Erste Bank JPMorgan Merrill Lynch International

Reinsurers’ share of underwriting provisions
The reinsurers’ share of the underwriting provisions is valued according to the terms of the
contracts.
The creditworthiness of each contracting party is taken into account when the reinsurers’ share is
valued. The creditworthiness of the Group’s reinsurers was such that no valuation adjustments on the
reinsurers’ share were necessary on the reporting dates of 31 December 2006 and 2005.
Receivables
The receivables shown in the balance sheet relate in particular to the following receivables:
Receivables from direct insurance business
— with policyholders
— with insurance brokers
— with insurance companies
Receivables from reinsurance business
Other receivables
Aside from the receivables from policyholders, receivables are reported at cost of acquisition less
impairment losses for expected uncollectible amounts. Receivables from policyholders are valued at
the cost of acquisition. Expected impairment losses from uncollectible premium receivables are
basically shown on the liabilities side of the balance sheet in other underwriting reserves (cancellation
reserves).
Other assets
Other assets are valued at cost of acquisition less impairment losses.
Taxes
The income tax expense comprises actual taxes and deferred taxes. The income tax associated
with transactions recognised directly in equity (unrealised gains and losses from financial investments
that are available for sale) is also recognised in equity with no effect on the income statement.
The actual taxes for the individual companies of the Vienna Insurance Group are calculated using
the company’s taxable income and the tax rate applying in the country of domicile.
Deferred taxes are calculated using the balance sheet liability method for all temporary differences
between values recognised for assets and liabilities in the IFRS consolidated financial
statements and the individual company’s tax bases for these assets and liabilities. In addition, any
probable tax benefit that could be realised from existing carried-over losses are included in the
calculation. Differences arising from goodwill that is not deductible for tax purposes and quasipermanent
differences related to ownership interests are not included in the tax deferral calculation.
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