Erste Bank JPMorgan Merrill Lynch International

The following table sets forth the Vienna Insurance Group’s gross premiums written from its direct
property and casualty insurance business in Austria, broken down by area of activity and class of
business for the periods presented:
Fiscal year ended December 31,
2007 2006
(in EUR million)
2005
Motor vehicle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 555.1 543.7 527.9
Accident . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118.2 108.8 105.2
General liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136.3 128.2 120.3
Legal costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42.7 41.5 39.9
Property insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 620.9 573.6 541.3
Retail and commercial customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 365.6 350.3 335.6
Corporate customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 255.3 223.3 205.7
Total property and casualty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,473.2 1,395.8 1,334.6
Motor Vehicle Insurance
Motor vehicle insurance provides motor vehicle liability, collision and passenger accident insurance
coverage. Motor vehicle liability insurance is obligatory for every vehicle registered for operation
on the public roads in Austria and covers damage caused to third parties in an accident, as well as
defense against unjustified damages claims. Collision insurance can be purchased to protect one’s
own vehicle but is not mandatory in Austria. The Vienna Insurance Group offers these products both
to retail customers for their private vehicles and to corporate customers to insure individual vehicles or
a fleet of vehicles. The full-coverage collision insurance insures the customer’s vehicle against
damage, destruction and loss through fire, explosion, theft, natural forces, glass breakage, parking
and vandalism damage, and accidental damage. With partial collision insurance, accidents are not
covered, and in some products parking damage is also excluded. This insurance is sold primarily for
personal motor vehicles, but also for motorcycles, mopeds, trucks, motor homes and trailers.
Passenger accident insurance also covers drivers and passengers in the event of injury in a traffic
accident, regardless of fault, even if the policyholder is injured in a traffic accident while traveling in
someone else’s motor vehicle.
In Austria, the insurer is responsible for establishing the price of motor vehicle liability insurance
and must notify the Financial Market Authority. The insured amount must be at least EUR 6 million for
passenger cars. Of that amount, at least EUR 1 million must be available for property damage and
EUR 5 million for personal injury (in addition to EUR 60,000 for pure economic losses). Higher
minimum insured amounts are prescribed by law for buses and trucks which transport hazardous
goods. The Vienna Insurance Group uses the customary pricing criteria: vehicle strength, merit/
demerit level and the extent of coverage and looks to the customer’s risk profile in setting the price.
The Vienna Insurance Group has detailed databases to monitor customer risk profiles. Its strategy is
based on the empirical model of a “good driver,” which is oriented more toward individual, specific
claims experience than toward abstract risk indicators such as age or gender. Under this merit/demerit
system, this orientation toward the “good driver” tends to limit long-term growth of premium income,
but results in above-average earnings due to lower claims expenses.
Primarily due to increasing motor vehicle repair costs, the contribution of the motor vehicle
insurance business line to the Group’s results has not always been satisfactory. In recent years, this
situation has significantly improved due to, amongst others, selective choice of policyholders with low
claims rates and steady improvement of problematic customer relationships resulting in an improvement
of the net loss ratio in the motor vehicles business line. In fiscal years 2005 to 2007, the loss
ratio in the motor vehicle insurance business line experienced a constant decline. Motor vehicle
passenger accident insurance comprises a limited range of risks compared to general accident
insurance, resulting in a net loss ratio in this line of business that is very low. The changes to Vienna
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