23 Investments

Investments for general account comprise financial assets, excluding derivatives, as well as investments in real estate.

Note

2018

2017

Available-for-sale (AFS)

84,675

88,170

Loans

42,653

39,368

Financial assets at fair value through profit or loss (FVTPL)

8,597

7,119

Total financial assets, excluding derivatives

23.1

135,925

134,658

Investments in real estate

23.2

2,700

2,147

Total investments for general account

138,625

136,804

23.1 Financial assets, excluding derivatives


	AFS		FVTPL		Loans		Total		Fair value
2018
Shares		478		1,682		-		2,161		2,161
Debt securities		77,340		3,913		-		81,253		81,253
Money market and other short-term investments		5,955		352		-		6,307		6,307
Mortgage loans		-		-		36,240		36,240		39,758
Private loans		-		-		4,103		4,103		4,494
Deposits with financial institutions		-		-		141		141		141
Policy loans		-		-		1,973		1,973		1,973
Other		902		2,649		196		3,747		3,747
At December 31, 2018		84,675		8,597		42,653		135,925		139,834

2017
Shares		490		1,062		-		1,551		1,551
Debt securities		80,200		4,144		-		84,344		84,344
Money market and other short-term investments		6,690		119		-		6,809		6,809
Mortgage loans		-		-		33,562		33,562		38,076
Private loans		-		-		3,642		3,642		4,181
Deposits with financial institutions		-		-		139		139		139
Policy loans		-		-		1,897		1,897		1,897
Other		791		1,795		127		2,713		2,713
At December 31, 2017		88,170		7,119		39,368		134,658		139,711

Of the debt securities, money market and other short-term investments, mortgage loans and private loans EUR 13,287 million is current (2017: EUR 13,749 million).

Refer to note 47 Fair value for further detail on fair value measurement.

Loan allowance

Movement on the loan allowance account during the year were as follows:


	2018			2017
At January 1		(165	)		(137	)
Addition charged to income statement		(35	)		(50	)
Reversal to income statement		3			13
Amounts written off		40			10
Net exchange differences		(1	)		3
Other		20			(4	)
At December 31		(138	)		(165	)

23.2 Investments in real estate


	2018			2017
At January 1		2,147			1,999
Additions		472			239
Subsequent expenditure capitalized		3			10
Transfers from other headings		-			1
Disposals		(209	)		(202	)
Fair value gains/(losses)		261			193
Net exchange differences		27			(89	)
Other		(1	)		(4	)
At December 31		2,700			2,147

99% of the value of Aegon’s properties, both for general account and for account of policyholders, were appraised (2017: 95%), of which 98% was performed by independent external appraisers (2017: 99%).

Of the investments in real estate EUR 530 million (2017: EUR 633 million) is held by Aegon Americas and EUR 2,150 million (2017: EUR 1,494 million) is held by Aegon the Netherlands.

Aegon Americas has invested in a commercial property portfolio, consisting of office, retail and industrial buildings. These non-cancellable leases have remaining lease terms up to 20 years. Most leases include a clause to enable upward revision of the rental charge on an annual basis according to either a fixed schedule or prevailing market conditions.

Aegon the Netherlands has invested in long-term residential property leases that can be terminated subject to a short-term notice. Under Dutch law, the maximum annual rent increase on residential property rented in the affordable housing segment is specified by the Dutch national government and equals the annual inflation rate plus a small margin.

Refer to note 48 Commitments and contingencies for a description of non-cancellable lease rights.

Rental income of EUR 82 million (2017: EUR 71 million; 2016: EUR 69 million) is reported as part of investment income in the income statement. Direct operating expenses (including repairs and maintenance) arising from investment property that generated rental income during the period amounted to EUR 63 million (2017: EUR 71 million; 2016: EUR 79 million). In 2018, EUR 2 million of direct operating expenses is related to investment properties that did not generate rental income during the period (2017: EUR 1 million; 2016: 1 million).

Transfers from other headings in 2017 mainly reflect the properties that were foreclosed during the year. The associated mortgage loans were previously reported as part of investments.

There are no restrictions on the realizability of investment property or the remittance of income and proceeds of disposal.

Refer to note 48 Commitments and contingencies for a summary of contractual obligations to purchase investment property.