Erste Bank JPMorgan Merrill Lynch International

agreement. If reinsurance contracts for small Group companies that involve a low level of risk
can only be purchased at unfavourable terms in the reinsurance market, the Vienna Insurance
Group itself acts as the reinsurance company. If necessary, these intragroup reinsurance
contracts are passed on as retrocession in the reinsurance market for safety reasons. The
guidelines for Wiener Städtische AG reinsurance cover are presented below. Retentions for all
other Group companies lie below those of Wiener Städtische AG.
Reinsurance coverage using Wiener Städtische AG as an example
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 contributions are limited to a maximum net loss for Wiener Städtische AG of EUR
1.5 million. This reinsurance structure can insure both the effects of certain major losses, for
example as a result of fire, and an increased frequency of claims.
Private customer activities. Private customer activities consist of essentially stable insurance
portfolios having calculable results that are marked, above all, by a stable frequency of claims.
Thus, frequent claims are only reinsured in exposed segments, for example storm insurance,
with a targeted use of proportional reinsurance to reduce the effects on retention. The effects
of fewer than expected major claims on retention are insured by non-proportional reinsurance.
Even in this business segment, the maximum net loss of Wiener Städtische AG is between
EUR 1.0 and 2.0 million, according to the sector.
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
1. INTANGIBLE ASSETS
The composition of intangible assets is as follows:
Detail
in EUR ’000
31.12.2006 31.12.2005
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 339,576 200,259
Purchased insurance portfolios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49,022 44,625
Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72,849 72,018
Acquired software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39,856 35,426
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,993 36,592
Total ........................................................ 461,447 316,902
Goodwill developed as follows during the reporting period:
Development of goodwill
in EUR ’000
31.12.2006 31.12.2005
Acquisition costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,566 27,583
Cumulative depreciation as of December 31 of the previous years . . . . . . . . . . �307 �206
Book value as of 31.12. of the previous year ........................ 200,259 27,377
Exchange rate changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,527 1,291
Book value as of 1.1. ........................................... 201,786 28,668
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137,790 171,591
Book value as of 31.12. ......................................... 339,576 200,259
Cumulative depreciation as of 31.12. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 308 307
Acquisition costs .............................................. 339,884 200,566
The goodwill changes essentially result from the acquisition of subsidiaries described in the
section “Scope and methods of consolidation” and an increase in the number of shares held in
Omniasig Insurance — Reinsurance Company, Bucharest.
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