Erste Bank JPMorgan Merrill Lynch International

The Vienna Insurance Group’s net loss ratio for legal costs insurance in Austria amounted to
approximately 47.9% on average between 2005 and 2007. The net loss ratio for legal cost insurance
improved significantly in 2007 due to a positive claims settlement and related release of reserves
made in previous years. The changes in the net loss ratio in fiscal years 2005 through 2007 are set
forth in the table below:
Fiscal year ended
December 31,
Net loss ratio 2007 2006
(in %)
2005
Vienna Insurance Group Austria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43.6 49.3 50.7
Property Insurance
Retail and Commercial Customers
In the retail and commercial business segment, the Vienna Insurance Group offers primarily
standardized package products. To a more limited extent, the Group offers policies with only one class
of insurance. Property insurance package products can include coverage for fire, fire business
interruption, water pipe damage and wind storm classes (flood coverage is also allocated to this class,
if available, depending on product) and glass breakage, burglary/theft and household coverage. In
addition, depending on the product, liability and legal costs insurance and various types of technology
coverage can also be included. The product portfolio for retail and commercial customers also
includes travel insurance and rain cancellation insurance. The package product range for retail
customers is divided primarily into household and homeowners insurance, while insurance for
commercial customers is divided into residential property, business and agricultural package
insurance.
In its non-motor class and commercial businesses, the Vienna Insurance Group offers a modular
system for each of its products, under which an insurance solution optimally adapted to the customer’s
needs can be individually assembled through flexible choices. The most important components are
also offered in the sizes “Small”, “Medium” and “Large” for even greater individual possibilities.
The development of the net loss ratio of the Vienna Insurance Group in the retail and commercial
segments in Austria in fiscal years 2005 to 2007 is set forth in the table below:
Fiscal year ended
December 31,
Net loss ratio 2007 2006
(in %)
2005
Vienna Insurance Group Austria
Fire and fire business interruption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58.0 59.4 58.7
Water pipe damage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73.5 79.9 76.5
Wind storm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172.2 248.9 143.7
Glass breakage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75.0 73.7 64.0
Burglary/theft . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137.4 138.9 152.7
Household . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50.9 53.6 55.6
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92.5 80.0 67.0
The relatively high loss ratio in the water pipe damage class compared with 2005 and the sharp
rise in the loss ratio in the wind storm class in 2006 are attributable to a sharp increase in losses
caused by frost and snow loads due to the exceptionally cold and snowy winter of 2005/2006. The
critical factor in the continued high loss ratio in the wind storm class in 2007 was the significant losses
caused by low-pressure system “Kyrill” at the end of January 2007. The continued negative loss
progression in the burglary/theft class in 2007 despite the sharp positive trend is essentially due to the
abrupt rise in losses by corporate clients; reorganization processes have already been initiated.
Altogether, the loss trend in 2007 was clearly positive, especially since the loss ratios declined
considerably, above all in the household, water pipe damage, and fire and consequential fire loss
classes, where the premiums are highest. As a result, the 2006 results, which were impacted by the
effects of the aforementioned weather events, were clearly surpassed.
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