Financial highlights (continued)
Insurance operations
Total result before tax from Insurance operations fell by EUR 8,168 million to a loss of EUR 1,635 million in 2008 from a profit of EUR 6,533 million in 2007. The underlying result before tax (excluding the impact of divestments and special items) decreased to a loss of EUR 1,235 million in 2008 from a profit of EUR 6,113 million in 2007. The sharp decline in results was mainly due to the deterioration of the financial markets in the second half of 2008, as well as EUR 2,087 million of gains on the sale of ING's stakes in ABN AMRO and Numico in 2007.
Underlying result from life insurance fell to a loss of EUR 1,744 million from a profit of EUR 4,831 million last year. Investment income was negatively impacted by capital losses and impairments on equity and debt securities, as well as negative fair value changes on real estate and private equity investments. Furthermore, the result was negatively impacted by DAC unlocking in the US as well as losses on the SPVA business in Japan due to hedge losses.
Underlying result before tax from non-life insurance declined 60.3% to EUR 509 million from EUR 1,282 million last year, due primarily to capital losses and impairments on equities, as well as unfavourable underwriting results in Canada.
Underlying gross premium income from life insurance decreased 3.7%, but was up 3.3% excluding ING Life Taiwan and currency impact, to EUR 38,748 million, mainly driven by the US, Australia, and most countries in Asia. Underlying gross premium income from non-life insurance decreased 8.1%, or 4.1% excluding currency impact, to EUR 4,402 million, largely caused by the sale of the health business in Chile.
Underlying operating expenses from the Insurance operations decreased 0.6%, but were up 0.7% excluding ING Life Taiwan to EUR 5,188 million as cost containment helped to offset most of the investments to support growth of the business in Asia/Pacific and Central Europe. Furthermore, the 2007 operating expenses contained a EUR 89 million one-off net release of employee benefits provisions in the Netherlands.
New sales, measured in annual premium equivalent (APE), for the life insurance business decreased 10.3%, or 7.8% excluding ING Life Taiwan to EUR 6,568 million primarily due to lower sales in the US, Australia, South Korea and Japan. APE is the sum of regular annual premiums from new business plus 10% of single premiums on new business written during the year. This decrease was in part offset by higher sales in Latin America, the Netherlands and Rest of Asia. The value of new business (VNB) decreased 8.1% to EUR 1,023 million. Excluding ING Life Taiwan, VNB remained flat compared to 2007.
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