NETHERLANDS – Dutch insurance group Achmea has continued to replace government bonds with credit in a bid to increase returns.

The company shifted approximately €800m of its holdings in Dutch, German and French government bonds into investment-grade credit, with relatively short maturity and high seniority, according to its first-half report.

The insurer already divested roughly €2bn in government bonds to re-invest into corporate bonds last year.

Its investments in government bonds, government-related bonds and government-backed paper currently make up 58% of its €33.8bn fixed income portfolio.

According to Achmea, a “very small proportion” of its government bond holdings were issued by Greece, Ireland, Italy, Portugal or Spain, with the largest part – €524m – of exposure relating to local business activities in Ireland.

It added that only 1.8% of its fixed income portfolio was invested in those countries.

Achmea said its equity portfolio grew to €1.1bn, following a return on investment of 14.2%, due mainly to rising share prices.

Its alternatives portfolio remained stable at €1bn, or approximately 2.4% of the overall investment portfolio.

Following downward revaluations of €36m, mainly affecting office holdings, Achmea’s property portfolio contracted to €1.4bn.

The insurer said it continued to focus on the shift from defined benefit to defined contribution (DC) plans, adding that it had completed its DC product range with new lifecycle products and communication tools.