Erste Bank JPMorgan Merrill Lynch International

Severance obligations
Based on statutory obligations, supplemented by collective agreement provisions, the Company is
obligated to make severance payments to all employees in Austria whose employment began before
January 1, 2003 and is terminated by the employer or upon commencement of retirement. The size of
this payment depends on the number of years of service and the employee’s earnings at the time of
severance and is equal to between two and 18 months’ earnings. A provision has been set up for this
obligation.
The provision is calculated using the projected unit credit method. Under this method, the sum of
the present value of future payments is calculated up to the point in time when the claims reach their
highest value (up to a maximum of 25 years).
For all employment in Austria beginning after December 31, 2002, the Company pays the
statutory contribution of 1.5% of earnings into an operating employee retirement fund, where the
contributions are invested in an employee account and paid out or passed on to the employee as a
claim when employment ends. The Company’s obligation is strictly limited to payment of these
amounts. Therefore, no provision needs to be set up for this contribution-based model.
Segment reporting
When its accounting was converted to IFRS in 2005, the Vienna Insurance Group divided its
activities into three primary segments (for the purposes of segment reporting) corresponding to its
three core business areas, namely, the “property and casualty,” “health insurance,” and “life insurance”
segments. Austria, the Czech Republic, Slovakia, the Remaining CEE markets, and other markets
were specified as secondary geographic segments. The number of secondary geographic segments
was increased in the interim financial statements for the third quarter of 2007. These new secondary
segments will be retained in the 2007 annual financial statements and in the future. The secondary
segments are now Austria, the Czech Republic, Slovakia, Poland, Romania, Remaining CEE markets,
and other markets.
Comparison of Fiscal Years 2007, 2006 and 2005 at the Group Level
The following table sets forth a summary of the income statement for fiscal years 2007, 2006 and
2005:
Fiscal year ended December 31,
2007 2006
(audited)
(in EUR million)
2005
Premiums
Gross premiums written . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,911.9 5,881.5 5,007.8
Net earned premiums. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,941.7 5,038.7 4,240.9
Financial result, not incl. associated and affiliated companies . . . . . . 995.8 711.4 593.9
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52.0 61.4 46.3
Expenses for insurance claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5,031.5 -4,213.3 -3,618.4
Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1,345.1 -1,136.4 -891.8
Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -182.4 -145.9 -142.0
Result from interests in associated and affiliated companies . . . . . . . 6.9 5.0 11.6
Profit before taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 437.3 321.0 240.3
Tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -88.4 -56.6 -41.6
Profit for the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 348.9 264.3 198.7
Wiener Städtische shareholder interest . . . . . . . . . . . . . . . . . . . 312.6 260.9 197.0
minority interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36.3 3.4 1.7
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