Erste Bank JPMorgan Merrill Lynch International

higher. Only in a few cases — and for limited periods of time — are reinsurers with lower
ratings accepted.
Design of the reinsurance programs. If economically justified, any company in the Group may
purchase reinsurance coverage individually from external reinsurers. If individual reinsurance
contracts can only be purchased by a company in the group on uneconomical terms, the
Vienna Insurance Group strives, as far as possible, to jointly place reinsurance contracts
covering risks from natural catastrophes, property lines, accident, aviation and motor vehicle
third-party liability under the Green Card [international motor vehicle insurance certificate]
agreement. If reinsurance contracts for small companies in the Group involving a low level of
risk may be purchased in the reinsurance market only on unfavourable terms, the Vienna
Insurance Group itself acts as the reinsurance company. If necessary, these intercompany
reinsurance contracts are, for reasons of safety, passed on by retrocession to the reinsurance
market. The guidelines for Wiener Städtische AG reinsurance coverage are presented below.
Retentions for all other companies in the Group are below those of Wiener Städtische AG.
Reinsurance coverage using the example of Wiener Städtische AG
Natural catastrophes. Wiener Städtische AG provides insurance for damages caused by
natural catastrophes such as storms, hail, flooding or earthquakes. Wiener Städtische AG
uses reinsurance coverage to limit its retained losses from natural catastrophes to EUR 4.5 million
per loss event.
Corporate customer business. In the corporate customer business, predominantly proportional
reinsurance cessions limit Wiener Städtische AG’s maximum net loss to EUR 1.5 million. This
reinsurance structure can guard against both the effects of individual large losses, for example
from fire, as well as an increased loss frequency.
Private customer business. The private customer business consists essentially of stable
insurance portfolios having calculable results that are marked, above all, by a stable loss
frequency. Thus, frequent claims are only reinsured for exposed segments, for example storm
insurance, with a targeted use of proportional reinsurance to reduce the effects on retention.
The effects on the retention of the few major claims to be expected are insured by nonproportional
reinsurance. Even in this business segment, the maximum net loss of Wiener
Städtische AG is between EUR 1.0 and 2.0 million for each class of insurance.
1. INTANGIBLE ASSETS
Detail 31.12.2007 31.12.2006
in EUR ’000
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 422,300 339,576
Purchased insurance portfolios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,629 49,022
Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71,576 72,849
Acquired software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,424 39,856
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,152 32,993
Total ........................................................ 524,505 461,447
Development of goodwill 31.12.2007 31.12.2006
in EUR ’000
Acquisition costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 339,884 200,566
Cumulative depreciation as of 31.12. of the previous years . . . . . . . . . . . . . . . . �308 �307
Book value as of 31.12. of the previous year ........................ 339,576 200,259
Exchange rate changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 942 1,527
Book value as of 1.1. ........................................... 340,518 201,786
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81,782 137,790
Book value as of 31.12. ......................................... 422,300 339,576
Cumulative depreciation as of 31.12. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 308 308
Acquisition costs .............................................. 422,608 339,884
The goodwill changes essentially result from the acquisition of companies described in the section
“Scope and methods of consolidation”. “Ray Sigorta A.S¸ . accounted for EUR 45,488,000 of this
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