Erste Bank JPMorgan Merrill Lynch International

always passed such resolutions as proposed. Due to WST-Versicherungsverein’s controlling influence,
minority and public shareholders will essentially possess limited voting rights and will not have the
power to influence the Issuer in any meaningful way. Although it is the purpose of WST-Versicherungsverein
to encourage and support the economic progress of Wiener Städtische AG, WST-
Versicherungsverein as a shareholder does not necessarily pursue the same interests as minority or
public shareholders. In particular, there is no assurance that WST-Versicherungsverein will align its
voting behavior with the interests of minority or public shareholders.
Under Austrian regulations, the solvency ratios of the Vienna Insurance Group are measured
at the WST-Versicherungsverein level
The principal shareholder of Wiener Städtische AG, WST-Versicherungsverein, is a mutual
insurance company which, in compliance with the provisions of insurance regulation statutes contributed
its entire insurance operations to Wiener Städtische AG. Under Austrian law, adherence to
regulatory solvency ratios is measured at the WST-Versicherungsverein level. Although the Articles of
Association of WST-Versicherungsverein state that WST-Versicherungsverein must act in the interests
of Wiener Städtische AG, WST-Versicherungsverein is not subject to any other restrictions on its other
business or investment decisions. Such decisions may have an impact on adherence to regulatory
solvency ratios. A failure to comply with the regulatory solvency guidelines by WST-Versicherungsverein
on a consolidated basis could result in a downgrading of the credit rating and to measures by the
insurance regulatory authority and thus have a material adverse effect on the assets, financial position
and earnings of the Vienna Insurance Group.
Sales by WST-Versicherungsverein of a significant number of shares of Wiener Städtische
AG in the market after this Offering could have a negative impact on the price of Wiener
Städtische AG shares
WST-Versicherungsverein has agreed that it will not sell the Shares held by it within 180 days of
the Closing Date without the consent of the Joint Global Coordinators. After that time, WST-
Versicherungsverein will be able to sell the shares it holds at any time. See “Plan of Distribution –
Lock-up”. The share price of Wiener Städtische AG could fall if WST-Versicherungsverein sells
additional shares in the market or the impression arises that such sales are expected. In such a
situation, it could also be difficult for Wiener Städtische AG to issue new shares at a time which it
regards as favorable and at an appropriate price.
Risks Arising from the Offering
The share price of Wiener Städtische AG could prove to be volatile
Share prices were subject to considerable fluctuations in the second half of 2007 and the
beginning of 2008. These fluctuations resulted from a number of factors: a liquidity crisis in the
financial sector, uncertainties about economic development, particularly in the U.S., but also in Europe
and important emerging countries, and fears of overvaluation of shares on stock exchanges in
emerging countries. The market price of Wiener Städtische AG’s shares could be subject to significant
fluctuations due to a variety of factors, including, among other things, actual or anticipated fluctuations
in Wiener Städtische AG’s operating results and financial performance, announcements of product
developments by Wiener Städtische AG’s existing or future competitors, regulatory changes or
changes in financial estimates by securities analysts and general economic conditions and other
factors, such as additional unforeseen consequences of the worldwide liquidity crisis. General volatility
of stock prices, in particular within the European financial sector, may also lead to price pressure on
the Shares of Wiener Städtische AG without there necessarily being a reason for this in the business
or the earnings outlook of Wiener Städtische AG.
Failure on the part of existing shareholders to exercise their Subscription Rights by May 7,
2008, will result in such Subscription Rights becoming null and void without compensation,
and shareholders will suffer dilution of their percentage ownership
If existing shareholders of Wiener Städtische AG do not exercise their Subscription Rights by
May 7, 2008, such Subscription Rights will become null and void without compensation. To the extent
that existing shareholders do not exercise their Subscription Rights to subscribe for the New Shares,
their proportionate ownership and voting interest in Wiener Städtische AG will be reduced.
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