Erste Bank JPMorgan Merrill Lynch International

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR FISCAL YEAR 2006
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Significant accounting policies
The consolidated financial statements as of 31 December 2006 have been prepared in accordance
with the International Financial Reporting Standards (“IFRS”) issued by the International
Accounting Standards Board (“IASB”), including the applicable interpretations of the International
Financial Reporting Interpretations Committee (“IFRIC”). The consolidated financial statements were
prepared based on the published IFRS as adopted by EU regulation. Application of these standards
was mandatory on 31 December 2006. Since 2002, the designation IFRS has stood for the overall
framework of all standards adopted by the IASB. Previously adopted standards continue to be referred
to as International Accounting Standards (IAS).
The consolidated financial statements are prepared in terms of thousands of Euro (“EUR ’000”,
using commercial rounding). As a rule, the consolidated financial statements are prepared using the
historical cost system, with the exception of the following assets and liability items, which are carried
at fair value:
1. Financial instruments available for sale
2. Financial instruments held for trading, including financial assets at fair value through profit
and loss
3. Investments of unit- and index-linked life insurance and underwriting provisions of unit- and
index-linked life insurance
4. Provision for derivatives trading
The accounting policies described below have been applied uniformly during the entire reporting
period and all prior reporting periods since preparation of the IFRS opening balance sheet as of
1 January 2004. This applies similarly to all fully consolidated companies included in the consolidated
financial statements. The sole exception to this Group-wide uniform application of accounting policies
concerns the valuation of insurance policies in accordance with IFRS 4 as discussed in more detail in
the section titled “Classification of insurance policies”.
Scope and methods of consolidation
The parent company of the Vienna Insurance Group is WIENER STÄDTISCHE Versicherung AG
VIENNA INSURANCE GROUP, Vienna. All companies that are under the control (“control principle”)
of Wiener Städtische AG (“subsidiaries”) are fully consolidated in the consolidated financial statements.
Control exists when Wiener Städtische AG is in a position to directly or indirectly determine the
financial and operating policies of a subsidiary. Consolidation of a subsidiary starts when a control is
gained and ends when this influence no longer exists. The consolidated financial statements include a
total of 25 domestic and 39 foreign companies. Subsidiaries that were unimportant for a fair
presentation of the net worth, financial position and earnings of the Group were not included in the
scope of consolidation. In total 20 domestic and 10 foreign subsidiaries were excluded for this reason.
Companies that are managed as a joint venture with other companies (“joint venture companies”)
are included using the proportional consolidation method (recognition of a proportionate share of the
assets, liabilities, income and expenses). During the reporting period, 4 companies were included in
the consolidated financial statements using proportional consolidation.
Associated companies are companies over which Wiener Städtische AG has a significant
influence, but does not exercise control. These companies are accounted for using the equity method.
The consolidated financial statements include 5 domestic and 3 foreign companies accounted for at
equity. In addition, 8 affiliated companies that are of less importance for the financial performance of
the Group were also accounted for at equity. Due to their minor importance, in accordance with the
requirements of IAS 39 “Financial instruments”, 30 companies were treated as available for sale
securities and carried accordingly at fair value. Wiener Städtische AG owns 31.6% of the shares of
Wüstenrot Versicherungs-Aktiengesellschaft, Salzburg. Significant influence within the meaning of IAS
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