2.1. Investment property

Land and buildings, including buildings on third-party land, which are held as long-term investments to earn rentals or for capital appreciation or both and which do not constitute underlying items in life and health insurance are measured using the cost model. These investment properties are amortised on a straight-line basis over a useful life of 15 to 80 years and are recognised under the item “Net investment income”.

In accordance with IAS 40.32A, those properties that represent underlying items in life and health insurance with participation are measured at fair value.

The fair value is determined by means of expert’s opinions. These expert’s opinions are prepared on the basis of earnings-oriented valuation techniques. It requires making assumptions about the future, principally concerning the capitalisation and discount rate, the expected utilisation (vacancy rate), the development of future rental charges and the condition of the land and buildings. Property value, location, usable area and usage category for the property are also taken into account.

For this reason, all measurements of the fair value for the land and buildings come under Level 3 of the hierarchy in accordance with IFRS 13. The valuation techniques respond to the underlying assumptions and parameters.

For instance, any reduction in the discount rate applied would result in an increase in the values ascertained for the land and buildings if the other assumptions and parameters remained unchanged.

Conversely, any reduction in the expected utilisation or the expected rental charges would, for instance, result in a decrease in the values ascertained for the land and buildings if the other assumptions and parameters remained unchanged. Measurement-relevant parameters are continuously updated. The assumptions relating to the reporting date are determined on the basis of the expert’s best estimate, taking current market conditions into account.

The rental income generated from investment property in the financial year totalled €145,214 thousand (2024: €139,404 thousand).

For land and buildings used by third parties and recognised at fair value, the following sensitivities result from the calculations in the partial internal model, which are coordinated with Solvency II: