Erste Bank JPMorgan Merrill Lynch International

The reserves are recognised at the value representing the best possible estimate of the
expenditure needed to fulfil the obligation. If the present value of the reserve calculated using a
commercial rate of interest differs significantly from the nominal value, the present value of the
obligation is recognised.
The other non-underwriting reserves item also includes personnel reserves other than the
reserves for pensions and similar obligations. These relate primarily to reserves for unused vacation
and anniversary bonus obligations. Anniversary bonus obligations are valued using the calculation
method described for post-employment benefit obligations and the same calculation parameters. The
corridor method is not used.
(Subordinated) liabilities
As a rule, liabilities are valued at amortised cost of acquisition. This also applies to liabilities
arising from financial insurance contracts.
Earned premiums
As a rule, deferred premiums (unearned premiums) are determined on a pro rata temporis basis.
No deferral of unit- and index-linked life insurance premiums is performed, since the full amount of the
premiums written in the reporting period is included in the calculation of the unit- and index-linked life
insurance underwriting reserve. The change in the cancellation reserve is also recognised in earned
premiums.
Expenses for insurance claims
All payments to policyholders arising from loss events, direct claims handling expenses, and
internal costs attributable to claims handling are recognised in expenses for insurance claims.
Expenses for loss prevention are also recognised in this item. Expenses for insurance claims are
reduced by the income gained from using existing contractual and statutory avenues of recourse
(this applies in particular to property and accident insurance). Changes in underwriting reserves,
except for the change in the cancellation reserve, are also recognised in the expenses for insurance
claims item.
Operating expenses
Group personnel and materials expenditures are assigned to the following items, depending on
the nature of the expenditures:
Expenses for insurance claims (claims handling expenses)
Expenses arising from capital assets (expenses for asset investment)
Operating expenses
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