Erste Bank JPMorgan Merrill Lynch International

premiums written in fiscal year 2007 were derived from the non-life line and 25.9% from the life
insurance line. Profit before tax amounted to EUR 73.8 million for fiscal year 2007 and 59.1 million for
fiscal year 2006. In fiscal year 2007, the Vienna Insurance Group’s loss ratio in the Czech Republic
improved to reach a level of 66.2%, representing an improvement of 5.2 percentage points over 2006,
during which year the country had been severely affected by snow pressure and floods. Influenced by
business expansion, net investment income in the Czech Republic increased by 8.6% in the period.
Property and Casualty Insurance
The property and casualty insurance products sold in the Czech Republic are similar to those
sold in Austria, see above “ – Austria – Property and Casualty Insurance”. Significant differences are
primarily the result of legal provisions and differing market conditions with respect to the calculation of
premiums and the amount and scope of coverage.
In the motor vehicle segment, Czech insurance companies are subject to a growing pressure on
margins, primarily in rural areas.
In the non-motor classes, homeowners and household insurance are becoming increasingly
important due to increased levels of prosperity.
The development of premium income for the property and casualty as well as life insurance
business and loss and expense ratios, the combined ratio for property and casualty business in the
Czech Republic are set forth in the table below:
Fiscal year ended December 31,
2007 2006 2005
Gross premiums written (EUR million) . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,130.5 1,048.0 891.5
Ceded reinsurance premiums as a percentage of premiums (%) . . . . . . . 18.0 20.8 21.6
Net earned premiums (EUR million) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 919.0 827.6 695.3
Net loss ratio (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66.2 71.4 62.9
Net expense ratio (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.5 25.9 29.5
Net combined ratio (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93.7 97.3 92.4
Life insurance
In the life insurance segment, the products sold in the Czech Republic are similar to those sold in
Austria, see above “– Austria – Life Insurance”. As is the trend in Austria, unit-linked products are
increasingly being developed and sold in the Czech market. The interest rate guaranteed by statute is
2.4% for traditional life insurance policies. Management anticipates increased demand for life
insurance products in the future, particularly in connection with the possibly imminent reform of the
pension system in the Czech Republic.
The following table sets forth gross premiums written income of the Vienna Insurance Group in
the Czech Republic in the life insurance segment:
Fiscal year ended
December 31,
2007 2006 2005
(in EUR million)
Regular premium payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 211.6 210.9 169.6
Single-premium policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80.7 48.6 49.4
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 292.3 259.5 219.0
Competition
In fiscal year 2007, Kooperativa Prague was ranked second in the Czech insurance market with a
22.3% market share, measured by gross premiums written; CPP was ranked eighth with a 3.6%
market share (Source: Statistics of Czech Insurance Association). Measured by gross premiums
written, Kooperativa Prague’s market share in the non-life lines of business was 28.9% in fiscal year
2007, according to the statistics of the Czech Insurance Association, and in the life insurance area, its
market share was 12.8%, resulting in a second place ranking in the non-life business and a third place
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