Business Performance of the Volksbanken Raiffeisenbanken Cooperative Financial Network
Economic conditions
The lengthy phase of weakness affecting the German economy continued in 2025. The performance of the economy as a whole did stabilize slightly, albeit at a low level. Inflation-adjusted gross domestic product (GDP) stagnated with year-on-year growth of 0.2 percent, following falls of 0.9 percent in 2023 and 0.5 percent in 2024. Price levels normalized too. Whereas consumer prices had soared by 5.9 percent in 2023, they went up by 2.2 percent on average in 2025, which was the same rate as in 2024./p>
Economic sentiment brightened at the start of the year, mainly thanks to the expected increase in spending on defense, infrastructure, and climate change mitigation by the newly elected German government. Once again, however, a sustained economic recovery failed to materialize over the course of the year. This was because economic growth was held back by the high level of economic uncertainty at global level – due to erratic US tariff policy and other factors – and persistent structural problems on the domestic front, such as bureaucratic hurdles and the general loss of international competitiveness.
Consumer spending played the biggest part in stabilizing the economy. Adjusted for inflation, public-sector and household consumer spending increased at a faster rate than in 2024 overall, primarily due to a further increase in spending on healthcare and social care. By contrast, the investment climate remained muted. Structural weaknesses in the business environment and the huge level of uncertainty surrounding geopolitics and economic policy meant that, once again, inflation-adjusted spending on capital equipment was at a low level. Inflation-adjusted investment in construction continued to decline, mainly because of the ongoing weakness of the housebuilding sector. The trade balance acted as a greater brake on overall economic growth than in the previous year. The headwinds generated by US trade policy, the euro’s appreciation against the US dollar, and stronger competition from Chinese products caused Germany’s exports to fall once again on an inflation-adjusted basis, whereas imports climbed sharply on the back of robust consumer spending and government investment in defense.
In the labor market, the number of people in work had been rising for years, but this trend ended in the reporting year. The average number of people in employment in Germany held steady at just under 46.0 million in 2025, having increased almost continuously since the mid-2000s. This stagnation was attributable to the subdued macroeconomic environment and advancing demographic change. Unemployment edged up from around 2.8 million people in 2024 to roughly 2.9 million in 2025. The unemployment rate rose from 6.0 percent to 6.3 percent.
The European Central Bank (ECB) continued to loosen its monetary policy in 2025. At its meeting in February, it lowered the deposit facility interest rate by 25 basis points to 2.75 percent, followed by further reductions at the meetings in March, April, and June 2025. All in all, the deposit facility rate was lowered by a total of 100 basis points. Consequently, the deposit facility rate stood at 2.0 percent at the end of the year, the interest rate for main refinancing operations at 2.15 percent, and the marginal lending facility interest rate at 2.40 percent. At its meeting in December, the ECB Governing Council stated that it expected inflation to settle at the level of the medium-term inflation target of 2.0 percent. It also emphasized that it would follow a data-dependent and meeting-by-meeting approach and was not pre-committing to a particular rate path.
Alongside the cuts to interest rates, the ECB also continued with its plan to normalize the eurosystem’s balance sheet by gradually scaling back bond positions held under the asset purchase program (APP) and the pandemic emergency purchase program (PEPP). Holdings in the APP portfolio diminished steadily as the principal payments from maturing bonds were no longer reinvested. The PEPP portfolio volume also shrank over the course of the year.
Business situation
Against a backdrop of challenging market conditions fueled by geopolitical crises, the Cooperative Financial Network posted profit before taxes of €11,566 million (2024: €11,333 million).
The institutions in the Cooperative Financial Network increased their loans and advances to customers to €1,081,170 million in the year under review (2024: €1,050,269 million).
The total volume of deposits held by the Cooperative Financial Network grew slightly over the course of 2025. Customer deposits totaled €1,089,334 million (December 31, 2024: €1,061,003 million). These deposits played a crucial part in funding the Cooperative Financial Network’s lending business.
Equity amounted to €158,521 million at the end of the reporting year (December 31, 2024: €150,612 million).
The Cooperative Financial Network had a rating of A+ (2024: A+) from credit rating agency Standard & Poor’s, while the rating from Fitch Ratings was AA– (2024: AA–). In 2025, the number of members of the Cooperative Financial Network fell slightly year on year. As at the end of the financial year, the cooperative banks had 17.5 million members (individuals and companies) in total, compared with 17.6 million at the end of 2024.
Financial performance
Net interest income amounted to €24,513 million in the year under review (2024: €24,316 million; forecast for 2025: on a par with 2024). Within the net figure, interest income declined to €39,665 million (2024: €41,945 million) and interest expense decreased to €17,238 million (2024: €19,691 million). Interest income went down because of the fall in the general level of market interest rates as a result of the ECB’s interest-rate cuts. The reduction in interest expense was partly attributable to the reallocation to low-yielding products on the liabilities side and to lower funding costs caused by the ECB’s interest-rate cuts. The cooperative banks’ net interest income is the biggest source of income for the Cooperative Financial Network.
Net fee and commission income advanced to €9,853 million in the reporting year (2024: €9,481 million; forecast for 2025: modest growth). The main sources of income continued to be payments processing (including card processing) and securities brokerage business. The bulk of net fee and commission income is attributable to the cooperative banks. The volume-related income of the Union Investment Group also makes a sizeable contribution to net fee and commission income.
Gains and losses on trading activities improved substantially to a net gain of €384 million in 2025 (2024: net loss of €643 million). The year-on-year change in gains and losses on trading activities was largely influenced by the DZ BANK Group. The change compared with 2024 was partly attributable to spread-related valuation effects on own issues caused by the fluctuation of market prices.
The net gain under gains and losses on investments came to €142 million (2024: net gain of €930 million; forecast for 2025: significant deterioration). There were reversals of impairment losses on some investments in 2025, but on a much smaller scale than in 2024. Conversely, impairment losses were recognized on longer-dated government bonds in particular owing to the rise in market interest rates.
The additions to loss allowances calculated in the reporting year amounted to a net addition of €4,317 million (2024: net addition of €4,488 million; forecast for 2025: fall, but remaining significantly above prior-year levels). The growing number of corporate and personal insolvencies was attributable to the weakness of the economy and was reflected in the sustained high level of loss allowances for loans and advances.
Other gains and losses on valuation of financial instrumentsdeteriorated year on year, amounting to a net loss of €48 million (2024: net gain of €150 million). This decline was largely due to the deterioration in gains and losses on derivatives used for purposes other than trading, which outweighed the improvement in gains and losses on financial instruments designated as at fair value through profit or loss. Other negative factors included the deterioration in gains and losses on guarantee commitments and own-account investments of the Union Investment Group.
Gains and losses on derivatives used for purposes other than trading came to a net loss of €245 million (2024: net gain of €109 million). Gains and losses on financial instruments designated as at fair value through profit or loss amounted to a net gain of €153 million (2024: net loss of €11 million). The net gain from fair value hedge accounting was €44 million (2024: €52 million).
Net income from insurance business, which is exclusively attributable to the R+V Group, comprises the insurance service result, gains and losses on investments held by insurance companies and other insurance company gains and losses, and insurance finance income or expenses. Net income from insurance business rose substantially to €2,457 million in 2025 (2024: €1,579 million; forecast for 2025: noticeable decrease). The insurance service result amounted to a profit of €3,038 million, up from €1,835 million in 2024. The insurance service result of the individual divisions was influenced by the IFRS 17 measurement methods used by them. The favorable level of claims in the non-life insurance and inward reinsurance divisions had a material impact on the insurance service result. The market conditions described in the section on the Insurance segment meant that gains and losses on investments held by insurance companies and other insurance company gains and losses amounted to a net gain of €2,272 million (2024: net gain of €5,094 million). Insurance finance income or expenses came to a net expense of €2,853 million (2024: net expense of €5,351 million), largely in relation to policyholders’ share of investment returns.
Administrative expenses rose to €22,178 million (2024: €20,815 million; forecast for 2025: noticeable rise). Staff expenses grew to €12,049 million (2024: €11,316 million), mainly due to collectively agreed pay rises, salary increases, and appointments to vacant positions. Other administrative expenses, which comprise general and administrative expenses plus depreciation/amortization and impairment losses, grew to €10,129 million (2024: €9,498 million). This was attributable to general inflation and, in particular, higher expenses for IT and consultancy.
Other net operating income decreased to €760 million (2024: €823 million).
Profit before taxes improved to €11,566 million (2024: €11,333 million; forecast for 2025: lower than in 2024) and was thus higher than had been predicted in 2024.
Income taxes amounted to €4,191 million (2024: €3,489 million), with most of this amount (€3,666 million; 2024: €3,598 million) attributable to current income taxes.
The net profit after taxes stood at €7,375 million in 2025 (2024: €7,843 million). This decline arose because the increase in income tax expense outweighed the rise in profit before taxes.
The Cooperative Financial Network’s cost/income ratio came to 58.3 percent in 2025 (2024: 56.8 percent).
Financial performance
| 2025 € million | 2024 € million | Change (percent) | |
|---|---|---|---|
| Net interest income | 24,513 | 24,316 | 0.8 |
| Net fee and commission income | 9,853 | 9,481 | 3.9 |
| Gains and losses on trading activities | 384 | –643 | > 100.0 |
| Gains and losses on investments | 142 | 9301 | –84.7 |
| Loss allowances | –4,317 | −4,4881 | −3.8 |
| Other gains and losses on valuation of financial instruments | −48 | 150 | >−100.0 |
| Net income from insurance business | 2,457 | 1,579 | 255.6 |
| Administrative expenses | −22,178 | –20,815 | 6.5 |
| Other net operating income | 760 | 8231 | –7.7 |
| Profit before taxes | 11,566 | 11,333 | 2.1 |
| Income taxes | −4,191 | −3,4891 | 10.1 |
| Net profit | 7,375 | 7,843 | −6.0 |
1 Amount restated.
Income statement – breakdown of the change in profit before taxes by line item
€ million
Financial position
The consolidated total assets of the Cooperative Financial Network advanced to €1,676,298 million as at December 31, 2025 (December 31, 2024: €1,637,981 million). Trust activities amounted to a volume of €2,429 million (December 31, 2024: €2,787 million).
On the assets side of the balance sheet, cash and cash equivalents declined to €89,698 million (December 31, 2024: €98,256 million). Loans and advances to banks rose to €66,693 million (December 31, 2024: €58,484 million) and loans and advances to customers to €1,081,170 million (December 31, 2024: €1,050,269 million). This upward trend in the year under review was mainly driven by increased lending by the cooperative banks.
Hedging instruments (positive fair values) amounted to €5,468 million (December 31, 2024: €3,530 million). Financial assets held for trading decreased to €29,680 million at the end of 2025 (December 31, 2024: €29,976 million). Within this figure, derivatives (positive fair values) declined to €13,201 million (December 31, 2024: €16,231 million) and receivables to €824 million (December 31, 2024: €965 million). By contrast, bonds and other fixed-income securities increased to €12,151 million (December 31, 2024: €10,329 million) and shares and other variable-yield securities to €3,182 million (December 31, 2024: €2,112 million).
Investments swelled to €265,427 million as at December 31, 2025 (December 31, 2024: €256,166 million). This included a rise in bonds and other fixed-income securities to €170,417 million (December 31, 2024: €162,888 million) and an increase in shares and other variable-yield securities to €89,364 million (December 31, 2024: €87,480 million).
Investments held by insurance companies went up from €121,404 million as at December 31, 2024 to €124,425 million at the end of 2025. This increase was largely due to the rise in fixed-income securities to €57,150 million (December 31, 2024: €54,936 million), in assets related to unit-linked contracts to €26,758 million (December 31, 2024: €24,859 million), in other loans to €1,021 million (December 31, 2024: €906 million), and in derivatives (positive fair values) to €157 million (December 31, 2024: €60 million). By contrast, promissory notes and loans decreased to €5,508 million (December 31, 2024: €5,937 million), registered bonds to €4,819 million (December 31, 2024: €5,029 million), deposits with ceding insurers and other investments to €23 million (December 31, 2024: €223 million), mortgage loans to €12,498 million (December 31, 2024: €12,685 million), variable-yield securities to €12,138 million (December 31, 2024: €12,257 million), and investment property to €3,538 million (December 31, 2024: €3,655 million).
On the equity and liabilities side of the balance sheet, deposits from banks increased to €139,714 million (December 31, 2024: €138,877 million). Deposits from customers amounted to €1,089,334 million (December 31, 2024: €1,061,003 million). Within this figure, liabilities repayable on demand were a particular area of growth, whereas savings deposits and home savings deposit declined.
Debt certificates issued including bonds fell to €97,999 million (December 31, 2024: €100,778 million). Within this figure, the portfolio of bonds issued came to €73,723 million (December 31, 2024: €78,988 million). The portfolio of other debt certificates issued amounted to €24,276 million (December 31, 2024: €21,789 million).
Financial liabilities held for trading stood at €41,181 million as at December 31, 2025 (December 31, 2024: €38,544 million). This increase was primarily the result of a rise in bonds issued, including share certificates, index-linked certificates, and other debt certificates issued, to €22,841 million (December 31, 2024: €20,961 million) and a rise in short positions to €3,578 million (December 31, 2024: €2,379 million). By contrast, derivatives (negative fair values) declined to €14,559 million (December 31, 2024: €14,997 million).
Insurance contract liabilities increased to €113,616 million (December 31, 2024: €111,340 million), primarily owing to the growth of the liability for remaining coverage to €101,014 million (December 31, 2024: €98,482 million).
Equity rose to €158,521 million as at the end of 2025 (December 31, 2024: €150,612 million). Within this figure, retained earnings increased to €136,432 million (December 31, 2024: €129,573 million), subscribed capital to €18,755 million (December 31, 2024: €18,058 million), and capital reserves to €1,293 million (December 31, 2024: €1,282 million). The reserve from other comprehensive income amounted to minus €490 million (December 31, 2024: minus €594 million).
The cooperative banks accounted for 83.4 percent of equity (December 31, 2024: 84.3 percent), while the other entities in the Cooperative Financial Network accounted for 16.6 percent (December 31, 2024: 15.7 percent). This equity allocation highlights the local entrepreneurial responsibility and the great significance of a decentralized governance model for the cooperative banks in the Cooperative Financial Network.
Capital ratios
The regulatory capital ratios improved over the course of 2025 owing to the retention of profits and a lesser effect from the Capital Requirements Regulation III (CRR III) than had been expected. A fall in the capital ratios had been forecast.
In absolute terms, the Cooperative Financial Network’s consolidated own funds increased by €9,211 million to €148,826 million. This growth was primarily attributable to the retention of profits based on the 2024 financial statements. The rise in the leverage ratio was attributable to the increase of €8,089 million in Tier 1 capital.
As at December 31, 2025, risk-weighted assets amounted to €864,067 million, which was up by €39,654 million year on year (see table on page 53 for details). This increase was predominantly due to the effect of implementing CRR III and to the growth of exposures in the customer lending business. In total, credit risk exposures made up 90.4 percent of risk-weighted assets (December 31, 2024: 91.2 percent).
The disclosures relating to own funds and capital requirements are based on the outcome of the extended aggregated calculation in accordance with article 49 (3) CRR in conjunction with article 113 (7) CRR. Further details can be found in the risk report within this management report.
Regulatory ratios
| (percent) | Dec. 31, 2025 | Dec. 31, 2024 | Change (percentage points) |
|---|---|---|---|
| Common equity Tier 1 capital ratio | 16.4 | 16.2 | 0.2 |
| Tier 1 capital ratio | 16.5 | 16.3 | 0.2 |
| Total capital ratio | 17.2 | 16.9 | 0.3 |
| Leverage ratio | 8.7 | 8.4 | 0.3 |
Operating segments
Retail Customers and SMEs
Net interest income amounted to €21,566 million in the year under review (2024: €20,550 million). Loans and advances to customers at the cooperative banks increased by 3.9 percent (December 31, 2024: 3.0 percent). The cooperative banks’ interest income contracted slightly. The reduction in interest expense at the cooperative banks was partly attributable to the reallocation to low-yielding products on the liabilities side and to lower funding costs caused by the ECB’s interest-rate cuts. Customer deposits at the cooperative banks increased by 3.7 percent (December 31, 2024: 3.9 percent).
Net fee and commission income came to €9,565 million (2024: €9,297 million). In 2025, this line item was again influenced primarily by income from payments processing (including card processing) and from securities brokerage business. A further driver of net fee and commission income in the Retail Customers and SMEs operating segment was the volume-related income contribution generated by the Union Investment Group as a result of the average assets under management. DZ PRIVATBANK’s contributions to income from private banking and the fund services business were up year on year too. As at December 31, 2025, high-net-worth individuals’ assets under management, which comprise the volume of securities, derivatives, and deposits of customers in the private banking business, came to €30.7 billion (December 31, 2024: €26.1 billion). Assets held for funds totaled €181.3 billion (December 31, 2024: €161.8 billion).
Gains and losses on trading activities came to a net gain of €193 million (2024: net gain of €201 million). This line item is derived from gains and losses on trading in financial instruments, gains and losses on trading in foreign exchange, foreign notes and coins, and precious metals business, and gains and losses on commodities trading.
The net loss under gains and losses on investments came to €72 million in 2025 (2024: net gain of €777 million). There were reversals of impairment losses on some investments in 2025, but on a much smaller scale than in 2024. Conversely, impairment losses were recognized on longer-dated government bonds in particular.
Loss allowances amounted to a net addition of €3,438 million (2024: net addition of €3,039 million). The increase in additions to loss allowances was attributable to the still gloomy economic conditions with muted economic prospects and to corporate and personal insolvencies over the course of the year.
Other gains and losses on valuation of financial instruments deteriorated to a net gain of €7 million (2024: net gain of €14 million).
Administrative expenses in the Retail Customers and SMEs operating segment amounted to €19,477 million in the reporting year (2024: €18,326 million). Staff expenses totaled €10,513 million (2024: €9,913 million). The year-on-year change in this item was primarily linked to appointments to vacant positions, salary increases, and collectively agreed pay rises. Other administrative expenses grew to €8,964 million (2024: €8,413 million). This was attributable to general inflation and, in particular, higher expenses for IT and consultancy.
Other net operating income decreased to €586 million (2024: €655 million).
As a result of the factors described above, profit before taxes amounted to €8,930 million in the reporting year (2024: €10,129 million). The cost/income ratio was 61.2 percent (2024: 58.2 percent).
Central Institution and Major Corporate Customers
The net interest income of the Central Institution and Major Corporate Customers operating segment diminished to €2,158 million in the year under review (2024: €2,939 million). In the segment’s Corporate Banking business line, net interest income went up slightly owing to the growth of the lending volume in the operating lending business. Net interest income from structured finance was a little higher than in the previous year, mainly due to growth in the lending volume to German and international corporate customers. Net interest income from money market and capital markets business fell sharply. Within this figure, the fall in interest rates in the money market led to reduced net interest income from the investment of liquidity from the excess of non-interest-bearing liabilities (e.g. equity) over non-interest-bearing assets.
Net fee and commission income came to €791 million in 2025 and was therefore higher than in the previous year (2024: €730 million). The principal sources of income were service fees in the Corporate Banking business line (in particular, from lending business including guarantees and international business), in the Capital Markets business line (mainly from securities issuance and brokerage business, agents’ fees, transactions on futures and options exchanges, financial services, and the provision of information), and in the Transaction Banking business line (primarily from payments processing including credit card processing, and safe custody). In the Corporate Banking business line, net fee and commission income edged up year on year. One of the main reasons for this was the increase in fees and commissions in the syndicated loan business. The contribution to net fee and commission income in the Capital Markets business line also rose slightly. The securities business was the main driver behind this rise. In addition, net fee and commission income in the Transaction Banking business line was up significantly year on year. This was mainly due to lower expenses paid under the service procurement agreement with equensWorldline SE as a result of bringing payments processing activities inhouse again at DZ BANK, a process that had commenced in 2024.
Gains and losses on trading activities came to a net gain of €191 million in 2025, improving sharply from a net loss of €817 million in the previous year. Gains and losses on trading activities essentially relate to DZ BANK’s business activities in the capital markets. The change compared with 2024 was partly attributable to spread-related valuation effects on own issues caused by the fluctuation of market prices, which – as a result of risk management – had a countervailing effect on gains and losses on non-derivative financial instruments. More specifically, the improvement in gains and losses on non-derivative financial instruments significantly outweighed the countervailing deterioration in gains and losses on derivatives.
Gains and losses on investments improved from a net gain of €115 million in 2024 to a net gain of €165 million in the reporting year. This was predominantly due to income from the sale of securities, which offset expenses arising from the unwinding of hedges in the context of portfolio fair value hedge accounting.
Loss allowances amounted to a net addition of €292 million (2024: net addition of €508 million). There were net reversals of loss allowances in stage 1. The net additions in stage 2 were considerably higher than in the previous year, whereas the net additions in stage 3 declined substantially and more than made up for the increase in stage 2.
Other gains and losses on valuation of financial instruments came to a net gain of €97 million in 2025 (2024: net gain of €123 million). Within this figure, there were decreases in both credit-risk-related measurement effects relating to financial assets measured using the fair value option and the net gain from ineffectiveness in hedge accounting.
Administrative expenses amounted to €2,075 million in 2025 (2024: €1,977 million). Staff expenses rose to €1,023 million (2024: €944 million) on the back of higher wages and salaries – and thus higher social security expenses – resulting not only from a rise in the number of employees but also from salary increases. Other administrative expenses came to €1,052 million (2024: €1,033 million).
Other net operating income decreased to €70 million (2024: €96 million), with expenses for provisions in connection with restructuring holding steady.
Profit before taxes swelled to €1,105 million (2024: €701 million), mainly due to the improvement in gains and losses on trading activities. The cost/income ratio was 59.8 percent in 2025 (2024: 62.1 percent).
Real Estate Finance
Net interest income came to €2,051 million (2024: €1,944 million). This increase was largely due to the increase in income from home savings loans and lower interest expense in building society operations at Bausparkasse Schwäbisch Hall, as well as to an improvement at DZ HYP resulting from an increase in the average volume of real estate loans. By contrast, net interest income fell at Münchener Hypothekenbank eG.
A net expense is traditionally reported in the Real Estate Finance operating segment under net fee and commission income as a result of agents’ fees. This net expense amounted to €53 million in 2025 (2024: €73 million).
Gains and losses on investments deteriorated to a net loss of €49 million (2024: net gain of €19 million), mainly because of losses on disposals of bonds.
Loss allowances amounted to a net addition of €257 million in 2025 (2024: net addition of €282 million). The net addition to loss allowances was primarily affected by individual larger exposures, the need for additions in connection with a deterioration in customer credit ratings, as evidenced by rating migrations, and updated macroeconomic parameters reflecting the challenging economic conditions.
Other gains and losses on valuation of financial instruments deteriorated year on year, amounting to a net loss of €138 million in 2025 (2024: net loss of €19 million). This was largely attributable to the negative liquidity-spread-related valuation effects on own issues and the net loss on the valuation of financial instruments measured at fair value at DZ HYP.
Administrative expenses rose to €953 million (2024: €888 million). Staff expenses totaled €495 million (2024: €442 million). This rise was predominantly due to salary increases and appointments to vacant positions. Other administrative expenses came to €458 million (2024: €446 million).
Profit before taxes fell to €674 million in the year under review (2024: €781 million). The cost/income ratio was 50.6 percent (2024: 45.5 percent).
Insurance
The insurance service result of the individual divisions was influenced by the IFRS 17 measurement methods used by them. The favorable level of claims in non-life insurance and inward reinsurance business had a material impact on the insurance service result, which amounted to a profit of €2,597 million overall (2024: profit of €1,371 million). This figure included insurance revenue amounting to €12,970 million (2024: €12,165 million) and insurance service expenses of €10,108 million (2024: €10,577 million). Net expenses from reinsurance contracts held stood at €264 million (2024: €217 million).
In the life and health insurance business, insurance revenue amounted to €2,757 million (2024: €2,529 million). Insurance service expenses amounted to €2,074 million (2024: €1,893 million). Net expenses from reinsurance contracts held in this division came to €6 million (2024: €5 million). This included amortization of the contractual service margin in an amount of €385 million (2024: €308 million) and release of the risk adjustment in an amount of €70 million (2024: €74 million).
In the non-life insurance business, insurance revenue amounted to €8,214 million (2024: €7,598 million). The main influence on this revenue was premiums earned on portfolios measured under the premium allocation approach. The insurance service expenses of the non-life insurance business stood at €6,937 million (2024: €7,056 million). Of this sum, €5,236 million (2024: €5,254 million) was attributable to expenses for claims, comprising payments for claims of €5,166 million (2024: €5,215 million) and the change in the liability for incurred claims amounting to a decrease of €70 million (2024: decrease of €40 million). It also included the change in the loss component, which amounted to an increase of €159 million (2024: decrease of €40 million). Other insurance service expenses included insurance acquisition cash flows and administration costs and totaled €1,861 million (2024: €1,762 million). Net expenses from reinsurance contracts held in this business came to €177 million (2024: €158 million). The combined ratio (net), which is the ratio of the sum of insurance service expenses and net income/expenses from reinsurance contracts held to insurance revenue, stood at 86.62 percent (2024: 94.94 percent). Major incurred claims from natural disasters came to a total of €25 million in 2025 (2024: €217 million).
Insurance revenue in the inward reinsurance business amounted to €1,999 million (2024: €2,038 million). This included not only premium income but also amortization of the contractual service margin in an amount of €254 million (2024: €271 million) under the general measurement model. Insurance service expenses came to €1,096 million (2024: €1,628 million). Net expenses from reinsurance contracts held in this business came to €81 million (2024: €54 million). The combined ratio (net), which is the ratio of the sum of insurance service expenses and net income/expenses from reinsurance contracts held to insurance revenue, stood at 58.91 percent (2024: 82.55 percent).
Gains and losses on investments held by insurance companies and other insurance company gains and losses deteriorated to a net gain of €2,367 million (2024: net gain of €5,212 million).
Long-term interest rates were higher than in 2024. The 10‑year Bund/swap rate was 2.93 percent as at December 31, 2025 (December 31, 2024: 2.36 percent). A weighted credit spread calculated in accordance with R+V’s portfolio structure, which was largely stable in 2025, stood at 44.0 points as at December 31, 2025 (December 31, 2024: 65.2 points). In 2024, this spread had fallen from 77.0 points as at December 31, 2023 to 65.2 points as at December 31, 2024.
During the reporting year, equity markets relevant to R+V performed well. For example, the EURO STOXX 50, a share index comprising 50 large, listed companies in the eurozone, saw a rise of 895 points from the start of 2025, closing the year under review on 5,791 points (December 31, 2024: 4,896 points). The index had added 374 points in 2024.
In the reporting year, movements in exchange rates between the euro and various currencies were generally less favorable than in the previous year. For example, the US dollar/euro exchange rate on December 31, 2025 was 0.8515 compared with 0.9657 as at December 31, 2024. In the previous year, the exchange rate had moved from 0.9053 as at December 31, 2023 to 0.9657 as at December 31, 2024.
These trends resulted in a deterioration in foreign-exchange gains and losses to a net loss of €1,169 million (2024: net gain of €658 million) and a negative change – resulting from the effects of changes in negative fair values, primarily of fixed-income investments in fund-linked business – in unrealized gains and losses to a net gain of €1,192 million (2024: net gain of €2,925 million). However, the contribution to earnings from the derecognition of investments improved to a net loss of €140 million (2024: net loss of €535 million), other non-insurance gains and losses improved to a net loss of €384 million (2024: net loss of €643 million), net income under current income and expense climbed to €2,972 million (2024: €2,930 million), and the balance of depreciation, amortization, impairment losses, and reversals of impairment losses improved to a net expense of €103 million (2024: net expense of €124 million). Changes in gains and losses on investments held by insurance companies are offset to an extent by corresponding changes in insurance finance income or expenses, so the overall effect on profit or loss is only partial.
Insurance finance income or expenses improved to a net expense of €2,853 million (2024: net expense of €5,351 million). In the life and health insurance business, this line item amounted to a net expense of €2,491 million (2024: net expense of €4,945 million). The improvement was mainly due to the aforementioned compensatory effect. Insurance finance income or expenses came to a net expense of €210 million in the non-life insurance business (2024: net expense of €256 million) and a net expense of €152 million in inward reinsurance (2024: net expense of €149 million). The amount within insurance finance income or expenses relating to discounting at the discount rate used at initial measurement (locked-in discount rate) was a net expense of €189 million in non-life insurance (2024: net expense of €191 million) and a net expense of €193 million in inward reinsurance (2024: net expense of €149 million).
Other net operating income rose to €33 million (2024: €8 million), mainly as a result of the year-on-year improvement in gains and losses on the disposal of non-current assets and disposal groups classified as held for sale, especially real estate.
There was a considerable rise in profit before taxes to €2,144 million, mainly because of the factors described above (2024: €1,240 million).