Erste Bank JPMorgan Merrill Lynch International

Detailed information on the valuation of underwriting items is available in the remarks for each
item.
Adequacy test for liabilities arising from insurance contracts
Liabilities from insurance contracts and financial insurance contracts are tested at each reporting
date for adequacy of the insurance liabilities recognised in the financial statements. During this
process, up-to-date estimates of current valuation parameters are examined, taking into account all
future cash flows associated with the insurance contracts, to determine whether the recognised
liabilities are adequate. If these tests determine that the book value of the insurance liabilities is
negative, taking into account capitalised acquisition costs and/or capitalised values of contract
holdings, the entire shortfall is immediately reversed and recognised in profit or loss.
Foreign currency translation
Transactions in foreign currency
The individual consolidated companies recognise transactions in foreign currency using the mean
rate of exchange on the date of each transaction. Monetary assets and liabilities in foreign currency
existing on the balance sheet reporting date are translated to EUR using the mean rate of exchange
on the balance sheet reporting date. Any resulting foreign currency gains and losses are recognised
with no effect on profit or loss.
Foreign currency translation of individual financial statements
For purposes of the IFRS, the functional currency of Wiener Städtische AG subsidiaries located
outside of the Euro zone is the currency of the country where they are located. All assets and
liabilities reported in the individual financial statements are translated to EUR using the mean rate of
exchange on the balance sheet reporting date. Items in the income statement are translated using the
average month-end mean rate of exchange during the reporting period. Foreign exchange gains and
losses incurred since 1 January 2004 are recognised in equity under “Differences arising from foreign
exchange translation” with no effect on the income statement.
Impairment of assets
Assets are tested each balance sheet reporting date for indications of impairment. Goodwill and
intangible assets with an indefinite useful life are tested shortly before each balance sheet reporting
date even if there are no indications of impairment.
Information on the impairment test of financial assets is provided in the section entitled “General
information on the accounting and valuation of investments”.
Estimates
The preparation of the IFRS consolidated financial statements requires that management make
discretionary assessments and specify assumptions concerning future developments which could have
significant effects on the recognition and value of assets and liabilities, the disclosure of other
obligations on the balance sheet reporting date, and the reporting of income and expenses during the
fiscal year.
There is a material risk that the following items could lead to a significant adjustment of assets
and liabilities in the next fiscal year:
Underwriting provisions
Pension reserves and similar obligations
Other non-underwriting provisions
Fair values of investments not based on stock market prices or other market prices
Goodwill
Valuation adjustments for receivables and other (accumulated) impairment losses
Deferred tax assets from the capitalisation of tax loss carryforwards
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