056 Chap. 2 GROUP MANAGEMENT REPORT INTERNAL CONTROLLING SYSTEMS the business in force. Another important key figure in this context is the new business value indicating the present value of all future profits expected from the insurance contracts newly concluded in the business year. In addition, performance management also cov- ers extraordinary items due to investment results or tax impacts. Since these items may have a significant influence on results but are not attributable to operat- ing business, they are excluded when measuring oper- ating profitability and are instead shown separately. On the basis of these results it is possible to calculate the key figures of return on economic capital (RoEC) and return on embedded value (RoEV). The RoEC puts the economic result, adjusted for extraor- dinary items, in proportion to the required capital (tar- get). This figure measures our operating profitability. On the other hand, the RoEV indicates the total eco- nomic result as a percentage of the actual capital. The RoEV is thus an indicator of our profitability taking into consideration extraordinary items. Results in the business year 2007 In 2007, the economic capital (EC) as well as the available risk-based capital (RC) increased substantially (see table on p. 55). This is primarily attributable to the higher value in force in the life and health sub-segments and correspondingly does not indicate a higher risk exposure in our life and health insurance business. With an embedded value (EV) also markedly increased to 5,875 m, the Group continues to be adequately capi- talized as a whole. Together with the hybrid capital there is an excess cover totalling 382 m. In the property and casualty segment, the eco- nomic capital equals 29.2 percent (previous year: 27.8 percent) of net premiums earned. The rise compared to the previous year is due to a slightly higher investment risk. The economic capital of life insurance amounts to 4.7 percent of net underwriting reserves (previous year: 4.3 percent). The reasons for this increase are the higher value in force included in the EC, on the one hand, and the increase of the interest risk on the basis of the assumption of a higher interest-rate volatility in the market, on the other hand. Compared to the previous year, the economic result in the life sub-segment increased by 51 m to 314 m. The main reasons for this increase are the higher new-business value, which improved due to higher margins, and risen profits from the insurance business in force. In 2007 the economic result in property and cas- ualty insurance rose substantially to 167 m. This was mainly due to the increase of normalized investment income (rise of interest rates in the duration range of relevance for property/casualty business) as well as an improvement of the balance of other income/ expenditure. The combined ratio at Group level further reduced from 95.7 percent to 95.3 percent in 2007. This is primarily attributable to the cost-cutting meas- ures taken in the Group. Linking the economic results with the previously calculated capital figures (EC and EV) leads to the fol- lowing key return figures: 2007 2006 m m New business value 145 129 Profits from business in force (including operational deviations) 170 144 Economic result after tax 314 263 Performance management life 2007 2006 m m Net underwriting result 138 124 Balance of other income/ expenditure* -134 -162 Normalized investment income 274 227 Economic result before tax 279 189 Normalized tax -112 -75 Economic result after tax 167 114 Performance management property/casualty * adjusted for extraordinary items