.
Tax expenses rose to €32.7 million (previous year: €26.4 million). The reporting half-year was in particular negatively influenced by write-downs on equities that could not be recognised for tax purposes.
"All other segments" covers the divisions that cannot be allocated to any other segment. This includes W&W AG, W&W Asset Management GmbH, the Czech subsidiaries, and the Group's internal service providers. The total assets of the other segments amounted to €6.1 billion (previous year: €6.0 billion). After-tax net income stood at €70.5 million (previous year: €94.8 million). This was composed, among other things, of the following:
W&W AG €47.0 million (previous year: €64.0 million), W&W Asset Management GmbH €9.6 million (previous year: €11.0 million), Czech subsidiaries €6.7 million (previous year: €7.5 million).
Net financial income amounted to €112.8 million (previous year: €128.2 million). It was mainly shaped by long-term equity investment income from within the Group received by W&W AG, which is included in net income from financial assets available for sale. Dividend income from fully consolidated subsidiaries is eliminated in the consolidation/reconciliation column in order to obtain values for the Group. The sale of the Czech insurance subsidiaries resulted on whole in a positive effect on results in the amount of €6.4 million. This was offset by lower net interest and derivative income and slightly higher expenses for risk provision.
Earned premiums fell by €13.1 million to €122.9 million (previous year: €136.0 million). This was mainly attributable to the sale of the two Czech insurance companies Wüstenrot životní pojišt'ovna a.s. and Wüstenrot pojišt'ovna a.s. Net insurance benefits decreased analogously to €78.2 (previous year: €88.2), also as a consequence of improved claims development.
General administrative expenses decreased to €43.8 million (previous year: €44.9 million).
Tax expenses rose to €28.9 million (previous year: €25.0 million). The reporting half-year was in particular negatively influenced by write-downs on equities that could not be recognised for tax purposes.
The consolidated total assets of the W&W Group amounted to €75.0 billion (previous year: €74.1 billion), consisting primarily of building loans in the amount of €23.9 billion (previous year: €24.3 billion) and investments in the amount of €48.2 billion (previous year: €47.0 billion).
Valuation reserves are formed if the current fair value of an asset is higher than the value at which it is carried in the balance sheet (carrying amount). Because interest rates fell during the first half of the year, the valuation reserves increased further. The W&W Group maintains valuation reserves primarily for building loans in the amount of €839.1 million (previous year: €763.8 million), for firstrate receivables from institutional investors in the amount of €3,667.7 million (previous year: €2,745.0 million), and for investment properties in the amount of €405.2 million (previous year: €401.6 million).
The W&W Group being a financial services group, the liabilities side is dominated by technical provisions and liabilities to customers.
Technical provisions – including those for unit-linked life insurance policies in the amount of €1.4 billion (previous year: €1.5 billion) – totalled €34.1 billion (previous year: €32.9 billion). This includes €28.4 billion (previous year: €28.1 billion) for the provision for future policy benefits, €2.7 billion (previous year: €2.0 billion) for the provision for premium refunds, and €2.5 billion (previous year: €2.5 billion) for the provision for outstanding insurance claims. The liabilities are primarily liabilities to customers amounting to €25.4 billion (previous year: €25.3 billion). They largely consist of savings deposits and deposits from home loan savings business amounting to €18.3 billion (previous year: €18.3 billion).
W&W AG and its subsidiaries always had sufficient liquidity. We obtain liquidity from our insurance, banking and home loan savings business and from financing activities.
The cash flow statement shows outflows of cash amounting to €–74.2 million (previous year: €–135.6 million) from operating activities and inflows of cash amounting to €517.8 million (previous year: €195.6 million) for investing activities, including capital investments. Financing activities resulted in an outflow of cash of €–164.6 million (previous year: €–81.8 million). Changes attributable to the effects of exchange rates and the scope of consolidation amounted to –0.6 (previous year 1,2). This resulted in a net change in cash of €278.4 million in the reporting year.
As at 30 June 2016, the W&W Group's equity stood at €3,792.6 million, compared with €3,643.7 million as at 31 December 2015. This primarily includes consolidated net profit as at 30 June 2016 and net income included in equity, which together amounted to €211.3 million. This was offset by the dividend payment of €56.1 million, as well as other effects totalling €6.3 million.
Detailed related party disclosures are found in the selected explanatory disclosures in the notes under "Other disclosures".
Recognising and exploiting opportunities is a fundamental requirement for the successful development of our management holding company. Consequently, the operational units and W&W AG pursue the goal across the Group of systematically identifying, analysing and evaluating opportunities and initiating suitable measures to utilise them. The starting point is our firmly established strategy, planning and control processes. For this purpose, we evaluate market and environment scenarios and examine the internal orientation of our product portfolio, cost drivers and other critical success factors. This takes place from the standpoint of sustainable value orientation.
Market opportunities are derived from this, which are discussed with the management within the framework of closed-door strategy meetings and incorporated into strategic planning. We have sound governance and control structures in place in order to evaluate and pursue opportunities on the basis of their potential, the required investment and the risk profile. The opportunities depicted in our 2015 Annual Report did not change materially during the first six months of 2016, such that we make reference to these in this context.
Risk reporting in the W&W Group's Half-Year Financial Report is carried out in compliance with Section 37w of the German Securities Trading Act (Wertpapierhandelsgesetz) and German Accounting Standard 16.
W&W AG is the parent company of the financial conglomerate and the mixed financial holding group. The objectives and principles of risk management described in the 2015 Annual Report continued to apply in the W&W Group as at 30 June 2016. The planned enhancements are continuously tackled and implemented. The organisational and operational structure of our risk management system corresponds to that described in the 2015 Annual Report.
Macroeconomic developments are described in the chapter "Business environment" in this Half-Year Financial Report.
The current level of low interest rates shapes the risk development (particularly for Württembergische Lebensversicherung AG) and thus has an effect on the risk-bearing capacity of the W&W Group. Current developments with relevance to risk are addressed in our risk management system on a regular basis and when events warrant it, and they are also evaluated at scheduled and ad-hoc meetings of the Group Board Risk with respect to their effects on the risk situation.
In connection with its risk strategy, the W&W Group aims for a risk-bearing capacity ratio of at least 125%. As at 30 June 2016, the calculations made on the basis of the internal risk-bearing capacity model at Group level show that there are sufficient financial resources to cover our risks.
The risk areas depicted in the 2015 Annual Report remain valid without change as at the cut-off date of 30 June 2016:
Compared with the risk report contained in the 2015 Group Management Report, we see material changes or changed basic conditions due to internal and external influences in the following risk areas:
Interest rate change risks. Whereas, in particular, the historically above-average income development of private households and the dynamism in the residential construction sector currently present a favourable macroeconomic environment, trends in interest rates on the bond markets must continue to be viewed critically. In the second quarter of 2016, yields on German government bonds fell to new record lows, due in particular to the decision by the British to leave the European Union, as well as the uncertainty about whether other countries will follow this example. We expect yields to continue to remain very low for the remainder of the year, including on European bond markets.
Low interest rates continue to pose great challenges for the industry's life insurance companies and home loan savings banks and thus also for the W&W Group, with its long-term customer guarantees and predominantly interestrate-dependent investments. The focus is also on the servicing of long-term guarantees and commitments (e.g. from pensions).
Compared with the end of the previous year, the W&W Group's risk capital requirement increased for the risk area "Market price risks".
In this regard, the development is shaped in particular by the increased risk at Württembergische Lebensversicherung caused by interest rates.
Counterparty default risk. Compared with the end of the previous year, the W&W Group's risk capital requirement increased for the risk area "Counterparty risks" on account of portfolio changes and the change in the relevant environmental factors (particularly spreads).
Accumulation risks. Despite the high impact from acts of nature, the year 2016 has so far been shaped for Württembergische Versicherung by favourable claims development. We expect claims to rise in the second half of the year. Compared with the previous year, we anticipate that the loss ratio will improve slightly by year-end.
Compared with the end of the previous year, the W&W Group's risk capital requirement increased for the risk area "Insurance risks" as at the reporting date on account of the performance by Württembergische Lebensversicherung. The main reason for the considerable increase in risk is once again the significant fall in interest rates.
The other risk areas did not experience any material changes compared with the risk report in the 2015 Group Management Report.
At the time the report was prepared, no direct risks were discernible that jeopardise the existence of the W&W Group as a going concern. However, owing to the EEA debt crisis, which has yet to be definitively resolved, the increased political and economic uncertainty in the European Union resulting from the UK's Brexit decision, and the continuing phase of low interest rates, the entire European financial sector has to expect that the risk situation will remain tense.
With the growth programme W&W@2020, the W&W Group is meeting the challenge of sustainably achieving the income targets that it has set, despite increasingly unfavourable basic conditions and the associated risks (such as persistently low interest rates). We are also tenaciously meeting the challenge posed by the growing influence that digitisation is having on customer behaviour. We have defined five strategic action areas in order to implement it:
The W&W Group has a risk management system in place that is capable of identifying existing and foresee-able future risks early on and evaluating them.
In connection with rating the company, the rating agency S&P also rates the W&W Group's risk management (socalled enterprise risk management (ERM)). The W&W Group's ERM is currently rated "strong", under-scoring the high importance that ERM has for the W&W Group.
This Half-Year Financial Report is based on the outlook for the W&W Group made in the 2015 Annual Report. In the following, we update our estimates for 2016 as a whole to the extent that we deviate from the prior outlook based on business development during the first half of the year.
.
On account of the positive development of business in the first six months of 2016, we continue to expect that we will post consolidated net income of more than €220 million at year-end – depending on how the capital markets develop and whether further extreme weather events occur. We currently do not expect that the UK's exit from the EU will have any permanent, direct, negative effects on the W&W Group.
In terms of future performance, persistently low interest rates, high expenses for implementing additional statutory and regulatory requirements, and rising capital requirements continue to pose a great challenge for the W&W Group and the entire financial services industry. In addition, consolidated net income could be significantly influenced by extraordinary positive or negative trends in claims. Counterparty defaults, capital market fluctuations or changes in the political environment would negatively impact our Group. Delays in implementing strategic measures could likewise constitute risks for financial performance.
This Half-Year Financial Report and, in particular, the outlook contain forward-looking statements and information.
These forward-looking statements represent estimates based on information that is available at the present time and is considered to be material. They can be associated with known and unknown risks and uncertainties, but also with opportunities. Because of the number of factors that influence the company's business operations, actual results may differ from those currently anticipated.
The company can therefore assume no liability for forward-looking statements. There is no obligation to adjust forward-looking statements to conform to actual events or to update them.
| in € thousands | 30/6/2016 | 31/12/2015 | |
|---|---|---|---|
| cf. Note no | |||
| A. Cash reserves | 380 459 | 299 454 | |
| B. Non-current assets classified as held for sale and discontinued operations | 1 | 294 | 96 022 |
| C. Financial assets at fair value through profit or loss | 2 | 3 332 635 | 3 243 271 |
| D. Financial assets available for sale | 3 | 25 499 703 | 24 259 671 |
| thereof sold under repurchase agreements or lent under securities lending transactions | 1 104 201 | 1 338 472 | |
| E. Receivables |
4 | 42 179 930 | 42 698 563 |
| Subordinated securities and receivables | 116 912 | 127 641 | |
| II. First-rank receivables from institutional investors |
15 273 792 | 15 688 698 | |
| III. Building loans | 23 875 136 | 24 293 438 | |
| IV. Other loans and receivables | 2 914 090 | 2 588 786 | |
| F. Risk provision |
5 | –193 217 | –199 845 |
| G. Positive market values from hedges | 6 | 37 406 | 57 972 |
| H. Financial assets accounted for using the equity method | 104 702 | 122 144 | |
| Investment property | 7 | 1 769 062 | 1 722 678 |
| J. Reinsurers' portion of technical provisions |
339 504 | 332 745 | |
| K. Other assets | 1 588 338 | 1 453 906 | |
| Intangible assets | 82 247 | 89 580 | |
| II. Property, plant and equipment |
213 134 | 219 914 | |
| III. Inventories | 85 994 | 76 789 | |
| IV. Current tax assets | 53 390 | 59 136 | |
| V. Deferred tax assets | 1 058 243 | 916 732 | |
| VI. Other assets | 95 330 | 91 755 | |
| Total assets | 75 038 816 | 74 086 581 |
1 See numbered explanations in the notes.
Liabilities
| in € thousands | 31/12/2015 | |
|---|---|---|
| cf. Note no | ||
| A. Liabilities under non-current assets classified as held for sale and discontinued operations 1 |
— | 79 735 |
| B. Financial liabilities at fair value through profit or loss | 986 356 | 752 411 |
| C. Liabilities 8 |
30 849 899 | 31 828 304 |
| I. Liabilities evidenced by certificates |
921 066 | 1 056 854 |
| II. Liabilities to credit institutions |
3 296 270 | 4 122 614 |
| III. Liabilities to customers | 25 350 621 | 25 335 037 |
| IV. Finance lease liabilities | 26 359 | 28 413 |
| V. Miscellaneous liabilities | 1 255 583 | 1 285 386 |
| D. Negative market values from hedges 9 |
530 338 | 544 643 |
| E. Technical provisions 10 |
34 111 374 | 32 860 538 |
| F. Other provisions 11 |
3 215 627 | 2 911 578 |
| G. Other liabilities | 1 097 800 | 895 429 |
| I. Current tax liabilities |
198 122 | 201 737 |
| II. Deferred tax liabilities |
892 992 | 687 108 |
| III. Other liabilities | 6 686 | 6 584 |
| H. Subordinated capital 12 |
454 838 | 570 201 |
| I. Equity |
3 792 584 | 3 643 742 |
| I. Interests of W&W shareholders in paid-in capital |
1 483 639 | 1 487 576 |
| II. Interests of W&W shareholders in earned capital |
2 286 642 | 2 138 356 |
| Retained earnings | 2 231 263 | 2 169 652 |
| Other reserves (other comprehensive income) | 55 379 | –31 296 |
| III. Non-controlling interests in equity | 22 303 | 17 810 |
| Total liabilities | 75 038 816 | 74 086 581 |
| in € thousands | 1/1/2016 to 30/6/2016 |
1/1/2015 to 30/6/2015 |
|
|---|---|---|---|
| cf. Note no | |||
| Income from financial assets available for sale | 688 192 | 989 429 | |
| Expenses from financial assets available for sale | –224 587 | –92 573 | |
| 1. Net income from financial assets available for sale 13 |
463 605 | 896 856 | |
| Income from financial assets accounted for using the equity method | 1 905 | 23 701 | |
| Expenses from financial assets accounted for using the equity method | — | — | |
| 2. Net income from financial assets accounted for using the equity method | 1 905 | 23 701 | |
| Income from financial assets/liabilities at fair value through profit or loss | 851 156 | 1 001 769 | |
| Expenses from financial assets/liabilities at fair value through profit or loss | –924 010 | –1 240 164 | |
| 3. Net expense from financial assets/liabilities at fair value through profit or loss 14 |
–72 854 | –238 395 | |
| Income from hedges | 220 278 | 134 233 | |
| Expense from hedges | –140 281 | –82 774 | |
| 4. Net income from hedges | 79 997 | 51 459 | |
| Income from receivables, liabilities and subordinated capital | 829 898 | 834 509 | |
| Expense from receivables, liabilities and subordinated capital | –428 389 | –394 478 | |
| 5. Net income from receivables, liabilities and subordinated capital 15 |
401 509 | 440 031 | |
| Income from risk provision | 55 143 | 68 936 | |
| Expense from risk provision | –53 251 | –69 499 | |
| 6. Net expense from risk provision 16 |
1 892 | –563 | |
| 7. | Net financial result | 876 054 | 1 173 089 |
| Income from investment property | 73 325 | 66 002 | |
| Expense from investment property | –32 187 | –34 398 | |
| 8. Net income from investment property | 41 138 | 31 604 | |
| Commission income | 124 114 | 109 180 | |
| Commission expense | –315 663 | –305 245 | |
| 9. Net commission expense 17 |
–191 549 | –196 065 | |
| Earned premiums (gross) | 2 048 336 | 1 979 044 | |
| Premiums ceded to reinsurers | –50 781 | –78 446 | |
| 10. Earned premiums (net) 18 |
1 997 555 | 1 900 598 | |
| Insurance benefits (gross) | –2 026 592 | –2 252 541 | |
| Received reinsurance premiums | 28 528 | 96 500 | |
| 11. Insurance benefits (net) 19 |
–1 998 064 | –2 156 041 | |
| Carryover | 725 134 | 753 185 |
| in € thousands | 1/1/2016 to 30/6/2016 |
1/1/2015 to 30/6/2015 |
|---|---|---|
| cf. Note no | ||
| Carryover | 725 134 | 753 185 |
| Personnel expenses | –296 371 | –302 515 |
| Materials costs | –203 072 | –203 658 |
| Depreciation/amortisation | –33 533 | –35 557 |
| 12. General administrative expenses | –532 976 | –541 730 |
| Other operating income | 104 822 | 109 311 |
| Other operating expense | –116 407 | –136 687 |
| 13. Net other operating expense | –11 585 | –27 376 |
| 14. Consolidated earnings before income taxes from continued operations | 180 573 | 184 079 |
| 15. Income taxes 20 |
–59 614 | –39 936 |
| 16. Consolidated net profit | 120 959 | 144 143 |
| Result attributable to shareholders of W&W AG | 120 084 | 142 024 |
| Result attributable to non-controlling interests | 875 | 2 119 |
| 17. Basic (= diluted) earnings per share, in € 21 |
1,28 | 1,51 |
| Thereof from continued operations, in € | 1,28 | 1,51 |
| in € thousands | 1/1/2016 to 30/6/2016 |
1/1/2015 to 30/6/2015 |
|---|---|---|
| Consolidated net profit | 120 959 | 144 143 |
| Other comprehensive income | ||
| Elements not reclassified to the consolidated income statement: | ||
| Actuarial gains/losses (–) from defined-benefit plans (gross) | –255 571 | 152 428 |
| Provision for deferred premium refunds | 20 954 | –10 635 |
| Deferred taxes | 71 740 | –43 357 |
| Actuarial gains/losses (–) from defined-benefit plans (net) | –162 877 | 98 436 |
| Elements subsequently reclassified to the consolidated income statement: | ||
| Unrealised gains/losses (–) from financial assets available for sale (gross) | 1 037 223 | –797 326 |
| Provision for deferred premium refunds | –650 307 | 491 478 |
| Deferred taxes | –119 264 | 94 512 |
| Unrealised gains/losses (–) from financial assets available for sale (net) | 267 652 | –211 336 |
| Unrealised gains/losses (–) from financial assets accounted for using the equity method (gross) | 78 | –734 |
| Provision for deferred premium refunds | — | — |
| Deferred taxes | –1 | 11 |
| Unrealised gains/losses (–) from financial assets accounted for using the equity method (net) | 77 | –723 |
| in € thousands | 1/1/2016 to 30/6/2016 |
1/1/2015 to 30/6/2015 |
|---|---|---|
| Unrealised gains/losses (–) from cash flow hedges (gross) | –21 562 | –28 486 |
| Provision for deferred premium refunds | — | — |
| Deferred taxes | 6 593 | 8 710 |
| Unrealised gains/losses (–) from cash flow hedges (net) | –14 969 | –19 776 |
| Currency translation differences of economically independent foreign units | 410 | 3 826 |
| Total other comprehensive income, gross | 760 578 | –670 292 |
| Total provision for deferred premium refunds | –629 353 | 480 843 |
| Total deferred taxes | –40 932 | 59 876 |
| Total other comprehensive income, net | 90 293 | –129 573 |
| Total comprehensive income for the period | 211 252 | 14 570 |
| Attributable to shareholders of W&W AG | 206 759 | 13 892 |
| Attributable to non-controlling interests | 4 493 | 678 |
| shareholders in paid-in capital | Interests of W&W | |
|---|---|---|
| Share capital | Capital reserve |
| in € thousands cf. Note no. Equity as at 1/1/2015 Consolidated net profit Other comprehensive income Total comprehensive income for the period Dividends to shareholders 20 Changes in ownership interests without loss of control Other Equity as at 30/6/2015 Equity as at 1/1/2016 Consolidated net profit Other comprehensive income Total comprehensive income for the period Dividends to shareholders 20 Changes in ownership interests without loss of control Other |
|||
|---|---|---|---|
| 490 311 | 997 265 | ||
| — | — | ||
| — | — | ||
| — | — | ||
| — | — | ||
| — | — | ||
| — | — | ||
| 490 311 | 997 265 | ||
| 490 311 | 997 265 | ||
| — | — | ||
| — | — | ||
| — | — | ||
| — | — | ||
| –1 427 | –2 511 | ||
| — | — | ||
| Equity as at 30/6/2016 | 488 884 | 994 754 |
| Interests of W&W shareholders in earned capital | Equity attributable to W&W shareholders |
Non controlling interests in equity |
Total equity | |||||
|---|---|---|---|---|---|---|---|---|
| Retained earnings |
Other reserves | |||||||
| Reserve for pension commitments |
Reserve for financial assets available for sale |
Reserve for financial assets accounted for using the equity method |
Reserve for cash flow hedges |
Reserve for currency translation |
||||
| 1 940 540 | –539 149 | 592 552 | 6 877 | 69 998 | 2 130 | 3 560 524 | 113 696 | 3 674 220 |
| 142 024 | — | — | — | — | — | 142 024 | 2 119 | 144 143 |
| — | 97 853 | –208 386 | –662 | –19 776 | 2 839 | –128 132 | –1 441 | –129 573 |
| 142 024 | 97 853 | –208 386 | –662 | –19 776 | 2 839 | 13 892 | 678 | 14 570 |
| –46 875 | — | — | — | — | — | –46 875 | — | –46 875 |
| 2 789 | — | 14 418 | — | — | — | 17 207 | –42 259 | –25 052 |
| –41 | — | — | — | — | — | –41 | — | –41 |
| 2 038 437 | –441 296 | 398 584 | 6 215 | 50 222 | 4 969 | 3 544 707 | 72 115 | 3 616 822 |
| 2 169 651 | –488 719 | 422 313 | 6 509 | 24 919 | 3 683 | 3 625 932 | 17 810 | 3 643 742 |
| 120 084 | — | — | — | — | — | 120 084 | 875 | 120 959 |
| — | –162 758 | 263 912 | 76 | –14 969 | 413 | 86 674 | 3 618 | 90 293 |
| 120 084 | –162 758 | 263 912 | 76 | –14 969 | 413 | 206 759 | 4 493 | 211 252 |
| –56 086 | — | — | — | — | — | –56 086 | — | –56 086 |
| –1 364 | — | — | — | — | — | –5 302 | — | –5 302 |
| –1 021 | — | — | — | — | — | –1 021 | — | –1 021 |
| 2 231 264 | –651 477 | 686 225 | 6 585 | 9 950 | 4 096 | 3 770 281 | 22 303 | 3 792 584 |
Cash flow from operating activities is determined using the indirect method.
The balance of cash and cash equivalents in the financial year consists of the item "Cash reserve" in the amount of €380.5 million (previous year: €155.9 million), bank deposits payable on demand in the amount of €841.3 million (previous year: €537.6 million) that are reported under the item "Other receivables", and bank deposits payable on demand in the amount of €0.0 million (previous year: €1.1 million) that were reclassified to the item "Non-current assets held for sale and discontinued operations". The cash reserve consists of cash on hand, deposits with central banks, and deposits with foreign postal giro offices.
Contained in "Cash flow from financing activities" are distributions in the amount of €6,872 thousand, which resulted from the repurchase of own shares. Own shares were sold from this in connection with an employee share ownership programme, triggering deposits in the amount of €1,145 thousand.
The W&W Group can freely dispose of its cash and cash equivalents.
As at 30 June 2016, the legally mandated balances with national central banks that are subject to reserve requirements amounted to €72.6 million (previous year: €76.1 million).
| in € thousands | 1.1.2016 to 30.6.2016 |
1.1.2015 to 30.6.2015 |
|---|---|---|
| I. Cash flow from operating activities |
–74 194 | –135 5551 |
| II. Cash flow from investing activities | 517 763 | 195 6401 |
| III. Cash flow from financing activities | –164 614 | –81 780 |
| in € thousands | 2016 | 2015 |
| Cash and cash equivalents as at 1 January | 943 331 | 715 053 |
| Net change in cash and cash equivalents (I.+II.+III.) | 278 955 | –21 695 |
| Change in cash and cash equivalents attributable to the effects of exchange rates and the scope of consolidation |
–553 | 1 241 |
| Cash and cash equivalents as at 30 June | 1 221 733 | 694 599 |
| 1 Previous year's figure adjusted. |
In accordance with the provisions of Section 37w in conjunction with Section 37y, no. 2, of the German Securities Trading Act (WpHG), the half-year financial report of Wüstenrot & Württembergische AG consists of condensed consolidated interim financial statements, an interim group management report and the responsibility statement required under Section 297, para. 2, fourth sentence, and Section 315, para. 1, sixth sentence, of the German Commercial Code (HGB). The interim group management report is prepared in accordance with the applicable provisions of the WpHG and German Accounting Standard DRS 16.
The accounting policies applied were the same as those used for the consolidated annual financial statements as at 31 December 2015, as well as those applicable as of 1. January 2016 for the first time. The latter had no material impact on the assets, liabilities, financial position and financial performance of the Group.
The condensed consolidated interim financial statements of Wüstenrot & Württembergische AG – consisting of the consolidated balance sheet, the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of changes in equity, the condensed consolidated cash flow statement and select notes – are presented in conformity with IAS 34 "Interim Financial Reporting", were drawn up on the basis of Section 315a HGB in conformity with the International Financial Reporting Standards (IFRS), as adopted by the European Union (EU), and have a condensed scope of reporting compared with the consolidated annual financial statements as at 31 December 2015.
On 8 August 2016 the Management Board of W&W AG gave release to the publication of this consolidated interim report.
An employee share ownership programme was introduced in the first half-year of 2016. It enabled all employees of companies in the W&W Group to acquire up to 40 shares of W&W AG at a price of €13.43 per share, which represented a discount of €5.00 per share. They are required to hold these shares for at least three years.
For this programme 358,000 own shares have been repurchased. Of those, 85,220 shares have been ordered by W&W employees. Personnel expenses amounted to 0.4 million euro.
In the first half-year of 2016, the Czech insurance companies Wüstenrot pojišťovna a.s. (TV), Prague, and Wüstenrot životní pojišt'ovna a. s. (TLV), Prague, as well as W&W Europe Life Limited, Dublin, were eliminated from the scope of consolidation.
The sale price of TV and TLV was in the low 8-figure range. A mid-7-figure profit resulted. This profit is shown in the consolidated income statement under "Net income from financial assets available for sale" and under "Net other operating income". These sales had no material influence on the net assets, financial position and financial performance of the W&W Group.
The deconsolidation of W&W Europe Life Limited had no material influence on the net assets, financial position and financial performance of the W&W Group.
The principles described in the following are used to determine the fair value of financial instruments, regardless of whether the fair value so determined is used for measurement purposes or for information in the notes.
Fair value is a market-based measurement, not an entity-specific measurement. For some assets and liabilities, observable market transactions or market information might be available. For other assets and liabilities, they might not be available. However, the objective of fair value measurement in both cases is the same: to estimate the price at which an orderly transaction to sell the asset or to transfer the liability would take place between market participants at the measurement date.
When no observable market transactions or market information is available, fair value is measured using another valuation technique that maximises the use of relevant observable inputs.
To increase the comparability, consistency and quality of fair value measurements, the IFRSs establish a fair value hierarchy that categorises into three levels the inputs to valuation techniques used to measure fair value. This hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1 inputs) and the lowest priority to unobservable inputs (Level 3 inputs).
If fair value cannot be reliably determined, the carrying amount is used as an approximate value to measure fair value. This essentially relates to loans under home loan savings contracts from collective business due to the special features of home loan savings products and the variety of rate constructions. Loans under home loan savings contracts are allocated to the item "Receivables" and are accordingly measured for accounting purposes at amortised cost.
Level classification is to be used for all assets and liabilities that are measured regularly, once or for the purposes of preparing disclosures about fair value. The identical aforementioned standards and principles apply to this.
Only a few estimates by management are necessary in order to determine the fair value of assets and liabilities whose prices are quoted on an active market. Similarly, only a few subjective measurements or estimates are needed for assets and liabilities that are measured using models customary in the industry and all of whose inputs are quoted on active markets.
The required degree of subjective measurement and estimates by management has a higher weight for those assets and liabilities that are measured using special, complex models and for which some or all inputs are not observable. The values determined in this way are significantly influenced by the assumptions that have to be made.
Financial instruments that are traded on an active market are measured at the unadjusted quoted or market price for identical assets and liabilities (Level 1). If pricing is not available on active markets, fair value is derived from comparable financial instruments or determined through application of recognised measurements models using parameters that are directly or indirectly observable on the market (e.g. interest rate, exchange rate, volatility) (Level 2). If measurement is impossible, or not fully possible, using quoted or market prices or by means of a measurement model using input factors that are directly or indirectly observable on the market, factors based on non-observable market data (non-observable input factors) are used to measure financial instruments (Level 3).
Unadjusted quoted or market prices (Level 1) are used to measure securities – equity instruments as well as debt-financing instruments – under the items "Financial assets at fair value through profit or loss", "Financial liabilities at fair value through profit or loss", "Financial assets available for sale", "Positive market values from hedges" and "Negative market values from hedges". Derivatives traded on exchanges or on the market are likewise measured at their quoted or market price.
The measurement methods used for Levels 2 and 3 consist of generally accepted measurement models, such as the present-value method, under which anticipated future cash flows are discounted at current interest rates applicable to the relevant residual term to maturity, credit risks and markets. This method is used to measure securities with agreed cash flows under the items "Financial assets at fair value through profit or loss", "Financial liabilities at fair value through profit or loss" and "Financial assets available for sale". Furthermore, it is used to measure interest rate swaps and non-optional forward transactions (e.g. currency forwards), which are depicted under the items "Financial assets at fair value through profit or loss", "Financial liabilities at fair value through profit or loss", "Positive market values from hedges" and "Negative market values from hedges".
In conformity with IFRS 8 "Operating Segments", segment information is generated on the basis of internal reports that are regularly reviewed by the entity's chief operating decision maker in order to allocate resources to the segment and assess its performance (so-called "management approach"). In the W&W Group, the chief operating decision maker is the Management Board.
The reportable segments are identified on the basis of both products and services and according to regulatory requirements. In this context, individual operating segments are combined within the Life and Health Insurance segment and the Property/Casualty insurance segment. The following section lists the products and services through which revenue is generated by the reportable segments. There is no dependence on individual major accounts.
The Home Loan and Savings Bank segment includes a broad range of home loan savings, as well as banking products primarily for private customers, e.g. home loan savings contracts, bridging loans, savings and investment products, current accounts, call money accounts, Maestro and credit cards, and mortgage and bank loans.
The Life and Health Insurance segment offers a variety of life and health insurance products for individuals and groups, including classic and unit-linked life and annuity insurance, term insurance, classic and unit-linked "Riester" and basic pensions, and occupational disability insurance, as well as full and supplementary private health insurance and nursing care insurance.
The Property/Casualty Insurance segment offers a comprehensive range of insurance products for private and corporate customers, including general liability, casualty, motor, household, residential building, legal protection, transport and technical insurance.
As in previous years, the performance of each segment was measured based on the segment earnings under IFRS. Transactions between the segments were carried out on an arm's length basis.
All other business activities of the W&W Group, such as central Group functions, asset management activities, property development and the marketing of home loan savings and banking products outside of Germany, are subsumed under "All other segments".
The column "Consolidation/reconciliation" includes consolidation adjustments required to reconcile segment figures to Group figures.
The measurement principles for segment reporting correspond to the accounting policies applied to the IFRS condensed consolidated half-year financial statements.
| Home Loan and Savings Bank |
Life and Health Insurance | ||||
|---|---|---|---|---|---|
| in € thousands | 1.1.2016 to 30.6.2016 |
1.1.2015 to 30.6.2015 |
1.1.2016 to 30.6.2016 |
1.1.2015 to 30.6.2015 |
|
| 1. Net income from financial assets available for sale | 101 476 | 113 853 | 340 970 | 720 188 | |
| 2. Net income from financial assets accounted for using the equity method | — | — | 497 | 10 886 | |
| 3. Net income from financial assets/liabilities at fair value through profit or loss |
–16 173 | –105 555 | –57 136 | –114 074 | |
| 4. Net income from hedges | 79 997 | 51 459 | — | — | |
| 5. Net income from receivables, liabilities and subordinated capital |
70 361 | 147 487 | 307 642 | 246 803 | |
| 6. Net income from risk provision |
4 737 | 2 025 | 838 | –1 354 | |
| 7. Net financial result |
240 398 | 209 269 | 592 811 | 862 449 | |
| 8. Net income from investment property | — | — | 38 781 | 29 226 | |
| 9. Net commission income | –5 558 | –5 264 | –66 500 | –67 771 | |
| 10. Earned premiums (net) | — | — | 1 214 230 | 1 121 536 | |
| 11. Insurance benefits (net) | — | — | –1 583 680 | –1 731 129 | |
| 12. General administrative expenses3 | –187 302 | –188 238 | –129 735 | –129 096 | |
| 13. Net other operating income | 1 644 | 8 521 | –38 372 | –56 210 | |
| 14. Segment net income before income taxes from continued operations | 49 182 | 24 288 | 27 535 | 29 005 | |
| 15. Income taxes | –16 049 | –4 297 | –9 410 | –10 119 | |
| 16. Segment net income after taxes | 33 133 | 19 991 | 18 125 | 18 886 | |
| Other information | |||||
| Total revenue4 | 663 501 | 762 938 | 1 648 525 | 1 590 774 | |
| thereof with other segments | 14 252 | 14 776 | 18 637 | 20 535 | |
| thereof with external customers | 649 249 | 748 162 | 1 629 888 | 1 570 239 | |
| Segment assets6 | 34 105 848 | 35 111 344 | 34 163 358 | 33 010 994 | |
| Segment liabilities6 | 32 183 577 | 33 320 874 | 33 623 424 | 32 557 457 | |
| Financial assets accounted for using the equity method6 | — | — | 41 755 | 50 970 |
1 Includes amounts from proportional profit transfers eliminated in the Consolidation column.
2 The column "Consolidation/reconciliation" includes the effects of consolidation between segments.
3 Includes service revenues and rental income with other segments.
4 Interest, commission and rental income and earned premiums (net) from insurance business.
5 Includes cross-segment premiums ceded to reinsurers.
6 Values as at 31 December 2016 and 31 December 2015, respectively.
| Property/Casualty Insurance |
Total for reportable segments |
All other segments1 | Consolidation/ reconciliation2 |
Group | |||||
|---|---|---|---|---|---|---|---|---|---|
| 1.1.2016 to 30.6.2016 |
1.1.2015 to 30.6.2015 |
1.1.2016 bis 30.6.2016 |
1.1.2015 to 30.6.2015 |
1.1.2016 to 30.6.2016 |
1.1.2015 to 30.6.2015 |
1.1.2016 to 30.6.2016 |
1.1.2015 to 30.6.2015 |
1.1.2016 to 30.6.2016 |
1.1.2015 to 30.6.2015 |
| 7 247 | 57 712 | 449 693 | 891 753 | 112 083 | 103 689 | –98 171 | –98 586 | 463 605 | 896 856 |
| 497 | 10 886 | 994 | 21 772 | 911 | 1 929 | — | — | 1 905 | 23 701 |
| 34 | –25 364 | –73 275 | –244 993 | –3 821 | 5 468 | 4 242 | 1 130 | –72 854 | –238 395 |
| — | — | 79 997 | 51 459 | — | — | — | — | 79 997 | 51 459 |
| 7 823 | 25 454 | 385 826 | 419 744 | 6 912 | 18 215 | 8 771 | 2 072 | 401 509 | 440 031 |
| –410 | –153 | 5 165 | 518 | –3 273 | –1 081 | — | — | 1 892 | –563 |
| 15 191 | 68 535 | 848 400 | 1 140 253 | 112 812 | 128 220 | –85 158 | –95 384 | 876 054 | 1 173 089 |
| 886 | 1 133 | 39 667 | 30 359 | 190 | 215 | 1 281 | 1 030 | 41 138 | 31 604 |
| –102 228 | –103 591 | –174 286 | –176 626 | –22 049 | –21 651 | 4 786 | 2 212 | –191 549 | –196 065 |
| 669 265 | 651 720 | 1 883 495 | 1 773 256 | 122 942 | 136 045 | –8 882 | –8 703 | 1 997 555 | 1 900 598 |
| –344 901 | –348 014 | –1 928 581 | –2 079 143 | –78 175 | –88 233 | 8 692 | 11 335 | –1 998 064 | –2 156 041 |
| –165 196 | –172 341 | –482 233 | –489 675 | –43 826 | –44 883 | –6 917 | –7 172 | –532 976 | –541 730 |
| 15 954 | 2 312 | –20 774 | –45 377 | 7 502 | 10 140 | 1 687 | 7 861 | –11 585 | –27 376 |
| 88 971 | 99 754 | 165 688 | 153 047 | 99 396 | 119 853 | –84 511 | –88 821 | 180 573 | 184 079 |
| –32 666 | –26 427 | –58 125 | –40 843 | –28 912 | –25 031 | 27 423 | 25 938 | –59 614 | –39 936 |
| 56 305 | 73 327 | 107 563 | 112 204 | 70 484 | 94 822 | –57 088 | –62 883 | 120 959 | 144 143 |
| 767 957 | 748 681 | 3 079 983 | 3 102 393 | 210 689 | 222 821 | –123 504 | –117 983 | 3 167 168 | 3 207 231 |
| –88 410 5 | –90 164 5 | –55 521 | –54 853 | 179 025 | 172 836 | –123 504 | –117 983 | — | — |
| 856 367 | 838 845 | 3 135 504 | 3 157 246 | 31 664 | 49 985 | — | — | 3 167 168 | 3 207 231 |
| 4 537 143 | 4 201 886 | 72 806 349 | 72 324 224 | 6 145 655 | 6 035 116 | –3 913 188 | –4 272 759 | 75 038 816 | 74 086 581 |
| 3 581 390 | 3 251 863 | 69 388 391 | 69 130 194 | 3 981 354 | 3 847 477 | –2 123 513 | –2 534 832 | 71 246 232 | 70 442 839 |
| 61 558 | 70 774 | 103 313 | 121 744 | 21 192 | 20 203 | –19 803 | –19 803 | 104 702 | 122 144 |
| Revenue from external customers1 |
Non-current assets2 | ||||
|---|---|---|---|---|---|
| in € thousands | 1.1.2016 to 30.6.2016 |
1.1.2015 to 30.6.2015 |
1.1.2016 to 30.6.2016 |
1.1.2015 to 31.12.2015 |
|
| Germany | 3 122 088 | 3 146 871 | 2 036 990 | 2 003 255 | |
| Czech Republic | 43 768 | 58 995 | 8 366 | 9 026 | |
| Other countries | 1 312 | 1 365 | 593 | 594 | |
| Total | 3 167 168 | 3 207 231 | 2 045 949 | 2 012 875 |
1 Revenues were allocated to the operating units based on the country of registration, and they consist of interest, commission and rental income, and earned premiums (net) from insurance business.
2 Non-current assets include investment property, intangible assets with the exception of capitalised insurance portfolios, and property, plant and equipment.
Properties held for sale as at 30 June 2016 consisted of a commercial property for own use in Ravensburg, which is allocated to the Property/Casualty Insurance segment.
The property is being disposed of for reasons of diversification and thus serves to further optimise the asset portfolio in the W&W Group. It is slated to be disposed of in the course of 2016.
Non-current assets held for sale and discontinued operations as at 31 December 2015 consisted of the assets of two Czech subsidiaries in "All other segments", a residential property in third-party use in Munich in the Life and Health Insurance segment and an investment in the Home Loan and Savings Bank segment, all of which were disposed of in the first half-year of 2016.
| in € thousands | 30.6.2016 | 31.12.2015 |
|---|---|---|
| Designated as financial assets at fair value | 2 302 136 | 2 403 586 |
| Equity instruments | 44 580 | 50 191 |
| Senior fixed-income securities | 243 802 | 234 938 |
| Structured products | 569 920 | 607 660 |
| Investments for the account and risk of holders of life insurance policies | 1 443 834 | 1 510 797 |
| Financial assets held for trading | 1 030 499 | 839 685 |
| Equity instruments | 12 942 | 9 796 |
| Derivative financial instruments | 1 017 557 | 829 889 |
| Financial assets at fair value through profit or loss | 3 332 635 | 3 243 271 |
| Amortised cost | Unrealised gains | Unrealised losses | Fair value/carrying amount |
|||||
|---|---|---|---|---|---|---|---|---|
| in € thousands | 30.6.2016 | 31.12.2015 | 30.6.2016 | 31.12.2015 | 30.6.2016 | 31.12.2015 | 30.6.2016 | 31.12.2015 |
| Equity instruments | 2 992 602 | 3 013 531 | 483 077 | 541 651 | –80 068 | –161 223 | 3 395 611 | 3 393 959 |
| Investments | 978 502 | 931 960 | 278 070 | 288 600 | –26 425 | –23 683 | 1 230 147 | 1 196 877 |
| Equities | 569 261 | 682 028 | 111 571 | 150 409 | –35 083 | –37 018 | 645 749 | 795 419 |
| Fund units | 1 444 839 | 1 399 543 | 93 436 | 102 642 | –18 560 | –100 522 | 1 519 715 | 1 401 663 |
| Subordinated securities and receivables |
1 232 432 | 1 242 373 | 19 305 | 20 288 | –22 062 | –29 069 | 1 229 675 | 1 233 592 |
| Senior fixed-income securities |
19 138 760 | 18 918 191 | 1 769 240 | 976 318 | –33 583 | –262 389 | 20 874 417 | 19 632 120 |
| Financial assets available for sale |
23 363 794 | 23 174 095 | 2 271 622 | 1 538 257 | –135 713 | –452 681 | 25 499 703 | 24 259 671 |
| Carrying amount | Fair value | ||||
|---|---|---|---|---|---|
| in € thousands | 30.6.2016 | 31.12.2015 | 30.6.2016 | 31.12.2015 | |
| Subordinated securities and receivables | 116 912 | 127 641 | 124 184 | 132 663 | |
| First-rank receivables from institutional investors1, 2 |
15 273 792 | 15 688 698 | 18 941 464 | 18 433 702 | |
| Building loans2 | 23 875 136 | 24 293 438 | 24 714 259 | 25 057 230 | |
| Other loans and receivables | 2 914 090 | 2 588 786 | 2 917 115 | 2 590 830 | |
| Other liabilities3 | 2 499 180 | 2 195 584 | 2 502 237 | 2 197 374 | |
| Other receivables4 | 414 910 | 393 202 | 414 878 | 393 456 | |
| Receivables | 42 179 930 | 42 698 563 | 46 697 022 | 46 214 425 |
1 Includes senior debenture bonds and registered bonds.
2 Includes portfolio hedge adjustment.
3 Receivables that constitute a class pursuant to IFRS 7.
4 Receivables that do not constitute a class pursuant to IFRS 7 and essentially contain receivables from insurance business with disclosure
requirements pursuant to IFRS 4.
To enable a better understanding of the information, the following table provides a detailed breakdown of receivables:
| in € thousands | 30.6.2016 | 31.12.2015 |
|---|---|---|
| Subordinated securities and receivables | 116 912 | 127 641 |
| First-rank receivables from institutional investors1 | 15 273 792 | 15 688 698 |
| Credit institutions | 10 613 951 | 10 998 698 |
| Other financial companies | 475 732 | 376 907 |
| Other companies | 50 289 | 198 805 |
| Public authorities | 4 129 568 | 4 117 141 |
| Portfolio hedge adjustment | 4 252 | –2 853 |
| Building loans | 23 875 136 | 24 293 438 |
| Loans under home loan savings contracts | 2 402 582 | 2 565 412 |
| Preliminary and interim financing loans | 11 473 730 | 11 481 035 |
| Other building loans | 9 778 643 | 10 065 111 |
| Portfolio hedge adjustment | 220 181 | 181 880 |
| Other loans and receivables | 2 914 090 | 2 588 786 |
| Other loans and advances2 | 2 499 180 | 2 195 584 |
| to customers | 379 602 | 399 563 |
| to credit institutions | 2 119 578 | 1 796 021 |
| Other receivables3 | 414 910 | 393 202 |
| Receivables from reinsurance business | 67 914 | 77 039 |
| Receivables from insurance agents | 120 554 | 68 902 |
| Receivables from policyholders | 220 496 | 238 833 |
| Miscellaneous other receivables | 5 946 | 8 428 |
| Receivables | 42 179 930 | 42 698 563 |
1 Includes senior debenture bonds and registered bonds.
2 Receivables that constitute a class pursuant to IFRS 7.
disclosure requirements pursuant to IFRS 4.
3 Receivables that do not constitute a class pursuant to IFRS 7 and essentially contain receivables from insurance business with
The carrying amount of receivables as a whole less impairments in the form of risk provision amounted to €41,986.7 million (previous year: €42,498.7 million).
The sub-item "Portfolio hedge adjustment" contains a measurement item from the interestrate-based measurement of loans and advances to customers, registered bonds and debenture bonds designated in connection with the portfolio fair value hedge. Recognised here was the change in the hedged item as relates to the hedged risk. The portfolio of derivatives that were included in the portfolio fair value hedge as at 30 June 2016 is contained in Notes 6 and 9.
| in € thousands | 30.6.2016 | 31.12.2015 |
|---|---|---|
| Subordinated securities and receivables | –15 | –25 |
| First-rate receivables from institutional investors | –993 | –1 073 |
| Building loans | –150 701 | –157 854 |
| Other loans and advances | –14 263 | –13 034 |
| Other receivables | –27 245 | –27 859 |
| Risk provision | –193 217 | –199 845 |
| in € thousands | 30.6.2016 | 31.12.2015 |
|---|---|---|
| Cash flow hedges | 19 813 | 24 342 |
| Hedging of interest rate risk | 19 813 | 24 342 |
| Fair value hedges | 17 593 | 33 630 |
| Hedging of interest rate risk | 17 593 | 33 630 |
| Positive market values from hedges | 37 406 | 57 972 |
The fair value of investment property amounted to €2,174.3 million (previous year: €2,124.2 million).
| Carrying amount | Fair value | |||
|---|---|---|---|---|
| in € thousands | 30.6.2016 | 31.12.2015 | 30.6.2016 | 31.12.2015 |
| Liabilities evidenced by certificates | 921 066 | 1 056 854 | 943 511 | 1 077 913 |
| Liabilities to credit institutions | 3 296 270 | 4 122 614 | 3 390 261 | 4 177 816 |
| Liabilities to customers | 25 350 621 | 25 335 037 | 25 579 836 | 25 555 608 |
| Finance lease liabilities | 26 359 | 28 413 | 27 359 | 28 322 |
| Miscellaneous liabilities | 1 255 583 | 1 285 386 | 1 255 174 | 1 284 910 |
| Other liabilities1 | 391 535 | 377 286 | 391 237 | 376 810 |
| Sundry liabilities2 | 864 048 | 908 100 | 863 937 | 908 100 |
| Liabilities | 30 849 899 | 31 828 304 | 31 196 141 | 32 124 569 |
1 Liabilities that constitute a class pursuant to IFRS 7.
2 Liabilities that do not constitute a class pursuant to IFRS 7 and essentially contain liabilities from insurance business with disclosure
requirements pursuant to IFRS 4.
To enable a better understanding of the information, the following table provides a detailed breakdown of liabilities:
| in € thousands | 30.6.2016 | 31.12.2015 |
|---|---|---|
| Liabilities evidenced by certificates | 921 066 | 1 056 854 |
| Liabilities to credit institutions | 3 296 270 | 4 122 614 |
| Liabilities to customers | 25 350 621 | 25 335 037 |
| Deposits from home loan savings business and savings deposits | 18 328 745 | 18 257 833 |
| Other liabilities | 6 994 894 | 7 053 730 |
| Down payments received | 26 982 | 23 474 |
| Finance lease liabilities | 26 359 | 28 413 |
| Miscellaneous liabilities | 1 255 583 | 1 285 386 |
| Other liabilities1 | 391 535 | 377 286 |
| Sundry liabilities2 | 864 048 | 908 100 |
| Liabilities from reinsurance business | 141 616 | 127 085 |
| Liabilities from direct insurance business | 619 400 | 675 923 |
| Other sundry liabilities | 103 032 | 105 092 |
| Liabilities | 30 849 899 | 31 828 304 |
1 Liabilities that constitute a class pursuant to IFRS 7.
2 Liabilities that do not constitute a class pursuant to IFRS 7 and essentially contain liabilities from insurance business with disclosure
requirements pursuant to IFRS 4.
| in € thousands | 30.6.2016 | 31.12.2015 |
|---|---|---|
| Cash flow hedges | 4 035 | 12 000 |
| Hedging of interest rate risk | 4 035 | 12 000 |
| Fair value hedges | 526 303 | 532 643 |
| Hedging of interest rate risk | 526 303 | 532 643 |
| Negative market values from hedges | 530 338 | 544 643 |
Losses resulting from the measurement of the hedging instrument are offset by the effects from the interest-rate-based measurement of loans and advances to customers designated in connection with the portfolio fair value hedge (cf. Note 4, "Receivables", sub-item "Portfolio hedge adjustment").
| Gross | ||
|---|---|---|
| in € thousands | 30.6.2016 | 31.12.2015 |
| Provision for unearned premiums | 481 528 | 254 998 |
| Provision for future policy benefits | 28 425 606 | 28 059 448 |
| Provision for outstanding insurance claims | 2 504 520 | 2 505 739 |
| Provision for premium refunds | 2 667 270 | 2 007 923 |
| Other technical provisions | 32 450 | 32 430 |
| Technical provisions | 34 111 374 | 32 860 538 |
| in € thousands | 30.6.2016 | 31.12.2015 |
|---|---|---|
| Provisions for pensions and other long-term employee benefits | 2 094 065 | 1 847 487 |
| Miscellaneous provisions | 1 121 562 | 1 064 091 |
| Other provisions | 3 215 627 | 2 911 578 |
The assumptions underlying the pension commitments that concern the actuarial interest rate were adjusted during the reporting period to conform to market conditions. As a result, the actuarial interest rate used to measure pension commitments fell from 2.00% as at 31 December 2015 to 1.25%. The adjustment of the interest rate was recognised as an actuarial loss, taking into account deferred taxes and the provision for deferred premium refunds, in the reserve for pension commitments and forms a part of other comprehensive income.
| Carrying amount | Fair value | |||
|---|---|---|---|---|
| in € thousands | 30.6.2016 | 31.12.2015 | 30.6.2016 | 31.12.2015 |
| Subordinated liabilities | 427 030 | 541 559 | 439 086 | 557 521 |
| Profit participation certificates | 27 808 | 28 642 | 30 360 | 32 333 |
| Subordinated capital | 454 838 | 570 201 | 469 446 | 589 854 |
In the first half of 2016, Württembergische Lebensversicherung made use of its right to early redeem its subordinated fixed to floating bearer note amounting to 86.6 million euro, according to art. 3 in connection with sect. 6 of the final terms.
| in € thousands | 1.1.2016 to 30.6.2016 |
1.1.2015 to 30.6.2015 |
|---|---|---|
| Income from financial assets available for sale | 688 192 | 989 429 |
| Interest income | 237 129 | 258 227 |
| Dividend income | 71 642 | 60 550 |
| Income from sales | 343 135 | 444 408 |
| Income from currency translation | 31 209 | 223 386 |
| Income from the ending of fair value hedges | 4 953 | 2 508 |
| Receipts on written-down bonds and other fixed-income securities | 124 | 350 |
| Expenses from financial assets available for sale | –224 587 | –92 573 |
| Expenses from sales | –68 207 | –44 263 |
| Expenses from impairments | –59 201 | –8 922 |
| Expenses from currency translation | –74 662 | –18 940 |
| Expenses from repurchase agreements and securities lending transactions | –2 | — |
| Expenses from the ending of fair value hedges | –22 515 | –20 448 |
| Net income from financial assets available for sale | 463 605 | 896 856 |
| in € thousands | 1.1.2016 to 30.6.2016 |
1.1.2015 to 30.6.2015 |
|---|---|---|
| Income from financial assets/liabilities at fair value through profit or loss | 851 156 | 1 001 769 |
| Income from assets/liabilities designated as financial assets/liabilities at fair value through profit or loss |
76 959 | 237 239 |
| Interest income | 6 139 | 7 298 |
| Dividend income | 301 | 102 |
| Income from measurement at fair value | 37 823 | 39 619 |
| Income from sales | 2 466 | 4 970 |
| Income from investments for the account and risk of holders of life insurance policies |
12 118 | 137 148 |
| Income from currency changes | 18 112 | 48 102 |
| Income from financial assets/liabilities held for trading | 774 197 | 764 530 |
| Interest income | 74 401 | 130 822 |
| Dividend income | 141 | — |
| Income from measurement at fair value | 429 361 | 336 192 |
| Income from sales | 68 118 | 41 880 |
| Income from currency changes | 202 176 | 255 636 |
| Expenses from financial assets/liabilities at fair value through profit or loss | –924 010 | –1 240 164 |
| Expenses from assets/liabilities designated as financial assets/liabilities at fair value through profit or loss |
–150 979 | –61 638 |
| Expenses from measurement at fair value | –38 632 | –40 971 |
| Expenses from sales | –1 067 | –1 099 |
| Expenses from investments for the account and risk of holders of life insur ance policies |
–92 426 | –1 748 |
| Expenses from currency changes | –18 854 | –17 820 |
| Expenses from financial assets/liabilities held for trading | –773 031 | –1 178 526 |
| Interest expenses | –143 397 | –192 091 |
| Expenses from measurement at fair value | –418 802 | –384 737 |
| Expenses from sales | –71 213 | –38 223 |
| Expenses from currency changes | –139 619 | –563 475 |
| Net expenses from financial assets/liabilities at fair value through profit or loss |
–72 854 | –238 395 |
| in € thousands | 1.1.2016 to 30.6.2016 |
1.1.2015 to 30.6.2015 |
|---|---|---|
| Income from receivables, liabilities and subordinated capital | 829 898 | 834 509 |
| Interest income from receivables | 667 116 | 737 597 |
| Income from sales of receivables | 155 296 | 6 925 |
| Income from the ending of fair value hedges | 1 376 | 1 670 |
| Income from currency translation | 6 110 | 88 317 |
| Expense from receivables, liabilities and subordinated capital | –428 389 | –394 478 |
| Interest expenses for liabilities | –347 146 | –311 177 |
| Interest expenses for subordinated capital | –14 220 | –17 026 |
| Expenses from sales of receivables | –529 | –525 |
| Expenses from the disposal of liabilities | –235 | –2 |
| Expenses from the ending of fair value hedges | –32 477 | –39 355 |
| Expenses from currency translation | –33 782 | –26 393 |
| Net income from receivables, liabilities and subordinated capital | 401 509 | 440 031 |
Interest expenses for subordinated capital contain €0.8 million (previous year: €1.8 million) for profit participation certificates and €13.4 million (previous year: €15.3 million) for subordinated liabilities.
| in € thousands | 1.1.2016 to 30.6.2016 |
1.1.2015 to 30.6.2015 |
|---|---|---|
| Income from risk provision | 55 143 | 68 936 |
| Release of risk provision | 40 256 | 53 666 |
| Release of provisions in lending business, for irrevocable loan commitments, for financial guarantees |
156 | 305 |
| Receipts on written-down receivables | 14 731 | 14 965 |
| Expenses from risk provision | –53 251 | –69 499 |
| Additions to risk provision | –45 114 | –62 072 |
| Additions to provisions in lending business, for irrevocable loan commitments, for financial guarantees |
–572 | — |
| Direct depreciations | –7 565 | –7 427 |
| Net expense from risk provision | 1 892 | –563 |
| in € thousands | 1.1.2016 to 30.6.2016 |
1.1.2015 to 30.6.2015 |
|---|---|---|
| Commission income | 124 114 | 109 180 |
| from the conclusion of building savings contracts | 62 494 | 49 815 |
| from banking/building savings business | 19 505 | 18 376 |
| from reinsurance | 8 710 | 8 936 |
| from brokering activities | 12 064 | 9 637 |
| from investment business | 17 564 | 18 346 |
| from other business | 3 777 | 4 070 |
| Commission expense | –315 663 | –305 245 |
| from insurance | –196 212 | –198 145 |
| from banking/building savings business | –96 291 | –82 808 |
| from reinsurance | 281 | –12 |
| from brokering activities | –3 815 | –4 201 |
| from investment business | –11 659 | –11 331 |
| from other business | –7 967 | –8 748 |
| Net commission expense | –191 549 | –196 065 |
| in € thousands | 1.1.2016 to 30.6.2016 |
1.1.2015 to 30.6.2015 |
|---|---|---|
| Gross premiums written | 1 182 071 | 1 111 924 |
| Change in the provision for unearned premiums | 20 607 | 21 933 |
| Premiums from the provision for premium refunds | 16 441 | 25 465 |
| Earned premiums (gross) | 1 219 119 | 1 159 322 |
| Premiums ceded to reinsurers | –13 676 | –42 268 |
| Earned premiums (net) | 1 205 443 | 1 117 054 |
| in € thousands | 1.1.2016 to 30.6.2016 |
1.1.2015 to 30.6.2015 |
|---|---|---|
| Gross premiums written | 1 076 354 | 1 060 226 |
| Direct | 1 073 114 | 1 056 536 |
| Reinsurance | 3 240 | 3 690 |
| Change in the provision for unearned premiums | –247 137 | –240 504 |
| Earned premiums (gross) | 829 217 | 819 722 |
| Premiums ceded to reinsurers | –37 105 | –36 178 |
| Earned premiums (net) | 792 112 | 783 544 |
Benefits under insurance contracts from direct business are shown without claim adjustment expenses. These are contained in general administrative expenses. Insurance benefits under reinsurance and the reinsurers' portion of insurance benefits may consist of both claim payments and adjustment expenses.
Shown under the item "Change in the provision for premium refunds" are additions to the provision for premium refunds, as well as the change in the provision for deferred premium refunds recognised in the income statement.
| in € thousands | 1.1.2016 to 30.6.2016 |
1.1.2015 to 30.6.2015 |
|---|---|---|
| Payments for insurance claims | –1 107 839 | –1 100 674 |
| Gross amount | –1 117 734 | –1 156 718 |
| Thereof to: reinsurers' portion | 9 895 | 56 044 |
| Change in the provision for outstanding insurance claims | 224 | –6 855 |
| Gross amount | –189 | –7 059 |
| Thereof to: reinsurers' portion | 413 | 204 |
| Change in the provision for future policy benefits | –365 805 | –447 820 |
| Gross amount | –365 906 | –476 600 |
| Thereof to: reinsurers' portion | 101 | 28 780 |
| Change in the provision for premium refunds | –101 496 | –167 196 |
| Gross amount | –101 496 | –167 196 |
| Thereof to: reinsurers' portion | — | — |
| Change in other technical provisions | –20 | — |
| Gross amount | –20 | — |
| Thereof to: reinsurers' portion | — | — |
| Insurance benefits (net) | –1 574 936 | –1 722 545 |
| Gross amount, total | –1 585 345 | –1 807 573 |
| Thereof to (total): reinsurers' portion | 10 409 | 85 028 |
| in € thousands | 1.1.2016 to 30.6.2016 |
1.1.2015 to 30.6.2015 |
|---|---|---|
| Payments for insurance claims | –409 514 | –416 716 |
| Gross amount | –434 320 | –441 476 |
| Thereof to: reinsurers' portion | 24 806 | 24 760 |
| Change in the provision for outstanding insurance claims | –13 252 | –16 658 |
| Gross amount | –6 565 | –3 370 |
| Thereof to: reinsurers' portion | –6 687 | –13 288 |
| Change in the provision for premium refunds | –131 | –123 |
| Gross amount | –131 | –123 |
| Thereof to: reinsurers' portion | — | — |
| Change in other technical provisions | –231 | 1 |
| Gross amount | –231 | 1 |
| Thereof to: reinsurers' portion | — | — |
| Insurance benefits (net) | –423 128 | –433 496 |
| Gross amount, total | –441 247 | –444 968 |
| Thereof to (total): reinsurers' portion | 18 119 | 11 472 |
| in € thousands | 1.1.2016 to 30.6.2016 |
1.1.2015 to 30.6.2015 |
|---|---|---|
| Current income taxes paid for the reporting period | –38 503 | –49 482 |
| Current taxes paid for other periods | 888 | 4 463 |
| Deferred taxes | –21 999 | 5 083 |
| Income taxes | –59 614 | –39 936 |
Basic earnings per share are determined by dividing the consolidated net profit by the weighted average number of shares:
| 1.1.2016 to 30.6.2016 |
1.1.2015 to 30.6.2015 |
||
|---|---|---|---|
| Result attributable to shareholders of W&W AG | in € | 120 083 962 | 142 024 483 |
| Number of shares at the beginning of the financial year | # | 93 749 720 | 93 749 720 |
| Issuance of new shares/conversion of options | # | –272 780 | — |
| Weighted average number of shares | # | 93 507 767 | 93 749 720 |
| Basic (= diluted) earnings per share | in € | 1.28 | 1.51 |
There currently are no potential shares that would have a diluting effect. Diluted earnings per share thus correspond to basic earnings per share.
On 9 June 2016, the Annual General Meeting of W&W AG resolved to distribute the dividend from the unappropriated surplus for the 2015 financial year as calculated in accordance with the HGB, which amounted to €61.5 million (previous year: €56.9 million), in the amount of €0.60 (previous year: €0.50) per share in cash.
Dividends totalling €56,086,164.00 were distributed on 10 June 2016.
(23) Disclosures concerning the measurement of fair value This sentence will receive additional changes reporting date.
There were no reclassifications between Level 1 and Level 2 during the reporting year or the previous year.
| Level 1 | Level 2 | Level 3 | Fair value/ carrying amount |
|
|---|---|---|---|---|
| in € thousands | 30.6.2016 | 30.6.2016 | 30.6.2016 | 30.6.2016 |
| Financial assets at fair value through profit or loss | 18 672 | 3 310 046 | 3 917 | 3 332 635 |
| Designated as financial assets at fair value through profit or loss |
— | 2 300 222 | 1 914 | 2 302 136 |
| Equity instruments | — | 44 580 | — | 44 580 |
| Fund units | — | 44 580 | — | 44 580 |
| Senior fixed-income securities | — | 243 802 | — | 243 802 |
| Other companies | — | 27 348 | — | 27 348 |
| Public authorities | — | 216 454 | — | 216 454 |
| Structured products | — | 569 920 | — | 569 920 |
| Interest-rate-based structured products | — | 196 299 | — | 196 299 |
| Equity- and index-based structured products | — | 373 621 | — | 373 621 |
| Investments for the account and risk of holders of life insurance policies |
— | 1 441 920 | 1 914 | 1 443 834 |
| Financial assets held for trading | 18 672 | 1 009 824 | 2 003 | 1 030 499 |
| Equity instruments | — | 10 939 | 2 003 | 12 942 |
| Fund units | — | 10 939 | 2 003 | 12 942 |
| Derivative financial instruments | 18 672 | 998 885 | — | 1 017 557 |
| Interest-rate-based derivatives | 494 | 976 472 | — | 976 966 |
| Currency-based derivatives | — | 20 101 | — | 20 101 |
| Equity- and index-based derivatives | 18 178 | 2 312 | — | 20 490 |
| Financial assets available for sale | 610 738 | 23 578 335 | 1 310 630 | 25 499 703 |
| Equity instruments | 610 738 | 1 501 600 | 1 283 273 | 3 395 611 |
| Investments, excluding alternative investments | — | — | 261 027 | 261 027 |
| Credit institutions | — | — | 20 850 | 20 850 |
| Other financial companies | — | — | 5 201 | 5 201 |
| Other companies | — | — | 234 976 | 234 976 |
| Level 1 | Level 2 | Level 3 | Fair value/ carrying amount |
|
|---|---|---|---|---|
| in € thousands | 30.6.2016 | 30.6.2016 | 30.6.2016 | 30.6.2016 |
| Alternative investments, including private equity | — | — | 969 120 | 969 120 |
| Other financial companies | — | — | 937 829 | 937 829 |
| Other companies | — | — | 31 291 | 31 291 |
| Equities | 610 738 | — | 35 011 | 645 749 |
| Credit institutions | 55 911 | — | 27 357 | 83 268 |
| Other financial companies | 51 566 | — | 7 654 | 59 220 |
| Other companies | 503 261 | — | — | 503 261 |
| Fund units | — | 1 501 600 | 18 115 | 1 519 715 |
| Subordinated securities and receivables | — | 1 202 318 | 27 357 | 1 229 675 |
| Credit institutions | — | 500 855 | — | 500 855 |
| Other financial companies | — | 363 547 | 27 357 | 390 904 |
| Other companies | — | 337 916 | — | 337 916 |
| Senior fixed-income securities | — | 20 874 417 | — | 20 874 417 |
| Credit institutions | — | 7 419 111 | — | 7 419 111 |
| Other financial companies | — | 1 644 144 | — | 1 644 144 |
| Other companies | — | 2 250 988 | — | 2 250 988 |
| Public authorities | — | 9 560 174 | — | 9 560 174 |
| Positive market values from hedges | — | 37 406 | — | 37 406 |
| Total assets | 629 410 | 26 925 787 | 1 314 547 | 28 869 744 |
| Financial liabilities at fair value through profit or loss | 8 671 | 977 685 | — | 986 356 |
| Financial liabilities held for trading | 8 671 | 977 685 | — | 986 356 |
| Derivative financial instruments | 8 671 | 977 685 | — | 986 356 |
| Interest-rate-based derivatives | 632 | 919 090 | — | 919 722 |
| Currency-based derivatives | — | 57 814 | — | 57 814 |
| Equity- and index-based derivatives | 7 862 | 781 | — | 8 643 |
| Other derivatives | 177 | — | — | 177 |
| Negative market values from hedges | — | 530 338 | — | 530 338 |
| Total liabilities | 8 671 | 1 508 023 | — | 1 516 694 |
| Level 1 | Level 2 | Level 3 | Fair value/ carrying amount |
|
|---|---|---|---|---|
| in € thousands | 31.12.2015 | 31.12.2015 | 31.12.2015 | 31.12.2015 |
| Financial assets at fair value through profit or loss | 21 001 | 3 222 270 | — | 3 243 271 |
| Designated as financial assets at fair value through profit or loss |
— | 2 403 586 | — | 2 403 586 |
| Equity instruments | — | 50 191 | — | 50 191 |
| Fund units | — | 50 191 | — | 50 191 |
| Senior fixed-income securities | — | 234 938 | — | 234 938 |
| Other companies | — | 25 512 | — | 25 512 |
| Public authorities | — | 209 426 | — | 209 426 |
| Structured products | — | 607 660 | — | 607 660 |
| Interest-rate-based structured products | — | 189 687 | — | 189 687 |
| Equity- and index-based structured products | — | 417 973 | — | 417 973 |
| Investments for the account and risk of holders of life insurance policies |
— | 1 510 797 | — | 1 510 797 |
| Financial assets held for trading | 21 001 | 818 684 | — | 839 685 |
| Equity instruments | — | 9 796 | — | 9 796 |
| Fund units | — | 9 796 | — | 9 796 |
| Derivative financial instruments | 21 001 | 808 888 | — | 829 889 |
| Interest-rate-based derivatives | 574 | 752 379 | — | 752 953 |
| Currency-based derivatives | — | 50 526 | — | 50 526 |
| Equity- and index-based derivatives | 20 427 | 5 983 | — | 26 410 |
| Financial assets available for sale | 759 676 | 22 226 459 | 1 273 536 | 24 259 671 |
| Equity instruments | 759 676 | 1 388 104 | 1 246 179 | 3 393 959 |
| Investments, excluding alternative investments | — | — | 264 495 | 264 495 |
| Credit institutions | — | — | 20 918 | 20 918 |
| Other financial companies | — | — | 4 164 | 4 164 |
| Other companies | — | — | 239 413 | 239 413 |
| Level 1 | Level 2 | Level 3 | Fair value/ carrying amount |
|
|---|---|---|---|---|
| in € thousands | 31.12.2015 | 31.12.2015 | 31.12.2015 | 31.12.2015 |
| Alternative investments, including private equity | — | — | 932 382 | 932 382 |
| Other financial companies | — | — | 901 091 | 901 091 |
| Other companies | — | — | 31 291 | 31 291 |
| Equities | 759 676 | — | 35 743 | 795 419 |
| Credit institutions | 69 584 | — | 27 357 | 96 941 |
| Other financial companies | 95 290 | — | 8 386 | 103 676 |
| Other companies | 594 802 | — | — | 594 802 |
| Fund units | — | 1 388 104 | 13 559 | 1 401 663 |
| Subordinated securities and receivables | — | 1 206 235 | 27 357 | 1 233 592 |
| Credit institutions | — | 495 575 | — | 495 575 |
| Other financial companies | — | 377 100 | 27 357 | 404 457 |
| Other companies | — | 333 560 | — | 333 560 |
| Senior fixed-income securities | — | 19 632 120 | — | 19 632 120 |
| Credit institutions | — | 7 608 469 | — | 7 608 469 |
| Other financial companies | — | 1 365 905 | — | 1 365 905 |
| Other companies | — | 1 969 418 | — | 1 969 418 |
| Public authorities | — | 8 688 328 | — | 8 688 328 |
| Positive market values from hedges | — | 57 972 | — | 57 972 |
| Total assets | 780 677 | 25 506 701 | 1 273 536 | 27 560 914 |
| Financial liabilities at fair value through profit or loss | 4 262 | 748 149 | — | 752 411 |
| Designated as financial liabilities at fair value through profit or loss |
— | — | — | — |
| Financial liabilities held for trading | 4 262 | 748 149 | — | 752 411 |
| Derivative financial instruments | 4 262 | 748 149 | — | 752 411 |
| Interest-rate-based derivatives | 233 | 719 858 | — | 720 091 |
| Currency-based derivatives | — | 24 505 | — | 24 505 |
| Equity- and index-based derivatives | 3 635 | 3 705 | — | 7 340 |
| Loan-based derivatives | — | 81 | — | 81 |
| Other derivatives | 394 | — | — | 394 |
| Negative market values from hedges | — | 544 643 | — | 544 643 |
| Total liabilities | 4 262 | 1 282 792 | — | 1 297 054 |
The following depicts the changes in the fair value of financial instruments classified in Level 3 for both the reporting period and the comparable period in the previous year.
| Changes in Level 3 | ||||||
|---|---|---|---|---|---|---|
| Financial assets at fair value through profit or loss |
Financial assets |
|||||
| Capital invest ments for the account and risk of holders of life insu rance policies |
Equity instruments |
|||||
| Fund units | Investments, excluding alternative investments | |||||
| Credit institutions |
Other financial companies |
Other companies |
||||
| in € thousands | ||||||
| As at 1 January 2015 | — | — | 22 422 | 4 979 | 233 265 | |
| Total comprehensive income for the period | — | — | 41 | 25 | –1 526 | |
| Income and expenses recognised in the consolidated income statement |
— | — | — | — | –161 | |
| Unrealised gains/losses (–) from financial assets available for sale (gross) |
— | — | 41 | 25 | –1 365 | |
| Purchases | — | — | — | — | 22 | |
| Sales | — | — | — | –842 | –4 284 | |
| Transfers to Level 3 | — | — | — | — | 3 235 | |
| As at 30 June 2015 | — | — | 22 463 | 4 162 | 230 712 | |
| Income statement as at 30 June1 | — | — | — | — | –151 | |
| As at 1 January 2016 | — | — | 20 918 | 4 164 | 239 413 | |
| Total comprehensive income for the period | –108 | –192 | –68 | 65 | –1 063 | |
| Income and expenses recognised in the consolidated income statement |
–108 | –192 | — | — | –387 | |
| Unrealised gains/losses (–) from financial assets available for sale (gross) |
— | — | –68 | 65 | –676 | |
| Purchases | — | — | — | — | 2 | |
| Sales | — | — | — | — | –3 376 | |
| Transfers to Level 3 | 2 022 | 2 195 | — | 845 | — | |
| Changes in the scope of consolidation | — | — | — | 127 | — | |
| As at 30 June 2016 | 1 914 | 2 003 | 20 850 | 5 201 | 234 976 | |
| Income statement as at 30 June1 | –108 | –192 | — | — | –387 |
1 Net income includes period income and expenses for assets still in the portfolio at the end of the reporting period.
Financial assets available for sale Total
937 829 31 291 27 357 7 654 18 115 27 357 1 314 547 –7 027 — — — –1 242 — –8 956
51
Realised gains and losses in the individual classes of financial instruments are shown in the net income from financial assets available for sale.
The transfer to Level 3 results from the use of non-observable measurement parameters due to the lack of directly or indirectly observable market data in comparison to the previous reporting period.
Nearly all of the securities in Level 3 consist of unquoted interests in investments that are not fully consolidated or not accounted for using the equity method, alternative investments or private equity funds in the direct portfolio. Their fair values are normally determined by each company's management, primarily on the basis of net asset value, in the amount of €927.8 million (previous year: €728.0 million). Of this, €23.4 million (previous year: €24.9 million) was attributable to "Investments, excluding alternative investments", and €904.3 million (previous year: €703.1 million) to "Alternative investments, including private equity". They were determined on the basis of specific information that is not publicly available, to which the W&W Group does not have access. Thus, it was not possible to subject them to a sensitivity analysis.
In the W&W Group, net asset values (2015: €166.2 million; previous year: €168.9 million) are measured for Group property investments that are assigned to "Investments, excluding alternative investments". These are based on discount rates that essentially determine the property's fair value. A change in discount rates by +100 basis points in connection with a sensitivity analysis leads to a reduction in fair value to €147.7 million (previous year: €157.7 million), while a change in discount rates by –100 basis points leads to an increase to €170.8 million (previous year: €181.1 million).
All changes in fair value are reflected in "Other comprehensive income".
The most significant measurement parameter for interests measured using the capitalised earnings method (2016: €58.5 million; previous year: €62.3 million) is the risk-adjusted discount rate. A material increase in the discount rate reduces fair value, whereas a decline increases fair value. However, a change by 10% has only a minor influence on the presentation of the net assets, financial position and financial performance of the W&W Group.
In addition, for certain interests, fair value is either deemed to be approximated by the amount of invested capital or is determined by outside appraisers. In this case as well, a sensitivity analysis is not possible due to lack of the specific parameters used.
The measurement methods used are listed in the following table "Quantitative information about the measurement of fair value in Level 3".
| Fair value | Measurement method |
Non-obser vable input factors |
Range, in % | |||
|---|---|---|---|---|---|---|
| in € thousands | 30.6.2016 | 31.12.2015 | 30.6.2016 | 31.12.2015 | ||
| Financial assets at fair value through profit or loss |
3 917 | — | ||||
| Designated as financial assets at fair value through profit or loss |
1 914 | |||||
| Investments for the account and risk of holders of life insurance policies |
1 914 | — | Net asset value | n/a | n/a | n/a |
| Assets held for trading | 2 003 | |||||
| Equity instruments | 2 003 | — | ||||
| Fund units | 2 003 | — | Net asset value | n/a | n/a | n/a |
| Financial assets available for sale | 1 310 630 | 1 273 536 | ||||
| Equity instruments | 1 283 273 | 1 246 179 | ||||
| Investments, excluding alternative investments |
261 027 | 264 495 | ||||
| 27 567 | 27 635 | Capitalised earnings method |
Discount rate | 6.23-10.37 | 6.23-10.37 | |
| 59 629 | 60 437 | Approximation method |
n/a | n/a | n/a | |
| 173 831 | 176 423 | Net asset value | Discount rate | 5.77-7.19 | 5.77-7.19 | |
| Alternative investments, including private equity |
969 120 | 932 382 | ||||
| 30 940 | 30 940 | Capitalised earnings method |
Discount rate | 4.94 | 4.94 | |
| 33 888 | 20 784 | Approximation method |
n/a | n/a | n/a | |
| 904 292 | 880 658 | Net asset value | n/a | n/a | n/a | |
| Equities | 35 011 | 35 743 | ||||
| 27 357 | 27 357 | Approximation method |
n/a | n/a | n/a | |
| 7 654 | 8 386 | Net asset value | n/a | n/a | n/a | |
| Fund units | 18 115 | 13 559 | ||||
| 13 787 | 13 114 | Approximation method |
n/a | n/a | n/a | |
| 4 328 | 445 | Net asset value | n/a | n/a | n/a | |
| Subordinated securities and receivables |
27 357 | 27 357 | ||||
| 27 357 | 27 357 | Approximation method |
n/a | n/a | n/a |
| in € thousands | 30.6.2016 | 31.12.2015 |
|---|---|---|
| Contingent liabilities | 737 648 | 652 276 |
| from deposit protection funds | 295 245 | 295 160 |
| from sureties and warranties | 325 | 329 |
| from capital contribution calls not yet made | 440 396 | 356 157 |
| Other contingent liabilities | 1 682 | 630 |
| Other obligations | 999 130 | 954 782 |
| Irrevocable loan commitments | 979 311 | 933 271 |
| Financial guarantees | 19 819 | 21 511 |
| TOTAL | 1 736 778 | 1 607 058 |
The nominal value of irrevocable loan commitments corresponds to the potential remaining obligations under loans and credit lines that have been granted but not yet drawn down or fully drawn down. It constitutes a reasonable approximation of fair value.
The parent company of Wüstenrot & Württembergische AG is Wüstenrot Holding AG, Ludwigsburg, Germany, which is wholly owned by the non-profit Wüstenrot Stiftung Gemeinschaft der Freunde Deutscher Eigenheimverein e.V., Ludwigsburg, Germany.
Natural persons considered to be related parties pursuant to IAS 24 are members of the key management personnel (the Management Board and Supervisory Board of W&W AG), the members of the Executive Board and Supervisory Board of the parent company, and their close family members.
Transactions with related persons of W&W AG were carried out in connection with the normal business activity of Group companies. This mainly had to do with business relationships in the areas of home loan and savings business, banking business, and life, health and property insurance.
All transactions were at arm's length and/or took place at preferential terms customary in the industry.
As at 30 June 2016, receivables from related persons amounted to €370.4 thousand (previous year: €357.6 thousand), and liabilities to related persons amounted to €2,678.2 thousand (previous year: €2,366.7 thousand). In the first half-year of 2016 interest income from related persons that resulted from granted loans amounted to €5.7 thousand (previous year: €1.1 thousand), and interest expenses for savings deposits from related persons amounted to €1.0 thousand (previous year: €1.7 thousand). In the first half-year of 2016, premiums in the amount of €20.3 thousand (previous year: €36.6 thousand) were paid by related persons for insurance policies in the areas of life, health and property insurance.
Wüstenrot Holding AG as parent company and W&W AG are parties to a brand name transfer and use agreement. As at 30 June 2016, a financial liability was owed to Wüstenrot Holding AG under this agreement in the amount of €20.6 million (previous year: €22.2 million). W&W AG makes fixed annual amortisation payments (principal and interest) to Wüstenrot Holding AG in the amount of €2.5 million, plus value-added tax.
Beyond this, business relations between the W&W Group and Wüstenrot Holding AG are essentially limited to making use of the banking services of Wüstenrot Bank AG Pfandbriefbank and services in the areas of IT and other services.
The transactions were at arm's length.
The W&W Group is a party to various services agreements with unconsolidated W&W AG subsidiaries and other related W&W AG companies. In addition, unconsolidated W&W AG subsidiaries and other related W&W AG companies made use of banking services. In 2015 W&W AG purchased a bond of V-Bank AG for the price of €6.5 million. It received interest income from the bond in the amount €259 thousand. Pensionskasse der Württembergischen VVaG is recognised under "Other related companies" as the post-employment benefit plan for the benefit of employees.
The transactions were at arm's length.
| in € thousands | 30.6.2016 | 31.12.2015 |
|---|---|---|
| Unconsolidated subsidiaries | 188 | 188 |
| Associated companies and joint ventures | 5 103 | — |
| Other related companies | 24 294 | 24 953 |
| Loans and advances to customers | 29 585 | 25 141 |
| Wüstenrot Holding AG | 32 | 52 |
| Unconsolidated subsidiaries | 58 953 | 50 970 |
| Associated companies and joint ventures | 1 | — |
| Other related companies | 1 545 | 34 |
| Other loans and receivables | 60 531 | 51 056 |
| Receivables from related companies | 90 116 | 76 197 |
| Associated companies and joint ventures | 33 | 63 |
| Liabilities to credit institutions | 33 | 63 |
| Wüstenrot Holding AG | 5 359 | 4 426 |
| Affiliated undertakings | 2 | — |
| Unconsolidated subsidiaries | 34 983 | 35 106 |
| Other related companies | 13 408 | 14 476 |
| Liabilities to customers | 53 752 | 54 008 |
| Wüstenrot Holding AG | 20 569 | 22 204 |
| Affiliated undertakings | — | 3 |
| Unconsolidated subsidiaries | 40 273 | 32 312 |
| Associated companies and joint ventures | 26 505 | — |
| Other related companies | 143 | 28 875 |
| Miscellaneous liabilities | 87 490 | 83 394 |
| Liabilities to related companies | 141 275 | 137 465 |
As at the reporting date, the open balances from transactions with related companies were as follows:
| in € thousands | 1.1.2016 to 30.6.2016 |
1.1.2015 to 30.6.2015 |
|---|---|---|
| Wüstenrot Holding AG | 60 | 120 |
| Unconsolidated subsidiaries | 16 100 | 16 199 |
| Associated companies and joint ventures | 264 | — |
| Other related companies | 1 028 | 886 |
| Income from transactions with related companies | 17 452 | 17 205 |
| Wüstenrot Holding AG | –685 | –1 463 |
| Unconsolidated subsidiaries | –17 391 | –17 755 |
| Associated companies and joint ventures | –195 | — |
| Other related companies | –14 895 | –6 546 |
| Expenses from transactions with related companies | –33 166 | –25 764 |
In terms of full-time equivalents, the number of employees of the W&W Group as at 30 June 2016 was 7,101 (previous year: 7,331). As at the reporting date, the number of employees was 8,528 (previous year: 8,763).
The average headcount in the last 12 months was 8,696 (previous year: 8,935). This average is calculated as the arithmetic mean of the end-of-quarter headcounts as at the reporting date between 30 September 2015 and 30 June 2016 and during the corresponding prior-year period and is distributed over the individual segments as follows:
| 30.6.2016 | 31.12.2015 | |
|---|---|---|
| Home Loan and Savings Bank | 2 445 | 2 533 |
| Life and Health Insurance | 1 006 | 965 |
| Property/Casualty Insurance | 3 746 | 3 813 |
| All other segments | 1 499 | 1 624 |
| Total | 8 696 | 8 935 |
It was decided after the reporting date to make a partial sale of a credit institution in "All other segments", which is accounted for using the equity method. The sale was made for strategic reasons and is expected to close during the 2016 financial year.
In addition it has been decided after the reporting date to sale a real estate property used by third parties. This sale is designed to further improve the asset portfolio of the W&W Group and the sale shall be finally closed by the end of 2016.
To the best of our knowledge, and in accordance with the applicable accounting principles for interim reporting, the condensed consolidated interim financial statements present a true and accurate view of the Group's net assets, financial position and financial performance, and the interim group management report provides a true and accurate presentation of the development and performance of the business and the position of the Group, together with a description of the principal opportunities and risks associated with the expected development of the Group in the financial year remaining.
Stuttgart, 8 August 2016
Dr. Alexander Erdland
Dr. Michael Gutjahr
Jürgen A. Junker
Jens Wieland
To Wüstenrot & Württembergische AG, Stuttgart
We have reviewed the condensed consolidated interim financial statements – consisting of the consolidated balance sheet, consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity, condensed consolidated cash flow statement, and select notes – and the interim group management report of Wüstenrot & Württembergische AG, Stuttgart, for the period from 1 January to 30 June 2016, which form part of the half-year financial report pursuant to Section 37w German Securities Trading Act (WpHG). The preparation of the condensed consolidated interim financial statements in accordance with IFRS applicable to interim reporting, as adopted by the EU, and of the interim group management report in accordance with the provisions of the WpHG applicable to interim group management reports is the responsibility of the company's management. Our responsibility is to issue a review report on the condensed consolidated interim financial statements and on the interim group management report based on our review.
We conducted our review of the condensed consolidated interim financial statements and the interim group management report in accordance with generally accepted German standards for the review of financial statements promulgated by the Institute of Public Auditors in Germany (IDW). Those standards require that we plan and perform the review in such a way that we can preclude through critical evaluation, with moderate assurance, that the condensed consolidated interim financial statements were not prepared in all material respects in accordance with the IFRSs applicable to interim reporting, as adopted by the EU, and that the interim group management report was not prepared in all material respects in accordance with the provisions of the WpHG applicable to interim group management reports. A review is limited primarily to the questioning of company employees and analytical procedures and therefore does not provide the assurance attainable through an audit of financial statements. Since, in accordance with our engagement, we have not performed an audit of financial statements, we cannot express an audit opinion.
Based on our review, no matters have come to our attention that cause us to presume that the condensed consolidated interim financial statements were not prepared in all material respects in accordance with the IFRSs applicable to interim reporting, as adopted by the EU, or that the interim group management report was not prepared in all material respects in accordance with the provisions of the WpHG applicable to interim group management reports.
Stuttgart, 12 August 2016
KPMG AG Wirtschaftsprüfungsgesellschaft
Dr Frank Ellenbürger Dr Christof Hasenburg Wirtschaftsprüfer Wirtschaftsprüfer
(German public auditor) (German public auditor)
Wüstenrot & Württembergische AG 70163 Stuttgart Germany phone + 49 711 662-0 www.ww-ag.com
Production W&W Service GmbH, Stuttgart
E-mail: [email protected] Investor relations hotline: + 49 711 662-725252
The financial reports of the W&W Group are available at www.ww-ag.com/publikationen. In case of any divergences, the German original is legally binding.
W&W AG is member of W&W AG is listed in
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