Erste Bank JPMorgan Merrill Lynch International

fund-combined tariffs with insufficient risk capital, in which case the risk capital would be covered by
the insured collective in case of an insured event.
On March 17, 2008, the FMA issued an administrative decree requesting BA-CA Versicherung to
refrain offering these products at the current price level starting April 15, 2008. BA-CA Versicherung
has changed its pricing and intends to file an appeal with the Austrian constitutional court and
administrative court including a petition for suspensive effect of the decree.
Decree issued by the FMA Regarding Pension Retirement Agreements
In its decree dated December 14, 2007, the FMA required Wiener Städtische Versicherung AG to
have a uniform guaranteed interest rate applying to accrued profits in previous years and the current
year for all retirement pension insurance contracts in the same (respective) group of the cover fund
(Deckungsstock).
Information Technology
The Vienna Insurance Group is dependent on the correct functioning of an operational EDP
facility (hardware and software) and on the acquired rights to use such a facility. The potential effects
of errors in the operation, programming and use of the EDP facility must be eliminated to the greatest
extent economically possible. In order to ensure smooth operation of critical EDP systems, the Vienna
Insurance Group has two geographically and organizationally separate computer centers, which are
run by Blue IT-Services GmbH, a subsidiary of IBM Österreich GmbH, under an outsourcing contract.
A complex security strategy has been implemented according to international standards to provide the
Group-wide EDP network with the maximum economically possible protection against potentially
adverse influences (including viruses, Trojans, hacking). This benefits all domestic companies in the
Group, and also benefits the foreign Group companies to the extent that they use services provided
by the common computing center. For the larger (as well as a few of the smaller) foreign Group
companies, this is true for the areas of bookkeeping and cost accounting as well as personnel
administration. In the medium term, as part of the process of implementing the SAP Project described
below, insurance policy administration for the larger foreign Group companies will also be performed
in the focal computing centers.
A Group-wide insurance policy administration system, aimed at providing a comprehensive EDP
model to support insurance solutions, is currently being developed in collaboration with the software
company SAP. The insurance policy administration system will meet the requirements of modern
standardized work processes, taking into consideration cost effectiveness, cross-border use by various
companies, low maintenance requirements, flexibility and data security. A number of Vienna Insurance
Group companies in Austria, the Czech Republic and Slovakia are taking part in this project. The
costs of the project will be shared among the companies using various SAP-modules according to a
new pricing model.
The administration of Kooperativa Prague’s new life insurance business has been tested using
this system since 2005. At the end of 2007, parts of the application were brought online there. During
2008, all modules for one part of the life insurance business will be brought on line in the Czech
Republic. The entire life insurance division of Kooperativa Prague should be converted to SAP by the
end of 2009. SAP Systems Integration AG, based in Germany, was chosen to be the operator of the
computing center for Prague; it has extensive experience running SAP software solutions.
The long-term goal is for all systems currently in use in the Vienna Insurance Group to be
gradually replaced throughout the entire Group by this new complete solution. It is expected that this
will result in the realization of significant savings. Customers will profit from faster processing of their
cases in the new system.
The operation of the IT infrastructure of the Vienna Insurance Group in Austria by Blue IT-
Services GmbH, a subsidiary of IBM Österreich GmbH, has been very stable and almost uninterrupted
from the very beginning after the assumption of the operation of important portions of policy
administration, the company network, and basic SAP operation at the end of 2004. The collaboration
with IBM provides the Vienna Insurance Group with the benefits of the services of one of the market
leaders in the operation of computing centers along with high-end technical services and the best
operational security available. On this basis it has been possible to boost the efficiency of administrative
processes and conduct insurance business in the narrow sense more aggressively.
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