Showing Annual Report 2011 Wiener Städtische Versicherung AG. Foresight.

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1 Showing Annual Report 2011 Wiener Städtische Versicherung AG Foresight.

2 ALWAYS There, WHERE YOU NEED US A 102 Austria s largest insurance network: 140 business offices, nine provincial headquarters, approximately 2,000 advisors Annual Report 2011 Wiener Städtische

3 Highlights & Management COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 A 1 Annual Report 2011 Wiener Städtische

4 Highlights 2011 EXCELLENT RESULTS IN SPITE OF DIFFICULT MARKET SITUATION. Profitability increased once again. Profit before taxes increased further. Combined ratio improved again to 95%. Securityoriented investment a key factor in stability. Assekuranz Award Austria 2011, insurance award for Business Class commercial insurance. Mobile phone storm alert system for desired locations. Market leader in Austria. TV commercial receives 2011 Werbespot Award for advertising. Annual Report 2011 Wiener Städtische

5 Editorial Showing Foresight Offer the best security for every situation in life. We consider this to be our main duty at Wiener Städtische. Long-term security and the right advice are more important than ever in difficult economic times. We are a reliable partner for our customers, operating the greatest number of local advisory offices country-wide to offer optimal solutions, custom-tailored products and straightforward claims settlement. Wiener Städtische develops many innovations to meet its customer needs to provide for the future, and is always one step ahead, because to us showing foresight means taking social change seriously, working for reforms and changing our products and services to adapt to changes in living conditions. This is based on our long-term risk-conscious business policy that customers can rely on today and in the future in every life situation. As the number 1 in Austria, we have shown foresight for 187 years, day after day, in and throughout Austria. Robert Lasshofer Chairman of the Managing Board of Wiener Städtische Annual Report 2011 Wiener Städtische

6 FOR A BETTER overview A Highlights & Management Highlights 2 Showing foresight (editorial) 3 Excellent profit performance (interview) 6 Wiener Städtische Managing Board 12 A day with the Managing Board 14 B COMPANY & STRATEGY Key figures 22 Leading in Austria 24 Vienna Insurance Group 26 Clear objectives and strategy 30 Skilled employees ensure success 34 Sustainable security 38 Carefree in all life situations 44 Campaigns with foresight 50 Annual Report 2011 Wiener Städtische

7 C MANAGEMENT REPORT 2011 Business development in Risk report 59 Outlook 61 Proposed distribution of profits 63 D ANNUAL FINANCIAL STATEMENTS 2011 Balance sheet 66 Income statement 72 Notes Auditor s report 105 Declaration by the Managing Board 107 Supervisory Board report 108 SERVICE Provincial advisory boards 110 Provincial head offices 113 Contact information and addresses 114 Glossary 123 Annual Report 2011 Wiener Städtische

8 B 6 Wiener Städtische AG Managing Board (l. to r.): Judit Havasi, Erich Leiß, General Manager Robert Lasshofer, Ralph Müller, Christine Dornaus. Annual Report 2011 Wiener Städtische

9 Highlights & Management COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS WE can look back on a year of excellent profit performance in A 7 An interview with the members of the Managing Board of Wiener Städtische Versicherung AG, General Manager Robert Lasshofer, Christine Dornaus, Judit Havasi, Erich Leiß and Ralph Müller. Mr Lasshofer, 2011 was not a particularly easy year for the economy in general, or for the insurance industry. How did Wiener Städtische do? Lasshofer: Wiener Städtische performed extraordinarily well, in spite of the difficult environment. We increased our result from ordinary activities to EUR 236 million, which is outstanding under the current economic conditions. We did, however, suffer a decline in premiums, mainly due to single-premium life insurance. This was due to an increase in the tax lock-in period from ten to 15 years. Elderly people in particular do not want to be locked-in for such a long period of time. This is why we are actively promoting a more realistic and, therefore, better solution. We were very successful in this product area in previous years, and were therefore all the more strongly affected by the change in the law. And how did the business perform in the other classes? Leiß: We recorded growth in all other classes in 2011, in some cases considerable growth. There was a significant turnaround, for example, in motor vehicle insurance. This was partly due to a considerable increase in new vehicle registrations last year an increase of 8.4%. However, there was also a recovery in the general discounting trend, for all policy types, making the motor vehicle business more profitable again. Our premiums increased by close to 3% for the non-motor vehicle class (i.e. property insurance without motor vehicle insurance). This was primarily because people are becoming considerably more serious about providing for the future, also with respect to their belongings. Insurance is being increasingly used in this way to cover risks that require protection. This is the case, for example, with catastrophe coverage, where we became the first mover by offering appropriately designed supplementary modules. Havasi: We recorded a 2.3% growth in health insurance in Some of the products in this class were updated, and some even redesigned completely, all while a very heated public debate was taking place on our health care system and its funding. We introduced two health care products in 2011 that show once again that we are serious about our responsibility to provide affordable insurance products. Given that people s financial resources diminish as they age, we are now offering a supplementary variant of our special class health care insurance that reduces premiums by 25%, or even 50%, starting at age 65. We are also a first mover in private nursing care provision, which we introduced as a supplementary module last year. We have also taken up this topic in the public debate, as we feel the funding gap is widening here. Lasshofer: The same is true of pension provisions, where we are working to maintain Annual Report 2011 Wiener Städtische

10 B 8 The Motor Vehicle business became more profitable again in Erich Leiß government funding, and we feel that a similar funding should be provided for private nursing care. When they think about private provisions for the future, people also generally think of a combination of pension and nursing care provisions. In our view, the government-sponsored old-age provision product should be improved by moving in the direction of investments with a very small weighting on shares and, so, with a guaranteed interest rate. How were you able to raise profits significantly in spite of a fall in premiums? The conditions on the capital markets were not particularly favourable... Dornaus: Given the environment, we can be truly proud of the profits we achieved. This was due, on the one hand, to highly capable asset management, which is generally conservative and security-oriented. In addition, we also pay close attention to the creditworthiness of the issuers when choosing investment securities, resulting in a high weighting of bonds with AAA and AA ratings in our investment portfolio. I say this, however, being fully aware of the scepticism needed when talking about ratings today, which is why this is just one of the criteria we use to choose investments. For 2012, we have set ourselves a goal of expanding our real estate portfolio in order to further increase the stability of our investments. Havasi: A high level of cost-efficiency also had a positive effect on our profits. The restructuring measures we have introduced in recent years, in particular combining all administrative responsibility for personal insurance, property insurance, and collections in three service centres, reduced costs substantially. We are also taking advantage of many synergies within the VIG Group, particularly with respect to back office areas and reinsurance programs. The only area in which we are purposely not cutting back is our employees. We are saving by reducing the complexity of our processes. Leiß: Thanks to highly disciplined cost management, we were able to further reduce our combined ratio to 95% in One has to keep in mind, however, that the reduction in claims figures for 2011 made it a year of very low losses. No natural catastrophes occurred in our area of operations, which was good for our profits, but does not mean that the risk of natural catastrophes is declining, and we nevertheless recorded a few large claims by our industrial customers was your first year of complete independence after the spin-off of Vienna Insurance Group Holding did everything work out well? Lasshofer: Focusing on our business operations in Austria proved to be a good move. With 3,500 employees, including approximately 2,000 directly involved in customer service, and around 1.3 million customers, we continue to be number 1 in the country and were able to increase premiums in all classes except, as previously mentioned, in life insurance, where the legal framework for single-premium policies simply changed to our disadvantage. We were nevertheless able to considerably increase our economic profit as compared to the previous year. Müller: We continue to systematically implement a regional approach for our 140 business offices, some of which were established in We are currently building a new provincial headquarters for Lower Austria, while simultaneously creating new business offices in locations such as Tulln and Herzogenburg. We are therefore investing heavily in Austria, especially in the locations where we are generating most of our premiums. The stability we enjoy in the VIG Group is a great help in all of this. You said earlier that you are not cutting costs where employees are concerned. What does this mean in concrete terms? Müller: It means that we see our employees as the key factor for the success of our regional approach, which is aimed at creating close customer relationships. Our goal therefore continues to be increasing the number of employees in customer service, Annual Report 2011 Wiener Städtische

11 Highlights & Management COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 and thereby also increasing customer satisfaction. We are therefore investing and adding new employees, particularly new field staff, even though these are difficult times. We are also currently training around 150 trainees under our trainee initiative, making us the leading Austrian insurance company in this area. We are looking for dedicated, outstanding individuals in this program qualifications, expertise and motivation are extremely important to us. The training and advanced training that each individual needs are therefore an important part of our annual employee performance reviews. We also place great importance on uniform principles and ethical conduct, which is why we reviewed our Code of Conduct last year and made it mandatory for all employees. Havasi: For us, equal opportunity is a matter of course 40% of Wiener Städtische s employees are women, and 34% of managers are women. In 2011 we established an Idea Exchange that gives female employees a good opportunity to become more involved with the Company. Designed as an internet platform, it not only allows suggestions to be submitted and rewarded, but also facilitates mutual support by allowing employees to work together to find solutions to real problems they are facing. This significantly promotes the exchange of knowledge and team spirit. What is happening in terms of customer service, products, and services? Havasi: 2011 was definitely a year of product innovation. We brought 14 new products to market, compared to a normal rate of three to five a year. These products covered all classes, and both private and business customers. Two examples were previously mentioned above, namely private nursing care and special-class premium reduction after the age of 65. Other examples of new products brought to market are a new life insurance product offering guaranteed interest for children, a single-premium product with inflation protection, and a supplementary module allowing hospital deductibles to be reduced. Leiß: In the area of mobility, we added a second bonus level to our highly successful motor vehicle climate bonus, a new insurance package for electric bicycles, and a product providing security against vehicle lease payment defaults. This underscores the self-image we have as a first mover in the Austrian insurance industry. We also consider it important to use all available channels to our customers, while remaining constantly up-to-date and innovative. In so doing, we also naturally make use of new technologies and are placing increasing emphasis on applications for smartphones. A not unimportant result is better customer access when a loss occurs, such as regular SMS information on the status of claims processing. Another example is a storm warning initiative we started in May 2011 as an important measure for effective loss prevention. Our WetterService mobile warning system provides free storm warnings to our private and business customers via an application or SMS for individually specified locations throughout Austria. How is the cooperation with Erste Bank Sparkassengruppe going? Lasshofer: We also continued to expand and intensify our efforts in this area last year, and will continue to do so in the future. This form of close cooperation between an insurance company and a bank is unique in Austria. It allows us to offer customers full service for all their financial needs. Due to the added value this creates, it is also well received by our mutual customers. There were a few changes and reassignments in the Wiener Städtische Managing Board in 2011 Lasshofer: Yes, changes were made and we also further optimised our management organisation by reassigning several areas of responsibility. Mr Ralph Müller joined our team on 1 April 2011 and is responsible for sales, marketing and advertising, areas that were previously mine. Peter Höfinger, on the other hand, withdrew from the Managing Board We pay close attention to issuer creditworthiness in our investments. Christine Dornaus A 9 Annual Report 2011 Wiener Städtische

12 B 10 We brought a total of 14 new Products to MArket in Judit Havasi on 30 June in order to dedicate himself more intensively to his duties in VIG. His former areas of responsibility, reinsurance and corporate customers, have now been assigned to Erich Leiß. Responsibility for human resources passed over to me from Judit Havasi at the end of In turn, she assumed responsibility for business organisation and IT from Erich Leiß, which gave him the freedom needed for the strategically very important corporate customer business. In addition, IT is particularly important in personal insurance, which is one of Judit Havasi s areas of responsibility. Mr Müller, what areas are you focusing on as a new member of the Managing Board? Müller: My goal is to ensure that customers feel they are getting excellent service. Based on the principle of no customer without an advisor, we will increase our efforts even further in the future to create the closest possible relationships with our customers. Our sales employees and distribution partners both have an extremely important role to play in this. We must successfully defend and expand our position as market leader in all areas of our broad portfolio of product offerings. This requires great commitment, as customers are rightfully more demanding today. Personal service, transparent product offerings, innovative solutions for all situations in life, and the power of our brand are central factors in this. We want to apply these strengths of our Company even more effectively. In late autumn, we also used an advertising awareness campaign to underline this with the themes: Showing Foresight, Be Able to Listen, and Talk in Plain Language. With respect to transparency, which is also an important topic in connection with Solvency II, how are the preparations coming along? Dornaus: We started full force on the implementation of all necessary measures in The original plan was, after all, for the new rules to enter into force at the beginning of 2013 although based on the current situation it now looks likely to be delayed. Solvency II brings a higher level of transparency with respect to our ability to fulfil our benefit commitments at any time and with respect to whether the Company is sound and solvent today and in the future. On the whole, therefore, the trend is in the direction of more careful, sustainable management. In addition, transparency also creates a greater level of trust. We therefore also feel this is a constructive change, even though a few provisions are still under discussion. It means more effort for us, and also requires a change to our management culture, since risk considerations have to play a greater role in all decision-making. The biggest hurdles are continuity of documentation, and the preparation and processing of associated reports and their integration into the dayto-day life of the Company. You just mentioned sustainability and trust, which brings me to the topic of social responsibility. What are your thoughts in this area? Havasi: Social involvement has always been very important to us. We have worked together with organisations like the Red Cross, Caritas, Hilfswerk, and Volkshilfe for many years. It is, after all, normal for an insurance company to help others who are not doing so well in essence, that is what our business is about. However, we also contribute to art and culture by sponsoring, for example, the Bregenz Festival, children and youth, or sports and exercise. Müller: In the spirit of our many years of commitment, we brought the Social Active Day to life in The idea was incredibly popular, with 200 employees volunteering for the initiative in just the first five weeks. This provides additional support for the sponsored parties that were just mentioned, and our employees are also free to make their own suggestions. In this way, we also demonstrate internally that social involvement is one of our central concerns, while at the same time motivating our employees. This means that we not only provide monetary support, but Annual Report 2011 Wiener Städtische

13 Highlights & Management COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 also make a personal contribution. It also fits in with our commitment to a regional approach, as there are projects receiving support throughout Austria. In addition, it is also fascinating to see what this creates internally. Employees talk with each other about what they are doing, considerably strengthening the bonds between employees and to the Company. The members of the Managing Board, by the way, have also taken part in this initiative. For example, I myself helped in the integration kindergarten in Brigittenau, the 20th District of Vienna, and was impressed by the enthusiasm of the children. We will focus on further increasing cus TOMerorieN TATion in sales. Ralph Müller Let us finish with a look into the future. What strategy will Wiener Städtische follow? Lasshofer: Even though conditions may have changed, our goals and strategy remain the same. First and foremost, we want to maintain and further expand our leading position in the Austrian insurance market. In addition to products and services that continue to set the trend for the future, the road to our goals is built on nationwide advice and service, top efficiency, an even closer partnership with Erste Bank and the Sparkasse savings banks, and a conscious commitment to our social responsibility. And what are the prospects for 2012? Müller: We began laying the foundation in our work plan for 2012 under the motto inspire our customers, which is aimed at further intensifying the level of advice provided, promoting the theme of oldage provision as a growth area, gaining new distribution partners, and positioning Wiener Städtische as the partner for brokers, agents, and financial service providers. Customer satisfaction is a key success factor we are putting our full efforts into. A 11 Lasshofer: We are doing everything possible to continue our record of good economic profits. The October 2011 forecast by the Austrian Association of Insurance Companies (VVO) predicts market growth of 1.8% over all classes in We would very much like to outperform this forecast for the overall market. In order to also increase our profits, we are naturally also working toward further improving our combined ratio. Thank you for the interview. Separating from VIG and concentrating on business operations in Austria has proven to be the right decision. Robert Lasshofer Annual Report 2011 Wiener Städtische

14 WIENER STÄDTISCHE MANAGING BOARD 12 Erich Leiß Judit Havasi Robert Lasshofer Ralph Müller Christine Dornaus Annual Report 2011 Wiener Städtische

15 Highlights & Management COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 Erich LeiSS Member of the Managing Board Judit Havasi Member of the Managing Board Robert Lasshofer General Manager, CEO Ralph müller Member of the Managing Board Christine dornaus Member of the Managing Board A Born in 1956 Born in 1975 Studied law Born in 1957 Studied social sciences and economics Born in 1968 Studied law Born in 1963 Studied commerce 13 Erich Leiß joined Donau Versicherung in In 1999 he became head of the property/casualty department. In 2007 he was appointed to the Managing Board with responsibility for the area of actuarial practice. Erich Leiß was a member of the Wiener Städtische Austria Committee of the Vienna Insurance Group Managing Board starting as of 1 January 2009 before his appointment to the Managing Board of Wiener Städtische Versicherung AG. Judit Havasi has been employed by the Vienna Insurance Group since She began as an internal audit employee in UNION Biztosító, and became the head of this company in Judit Havasi was a member of the Wiener Städtische Austria Committee of the Vienna Insurance Group Managing Board and a member of the Managing Board of UNION Biztosító in Hungary before her appointment to the Managing Board of Wiener Städtische Versicherung AG in Robert Lasshofer first worked for the Group at Union Versicherung AG in After that, he became managing director of AWD Gesellschaft für Wirtschaftsberatung and was appointed to the Managing Board of Donau Versicherung in He became a member of the Managing Board of Wiener Städtische Versicherung AG in In October 2007, he was appointed Deputy General Manager. He has been General Manager of Wiener Städtische Versicherung AG since 3 August Ralph Müller was a member of the Managing Board of AWD Holding AG with responsibility for Austria and the CEE region before being appointed to the Managing Board of Wiener Städtische Versicherung AG on 1 April From 2000 to 2004, he was managing director of Bank Austria Finanzservice. He was head of sales starting in 2005, and subsequently a member of the managing board of Bank Austria responsible for the private and commercial customer areas. Christine Dornaus began her career at Wiener Städtische Versicherung AG in 2002 as assistant manager of the investment management and loans department, which she has managed since Before this, she followed a 10-year banking career by setting up the controlling department in Invest Equity Beteiligungs AG. She was a member of the Wiener Städtische Austria Committee of the Vienna Insurance Group Managing Board and a member of the Extended Board before being appointed to the Managing Board of Wiener Städtische Versicherung AG in Areas of responsibility: General liability insurance, property insurance, legal protection insurance, private and commercial business, motor vehicle insurance, special damages, corporate and large customer business, reinsurance, property insurance service centre Areas of responsibility: Company law, sponsoring, business organisation, IT management and provider management, life insurance, casualty insurance, health insurance, personal insurance service centre Areas of responsibility: Management of the Company, strategic matters, media and public relations, internal communications, Erste Bank Sparkassengruppe partnership, human relations and personnel development, general secretariat, communication with the Supervisory Board, representative vis-a-vis the supervisory authority, insurance associations and trade associations Areas of responsibility: Marketing and advertising, central sales management, primary distribution, secondary distribution, commercial client business, corporate and large customer sales, provincial headquarters Areas of responsibility: Securities and funds, equity investment management and loans, real estate, finance and accounting, collections service centre Annual Report 2011 Wiener Städtische

16 A A DAY WITH THE WIENER STÄDTISCHE MANAGING BOARD 14 7:55 A.M. Erich Leiß is already talking with a field employee early in the morning about the solution for a claim in the Large Customer segment. He always makes time to talk with sales staff. Erich Leiß area of responsibility includes, among other things, property insurance for private and business customers, as well as corporate and large customers. Claims processing is of key importance to his everyday work. Cooperative garages, for instance, allow efficient time-saving organisational structures that directly benefit customers. A Wiener Städtische adjuster can simply drive to such a garage to assess the claim. This saves customers travel time, waiting time and formalities. Annual Report 2011 Wiener Städtische

17 8:00 A.M. Judit Havasi checks the agenda for the day with her assistant and takes the documents for today s Idea Exchange meeting, one of Wiener Städtische s many employee initiatives. A 15 Our 2012 work programme is all about intensifying our sales activities. Our main goal is to provide excellent service that further increases customer satisfaction. 9:15 A.M. Ralph Müller (centre) calls a quick sales meeting in his office. He discusses current issues with Walter Wichtel, head of Corporate Sales (left), and Gerhard Heine, head of Alternative Sales. The focus is on objectives and sales measures for The latest sales figures are analysed and agreement is reached on main priorities and the implementation of planned measures over the next few weeks. An initiative to expand both distribution channels is planned for Annual Report 2011 Wiener Städtische

18 A 16 10:00 a.m. Christine Dornaus, responsible for the investment area, talks on the phone with an employee about the details that still need to be clarified regarding a possible real estate investment. In accordance with its conservative investment policy, Wiener Städtische is planning to expand its real estate portfolio in :55 a.m. Ralph Müller informs Robert Lasshofer about current sales results. Wiener Städtische continues to follow the principle of regionalism, even in difficult economic times. Having a nationwide presence in Austria is a fundamental decision that allows customer contact to be further intensified in the future and the best possible advisory services to be offered. Wiener Städtische is a reliable partner for its customers. Our motto is: An advisor for every customer. We want our customers to be enthusiastic about our expertise and innovative products. Those are our stated goals for Annual Report 2011 Wiener Städtische

19 Highlights & Management COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 A 17 11:30 a.m. The Idea Exchange committee: Robert Redl, Robert Bilek, Chairman Judit Havasi, Franz Urban, Ralph Müller (l. to r.) The committee meets periodically to discuss and evaluate ideas submitted by employees and to decide on their implementation. The suggestions cover a wide range extending all the way from minor improvements in the workplace to Group-wide innovations. More than 250 ideas submitted since the beginning of September 2011, more than 400 comments, and more than 10,000 visitors show the great interest generated by the Idea Exchange. Annual Report 2011 Wiener Städtische

20 A 18 1:30 p.m. Erich Leiß receives the latest figures on the mobile phone storm warning from co-worker Astrid Frisch. We work continuously to optimise loss prevention by integrating state-ofthe-art technologies. The storm warning initiative that began in 2011 to deliver warnings by SMS or app has been very well received by our customers. They greatly value the opportunity to receive storm warnings not only for the location where they live, but for any location in Austria. Annual Report 2011 Wiener Städtische

21 A 2:15 p.m. Judit Havasi talks with Sabine Weiss, who is responsible for advertising and sponsoring, about activities for Social Active Day Wiener Städtische is once again promoting employee social involvement to help the needy and disadvantaged in our society in 2012 by making a working day available to all employees who want to volunteer their time. Social responsibility is a key theme that is consciously and actively promoted within our company. The impressive success of the Social Active Day shows that our employees are highly dedicated to volunteer activities. 19 2:45 p.m. On the way to a meeting with other members of the Managing Board, Robert Lasshofer meets Doris Janik, head of the General Secretariat, and hears about the latest developments in the Austrian insurance market. Annual Report 2011 Wiener Städtische

22 A 20 3:35 p.m. Erich Leiß and Annemarie Ulbing, head of the Property Insurance Service Centre, discuss the new customer satisfaction study. In order to increase customer satisfaction, Wiener Städtische focuses not only on quick and easy claims processing, but also on optimising measures for loss prevention. 4:15 p.m. Christine Dornaus chairs the investment meeting with Reza Kazemi- Tabrizi, Robert Burger, Christian Buchmayer and Anton-Leonhard Werner (l. to r.). The meeting begins with a discussion of the current market situation. Christine Dornaus examines investment valuations and discusses with her team the next steps to be taken for the planned transactions. In accordance with the policy of risk-conscious business management, the focus is on security-oriented investments. Annual Report 2011 Wiener Städtische

23 Highlights & Management COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 A 21 6:15 p.m. Robert Lasshofer is on his way to the 20th floor to a discussion meeting. Stability and security have top priority in every decision. We ensure this by making selected investments in sound projects that guarantee reliability for our customers even in economically difficult times. Annual Report 2011 Wiener Städtische

24 Key Figures Wiener Städtische Versicherung AG in EUR million B 22 Gross premiums written 2, ,274.6 Property/casualty insurance 1, ,066.2 Life insurance 1, Health insurance Financial result Result from ordinary activities Total investments 12, ,323.0 Investments 10, ,107.1 Investments for unit-linked and index-linked life insurance 2, ,215.9 Underwriting provisions (excluding unit-linked and index-linked life insurance) 8, ,531.3 Underwriting provisions for unit-linked and index-linked life insurance 2, ,164.9 Equity capital Number of employees 3,497 3,462 Office employees 1,546 1,543 Field sales representatives (incl. trainees) 1,951 1,919 Annual Report 2011 Wiener Städtische

25 Highlights & Management COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS PREMIUMS BY SEGMENT 2011 INSURANCE PAYMENTS* BY SEGMENT Property/Casualty 46.9% Life 38.4% Property/Casualty 40.5% Life 43.7% B Health 14.7% Health 15.8% * Incl. costs of claims processing RESULT FROM ORDINARY Activities BY SEGMENT STRUCTURE OF INVESTMENTS 31 DEC 2011* Property/Casualty 74.2% Life 12.9% Health 12.9% Other 0.5% Real estate 2.7% Loans 14.0% Securities 64.6% Equity investments 18.2% * Investments as at 31 December 2011 excluding investments for unit-linked and index-linked life insurance: EUR 10, million Annual Report 2011 Wiener Städtische

26 Leading IN Austria B 24 In an excellent position even in financially difficult times: as a reliable partner with foresight, Wiener Städtische offers security and stability, along with the experience of a company that has been well established for 187 years. Other key success factors for Wiener Städtische s market leadership in Austria are its financial strength, know-how, innovative insurance solutions and top-level consulting competency. With a market share of about 14% and a premium volume of about EUR 2.27 billion most recently, Wiener Städtische Versicherung is the leading Austrian insurance company. It is also the largest individual company in the international Vienna Insurance Group (VIG). It has its registered office in Vienna and is focused on activities within the Austrian market. As an insurance partner, it is responsible for more than 1.3 million customers across all lines of business. In addition, Wiener Städtische has branch offices in Italy and Slovenia. Consistent customer orientation With provincial headquarters in all nine federal states, about 140 business offices and approximately 2,000 advisors, Wiener Städtische is clearly focused on having a nationwide presence in Austria in order to provide the best possible advisory services and ensure proximity to its customers. The consistent implementation of the principle of regionalism is the basis for the ongoing optimisation of customer relationships, comprehensive professional support throughout Austria and prompt claims settlement. Clear customer orientation is the crux of Wiener Städtische s success and will continue to be one of the main pillars of its strategic orientation. This is also the core strength of all employees and distribution partners. Reliable partner in all situations As an innovative insurance company, Wiener Städtische offers individual, flexible insurance solutions for every personal life situation as well as customised packages for businesses in all lines of business (property/casualty, life and health insurance). Banking products are also becoming increasingly important. In 2008, Wiener Städtische addressed the growing need of its customers for comprehensive support by entering into a distribution agreement with Erste Bank Sparkassengruppe. Continuous investments into this partnership expand and improve the services offered on an ongoing basis in order to be able to offer customers one-stop solutions in all financial matters. Source of economic stimulus Thanks to its long-standing business history and strong market position, Wiener Städtische is one of the most important investors and sources of stimulus for the business hub Austria. Annual Report 2011 Wiener Städtische

27 Highlights & Management COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 B 25 We are represented throughout Austria. Judit Havasi Wiener Städtische is one of the most important institutional real estate investors in the country and regularly adds properties to its investment portfolio. Also when it comes to investments, Wiener Städtische always acts with a view toward maximum security and a high return for the policy holders. As an equitable partner for industrial enterprises and large corporations, Wiener Städtische also makes a major contribution to the stability and growth of the Austrian economy. Stability and security Targeted investments in solid projects as well as the Company s long-standing experience and success provide stability even in economically difficult times. In addition, a high equity ratio and integration into the broadly positioned Vienna Insurance Group (VIG) provide security. VIG, which is listed on the Vienna Stock Exchange s leading index, occupies a leading position on the market in Central and Eastern Europe and makes a significant contribution to Austria as a financial centre. Already today, Wiener Städtische is well prepared for the new risk regulations and capital requirements for insurance under the terms of the EU Directive Solvency II. factbox R With a market share of about 14% and 1.3 million customers, the leading insurance company in Austria R new provincial headquarters, about 140 business offices and 3,500 employees, of which 2,000 are advisors, ensure the provision of services nationwide R Strong financial position due to solid capital resources and integration into the Vienna Insurance Group Annual Report 2011 Wiener Städtische

28 VIENNA INSURANCE GROUP B 26 With a premium volume of approximately EUR 9 billion and around 25,000 employees, Vienna Insurance Group (VIG) is one of the leading insurance groups in Austria and Central and Eastern europe (CEE). Innovation, strong customer relationships and an emphasis on customer service create a high quality product portfolio offering attractive solutions in both the life and non-life insurance segments. VIG s clearly focused strategy for expansion in the CEE region enabled it to make a transition from being an Austrian insurance company to an international group at an early stage. Today, VIG is represented by approximately 50 insurance companies in 25 countries. VIG stands for financial stability, and offers a high level of security to customers, shareholders, partners and employees. One of the key reasons is its conservative investment policy. This is reflected in its A+ rating with a stable outlook, which makes Vienna Insurance Group the best-rated company in the ATX leading index of the Vienna Stock Exchange. VIG has also been listed on the Prague Stock Exchange since In addition to economic considerations, the Group also places great importance on an involvement with social concerns and helping to create a future society worth living. In this way, Vienna Insurance Group remains true to its fundamental goal of value-oriented growth. Core market: Austria Vienna Insurance Group is the largest insurer in Austria, where it holds an excellent position with its group companies Wiener Städtische, Donau Versicherung and s Versicherung. The strength shown in this core market since 1824 is one of the reasons for the successful realisation of VIG s internationalisation strategy. Annual Report 2011 Wiener Städtische

29 Highlights & Management COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 A clear division of responsibilities within the Group allows full concentration on Austria. Robert Lasshofer Major player in the CEE region Vienna Insurance Group started its expansion in 1990, making it one of the first Western European insurance companies to expand into Central and Eastern Europe. Today the Group is one of the most important players in this region and earns more than 50% of its total Group premiums in the CEE region. It has group companies and branches in the following countries in this region: Albania, Belarus, Bulgaria, Croatia, Czech Republic, Estonia, Georgia, Hungary, Latvia, Lithuania, Macedonia, Montenegro, Poland, Romania, Russia, Serbia, Slovakia, Slovenia, Turkey and the Ukraine. VIG has also been represented in Bosnia-Herzegovina since Due to many years of experience and excellent knowledge of the markets in this region, and to its expertise in all insurance matters, VIG is optimally positioned to continue benefiting from future increases in the standard of living in the CEE region and from the accompanying increased need for insurance. Vienna Insurance Group is also represented in Germany, Liechtenstein and Italy. A common goal: to offer security to customers Every customer is unique. They differ in their need for insurance and retirement provisions, living circumstances and the way they like to receive advice. Vienna Insurance Group is aware of this. There is no standard insurance customer for VIG, it therefore pays close attention to special local characteristics, and maintains a presence with more than one brand name and broad distribution networks in many of its markets. There is one thing, however, that all Vienna Insurance Group companies have in common: the goal of providing security to customers. household and homeowner insurance as well, today retirement provisions, savings and investment products in the form of life insurance policies are enjoying rising popularity. With the establishment of VIG RE, the Group has also had its own reinsurance company since The location of the company s registered office in the Czech Republic underscores the importance of the CEE region as a growth market for VIG. Strategic partnership with Erste Group Erste Group is a strong partner for Vienna Insurance Group. It also operates independently, has the same values and follows a similar growth strategy. The two companies benefit equally from a longterm cooperation agreement concluded in 2008 for Austria and the CEE region. Erste Group distributes VIG insurance products, whereas VIG companies offer Erste Group banking products in return. The cooperative arrangement gave Vienna Insurance Group access to a wellestablished bank distribution network. Skilled employees bring success Employees play a particularly important role in the success of a service company. Here too, in addition to dedication, professional advice, and excellent service, Vienna Insurance Group places great importance on understanding local markets and close customer relationships. Further information on Vienna Insurance Group is available at or in the VIG Group Annual Report. B 27 VIG companies have offered a complete range of insurance solutions in Austria for many decades in both the non-life and life segments. Although the markets in Central and Eastern Europe are currently still at a different economic level, they are increasingly moving in a similar direction. While demand in this region in the period following 1989 was initially strongest for motor vehicle insurance, and then Annual Report 2011 Wiener Städtische

30 AVOID THE PROBLEMS OF TOMORROW TODAY. PROVIDE FOR THE FUTURE. B 28 Annual Report 2011 Wiener Städtische

31 Highlights & Management COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 Take care of tomorrow, while still being able to enjoy today. Our Prämienpension and Garantiepension pension products offer flexible retirement provision models at a reasonable price, and help provide a secure standard of living even after the end of your professional life. B 29 What we can offer you Don t worry about getting old. Our Extra- Pflegegeld nursing care insurance adds many benefits that enhance the basic government insurance, closing a big gap in your retirement provisions. Annual Report 2011 Wiener Städtische

32 CLEAR OBJECTIVES AND STRATEGY Wiener Städtische s overarching strategic objective is clear and seemingly simple: continuing to develop its position as the leading insurance company in Austria. B 30 Our goal is to ensure sustained Company performance over the long term. Robert Lasshofer Radical change continues in insurance markets. Regulatory changes, a new risk perception as a result of the financial and economic crises and changes in customer behaviour pose major challenges to insurance companies. Better informed and knowledgeable consumers create a competition in trust. On the other hand, as a result of people s increasing need for security, the crisis brings new business opportunities, especially in consulting as well as in the pension and property insurance business. OBJECTIVES Developing a leading market position With a market share of about 14% and a premium volume of EUR 2.27 billion, Wiener Städtische easily remained number 1 in the Austrian market in Approximately 1.3 million private and business customers rely on the first-class service provided by Wiener Städtische in the life insurance, health insurance and property and casualty segments. Wiener Städtische s primary strategic objective is not only to maintain this leading position but also to continue to develop it. As a reliable partner to its customers in all life situations, it focuses on open dialogue, a high degree of transparency and a business perspective that extends beyond the here and now. With these objectives in mind, it has developed a series of operational objectives that are to contribute to the long-term security and enhancement of the Company s success. > Best possible consulting services for the customers > Targeted personnel development > Innovation of products and services > Increasing profitability > Sustainable development of the Company s management and investments > Developing the partnership with Erste Bank STRATEGY Several strategic cornerstones serve to implement these objectives always with a view to the wellbeing, security and peace of mind of the customers. Credibility and trust, customer satisfaction and quality of service, responsibility and initiative as well as appreciation and respect are the fundamental values. The motto chosen for 2012 Inspire our clients! perfectly conveys the central strategic approach. Best possible service nationwide Due to the consistent implementation of the principle of regionalism, Wiener Städtische is represented and close to its customers throughout Austria. Established components of this proximity are the provincial headquarters in all nine federal states, the approx. 140 business offices throughout Austria and the approx. Annual Report 2011 Wiener Städtische

33 Highlights & Management COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 B 2,000 advisors in the Company. Even in economically turbulent times, Wiener Städtische holds on to its wide regional base and invests in establishing and expanding its locations. Constant innovation When it comes to the development of innovative insurance products and services that are tailored to meet customer needs, Wiener Städtische has traditionally been the trendsetter in Austria. The Company will continue to maintain and develop this position. Optimisation, simplification and individualisation are the most significant challenges in this regard. For example, in 2011 storm alert services were provided to all customers free of charge via an app. Developing the partnership with Erste Bank Sparkassengruppe The successful partnership, which has been going on since 2008 and which allows customers to obtain comprehensive advice on a full range of financial and insurance matters, will be further developed and strengthened, as both companies have customer potential that has not yet been fully exploited. misation of administrative services and synergies to continuously improve the combined ratio and result from ordinary activities. The Company also deliberately pursues a conservative investment policy. Social responsibility Since its foundation 187 years ago, Wiener Städtische has upheld values, such as joint or sustainable management. This fundamental attitude is a permanent process that is firmly anchored in the corporate culture. Reliable customer support is just as much part of it as equal treatment, caring for employees, respect for the environment, social involvement or promoting sports, arts and culture. Targeted personnel development Wiener Städtische employees primarily advise customers. Employee development and training of young employees are, therefore, crucial for lasting success in personal advisory services. We want to inspire our customers in Ralph Müller 31 Improving efficiency and cost control Long-term success requires solid figures and high efficiency. Accordingly, Wiener Städtische s aim is for targeted growth in premium volume as well as further opti- Annual Report 2011 Wiener Städtische

34 OUR CUSTOMERS UNDERSTAND THEIR BUSINESS. WE UNDERSTAND OURS. B 32 Business Class is right for your business. Professional service and advice even for complex requirements. We take care of all of your insurance needs, so that you can concentrate on your business. What we can offer you Flexible custom-tailored protection with special Plus- Risk packages. In addition to extended cover, you can even obtain cover for natural hazards with our unidentified hazards and natural hazards packages. Annual Report 2011 Wiener Städtische

35 Highlights & Management COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 B 3 3 Annual Report 2011 Wiener Städtische

36 SKILLED EMPLOYEES ENSURE SUCCESS B Experience, skills and the involvement of its employees are key factors for success in Wiener Städtische s leading position on the Austrian insurance market. First-class educational and training programmes, as well as initiatives to motivate employees contribute significantly to customer satisfaction and optimal customer consulting. 3 4 Jobs for about 3,500 employees During its 187 years in business, Wiener Städtische has become the largest employer in the Austrian insurance industry. Of the approx. 3,500 staff members, about 2,000 work as advisors. Open communication and a Code of Conduct, which is based on Wiener Städtische s corporate values, are of central importance to all the employees in their daily Trainees: Matthias Krischke, Joana-Nina Matejka, Jessica Sedlacek, Dominik Salomon, Lisa Dolezal and Fabian Leidenfrost (l. to r.). interactions. The corporate behaviour towards the employees, customers and shareholders is guided by honesty and sustainability, leadership in matters large and small, customer satisfaction, diversity and equal opportunity. In addition, values, such as respect, fairness and appreciation, characterise the corporate culture. Largest apprentice trainer in Austria As the number 1 apprentice trainer, Wiener Städtische employs about one third of all apprentices that are trained as insurance advisors throughout Austria. About 250 young people from all over Austria have completed their apprenticeship with Wiener Städtische over the past five years. In 2011, Wiener Städtische continued to focus on the promotion of young talent and offered again training with open-ended career opportunities to about 100 young people as part of the apprentice recruitment. Thus, in addition to a sound training, the apprentices also obtain the necessary equipment for a promising professional career. Approximately 150 apprentices, of which 36% are women, are currently undergoing training. Personnel development in focus In addition to general education and training, which are central elements of personnel policy, group-wide analyses of potential form the basis for a targeted, Annual Report 2011 Wiener Städtische

37 Highlights & Management COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 needs-based support programme for the purpose of imparting know-how and corporate values on an individualised basis. Wiener Städtische continuously invests in training and support programmes in order to offer its employees growth opportunities and career perspectives. An important focus of personnel development is a three-level training programme for executives, which systematically supports the target groups future/young executives, department heads and group leaders in customised internal courses. The goal is to strengthen the leadership skills of the participants. In addition, the Company makes a conscious effort to promote the exchange of information and the continuous transfer of best practices among all employees. In doing so, Wiener Städtische contributes significantly not only to the personal and professional development of its employees, but also to the long-term security of its corporate success. Exchange of ideas creativity pays off die Ideenborse Employees can demonstrate their faith in their own ideas on Wiener Städtische s Ideas Exchange. All employees are invited to submit via this online platform their ideas, beliefs and experiences in order to improve processes, products or workplace design. They can also actively support the new and onward development of products and services. A committee under the direction of Judit Havasi meets on a regular basis and evaluates every single idea that has been submitted. Equal treatment in practice In the course of its long tradition, Wiener Städtische has attached great importance to equal treatment, as well as finding a balance between life at work and home. With two women and mothers in the five-member Managing Board and 35% women in middle management positions, the Company puts this principle into practice. In addition, since 2005, Wiener Städtische has been a quick starter with respect to the so-called Daughters Day, as part of which all Viennese girls between the ages of eleven and sixteen are invited to take a look behind the scenes of a typical workday of Viennese companies. In 2011, 40 girls took this opportunity to learn about the responsibilities of an insurance advisor at Wiener Städtische. As one of the most family- and femalefriendly companies in Austria, Wiener Städtische has already received several awards. As early as 1974, it played a pioneering role as one of the first employers in Austria to introduce a company kindergarten in Vienna. Today, 104 children of employees are looked after in these facilities. The possibility of flexible working time and work organisation models, as well as the return of 90% of the em ployees from maternity leave, demonstrate the success of the measures for the benefit of a work-life balance. Naturally, Wiener Städtische also practices equal treatment when it comes to persons with special needs and the topic of immigration. It has 102 disabled employees, which is more than what is legally required. In addition, Wiener Städtische supports multilingualism as an important element when it comes to customer information and English is part of its minimum requirements in all areas. Employee statistics as of 31 December 2011 Number of employees 2010 As of 31 Dec 2011 As of 31 Dec Change Administration 1,546 1,543 3 Headquarters 1,030 1, Provincial headquarters (including business offices) Sales 1,802 1, Sales representatives 1,598 1, Organisational employees Apprentices Total 3,497 3, The decrease in the number of personnel by 35 employees is mainly due to natural turnover and the integration of duties during the structural reorganisation of the Company. B 35 Annual Report 2011 Wiener Städtische

38 DON T JUST TALK ABOUT RESPONSIBILITY. TAKE SOME, TOO. B 36 Insurance has a great deal to do with responsibility that extends far beyond the business itself. One has to look at people in their entirety. We therefore encourage our employees to become socially involved. What we can offer you Many years of social involvement. Approximately 200 employees were involved in helping the disadvantaged during just the first five weeks of the Social Active Day initiative. Annual Report 2011 Wiener Städtische

39 Highlights & Management COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 B 37 Annual Report 2011 Wiener Städtische

40 Sustainable security Wiener Städtische actively assumes social responsibility vis-à-vis its employees, customers and society. Values, such as social involvement and sustainable management, are integral parts of corporate governance. B 3 8 Social Active Day For many years, Wiener Städtische has been socially committed to and has cooperated with aid organisations, such as Caritas, Hilfswerk, Kinderfreunde, Diakonie, the Red Cross, Volkshilfe, the Samaritans and Integrationshaus. In 2011, the European Year of Volunteering, Wiener Städtische sent another powerful message of the high importance attributed to social issues within the Company with the so-called Social Active Day. The Social Active Day initiative was introduced in order to actively support the pro bono involvement of its employees. Already in the first five weeks, about 200 employees used Social Active Day in around 50 projects for the benefit of disadvantaged members of our society. They were able to get involved with aid organisations, with which Wiener Städtische had a pre-existing partnership, or with projects suggested by them. The range of activities was comprehensive and included giving soup to those in need, caring for the elderly, working with persons with special needs, caring for children from socially disadvantaged families, as well as replenishing the shelves at social supermarkets. The Managing Board also participated in this activity. Robert Lasshofer spent a day accompanying the residents of the nursing ward of a retirement home. Judit Havasi spent time with children with special needs and helped out at the Am Himmel nursery, which provides curative education, while Ralph Müller visited the Kinderfreunde Kindergarten in Engerthstraße, where he demonstrated his talent as a storyteller. Judit Havasi dedicated her time to the Am Himmel remedial nursery on her Social Active Day. Sustainable products with foresight Wiener Städtische also meets its responsibility for providing sustainable and longterm security to its customers through affordable products as part of the government-sponsored pension plan and individually customisable models for a company pension plan. Thus, Wiener Städtische covers both elements that are recommended within the scope of the Annual Report 2011 Wiener Städtische

41 Highlights & Management COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 B 39 Ralph Müller with children from the Kinderfreude Kindergarten. three-pillar model as a supplement to government pension with attractive offerings. Products tailored to the needs of persons with special needs In 2011, Wiener Städtische developed, together with the Behindertensportverband Salzburg (Disabled Sports Federation of Salzburg), a unique, tailor-made insurance concept for group health and accident insurance. Previously, the approximately 7,000 members of this federation had difficulty in obtaining or had limited access to insurance solutions as a result of their physical impairment. This obstacle could only be overcome with the help of Wiener Städtische a significant step towards equal treatment in the insurance field. The framework agreement offers comprehensive insurance coverage in the event of an accident or illness, including spouses or domestic partners as well as children of members of the Disabled Sports Federation. Accident insurance also includes insurance coverage for participation in national competitions as well as the option of co-insurance for international competitions. Micro-insurance celebrating five successful years Socially disadvantaged groups are more exposed to risks, such as illness, accidents or loss of property, than the average population. Thus, Wiener Städtische was the first insurance company in Austria and in the European Union to address the issue of micro insurance. In 2011, the cooperation with the Zweite Sparkasse, the Bank für Menschen ohne Bank ( the bank for those without a bank ), has already celebrated its fifth anniversary. Zweite Sparkasse provides people in need with particularly favourable banking and insurance services free of charge. Included within the scope of this cooperation, Wiener Städtische gives customers of Zweite Sparkasse basic insurance coverage with free legal advice once every three months, as well as free accident insurance. Wiener Städtische Versicherungsverein Vermögensverwaltung Vienna Insurance Group provided support for this activity. Sponsorship for art and culture By supporting art and cultural projects, Wiener Städtische significantly contributes Providing support to socially disadvantaged groups is one of Wiener Städtische s fundamental values. Robert Lasshofer Annual Report 2011 Wiener Städtische

42 B 4 0 Hermann Fried, Wiener Städtische Provincial Director, Christine Dornaus, Member of the Wiener Städtische Managing Board, and Thomas Irschik and Gerhard Fida, Managing Directors of Wien Energie Fernwärme, at the awarding of the CO 2 certificate by the Vienna University of Technology (l. to r.). to the diversity and attractiveness of Austria s cultural landscape. For many years Wiener Städtische has been the sponsoring partner of institutions, such as Burgtheater Wien, Volkstheater Wien, Theater in der Josefstadt, Vereinigte Bühnen Wien, Opernfestspielen St. Margarethen, Bregenzer Festspiele, Carinthischer Sommer and Viennale to name just a few examples. Activities for children, adolescents and families Wiener Städtische is also a reliable partner for supporting children and adolescents taking part in sports activities, creative projects and initiatives on the issue of safety. It supports, for example, Kinderfreunde, the Zoom Kindermuseum, and the KinderuniWien. Supporting sports and exercise Sports are an important contributing factor in maintaining one s health. The correct preventive health care, vitality and a healthy body are essential requirements for a happy and fulfilled life. As sponsor of various Austrian sports associations, Wiener Städtische supports numerous projects, such as the Vienna City Marathon, the Wachau Marathon, the Vienna Capitals and the Wiener Käfigmeisterschaften. Annual Report 2011 Wiener Städtische

43 Highlights & Management COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 Careful handling of resources Wiener Städtische also takes environmental protection very seriously as part of its activities. The Company focuses primarily on campaigns on raising the awareness of its employees as well as on the ongoing optimisation of energy efficiency in the entire building and office operations, including the IT infrastructure. This also includes the use of environmentally friendly materials as well as energyefficient lighting systems. In addition, Wiener Städtische, as a cooperation partner, gives the IT hardware that it no longer uses to the non-profit organisation AfB (Arbeit für Menschen mit Behinderungen, Work for People with Disabilities). AfB collects the IT equipment from its cooperation partners, tests it, repairs it, if necessary, and re-sells it with a twelve-month warranty. AfB has set out to create workstations for persons with special needs at its facility and has thus established the first non-profit IT system house in Europe. When it comes to supplying its office buildings with heating, Wiener Städtische increasingly uses district heating, and thereby contributes significantly to the reduction of the greenhouse gas CO 2. The new provincial headquarter in St. Pölten, which is still under construction, will be built according to the most modern energy technology principles and will be supplied with district heating. By using this environmentally friendly, reliable and efficient technology, Wiener Städtische saved a total of 1,575 tons of CO 2 at three office locations in Vienna in In the coming years, a climate protection partnership with Wien Energie Fernwärme is expected to help to further increase district heating and lower the emission levels more than before. The CO 2 savings will be confirmed by a certificate issued by the Vienna University of Technology. factbox Wiener Städtische as Sponsor R Children & adolescents: Sponsoring projects, including Kinder-Sicherheitsolympiade or Zoom Kindermuseum, and collaboration with child-oriented organisations. R Social involvement: Cooperation with Zweite Sparkasse, the Bank für Menschen ohne Bank, and with many aid organisations. R Arts & culture: Wiener Städtische supports cultural projects, theatre productions, as well as film and music festivals. R Sports & exercise: With the right pension plans and as a sponsor of the Austrian sports associations, Wiener Städtische uses measures to maintain and support health. In this regard, it also supports large events such as the Vienna City Marathon. Active climate Protection is an important everyday principle of SUSTAinability for us. Christine Dornaus B 41 Annual Report 2011 Wiener Städtische

44 YOU HAVE TO GET BETTER BY YOURSELF. WE LL DO THE REST. B 42 Fighting an illness already takes enough energy. You shouldn t also have to worry about the cost of the treatment. What we can offer you Pay significantly lower premiums starting at age 65. With our new ZukunftsPlus supplementary insurance for TopMed health policies, you can choose to reduce your premiums by 25% or even 50%. Annual Report 2011 Wiener Städtische

45 Highlights & Management COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 B 4 3 Annual Report 2011 Wiener Städtische

46 CAREFREE IN ALL LIFE SITUATIONS With customised, flexible products and individual services, Wiener Städtische s customers can obtain optimal provision for all life situations. B 4 4 Create a solid foundation for the future. Judit Havasi The needs and satisfaction of the customers are the focus of all of the Company s activities in 2011, 14 product innovations set new standards in this regard. The focus was on pension and business products. PENSION INITIATIVE Security is Wiener Städtische s core business and especially in economically difficult times the need for long-term security is greater than ever. Also in the field of private pensions, Wiener Städtische owes its pioneering role and market leadership not least to its foresight in socio-political themes and issues. Most recently, in November 2011, it presented, together with the Institut für Strategieanalysen (Institute for Strategy Analyses [ISA]), a security radar that analyses the concerns of 1,800 insured parties in Austria. The information gained from this study is incorporated into the concept of new products and guarantees a precise alignment with customer needs. 47% of those surveyed indicate financial security in old age to be the number 1 concern. This confirms that Wiener Städtische made the right choice with the pension initiative it started in 2011 and its commitment to reforms in the government incentive system permitting greater freedom of choice. Therefore, these will be continued at full force in Wiener Städtische provides its customers with the right provision in all phases of life and, if the needs of the customers change, adjusts its insurance offerings in a flexible manner to new life situations. The product portfolio includes pension insurance, life insurance, accident insurance, nursing care and building society savings. On the security radar, financial security in old age was followed by concern about property and fear of natural disasters. In 2011, Wiener Städtische invested in product innovations and preventive measures also in these areas an overview of the key innovations is provided below. INNOVATIONS IN LIFE INSURANCE The classic life insurance continues to be a favourite when it comes to securityoriented pension. Benefits that argue in favour of this are guaranteed interest and, in the case of the Garantiepension pension product, calculation of the pension payment according to the pension table that applies at the time the contract is entered into. This means a higher pension in the case of continuously increasing life expectancy, because a shorter average payment period is assumed at the time a policy is purchased. Double pension with the Start-ins- Leben package for children The Start-ins-Leben package combines insurance coverage and capital formation in one product of the classic life insurance. With a guaranteed interest of 2%, a solid financial basis can be created for the future of the insured child, since at the time of the determined payout, a starting capital is created for key milestones in life professional training, education, dwelling or driving licence. Even in the event of death of the premium payer, the insured Annual Report 2011 Wiener Städtische

47 Highlights & Management COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 sum plus the gains accrued after expiry of the agreed term of insurance will be paid out. Wiener Städtische also assumes payment of outstanding contributions. How the profits are invested (classic, dynamic or progressive) and the monthly contributions can be freely selected with this product. In addition, the Junior s Best future provision plan for children or grandchildren and the special insurance package TAKE IT EASY for students and young people offer further customised, advantageous pension models for young people. Limited Edition 15/10 & Sicher Save for 15 years, but pay only for ten years this is the clear benefit of the Limited Edition 15/10 & Sicher (secure), a product of the classic endowment insurance. In the case of survival, at the end of the term, Wiener Städtische pays 104.5% of the gross premium amount, plus profit sharing. The payment is exempt from income tax and investment income tax. PIONEER IN PENSIONS AND NURSING CARE The state-supported pension provision or premium pension for closing the pension gap has developed into one of Wiener Städtische s most successful pension products. In 2011, it celebrated its 240,000th state-supported premium pension customer and the trend of supported pension provision continues. Compared to the previous year, in 2011, Wiener Städtische was able to record more than 5% growth in premium from premium pension contracts. New PflegeBONUS with payment at intervals As the number 1 insurance company in Austria, Wiener Städtische has also recognised the high importance of private nursing care, which will continue to gain importance in light of demographic and social developments, and develops innovative products for it. For example, in 2011 it brought the attractive additional policy PflegeBONUS to the market for the event when no benefit claims are made. If no need for care arises, as of age 65, the customer benefits from a premium payment every five years. The new policy can also be taken out in addition to any existing contracts. Reduction in deductibles when in hospital With the Selbstbehaltsretter deductible saver product, Wiener Städtische offers a new additional policy that is unique in Austria, which lowers the financial burden in the event of a hospital stay. The policy guarantees reduction in the deductible payable as of the second calendar year gradually by 20%. If no claims are submitted for five calendar years, there will be no deductible payable in the sixth year in the event of a hospital stay. The Selbstbehaltsretter policy can be taken out as a supplement to the special class policies with deduction. Special class premium reduction as of age 65 with ZukunftsPLUS Income usually decreases on reaching retirement. With ZukunftsPLUS, a supplemental insurance for special class TOP MED, customers can reduce their premium by 50% or 25% when they reach 65. Until the age of 60, this additional policy can be taken out without any medical examination. The customer s high level of freedom of choice is also a unique feature. In the event the contract is terminated at the age of 65, the customer receives an attractive one-time payment instead of the above-mentioned reduction in premium. In the event the policy is terminated prior to the claim for a reduction of the premium, the entire actuarial reserve of the additional policy is paid out. Award-winning BUSINESS CLASS As a strong partner for the economy, Wiener Städtische strives to satisfy the continuously increasing security requirements of small and medium-sized operations (approximately 40,000 customers at present) with continuous product innovations. In 2011, Wiener Städtische received the Assekuranz Award with a B 4 5 Annual Report 2011 Wiener Städtische

48 B 4 6 factbox Business Class R Classic and Premium versions complete and efficient basic protection or complete all-round protection can be freely chosen for each segment R Commercial third-party liability insurance with flexible sum selection, choice of deductible payable and comprehensive clause package R Numerous extras for special requirements as well as free apps and free collection service R Flexible solutions for business interruptions with individual sums, liability periods, pension solutions R Plus Risk package: flexible extra protection for unidentified risks, flood or earthquake, which can be taken out individually R Individual motor vehicle packages for each segment R Outside business packages: comprehensive protection for outdoor property, e.g. umbrella bars, lamps, company signs, swimming pools or outdoor furniture very good classification for once again bringing additional diverse products and services onto the market for Business Class commercial insurance last year. This enabled it to offer its customers even more precise insurance protection and comprehensive services, including skilful advisory for complex requirements. The nine components of contents insurance, assistance, liability insurance, building insurance, legal expenses insurance, machine commercial insurance, electronics comprehensive insurance, transport insurance and freezer container insurance cover all the insurance needs of businesses. In addition, Wiener Städtische is the only insurance company in Austria to include claims management free of charge. INNOVATIONS IN MOBILITY AND LEGAL PROTECTION Strong environment triple in the motor vehicle business With the Climate Bonus and Environment Bonus, Wiener Städtische introduced preferential premium policies for motor vehicles six years ago in order to support forward-looking technologies for the reduction of pollutants. By doing so, it was the first Austrian insurance company to promote the use of environmentally friendly vehicles. Every other customer of Wiener Städtische already benefits from this attractive policy. The climate bonus promotes conventionally powered vehicles if they have lower CO 2 emissions. The environment bonus, in turn, promotes vehicles that run on natural gas, hybrid vehicles as well as other alternative drive concepts. In 2011, the climate bonus was expanded by a second bonus level. Whereas the premium savings in the case of a CO 2 emission of up to 160 g/km in the motor vehicle liability insurance amount to 10%, now 20% of the policy amount can be saved in the case of an emission of up to 120 g/km. In addition, in 2011, Wiener Städtische brought a new insurance package for electric bicycles onto the market. In all, more than 580,000 customers put their trust in the extensive cover provided by Wiener Städtische s third-party liability motor vehicle insurance and more than 230,000 customers in its comprehensive motor vehicle insurance. This is largely the result of the innovative additional offerings, such as the family bonus in thirdparty liability and comprehensive insurance, which provides a more favourable classification by up to three stages for each additional vehicle within the family. Through the leasing company Wiener Städtische Donau Leasing, Wiener Städtische also offers its customers lease financing models with many additional benefits. As of 2011, customers can insure themselves with the new insurance concept Leasing-Protect against a payment default on their motor vehicle lease agreement. The well-established travel insurance for care-free travel offers protection against motor vehicle damage at home or abroad and can simply be taken out by means of a payment slip policy. In 2011, this insurance was expanded by a new leisure package for sports, hunting and fishing. It also insures private property and is of interest primarily to those who would like to temporarily expand their coverage for a trip. Legal protection Wiener Städtische s legal protection insurance is an ideal product for both employees and the self-employed. In addition, as of 2011 it offers many innovations: premium-free and worldwide assistance abroad for criminal law protection, higher insured sums, legal protection in inheritance and family law matters, stalking, employment law matters as well as in the event of mobbing and workplace sexual harassment, general contract law protection and social insurance legal protection, which also offers coverage for proceedings at the highest courts. Particular benefits to the customer are instant protection, protection for the entire family, free choice of a lawyer as well as a premium discount of 15% if the customer decides to take out a policy with a 10% deductible. Annual Report 2011 Wiener Städtische

49 Highlights & Management COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 MODERN MOBILE UP-TO-DATE CUTTING EDGE SERVICES The security of and service to its customers, along with the intelligent use of the most recent technologies, are at the core of Wiener Städtische s diverse innovative developments in the service sector. The company website, as the central platform, offers the best service and optimised user friendliness: here, both private and business customers can promptly find all the desired information and can obtain information on all of Wiener Städtische s insurance solutions including online calculation and quote generation. Naturally, online claim notification is also available. The well-structured service area offers information about all the key contact platforms, service numbers and assistance services, and the website also offers valuable tips on loss prevention. Wiener Städtische s ombudsman, whose office can be reached by phone, or through the website, provides feedback on customer satisfaction and is of course also available for personal customer contact. Prompt service and a minimum waiting time for replying to complaints ensure that customers receive a response regarding further procedure within a few hours, including when contact is made via . The ombudsman s office also receives a lot of positive customer feedback and shows that the constant further development of the service contributes significantly to maximising customer satisfaction. With this in mind, all complaints submitted are deemed to be an opportunity to improve the customer relationship and are, therefore, analysed in a very detailed manner, verified for feasibility and communicated to all departments concerned. an app for all smart phones or via SMS. Thus, storm alerts reach customers automatically and accurately directly over their mobile phone, wherever they are in Austria. Secured data quality in conjunction with cutting-edge technology now guarantees safety and reasonable prevention in the event of a storm. In addition, as of August 2011, the alert service can be subscribed to not only for one but three locations. Business customers can even select up to 30 operating sites. By the end of 2011, more than 265,000 alerts have been sent locally, regionally and nationally. The app for all events Wiener Städtische s free Schaden- Service-App (loss service app) for iphones and Android mobile phones offers via a loss form, check lists and first aid measures as well as an emergency call, valuable tips and quick help in a case of emergency number regardless of whether the loss is caused by a storm, fire, burglary or motor vehicle. Not least, this service offers all customers the option of an uncomplicated and time-saving claim settlement. In addition, the current status of the loss event will, upon request, be communicated at any time via SchadenSMS service. We ensure that our mobile services are as user-friendly as possible. Erich Leiß B 47 Successful storm alert In May 2011, Wiener Städtische initiated an important measure to effectively prevent losses with its storm alert initiative. The new WetterService mobile weather alert system is available free of charge to both private and business customers as Annual Report 2011 Wiener Städtische

50 AGAINST BUMPS AND SCRAPES TO THE SOUL. AND ELSEWHERE. B 4 8 You drive better with all-around cover. And if something actually does happen, you are in the best of hands with us, because we cover all mobility risks with attractive modules with flexible components. What we can offer you A trio of excellent environmental products in the motor vehicle segment. Our environmental bonus benefits vehicles with alternative drive technologies (natural gas, hybrid, super ethanol or electric), and our two-level climate bonus benefits vehicles with low CO 2 emissions. Annual Report 2011 Wiener Städtische

51 Highlights & Management COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 B 49 Annual Report 2011 Wiener Städtische

52 CAMPAIGNS WITH foresight B 50 Clear advertising messages and, as ever, best impact values for the Dear Neighbours from the well-known TV campaign ensure a strong and successful presence in the media for Wiener Städtische. True to the motto: We wish your problems were ours, the Wiener Städtische brand appeared with messages for customised insurance solutions and skilful advisory in a wide range of media. The advertising portfolio as of the end of 2011 has been supplemented with a highly acclaimed poster campaign. New Poster Campaign Showing foresight be able to listen talk in plain language Hand in hand with numerous product innovations, in 2011, Wiener Städtische also focused on a new impetus in its advertising. With the new poster campaign launched throughout Austria in October 2011, it focuses on its skills and strengths as a partner and advisor. Three visuals in close-ups place emphasis on the following central themes Showing Foresight, Be Able to Listen and Talk in Plain Language. With these, Wiener Städtische memorably conveys the message that it always provides its customers with the best possible advice and addresses their personal needs with customised, individually tailored products and services. The fact that Wiener Städtische also demonstrates foresight is emphasised by its solid and long-term commitment to business policy, on the basis of which it will be able to reliably serve its clients in all life situations. TV Campaign Dear Neighbours still a hit The best stories are true stories with this concept, Wiener Städtische not only conquered viewers hearts, but also successfully conveys, in addition to product messages, values, such as trust, reliability and proximity. With the TV campaign about the likeable neighbours, Wiener Städtische also demonstrated foresight Annual Report 2011 Wiener Städtische

53 Highlights & Management COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 B Lisa, Peter and Sophie The Dear Neighbours in the TV Campaign. 51 for its media appearance. The trailer that presents three protagonists (single mother with teenage daughter, new neighbour) was broadcast for the first time in November The continuation of the campaign, which in 2010 had been selected as a double- impact winner, proved to be very successful in 2011 as well. In the TV spot, the female protagonist guides her neighbour into a parking space. Distracted by her daughter, she gives an erroneous signal, as a result of which the neighbour causes damage. The episode humorously conveys to the viewer that the customers of Wiener Städtische are covered against all mobility risks. Other spots that were broadcast in 2011 addressed the topic of pension provision in general ( Morning Hygiene ) and the personal advisory to premium pension ( The New One ). The Neighbours introduce themselves In 2011, it was time to give names to the popular protagonists from the advertising spots they have been around long enough to develop a relationship with each other as well as with the viewers. For that reason, Wiener Städtische initiated a name-finding campaign among its 3,500 employees, who were very enthusiastic about participating and submitted 1,180 suggestions and 787 different names. In the end, the competition came down to the most frequently submitted names. In the future, the mother can be addressed as Sophie, the daughter as Lisa and the neighbour as Peter. Image and Print Campaigns From the poster campaign, the subject Showing Foresight has also been used since the autumn of 2011 as an advertisement in various print media and has been combined with the well-known slogan We wish your problems were ours. In addition, the performers of Dear Neighbours appeared again on print advertisements also in 2011, in line with the respective TV spot and the associated products. As part of a uniform marketing appearance, Wiener Städtische s product folders will also be designed with the corresponding photographs from the campaign. The Say only one Word campaign was also continued in In this sequel, Wiener Städtische conveyed its message by focusing on the essential point. Catchwords, such as Security, Pension, Care, Trust, and even loss events, such as, Burst Pipe or Car Body Damage conveyed strong values and clear messages about the products. Our message focuses on our strengths as a partner and ADVisor. Ralph Müller Annual Report 2011 Wiener Städtische

54 EQUIPMENT CAN COME APART AT THE SEAMS. BUT OUR INSURANCE HOLDS. A 52

55 Highlights & Management COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 B Make your home a carefree zone. We have the right solution for all needs and types of losses from garden sheds to multifamily properties. After all, the best way to handle losses is together. 5 3 What we can offer you Comprehensive, custom-tailored protection for an allround secure feeling in your home. Annual Report 2011 Wiener Städtische

56 MANAGEMENT REPORT 2011 C 54 ECONOMIC CONDITIONS Financial market development in 2011 Capital market development was influenced by a wide range of political, economic and even environmental factors in the year just ended. Dramatic political changes in North Africa and the Middle East were the focus of attention at the beginning of A number of autocrats were forced to leave the stage and make room for democratic movements. In one case, this was brought about by a civil war, with the rebels receiving international support. This reshaping of the political landscape in the Middle East and North Africa affected the international financial markets, mainly through the resulting fluctuations in the price of oil. A natural disaster in Asia caused massive damage to the Fukushima nuclear power plant in Japan, leading to a high level of market turbulence. In addition to the environmental contamination caused by high levels of radiation, this was also a serious setback for Japanese industry, and a great deal more time is still needed to remedy the effects on the economy. The core European countries, in particular Germany and Austria, provided a positive surprise in terms of economic performance in the first half of the year, while the peripheral countries continued to battle with stagnation and even recession. The data published in the USA were also rather disappointing. The biggest test, however, was still to come for international capital markets. Excessive levels of sovereign debt became the dominant topic of discussion during the course of the summer. In addition to Greece and Portugal, attention also turned to Italy and Spain. International rating agencies unleashed a wave of credit downgrades for European countries and banks. Standard & Poor s even downgraded the AAA status held by the USA. Risk premiums for southern European countries exploded to record levels. At the same time, yields on German government bonds fell to all-time lows. The DAX and ATX indices, for example, lost more than 30% of their value in a relatively short time during this phase. The financial sector in particular suffered dramatically from growing risk aversion and a lack of confidence in its stability. Resolutions aimed at solving the "euro crisis" were adopted at many EU crisis summits, rescue funds were set up, and new capital requirements were put into place for European banks. However, none of these measures were able to reduce tension over the long term. All of these efforts were also hindered by an economic slowdown that was gradually beginning to affect core European countries, too. The European Central Bank then attempted to remedy the situation by reducing its key interest rate from 1.5% to 1% in the last two months of the year. The end effect was very sobering on balance for the capital markets. European equity markets were more strongly affected than, for example, the USA. The DAX ended the year with a loss of 15.4%, and the EURO STOXX 50 closed with a loss of 14.5%. The market in Austria, where the ATX index recorded a loss of 34.9%, was one of the most strongly affected by these negative developments. In contrast, the US S&P 500 index managed to end the year unchanged. Economic situation in Austria The economy slowed considerably after recording a good first quarter in Only slow growth of 0.2% was recorded in each of the second and third quarters. The Austrian economy nevertheless did grow strongly in The latest forecast by the Austrian central bank (Österreichische Nationalbank OeNB) predicts real GDP growth of 3.3% in The labour market also did surprisingly well in Inflation rose, however, to 3.5% due to large increases in the price of energy, services and food. THE AUSTRIAN INSURANCE MARKET According to preliminary statistics from the Austrian Association of Insurance Companies at the end of February 2012, the Austrian insurance industry recorded a 1.7% reduction in total premiums in 2011 to EUR billion (2010: +2.0%). Premium income from life insurance declined by 7.5% to EUR billion (2010: +1.9%). Life insurance with regular premiums rose by 1.6% to EUR billion (2010: +1.4%), while single-premium life insurance fell by 32.2% to EUR billion (2010: +3.2%). This was primarily due to an increase raising the minimum lock-in period to 15 years.

57 HIGHLIGHTS & MANAGEMENT COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 Health insurance premiums grew by 3.6% to EUR billion (2010: +3.0 %). Premiums written for property and casualty insurance grew by 2.9% to EUR billion (2010: +2.0%) thereby outperforming PREMIUMS 2011 BY SEGMENTS Life 38.4% (43.5%) BUSINESS DEVELOPMENT IN 2011 Property/casulty 46.9% (43.0%) OVERALL BUSINESS DEVELOPMENT Wiener Städtische is one of the leading insurance companies in the Austrian insurance market. It operates in the property/casualty, life and health insurance segments. Wiener Städtische also has branch offices in Italy and Slovenia. These branch offices sell products in the non-motor vehicle and life insurance classes. The Slovenian branch office is located in Ljubljana and has 30 employees. Wiener Städtische has operated in Italy since The Rome branch office has 16 employees. Wiener Städtische is a 99.9% subsidiary of VIENNA INSUR- ANCE GROUP AG Wiener Versicherung Gruppe, whose A+ rating was reconfirmed with a stable outlook by the internationally recognised rating agency Standard & Poor's in Premium income Wiener Städtische generated a premium volume of EUR 2, million in financial year 2011, representing a decrease of 6.5% compared to The decrease is due to a sharp decline in premium income from single-premium life insurance policies. EUR 2, million of these total premiums were generated from direct business and EUR 8.77 million from indirect business. EUR 1, million of the gross premiums written was retained by Wiener Städtische, and EUR million ceded to reinsurance companies. Property/casualty insurance contributed EUR 1, million in premiums, representing 46.9% of total premium income, while life insurance contributed EUR million, or 38.4%, and health insurance EUR million, or 14.7%. Figures for 2010 in brackets Health 14.7% (13.5%) Expenses for claims and insurance benefits Including the change in the mathematical reserve, gross expenses for claims and insurance benefits fell by 22.4% in 2011 compared to the previous year, to EUR 1, million. This was primarily due to the volatility of the singlepremium business and price losses in unit- and index-linked life insurance. Operating expenses Administrative expenses were EUR million, representing a decrease of 0.4% compared to the previous year. Workflow efficiency was examined and improved during the organisational changes made under corporate law in 2010, including the Vienna Insurance Group Holding spin-off. For example, joint use is made of back-office departments, such as accounting. Group-wide systems are also being used in the IT area. C 55

58 C 56 Key figures for Wiener Städtische 1) 2) 3) in EUR million Gross premiums written 2, , Thereof property/casualty 1, , Thereof life 1, Thereof health Gross premiums written, direct 2, , Thereof property/casualty 1, , Thereof life 1, Thereof health Gross premiums written, indirect Thereof property/casualty Thereof life Thereof health Financial result Gross expenses for claims and insurance benefits 1-2, , Result from unrealised gains and losses from unit- and index-linked life insurance Gross administrative expenses Result from ceded reinsurance Other income/expenses (net) Result from ordinary activities Thereof property/casualty Thereof life Thereof health Investments 2 12, , Underwriting provisions 3 10, , Incl. the change in the mathematical reserve. Incl. unit-and index-linked life insurance. Incl. unit- and index-linked life insurance and deposits from ceded reinsurance business. Combined ratio far below 100% The combined ratio is a figure showing the ratio of administrative expenses and insurance payments to net earned premiums in the property/casualty area. Wiener Städtische's 2011 net combined ratio of 95% (after deducting reinsurers' shares) was once again significantly less than 100%. Solvency in accordance with VAG Solvency is the equity capital available to an insurance company, i.e. free and unencumbered assets. Insurance company solvency is governed by 73b(1) VAG (the Austrian Insurance Supervision Act), which is intended to ensure that policyholder claims are secure even in the case of unfavourable developments. Wiener Städtische has equity capital of EUR 1, in the form of free and unencumbered assets. The solvency requirement is EUR This means that Wiener Städtische has a cover ratio of %. The higher the level of capital available (solvency), the better these claims are covered. Financial result Wiener Städtische's financial result increased to EUR million in This was mainly due to an increase in the extraordinary financial result, which in turn was due to the realisation of loan-related gains, and from realised securities-related gains and losses. Investments Investments were EUR 12, million as at 31 December 2011, including EUR 2, million attributable to investments for unit- and index-linked life insurance. Investments without including unit- and index-linked life insurance were EUR 10, million at the end of Investments at the end of 2011 (not including investments for unit- and index-linked life insurance) consisted of 64.58% in securities, 18.19% in participations, 14.04% in loans, 2.67% in real estate and 0.52% in other investments. STRUCTURE OF INVESTMENTS 31/12/2011* Others 0.52% Real estate 2.67% Loans 14.04% Ownership interests 18.19% Securities 64.58% * Balance of investments excluding unit-linked and index-linked life insurance was EUR 10, mn as at 31 December 2011

59 HIGHLIGHTS & MANAGEMENT COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 Result from ordinary activities Wiener Städtische earned a result from ordinary activities of EUR million in 2011, calculated according to the requirements of the Austrian Commercial Code (UGB). This corresponds to an increase of 25.6% over the value of the previous year (EUR million). This increase was mainly due to a reduction in expenses for claims and insurance benefits. 74.2% of the result from ordinary activities came from the property/casualty segment, 12.9% from life insurance, and 12.9% from health insurance. RESULTS FROM ORDINARY BUSINESS BY SEGMENTS 2011 Property/casualty 74.2% (65.7%) Life 12.9% (21.7%) Health 12.9% (12.6%) Direct premiums written by Wiener Städtische in the nonmotor vehicle classes rose by 3.1% to EUR million. In 2011, the motor vehicle classes recorded an increase of 0.6% in direct premiums to EUR million. The insurance market is showing a slight recovery in this class, primarily due to an increase of 8.4% in new registrations (+27,582) compared to the previous year. In the non-motor vehicle classes (direct business), high growth rates were recorded in the storm damage (+7.0% to EUR million), water pipes (+5.5% to EUR million) and casualty insurance (+3.4% to EUR million) areas. Premium volume for storm damage insurance rose as a result of continuing demand for coverage against natural catastrophes, which is in turn due to increased public awareness of the need for insurance coverage in this area. The steady increase in public awareness about the risks of everyday life and the need to increase insurance protection beyond the coverage provided by social security is responsible for the increase in new accident insurance policies. Key figures property/casualty insurance C 57 Figures for 2010 in brackets Research and development Due to the nature of the business, research and development plays a secondary role for Wiener Städtische. Development work in the most general sense is done as part of product pricing during product development, for example in the area of demographics or risk-related parameters, or in terms of preventive measures. in EUR million Gross premiums written , Financial result Gross expenses for claims and insurance benefits Gross administrative expenses Result from ceded reinsurance Other income/expenses (net) Result from ordinary activities The claim ratio was 65% (total after reinsurance, not incl. claims processing expenses). BUSINESS DEVELOPMENT IN DETAIL Property and casualty insurance Wiener Städtische recorded a premium increase of 1.9% over the previous year to EUR 1, million in the property and casualty business (direct and indirect). This was mainly due to positive performance in the non-motor vehicle classes. Indirect property and accident premiums fell by 43.8% to EUR 5.3 million. This was due to Group-wide reinsurance programs using VIG RE in Prague. Direct premiums written, on the other hand, rose by 2.3% to EUR 1, million.

60 C 58 Expenses for claims and insurance benefits rose 3.9% in 2011 to EUR million. Gross administrative expenses were EUR million in 2011 (+1.0%). The result from ordinary activities for the property/casualty area was EUR million for the whole of 2011, representing an increase of 41.7% over the previous year. Life insurance Wiener Städtische recorded a decrease in life insurance premiums to EUR million, representing a drop of 17.5% compared to This was primarily due to increased volatility in the single-premium product area. Due to changes in the tax framework for life insurance, there was a massive fall in new single-premium business in The change that came into effect (raising the minimum lockin period to 15 year) as part of the amendments to the 2011 Austrian Budget Accompanying Act (Budgetbegleitgesetz) imposes an 11% insurance tax on policies with terms shorter than 15 years. Direct premiums written in the life insurance segment fell by 17.6% compared to the previous year, with premiums from single-premium policies falling even further by 43% to EUR million. Life insurance policies with regular premiums decreased by 1.5% to EUR million because of an increase in policy expirations. Key figures life insurance in EUR million Gross premiums written 1, Financial result Gross expenses for claims and insurance benefits 1-1, Result from unrealised gains and losses from unit- and index-linked life insurance Gross administrative expenses Result from ceded reinsurance Other income/expenses (net) Result from ordinary activities incl. the change in the mathematical reserve The result from ordinary activities was EUR million for the life insurance business in 2011, representing a drop of 24.9% compared to Health insurance EUR million in premiums were written in the health insurance segment during the financial year just ended, corresponding to an increase of 2.3% over Wiener Städtische also brought new products to market in 2011 that were primarily intended to make it easier for young people to purchase private health insurance. Wiener Städtische also added new supplementary nursing care policies to its product range. Expenses for claims and insurance benefits (incl. the change in the mathematical reserve) were EUR million in Gross administrative expenses were EUR million in The result from ordinary activities reached EUR million in the health insurance segment in Key figures health insurance in EUR million Gross premiums written Financial result Gross expenses for claims and insurance benefits Gross administrative expenses Result from ceded reinsurance Other income/expenses (net) Result from ordinary activities incl. the change in the mathematical reserve Gross expenses for claims and insurance benefits were EUR million in 2011 (incl. change in the mathematical reserve). Gross administrative expenses were EUR million in 2011 (-3.3%). This change was caused by the drop in single-premium business and price decreases in unit- and index-linked life insurance.

61 HIGHLIGHTS & MANAGEMENT COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 Employees The number of Wiener Städtische employees fell by 35 compared to the previous year. At the end of 2011, Wiener Städtische had a total of 3,462 employees, including 1,778 sales employees and 1,543 administrative employees. There were 141 trainees at the end of Number of employees Office employees 1,546 1,543 Field sales representatives (incl. trainees) 1,951 1,919 TOTAL 3,497 3,462 Employee interests Wiener Städtische's business performance is highly dependent on the use of qualified, satisfied employees. Professional, motivated employees therefore represent a valuable resource for Wiener Städtische. Training, advanced training and equal treatment in the workplace are key elements of the Company's business philosophy. The Company places great importance on training and offers many development and career opportunities. The Company's own human resources development company, Horizont GmbH, is one of the ways the Company ensures continuous training of its employees. Targeted support is also provided for trainee development. Wiener Städtische will continue its efforts in this area in 2012 by offering 100 young people outstanding career opportunities. RISK REPORT 2011 The risk management system consists of all the guidelines, processes and reporting procedures used to continuously identify, measure, monitor, manage and report on relevant risks on an individual and aggregated basis while taking account of interdependencies. One of the main functions of the Company-wide corporate risk management department is to establish, maintain and manage the risk management system. The new Solvency II framework directive (2009/138/EG), which also amends insurance company risk management, is to be implemented at the national level in the EU by 2013, although delays of a year are very likely. Like the Basel II model for the banking sector, Solvency II is composed of three pillars. The first pillar deals with the quantitative requirements of capital adequacy, while the second pillar deals with the qualitative requirements for company management, the risk management system and internal controls. The second pillar also covers supervisory principles and methods. The third pillar deals with the new provisions for market discipline, transparency and disclosure requirements. C 59 Wiener Städtische is one of the most family and womenfriendly companies in Austria. The company day-care centre is one example of how employees are actively supported in creating a balance between career and family. Wiener Städtische also provides a variety of fringe benefits to make conditions attractive for its women employees. Events occurring after the balance sheet date No other events of special significance that would have changed the presentation of the net assets, financial position and results of operations occurred after the balance sheet date.

62 C 60 Due to the many complex requirements of the new Solvency II framework directive, implementation has already begun on Level 2 and drafts for Level 3, when available, based on the framework directive and provisional implementing measures. As a rule, there is no single valid method for implementing these future statutory principle-based requirements. Insurance companies have been asked to analyse the statutory requirements and provide a justification for their method of implementation. These issues therefore require intensive efforts in advance in order to implement the current abstract and theoretical risk management requirements of Solvency II in practice. Wiener Städtische performed a voluntary test run for the calculation of risk-based equity capital in 2011 in order to document and improve the calculation procedures. Current plans are to use a partial internal model to calculate the risk capital needed for the property/casualty class. The model is under development and must receive supervisory approval under Solvency II. The actuarial department is performing ongoing tests of the potential internal model for property/casualty insurance whose theoretical foundations are being developed by the Group. The Company-wide risk management department and the actuarial department are developing a concept for application of the internal mode in consultation with all relevant areas, such as operational departments, the Group and the FMA. In addition, Wiener Städtische is an active participant in the Group-wide project that is making preparations for Solvency II. The rating agency Standard & Poor s continuously rates the VIG Group and, therefore, Wiener Städtische, which is the most important component of the Group. The Group has an A+ rating with stable outlook. All important risk measures are in the good to excellent range. THE INDIVIDUAL RISK CATEGORIES Underwriting risks Underwriting risks are risks that the calculated premiums and reserves will be insufficient to provide the benefits that are promised to policyholders in advance, but unknown. Credit risk This risk quantifies the potential loss due to a deterioration of the situation of a counterparty against which claims exist. Market risk Market risk is the risk of changes in the value of investments due to unforeseen fluctuations in interest rate curves, share prices and exchange rates, and the risk of changes in the market value of real estate and participations. Strategic risks Strategic risks can arise due to changes in the economic environment, case law, or the regulatory environment. Operational risks These may result from deficiencies or errors in business processes, controls or projects caused by technology, employees, organisation or external factors. Liquidity risk Liquidity risk depends on how good the fit is between investment holdings and insurance obligations. Concentration risk Concentration risk is a single direct or indirect position, or a group of related positions, that have the potential to significantly endanger the insurance company, core businesses or key performance measures. Concentration risk is caused by an individual position, a collection of positions with common holders, guarantors or managers, or by sector concentrations. RISK STRATEGY The Managing Board is responsible for risk management, and the internal control system developed from it, and defines the risk strategy, risk policy, targets and measurement bases. The objective of risk management is not complete avoidance of risk, but instead a conscious acceptance of desired risks or the implementation of measures to monitor and, if necessary, reduce existing risks based on economic factors. These considerations are based on the assumption that higher returns can be achieved by accepting higher risk. The risk-return ratio is therefore a key measure that should be optimised. RISK ORGANISATION In addition to the operational risk managers, an independent corporate risk management department has been estab-

63 HIGHLIGHTS & MANAGEMENT COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 lished in the Managing Board Secretariat, directly under the Managing Board. The risk committee is headed by the Company-wide corporate risk management department; it is part of the risk management system and provides detailed reports for the Company-wide risk report. The risk committee is an information platform used to identify relevant risks; it proposes risk management measures to the Managing Board. OUTLOOK will also be dominated by the Eurozone crisis. The international rating agencies Standard & Poor s and Fitch consider default by Greece to be very likely. The rating agencies began downgrading the credit ratings of most European countries in Austria was also affected, receiving a downgrade to AA+. The countries of Europe must now propose a solution for stabilising the EU financial system, and support and implement such a solution. The insurance industry expects the new solvency legislation to have unpleasant side effects, i.e. that it will be expensive and increase capital costs. Wiener Städtische will continue to improve its Solvency II compliance in 2012 and optimise and document its risk processes. Another test run of the riskbased equity capital calculation and an Own Risk and Solvency Assessment (ORSA) are planned for the second half of the year. Internal control system OUTLOOK ECONOMIC GROWTH FOR AUSTRIA IN 2012 The Austrian economy grew strongly in The latest forecast by the Austrian Central Bank (Österreichische Nationalbank OeNB) predicts real GDP growth of 3.3% in Do to a significant deterioration in foreign trade and a major loss of confidence, growth will likely only be 0.7% in Assuming that the international economy recovers and the loss of confidence resulting from the sovereign debt crisis eases, growth is expected to increase to 1.6% in The economic outlook is therefore considerably poorer compared to the OeNB forecast of June The forecasts for 2012 and 2013 were reduced by 1.6 and 0.9 percentage points, respectively. Austria continues to be one of the countries with the lowest unemployment rates in the Eurozone. The unemployment rate was 4.2% in 2011 based on the Eurostat definition. As growth prospects deteriorated, however, it rose from 4.1% in the second quarter of 2011 to 4.6% at the end of 2011, followed by a small reduction. The unemployment rate is expected to remain at 4.5% in 2012 and C 61 The internal control system (ICS) is continuously revised and documented. Operational and financial statement-related risk classes are ranked according to risk magnitude, combined with their controls in a risk and control matrix, and reported to the Managing Board and Supervisory Board. This allows control processes to be efficiently optimised. This risk and control matrix is monitored continuously and registered, thereby enabling optimal risk hedging.

64 C 62 THE AUSTRIAN INSURANCE MARKET IN 2012 The insurance market will be dealing with the financial and banking crisis and the resulting real economic problems for some time to come. The outlook for the Austrian insurance industry is, however, optimistic. According to the February 2012 forecasts by the Austrian Association of Insurance Companies (VVO), the Austrian insurance market as a whole will grow by 1.3% in The decrease in premiums in 2011, provisionally estimated at 7.5%, is due to above-average growth in single-premium life insurance in 2010 and the change of the minimum lock-in period to 15 years. According to initial conservative forecasts, a small reduction of 0.5% is expected for life insurance premiums in However, due to the demographic change which is increasing the number of older people in the population, demand is expected to rise in the area of retirement provisions. Life insurance is the ideal instrument for making provisions to protect one's standard of living in old age. Premium growth is expected to remain strong in the health insurance area, with an increase of 3.2% expected in The growing propensity to invest in private health insurance in order to protect the standard of medical care in old age will have a positive effect on premium income. Property/casualty premiums are forecast to grow by 2.5% in Premiums for motor vehicle liability insurance are expected to grow again slightly by 0.3% in WIENER STÄDTISCHE IN 2012 Times of economic stress cause a particularly large increase in customer demands for security. This applies both to preservation of assets and safeguarding the standard of living that has been achieved. Our focus in 2012 will be to inspire our customers and gain their confidence by further intensifying customer contact and personal advice, thereby clearly orienting all our activities around the customer. This also applies to the acquisition of new customers in the market, who we plan to win over with custom-tailored products and services. Wiener Städtische worked intensively on product improvements in 2011, and great efforts will also be made to be just as innovative in Product-specific optimisations will be used to smooth the road to our customers. In addition to intensifying efforts to build customer relationships, attention has also turned to the business opportunities offered by advisory services in the retirement provision and property insurance business. In light of the trend toward increasingly better informed consumers, Wiener Städtische's top priority is to communicate transparently and credibly to customers that their retirement provisions are in good hands and taken seriously by Wiener Städtische, today and in the future.

65 HIGHLIGHTS & MANAGEMENT COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 Proposed appropriation of profits WIENER STÄDTISCHE Versicherung AG Vienna Insurance Group ended financial year 2011 with net retained profits of EUR 186,390, We propose that the 2011 net retained profits be appropriated as follows: A dividend of EUR 140,000, should be paid from the net retained profits, and the remaining balance of EUR 46,390, carried forward. The Managing Board C Robert Lasshofer 63 Christine Dornaus Judit Havasi Ralph Müller Erich Leiß Vienna, 9 March 2012

66 ANNUAL FINANCIAL STATEMENTS 2011 Wiener Städtische Versicherung ag Vienna Insurance Group Separate financial statements prepared in accordance with the Austrian Corporate Code (UGB) and the Austrian Insurance Supervision Act (VAG) ANNUAL FINANCIAL STATEMENTS 66 Balance sheet 72 Income statement NOTES General disclosures on accounting policies 79 Accounting policies 86 Notes to the balance sheet 89 Notes to the income statement 93 Profit participation 101 Significant equity investments 102 Other disclosures D AUDITOR S REPORT DECLARATION BY THE MANAGING BOARD 6 4 SUPERVISORY BOARD REPORT Annual Report 2011 Wiener Städtische

67 Highlights & Management COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 wiener städtische versicherung ag Vienna Insurance Group Separate financial statements prepared in accordance with the Austrian Corporate Code (UGB) and the Austrian Insurance Supervision Act (VAG) 31/12/2011 Reporting period 1/1/ /12/2011 Balance sheet comparison date 31/12/2010 Income statement comparison date 1/1/ /12/2010 Currency EUR D 6 5 Annual Report 2011 Wiener Städtische

68 BALANCE SHEET FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2011 D 66 Assets Property/casualty In EUR A. Intangible assets I. Expenses for acquisition of an insurance portfolio 700, II. Other intangible assets 15,099, TOTAL INTANGIBLE ASSETS 15,799, B. Investments I. Land and buildings 35,786, II. Investments in affiliated companies and participations 1. Shares in affiliated companies 536,270, Bonds and other securities of affiliated companies and loans to affiliated companies 562,961, Participations 28,124, thereof reorganisation surplus Bonds and other securities of and loans to companies in which an ownership interest is held 1,937, ,129,293, III. Other investments 1. Shares and other non-fixed-income securities 188,498, Bonds and other fixed- income securities 277,273, Shares in joint investments Mortgage receivables 21,004, Policy prepayments Other loans 33,818, Bank balances 21,886, ,481, IV. Deposits on assumed reinsurance business 504, TOTAL INVESTMENTS 1,708,066, C. Investments of unit- and index-linked life insurance 0.00 D. Receivables I. Receivables from direct insurance business 1. from policyholders 70,822, from insurance intermediaries 60,041, from insurance companies 15,188, ,052, II. Receivables from reinsurance business 77,481, III. Other receivables 141,729, TOTAL RECEIVABLES 365,263, E. Pro rata interest 15,165, F. Other assets I. Tangible assets (not incl. land and buildings) and inventories 18,357, II. Current bank balances and cash on hand 23,768, III. Futher other assets 87,318, TOTAL OTHER ASSETS 129,445, G. Prepaid expenses I. Deferred taxes 41,143, II. Other prepaid expenses 19,207, TOTAL PREPAID EXPENSES 60,351, H. Offsetting items between departments 125,756, Total assets 2,419,846,709.69

69 HIGHLIGHTS & MANAGEMENT COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 Health Life Total business in In EUR ' , , , ,161, , , ,861, ,072 87,310, ,681, ,779, ,844 11,523, ,017,587, ,565,381, ,484,257 58,038, ,709, ,710, ,440 9,518, ,948, ,591, , ,957, ,957, ,957 16,747, ,827, ,031, ,574,278, ,716, ,799,399, , ,732, ,354,494, ,661,724, ,836, ,773, ,872,756, ,678,803, ,770, ,107, ,107, ,787 37,655, ,639, ,300, , ,981, ,981, ,026 4,801, ,869, ,489, ,998 14,194, ,158, ,008, ,787,856, ,089, ,034,495, , ,872, ,376, , ,296, ,511,688, ,107,051, ,286, ,215,940, ,215,940, ,223,989 3,569, ,941, ,333, , , ,459, ,620 1,341, ,910, ,247, ,607, ,777, ,570, ,745 5, , ,708, ,192 1,518, ,450, ,697, ,930 6,434, ,279, ,977, ,282 12,570, ,426, ,162, ,628 D , ,720, ,648 29,715, ,426, ,911, ,047 4,127, ,186, ,633, ,298 33,843, ,976, ,264, ,993 2,582, ,915, ,642, , ,137, ,344, ,740 2,582, ,053, ,987, , ,189, ,946, ,190,917, ,535,480, ,146,245, ,427,500

70 BALANCE SHEET FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2011 D 68 Liabilities and shareholders' equity Property/casualty In EUR A. Shareholders' equity I. Share capital 1. Par value 10,000, II. Capital reserves 1. Committed reserves 157,617, III. Retained earnings 1. Mondatory reserves 1,000, Free reserves 14,000, ,000, IV. Risk reserve as per 73a VAG, taxed portion 15,301, V. Net retained profits 144,883, thereof brought forward 23,835, Thereof partial payment in accordance with 54a AktG 0.00 TOTAL SHAREHOLDERS' EQUITY 342,802, B. Tax-exempt reserves I. Risk reserve as per 73a VAG 19,406, II. Valuation reserve for impairment losses 326, TOTAL RESERVES 19,732, C. Subordinated liabilities II. Supplementary capital bond 70,000, TOTAL SUBORDINATED LIABILITIES 70,000, D. Underwriting provisions - retained I. Unearned premiums 1. Gross 109,563, Reinsurers' share 14,121, ,441, II. Mathmatical reserve 1. Gross Reinsurers' share III. Provision for outstanding claims 1. Gross 1,078,454, Reinsurers' share 348,071, ,382, IV. Provision for profit-unrelated premium refunds 1. Gross 23,065, Reinsurers' share 2,870, ,194, V. Provision for profit-related premium refunds and policyholder profit participation 1. Gross 196, Reinsurers' share , VI. Equalisation provision 141,715, VII. Other underwriting provisions 1. Gross 13,014, Reinsurers' share 1,489, ,524, TOTAL TECHNICAL PROVISIONS 999,456, E. Underwriting provisions of unit- and index-linked life insurance 0.00 Amount carried forward 1,431,991,247.47

71 HIGHLIGHTS & MANAGEMENT COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 Health Life Total business in In EUR ' ,000, ,000 28,724, ,539, ,881, , ,000, ,000 10,000, ,000, ,000, ,000, ,000, ,000, ,325, ,226, ,853, ,853 22,760, ,747, ,390, ,246 9,811, ,497, ,145, ,000 64,810, ,512, ,125, ,981 9,208, ,825, ,440, ,440 11,018, ,435, ,779, ,287 20,226, ,260, ,220, ,727 10,000, ,000, ,000, ,000 10,000, ,000, ,000, ,000 2,137, ,506, ,207, , , ,924, , ,478, ,363, ,844, , ,939, ,070,829, ,972,768, ,188,991 91,631, ,308, ,158, ,059,670, ,789, ,869,979, ,785 44,711, ,988, ,169,154, ,118,470 4,470, ,241, , ,937, ,593, ,561, ,057 D 69 15,050, ,115, ,988 1,505, ,545, ,375, ,739, , ,533, ,730, , ,533, ,730, ,715, , , ,064, ,602, , , ,064, ,489, ,112, , ,542, ,189,684, ,055,682, ,294, ,164,866, ,164,866, ,141, ,579, ,005,324, ,398,895, ,593,039

72 Liabilities and shareholders' equity Property/casualty In EUR Amount carried forward 1,431,991, F. Non-underwriting provisions I. Provision for post-employment benefits 5,981, II. Provision for pensions 37,331, III. Tax provisions 29,258, IV. Other provisions 72,706, TOTAL OTHER PROVISIONS 145,277, G. Deposits from ceded reinsurance business 82,092, H. Other liabilities I. Liabilities from direct insurance business 1. from policiyholders 84,710, from insurance intermediaries 16,088, from insurance companies 5,072, ,870, II. Liabilities from reinsurance business 18,702, III. Liabilities from bonds (not including supplementary capital) 0.00 IV. Liabilities to financial institutions 103, V. Other liabilities 634,111, TOTAL LIABILITIES 758,787, I. Prepaid expensese 1,698, Total assets 2,419,846, D 70

73 HIGHLIGHTS & MANAGEMENT COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 Health Life Total business in In EUR ' ,579, ,005,324, ,398,895, ,593,039 2,376, ,357, ,715, ,912 14,832, ,402, ,566, , , ,489, ,489 1,694, ,664, ,065, ,814 18,903, ,655, ,836, ,869 93,448, ,186, ,726, ,402 3,106, ,745, ,562, , ,305, ,393, , , ,361, ,050, ,327, ,282, ,261 7,999, ,539, ,240, , ,000, ,000, , ,665, ,768, , ,545, ,787, ,444, , ,906, ,043, ,260,736, ,388,802 80, ,271, ,049, ,388 1,190,917, ,535,480, ,146,245, ,427,500 D 71

74 INCOME STATEMENT FOR THE FINANCIAL YEAR FROM 1 JANUARY TO 31 DECEMBER 2011 D 72 Property/casualty insurance In EUR In EUR '000 Underwriting account 1. Net earned premiums Premiums written Gross 1,066,178, ,046,516 Ceded reinsurance premiums 443,857, ,320, ,300 Change due to unearned premiums Gross 4,054, ,191 Reinsurers' share 5,391, ,336, ,617 TOTAL PREMIUMS 623,657, , Investment income from technical business 34, Other underwriting income 5,743, , Expenses for claims and insurance benefits Payments for claims and insurance benefits Gross 659,793, ,493 Reinsurers' share 219,087, ,706, ,266 Changes in provision for outstanding claims and insurance benefits Gross 48,982, ,436 Reinsurers' share 62,401, ,419, ,607 TOTAL CLAIMS AND INSURANCE BENEFITS 427,286, , Increase in underwriting provisions Other underwriting provisions Gross 949, Reinsurers' share , TOTAL INCREASE IN UNDERWRITING PROVISIONS 949, Expenses for profit-unrelated premium refunds Gross 7,735, ,166 Reinsurers' share 505, ,230, ,458 TOTAL EXPENSES FOR PROFIT-UNRELATED PREMIUM REFUNDS 7,230, , Administrative expenses Acquisition expenses 191,644, ,487 Other administrative expenses 47,093, ,834 Reinsurance commissions and profit commissions from reinsurance cessions 87,951, ,356 TOTAL OPERATING EXPENSES 150,785, , Other underwriting expenses 11,704, , Change in the equalisation provision 12,507, ,410 Underwriting result (Amount carried forward) 43,986, ,698

75 HIGHLIGHTS & MANAGEMENT COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 Property/casualty insurance In EUR In EUR '000 Underwriting result (amount carried forward) 43,986, ,698 Non-underwriting account 1. Investment and interest income Income from participations 44,791, ,893 Income from land and buildings 3,522, ,518 Income from other investments 76,704, ,886 Income from appreciations 264, Gains from disposal of investments 47,026, ,775 Other investment and interest income 2,476, ,880 TOTAL INVESTMENT INCOME 174,784, , Expenses for investments and interest expenses Expenses for asset management 2,056, ,536 Depreciation of investments 2,994, ,879 Interest expenses 39,083, ,893 Losses from disposal of investments Other investment expenses 140, ,189 TOTAL INVESTMENT EXPENSES 44,274, , Investment income transferred to the underwriting account 34, Other non-underwriting income 315, Other non-underwriting expenses 61, Result from ordinary activities; property/casualty insurance 174,717, ,340 D 73

76 INCOME STATEMENT FOR THE FINANCIAL YEAR FROM 1 JANUARY TO 31 DECEMBER 2011 D 74 Health insurance In EUR In EUR '000 Underwriting account 1. Net earned premiums Premiums written Gross 335,444, ,763 Ceded reinsurance premiums 40,902, ,541, ,693 Change due to unearned premiums Gross 201, Reinsurers' share 3, , TOTAL PREMIUMS 294,746, , Investment income from technical business 31,334, , Other underwriting income 3, Expenses for claims and insurance benefits Payments for claims and insurance benefits Gross 214,126, ,094 Reinsurers' share 21,807, ,319, ,846 Changes in provision for outstanding claims and insurance benefits Gross 379, Reinsurers' share 60, , TOTAL CLAIMS AND INSURANCE BENEFITS 192,638, , Increase in underwriting provisions Mathematical reserve Gross 61,413, ,509 Reinsurers' share 6,217, ,196, ,293 TOTAL INCREASE IN UNDERWRITING PROVISIONS 55,196, , Expenses for profit-unrelated premium refunds Gross 12,402, ,472 Reinsurers' share 1,238, ,164, ,127 TOTAL EXPENSES FOR PROFIT-UNRELATED PREMIUM REFUNDS 11,164, , Administrative expenses Acquisition expenses 26,474, ,051 Other administrative expenses 13,793, ,689 Reinsurance commissions and profit shares From reinsurance cessions 4,562, ,402 TOTAL OPERATING EXPENSES 35,705, , Other underwriting expenses 1,107, Underwriting result (Amount carried forward) 30,272, ,586

77 HIGHLIGHTS & MANAGEMENT COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 Health insurance In EUR In EUR '000 Underwriting result (amount carried forward) 30,272, ,586 Non-underwriting account: 1. Investment and interest income Income from participations 29, Income from land and buildings 2,173, ,327 Income from other investments 37,740, ,675 Gains from disposal of investments 3,824, ,716 Other investment and interest income 3,131, ,296 TOTAL INVESTMENT INCOME 46,898, , Expenses for investments and interest expenses Expenses for asset management 4,029, ,897 Depreciation of investments 2,814, ,588 Interest expenses 7,708, ,589 Losses from disposal of investments Other investment expenses 1,012, TOTAL INVESTMENT EXPENSES 15,564, , Investment income transferred to the underwriting account 31,334, , Other non-underwriting income 21, Result from ordinary activities; health insurance 30,293, ,586 D 75

78 INCOME STATEMENT FOR THE FINANCIAL YEAR FROM 1 JANUARY TO 31 DECEMBER 2011 D 76 Life insurance In EUR In EUR '000 Underwriting account 1. Net earned premiums Premiums written Gross 872,928, ,058,516 Ceded reinsurance premiums 3,381, ,546, ,313 Change due to unearned premiums Gross 2,232, ,169 Reinsurers' share 19, ,212, TOTAL PREMIUMS 871,759, ,056, Investment income from technical business 227,025, , Unrealised gains on investments shown under balance sheet asset item C 51,338, , Other underwriting income 563, Expenses for claims and insurance benefits Payments for claims and insurance benefits Gross 1,023,787, ,969 Reinsurers' share 3,981, ,019,805, ,236 Changes in provision for outstanding claims and insurance benefits Gross 1,528, ,086 Reinsurers' share 90, ,618, TOTAL CLAIMS AND INSURANCE BENEFITS 1,021,424, , Increase in underwriting provisions Mathematical reserve Gross ,824 Reinsurers' share TOTAL INCREASE IN UNDERWRITING PROVISIONS , Increase in underwriting provisions Mathematical reserve Gross 261,579, Reinsurers' share 2,320, ,259, TOTAL REDUCTION UNDERWRITING PROVISIONS 259,259, Expenses for profit-unrelated premium refunds and policyholder profit participation Gross 18,350, ,700 Reinsurers' share ,350, TOTAL PROFIT PARTICIPATION 18,350, , Administrative expenses Acquisition expenses 110,038, ,083 Other administrative expenses 32,459, ,259 Reinsurance commissions and profit commissions from reinsurance cessions 527, TOTAL OPERATING EXPENSES 141,969, , Unrealised losses on investments shown under balance sheet asset item C 194,480, , Other underwriting expenses 3,280, Underwriting result (Amount carried forward) 30,440, ,623

79 HIGHLIGHTS & MANAGEMENT COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 Life insurance In EUR In EUR '000 Underwriting result (amount carried forward) 30,440, ,623 Non-underwriting account: 1. Investment and interest income Income from participations 18,398, ,764 Income from land and buildings 8,145, ,260 Income from other investments 257,013, ,381 Income from appreciations 428, ,005 Gains from disposal of investments 27,153, ,521 Other investment and interest income 34,938, ,166 TOTAL INVESTMENT INCOME 346,078, , Expenses for investments and interest expenses Expenses for asset management 15,672, ,532 Depreciation of investments 60,081, ,908 Interest expenses 27,349, ,915 Losses from disposal of investments 7,435, ,852 Other investment expenses 8,513, ,448 TOTAL INVESTMENT EXPENSES 119,052, , Investment income transferred to the underwriting account 227,025, , Other non-underwriting income 57, Result from ordinary activities; life insurance 30,498, ,631 D 77

80 INCOME STATEMENT FOR THE FINANCIAL YEAR FROM 1 JANUARY TO 31 DECEMBER 2011 Property/Casualty + Health + Life = Total Business In EUR In EUR '000 Underwriting result, property/casualty 43,986, ,698 Underwriting result, health 30,272, ,586 Underwriting result, life 30,440, ,623 TOTAL UNDERWRITING RESULT 104,699, ,907 D 78 Non-underwriting account: 1. Investment and interest income Income from participations 63,218, ,951 Income from land and buildings 13,841, ,105 Income from other investments 371,458, ,942 Income from appreciations 692, ,005 Gains from disposal of investments 78,004, ,011 Other investment and interest income 40,545, ,342 TOTAL INVESTMENT INCOME 567,761, , Expenses for investments and interest expenses Expenses for asset management 21,758, ,965 Depreciation of investments 65,889, ,375 Interest expenses 74,141, ,397 Losses from disposal of investments 7,435, ,882 Other investment expenses 9,665, ,340 TOTAL INVESTMENT EXPENSES 178,891, , Investment income transferred to the underwriting account 258,394, , Other non-underwriting income 395, Other non-underwriting expenses 61, Result from ordinary activities 235,509, , Taxes on income 59,771, , Profit for the period 175,738, , Release of reserves Release of valuation reserve for impairment losses 24,506, ,727 TOTAL RELEASE OF RESERVES 24,506, , Transfer to reserves Transfer to risk reserve as per 73a VAG ,000 Transfer to free reserves 60,000, TOTAL TRANSFER TO RESERVES 60,000, , Profit for the year 140,244, , Partial payment in accordance with 54a AktG , Retained profits brought forward 46,145, Net retained profits 186,390, ,246

81 HIGHLIGHTS & MANAGEMENT COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 NOTES TO THE ANNUAL FINANCIAL STATEMENTS OF 2011 I. GENERAL DISCLOSURES ON ACCOUNTING POLICIES The accounting provisions of the Austrian Commercial Code (UGB) and special provisions of the Austrian Insurance Supervision Act (VAG) as amended were applied when preparing the annual financial statements as of 31 December The annual financial statements were prepared in accordance with Austrian generally accepted accounting principles and the general standard of presenting a fair and true view of the net assets, financial position and results of operations. The precautionary principle was satisfied in that only profits that had been realised as at the balance sheet date were reported and all identifiable risks and impending losses were recorded in the balance sheet, with the exception of the less strict valuation of bonds and other fixed-income securities as provided for in 81h(1) VAG and use of the valuation relief options provided for in 81h(2) VAG for units of institutional funds. Figures are generally shown in thousands of euros (EUR 000). Figures from the previous year are indicated as such or shown in brackets. II. ACCOUNTING POLICIES Land is valued at cost, buildings at cost less depreciation and any write-downs. As a rule, repair costs for residential buildings are spread over ten years. Investments for unit- and index-linked life insurance are valued using the current cost principle. Unit-linked life insurance investments are made in the following funds: A2A DEFENSIV T ABER GLOBAL II EURO GOVERNMENT BOND A2 T ABERDEEN GL EMERG MKT SM I2 USD ABERDEEN GLOBAL EMERGING MARKETS EQUITY A2 T ABERDEEN GLOBAL WORLD RESOURCES S2 T ACATIS AKTIEN GLOBAL FONDS T ACTIVEST TOTAL RETURN D ALL ASIA MITEIGENTUMSANTEILE GEM 20 INFG T ALL EUROPE THESAURIERUNGS ANTEILE ALL JAPAN T MITEIGENTUMSANTEILE ALL TRENDS T ALL WORLD T MITEIGENTUMSANTEILE ALLIANZ PIMCO EUROPAZINS A ALLIANZ PIMCO INTERNATIONAL RENTENFONDS ALLIANZ RCM BIOTECHNOLOGIE A ALLIANZ RCM VERMOEGENSBILDUNG DEUTSCHLAND A AMUNDI FUND EQUITY LATIN AMERICA AU C T USD ARERO DER WELTFONDS T AUSTRIA STOCK T AXA WF FRAMLINGTON SWITZERLAND A CAP T CHF AXA WORLD EURO 5 7 CAP BANTLEON OPPORTUNITIES L PT BARING EASTERN EUROPE FUND BARING EUROPE SELECT INC GBP BARING GERMAN GROWTH TRUST T GBP BARING GLB EMG MKTS FD USD INC BARING HONG KONG CHINA FD A BAWAG PSK GLOBAL BOND FOND BAWAG PSK MUENDEL RENT KRZ A BAWAG PSK MUENDEL RENT KRZ T BELLEVUE LUX BB MEDTECH BEUR BERENBERG EMER MKT EQY SEL R BGF EMERGING EUROPE FUND A2 BGF EUROPEAN FUND A2 BGF GBL HI YIELD BD HED A2 BGF NEW ENERGY FUND USD A2 BL BOND DOLLAR T BL BOND EURO T BLACKROCK GLOBAL FUND JAPAN S&M CAP OPPORTU- NITIES A2 USD BLACKROCK GLOBAL FUNDS WORLD GOLD FUND BLACKROCK GLOBAL FUNDS EMERGING MARKETS FUND A2 USD BLACKROCK GLOBAL FUNDS EURO BOND FUND A2 EUR BLACKROCK GLOBAL FUNDS EUROPEAN OPPORTUNITY FUND A BLACKROCK GLOBAL FUNDS GLOBAL ALLOCATION FUND HEDGED A2 EUR D 79

82 D 80 BLACKROCK GLOBAL FUNDS LATIN AMERICAN FUND T USD BLACKROCK GLOBAL FUNDS NEW ENERGY FUND T BLACKROCK GLOBAL FUNDS US FLEXIBLE EQUITY FUND A2 USD BLACKROCK GLOBAL FUNDS WORLD ENERGY FUND T USD BLACKROCK GLOBAL FUNDS WORLD GOLD FUND BLACKROCK GLOBAL FUNDS WORLD MINING FUND A2 EUR BLUEBAY HIGH YIELD BOND B BNPP L1 BOND WORLD EMERGING LOCAL C USD BNPP L1 EQUITY USA GROWTH C T BNPP L1 EQ EU ENRGY CD BNPP L1 EQUITY EUROPE CC BW RENTA INTERNATIONAL UNIVERSAL FONDS CAPITAL INVEST GOLD STOCK A CAPITAL INVEST SWISS STCK A CARMIGNAC INVESTISSEMENT CARMIGNAC PATRIM.A 3D CB GELDMARKT DEUTSCHLAND I A CI GLOBAL MIX 50 COMGEST GROWTH INDIA USD COMINVEST FONDAK P COMINVEST FONDIS A COMSTAGE ETF DOW JONES EURO STOXX 50 TR CPB ZZ 2 FUND CPB ZZ1 FUND C-QUADRAT ACTIVE BALANCED T C-QUADRAT ACTIVE GLOBAL EQUITY T C-QUADRAT ARTS BEST MOMENTUM T C-QUADRAT ARTS TOTAL RETURN BALANCED T C-QUADRAT ARTS TOTAL RETURN GLOBAL - AMI C-QUADRAT ARTS TOTAL RETURN SPECIAL T C-QUADRAT BEST FONDS BASIC T CREDIT SUISSE BF LUX CHF B T CREDIT SUISSE BF LUX SHORT TERM CHF B T CREDIT SUISSE EF (LUX) USA VALUE B CRYSTAL ROOF RUBIN T CRYSTAL ROOF SAFIR T CRYSTAL ROOF SMARAGD T CS EF LUX GLB VALUE R CHF CS EUROREAL A DBXT DBLCI DBX TRACKERS DJ EU STX 50 1D DEEP BONUS 30 ZERT.EUROSTOXX 50 DEGI EUROPA DEKARENT INTERNATIONAL CF DEXIA BOND EURO INFLATION LINKED C T DEXIA EQUITIES B EUROPEAN PROPERTY C T DEXIA QUANT EQUITIES EUROPE C T DEXIA QUANT EQUITIES USA C T DEXIA SUSTAINABLE MEDIUM C CAP T DIT GLOBAL MARKETS BOND UNITS DJE ABSOLUT P DJE INTERCASH P DJE RENTEN GLOBAL P DKLT EM BD UNITS CF DISTRIBUTION DWS AKKUMULA T DWS AKTIEN STRAT DEUTSCHLAND DWS BIOTECH TYP 0 DWS DEUTSCHLAND DWS ENERGY TYP O DWS FLEX PENS 2014 T DWS FLEXPENSION 2015 T DWS FLEXPENSION 2016 T DWS FLEXPENSION 2017 T DWS FLEXPENSION 2018 T DWS FLEXPENSION 2019 T DWS FLEXPENSION 2020 T DWS FLEXPENSION 2021 T DWS FLEXPENSION 2022 T DWS FLEXPENSION 2023 T DWS FLEXPENSION II 2019 T DWS FLEXPENSION II 2020 T DWS FLEXPENSION II 2021 T DWS FLEXPENSION II 2023 T DWS FLEXPENSION II 2024 T DWS FLEXPENSION II 2025 T DWS FLEXPENSION II 2026 T DWS HEALTH CARE TYP O DWS INTER RENTA DWS INVEST CHINESE EQUITY LC EUR DWS INVEST EUROPEAN EQUITIES T DWS INVEST GLOBAL AGRIBUSINESS LC DWS INVEST TOP 50 ASIA LC DWS INVEST TOP 50 ASIA T DWS OSTEUROPA FCP UNITS CAPITALISATION T DWS SHIFT 2015 EUR T DWS SHIFT 2016 EUR T DWS SHIFT 2017 EUR T DWS TELEMEDIA TYP O DWS TOP 50 ASIEN T DWS TOP 50 WELT DWS TOP DIVIDENDE ANTEILE DWS VERMOEGENSBILDUNGSFOND I A E+S ERFOLGS INVEST T ECOFIN INDEX AKTIEN GLOBAL T

83 HIGHLIGHTS & MANAGEMENT COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 ESPA BEST OF AMERICA T ESPA BEST OF EUROPE T ESPA BEST OF HEALTHCARE T ESPA BEST OF WORLD T ESPA BOND DANUBIA T ESPA BOND DOLLAR A ESPA BOND DOLLAR CORP T ESPA BOND EMERGING MARKETS ESPA CASH EURO MIDTERM A ESPA CASH EURO PLUS T ESPA PORTFOLIO BALANCED 50 T ESPA PORTFOLIO BALANCED 30 T ESPA PORTFOLIO BOND T ESPA SELECT BOND T ESPA STOCK ASIA INFRASTRUCTURE T ESPA STOCK ISTANBUL T ESPA STOCK NEW CONSUMER T ESPA STOCK PHARMA T ESPA STOCK VIENNA A ETF DACHFONDS P ETHNA AKTIV E T ETHNA AKTIV E UNITS ETHNA GLOBAL DEFENSIV A FAIR INVEST BALANCED T FI ALPHA RENTEN GLOBAL FIDELITY EURO BOND FUND A FIDELITY EUROPEAN FUND T EUR FIDELITY EUROPEAN GROWTH FUND A FIDELITY FDS SOUTH E ASIA A FIDELITY FDS SOUTH E ASIA A USD FIDELITY FNDS GL CONS IND A FIDELITY FNDS GL TECH FD A FIDELITY FNDS GLO FIN SVC A FIDELITY FNDS GL HEALTH C A EUR FIDELITY FNDS STERLING BD A GBP FIDELITY FUND CHINA FC A USD FIDELITY FUNDD II AUD CURRENCY FUND FIDELITY FUNDS INTERNATIONAL USD FUND FIDELITY FUNDS LATIN AMERICA FUND USD FIDELITY FUNDS MALAYSIA FUND A USD FIDELITY FUNDS PACIFIC FUND USD FIDELITY FUNDS WORLD FUND FIDELITY GLOBAL PROPERTY FUND A EUR FIDELITY JAPAN FUND A JPY FIDELITY JAPAN SMALLER COMPANIES FUND A JPY FIDELITY MODERATE FPS EUR FUND FIDELITY PS GLOBAL GROWTH FUND A USD FIDELITY PS GROWTH FUND A FIDELITY SOUTH EAST ASIA T USD FORTIS L FUND EQ ENRGY WD CC FRANK TE IN FR GL SMC G AACC FRANKLIN INDIA FUND T EUR FRANKLIN TEMPLETON BRIC FUND GARTMORE CONTINENTAL EUROPEAN SHS A1 GLOBAL ADVANTAGE EMERGING MARKETS HIGH VALUE T GLOBAL HEALTH CARE GOLDEN ROOF BRANCHEN T GOLDEN ROOF WELT R T GOLDMAN SACHS EUROP COR E BA GUTMANN VORSORGEFONDS A HENDERSON GLOBAL TECHNOLOGY A2 USD HSBC GIF CHINESE EQUITY AD USD HSBC GLOBAL INDIAN EQUITY USD INDUSTRIA A EUR INVESCO ASIA INFRASTRUCT A USD INVESCO EMERGING MARKETS BOND A INVESCO GLB HEALTH CARE A USD INVESCO GLOBAL TECHNOLOGY A USD INVESCO JAPANESE EQUITY A INVESCO JAPANESE SMALL/MID CAP EQUITY A INVESCO JAPANESE VL EQUITY T JPY INVESCO PACIFIC EQUITY A USD INVESCO PAN EUR STRUC EQTY A INVESCO PAN EUROPEAN EQUTIY T INVESCO PAN EUROPEAN SMALL CAP EQUITY T INVESCO UMWELT UND NACHHALTI ISHARES ATX DE ISHARES DAX DE ISHARES DJ EURO STOXX 50 DE ISHARES DJ EURO STOXX SD 30 ISHARES EB.REXX JUMBO PFANDBRIEFE ISHARES EUROSTOXX SEL DVD 30 ISHARES MSCI EMERGING MARKET ISHARES MSCI WORLD ISHARES MSCI WORLD ACC ISHARES S+P LISTED PRIVATE EQUITY USD JB EUROPE GRWTH STOCK B EUR JB GBP STERLING CASH FUND B JP MORGAN FLEMING EUROPE SMALL CAP FUND JPM AMERICA EQUITY A USD JPM EMERGING MARKETS DEBT A DIS EUR HGD JPM EMERGING MARKETS EQUITY A USD JPM GLOBAL TOTAL RETURN T EUR JPM INDIA FUND A USD JPM LATIN AMERICA A USD JPM MORGAN US SMALL CAP GROWTH A DIS USD JPM PACIFIC EQUITY A DIST USD JPM US TECHNOLOGY A USD D 81

84 D 82 JPMORGAN EUROPE STRATEGIC VALUE A JPMORGAN F EAST EURO E A JULIUS BAER MULTISTOCK BLACK SEA FUND A KBC ECO FUND WATER C KBC EQUITY FD FOOD & BEVERAGES C KBC RENTA NOKRENTA B CAP NOK KBC RENTA NZD RENTA CAP KEPLER ETHIK AKTIENFONDS A LLOYDS TSB MF NEW ZEALAND NZD LO FUNDS WORLD GOLD EXPERTISE USD P LO FUNDS WORLD GLD EUR PA LYXOR ETF DJ BUYWRITE PARTS DE CAPITALISATION/DI LYXOR ETF EURO 5 7Y LYXOR ETF EURO MTS LYXOR ETF EUROMTS CBA LYXOR ETF WORLD WATER LYXOR EURO MTS 3 5Y M&G 1 GLOBAL BASIC ACCUMALTED SHARES CLASS A M&G ASIAN FUND A ACC M&G GLBL GROWTH EUR A ACC MAGNA TURKEY FUND A MARKET ACCESS JIM ROGERS INT COMMODITY INDEX MLIIF WORLD MINING SHARES A2 CAPITALISATION USD MMT GLOBAL SELECTION B A MORGAN STANLEY EMERGING MARKETS DEBT T USD MORGAN STANLEY EMERGING MARKETS EQUITY T USD MULTI INVEST OP NORDASIA FUND T OEKOWORLD OEKOVISION CLASSIC OP FOOD ANTEILE A PEH STRATEGIE FLEXIBEL PIA AMERICA STOCK FONDS T USD PIA DOLLAR BOND FONDS T PIA DOLLAR SHORT TERM BOND A PIA EURO BOND A PIA EURO CORPORATE BOND T PIA MASTER FONDS DYNAMISCH A ANTEILE PIA MASTER FONDS DYNAMISCH T PIA MASTER FONDS PROGRESSIV T PIA MASTER FONDS TRADITIONELL T PIA MÜNDEL BOND A MITEIGENTUMSANTEILE PIA SELECT EUROPE STOCK A MITEIGENTUMSANTEILE PIA SELECT EUROPE STOCK T PIA TRADERENT T PICTET FUNDS FCP BIOTECH ANT. P PICTET ASIAN LOCAL CURRENCY PDY GBP PICTET FUNDS (LUX) SICAV SECURITY PICTET FUNDS (LUX) SICAV WATER PICTET GLOBAL EMERG DEBT P USD PICTET WATER I PICTET WATER PDY PICTET EMERGING DEBT HP PIONEER AUSTRIA CORP TR IN A PIONEER CENTRAL EUROPE BD A PIONEER EM. M. PIONEER EURO AGGREGATE BOND PIONEER EURO BOND MEDIUM PIONEER FDS GLBL ECOLG A AC PIONEER FDS GLOBAL SEL A A PIONEER FUNDS CORE EU EQ A PIONEER FUNDS US DOL S T A USD PIONEER FUNDS EURO AG BO A=A PIONEER EM EUR & MED A EUR PSM GROWTH UI PSM VALUE STRATEGY UI QUALITY USA EQUITY FUND B USD RAIFFEISEN EURO RENT T RAIFFEISEN OESTERREICH AK A RAIFFEISEN EURASIEN AKTIEN A RAIFFEISEN OSTEUROP AKTIEN A REAL INVEST AUSTRIA A RINGTURM PIF DYNAMISCH VT RINGTURM PIF TRADITIONELL VT ROBECO INT. ASSET MANAGM. BV RT ABSOLUTE RETURN BOND FUND T RT ACTIVE GLOBAL TREND T RT EURO CASH PLUS T RT OESTERREICH AKTIENFONDS T RT OSTEUROPA AKTIENFONDS T RT VIF VERSICHERUNG INTERNATIONAL T RT VORSORGE 14 RENTENFONDS A RT VORSORGE RENTENFONDS T RT ZUKUNFTVORSORGE AKTIENFONDS T SCHOELLERB GLOBAL PENSION FONDS SCHOELLERBANK TOP BAL M T SCHOELLERBANK AKTIENFONDS A SCHOELLERBANK AKTIENFONDS T SCHOELLERBANK AKTIENFONDS WÄHR.T SCHOELLERBANK AKTIENFONDS WÄHRUNGSGESICHERT SCHOELLERBANK ANLEIHEFONDS A SCHOELLERBANK ANLEIHEFONDS T SCHOELLERBANK ANLEIHENFNDS 14 A SCHOELLERBANK ANLEIHENFONNDS 14 T SCHOELLERBANK EURO ALTERNATIV SCHOELLERBANK EURO ALTERNATIV T SCHOELLERBANK GLOB RESORCS A SCHOELLERBANK GLOB RESORCS T SCHOELLERBANK GLOBAL DYNAMIK T

85 HIGHLIGHTS & MANAGEMENT COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 SCHOELLERBANK KURZINVEST A SCHOELLERBANK KURZINVEST T SCHOELLERBANK KURZINVST T SCHOELLERBANK LIQUID A SCHOELLERBANK LIQUID T SCHOELLERBANK NETTO RENT SCHOELLERBANK NETTORENT T SCHOELLERBANK PIF T SCHOELLERBANK REALZINS PLUS A SCHOELLERBANK REALZINS PLUS T SCHOELLERBANK USD KURZINVEST T SCHOELLERBANK USD KURZINVEST ANTEILE A SCHOELLERBANK USD KURZINVST A SCHOELLERBANK USD RENTENFONDS A SCHOELLERBANK USD RENTENFONDS A EUR SCHOELLERBANK USD RENTENFONDS T SCHOELLERBANK VORSORGEFONDS SCHOELLERBANK VORSORGEFONDS T MITEIGENTUMS- ANTEILE SCHOELLERBANK ZINSSTRUKTUR PLUS MITEIGEN- TUMSF.GEM. SCHÖLLERB.ZINSSTRUK.PLUS SCHÖLLERBANK (LEMBERGER) USD RENTENFONDS T SCHÖLLERBANK GLOBAL PENSION SCHRODER INT EME ASIA A USD ACC SCHRODER INT HONG KONG EQ AAC HKD SCHRODER INTL EMG EUROPE A D SEMPER BOND EURO A SEMPERPROPERTY EUROPE T SEMPERSHARE AUSTRIA T SMART INVEST HELIOS AR B SPAENGLER BOND CORPORATE A SPAENGLERR BOND CORPORATE RT SPECIAL PLUS T STARCAPITAL UNIVERSAL BONDVALUE UI SUCCESS ABSOLUTE T SUCCESS RELATIVE T SUPERIOR 3 ETHIK A TEMPLETON ASIA GROWTH FUND T EUR TEMPLETON EMERGING MARKETS BAL. FUND T TEMPLETON EMERGING MARKETS FUNDS A YDIS TEMPLETON GLOBAL TOTAL RETURN T EUR TEMPLETON GROWTH FUND EURO TERRASSISI RENTEN I AMI A THREADNEEDLE EM MK B USD RGA THREADNEEDLE EUROPEAN SELECT FUND THREADNEEDLE US EQUITIES TOP VARIO MIX T TRADECOM FONDSTRADER T TRADITIONAL FUND TR GLOBAL BD GBP DG UBS (LUX) STRATEGY FUND FCP BALANCED T UBS LUX BOND FUND GBP P ACC UBS LUX BOND FUND USD P ACC T UBS LUX BOND FUND CHF P ACC T CHF UBS LUX MD TRM BND EUR P ACC UNIASIA T UNIDEUTSCHLAND UNIDYNAMICFONDS EUROPA A UNIFONDS UNIGLOBAL UNIJAPAN UNTERNEHMENSANLEIHENFONDS 2014 GEM 20 INVFG A UNTERNEHMENSANLEIHENFONDS 2014 GEM 20 INVFG T VONTOBEL EMERGING MARKETS EQUITY B T USD VONTOBEL USD BOND T VONTOBEL EURO BOND A VONTOBEL SWISS MONEY B CHF VPI WORLD INVEST TM VPI WORLD SELECT TM WALSER PORTFOLIO GERMAN SCT WIENER PRIVATBANK PREMIUM AUSGEWOGEN T WIENER PRIVATBANK PREMIUM DYNAMISCH T WSTV ESPA DYNAMISCH WSTV ESPA PROGRESSIV WSTV ESPA TRADITIONELL WSTV ESPA GARANTIE II WSTV ESPA GARANTIE MITEIGENTUMSFONDS In accordance with 20A I Shares and other non-fixed-income securities (with the exception of units of RT2 and RT3 institutional funds), and shares in affiliated companies are valued according to the strict lower-of-cost-or-market principle (strenges Niederstwertprinzip). Starting in 2008, bonds and other fixed-income securities have been valued using the less strict lower-ofcost-or-market principle (gemildertes Niederstwertprinzip) provided for in 81h(1) VAG. Valuation using the less strict lower-of-cost-or-market principle resulted in write-downs of EUR 110,237,000 (EUR 59,833,000) not being performed. Bonds issued by the Republic of Greece were written down to market value at the end of In accordance with Management Board resolutions, holdings of RT2 and RT3 institutional funds were reported as fixed assets and the valuation relief options provided for in 81h(2) VAG were not used until 30 September D 83

86 D 84 PwC INTER-TREUHAND GmbH Wirtschaftsprüfungs- und Steuerberatungsgesellschaft provided confirmation that the statutory requirements for using the valuation relief options were satisfied and the existing amount of net hidden reserves was double the size of the write-downs not performed. Use of the less strict valuation principle resulted in EUR 94,258,000 (EUR 0) in write-downs not being performed for units of institutional funds. The Company makes its investments in fixed-income securities, real estate, participations, shares, and structured investment products, taking into account the overall risk position of the Company and the investment strategy provided for this purpose. The risk inherent in the categories specified and market risks were taken into account when determining exposure volumes and limits. The investment strategy is laid down in the form of investment guidelines that are continuously monitored for compliance by the corporate risk controlling and internal audit departments. The corporate risk controlling department reports regularly to the tactical and strategic investment committee. The internal audit department reports regularly to the Managing Board. As a rule, investments are generally low-risk. The strategic investment committee decides on possible high-risk investments based on the inherent risk of each individual investment after performing a full analysis of all related risks and liquidity at risk, and considering all assets currently in the portfolio and the effects of the individual investments on the overall risk position. All known financial risks are assessed regularly and specific limits or reserves are used to limit exposure. Security price risk is reviewed periodically using value-at-risk and stress tests. Default risk is measured using both internal and external rating systems. An important goal of investment and liquidity planning is to guarantee that the return on investment remains continuously above the minimum rate of return for the life insurance class and that adequate amounts of liquid, value-protected financial investments are maintained for all classes. Liquidity planning therefore takes into account the trend in insurance benefits and the majority of investment income is generally reinvested. The Company reported assets whose interest payments were not guaranteed and whose principal repayment might be defaulted in whole or in part in the balance sheet asset item shares and other non-fixed-income securities with a carrying amount of EUR 29,973,000 (EUR 32,345,000) and a fair value of EUR 29,973,000 (EUR 33,996,000) as at 31 December Austrian banks have the option to tender previously subscribed bank bonds with a value of EUR 15,000,000 in It is currently not expected that these options will be exercised. As a rule, mortgage receivables and other loans, including those to affiliated companies and companies in which a participation is held, are valued at the nominal value of the outstanding receivables. Discounts deducted from loan principal are spread over the term of the loan and shown under deferred income on the liabilities side of the balance sheet. Valuation allowances of adequate size are formed for doubtful receivables and deducted from their nominal values. Tangible assets (not including land and buildings) are valued at cost less depreciation. Low-cost assets are written off in full in the year of acquisition. Unearned premiums for property/casualty insurance were generally calculated by prorating over time after applying a cost deduction of EUR 17,708,000 (EUR 16,859,000). Unearned premiums for life insurance are formed according to the amounts prescribed in the business plan. No cost deduction is applied. Unearned premiums for health insurance are calculated by prorating over time without applying a cost deduction. The mathematical reserve is calculated using the formulas and calculation bases contained in the business plans approved by or submitted to the supervisory authority. The provision for outstanding claims for direct property/casualty and life insurance business is calculated for claims reported by the balance sheet date by individually valuing unsettled claims and adding lump-sum safety margins for large unexpected losses. Lump-sum provisions based on past experience are formed for claims incurred but not reported.

87 HIGHLIGHTS & MANAGEMENT COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 In health insurance, provisions for outstanding claims are calculated by applying lump-sum percentages to payments made for claims during the financial year. The percentage rates were unchanged compared to the previous year. In indirect business, provisions for outstanding claims are primarily based on reports from ceding companies as of the 31 December 2011 balance sheet date. The reported amounts were increased where this was considered necessary in light of past experience. The equalisation provision is calculated in accordance with the directive of the Austrian Federal Finance Minister, BGBl (Federal Gazette) No. 545/1991 in the version contained in BGBl II No. 66/1997. Use was made of the release provision in 13. The provision for profit-related premium refunds and policyholder profit participation includes the amounts earmarked for policyholder premium refunds based on the business plans and articles of association for which no disposition had been made as of the balance sheet date. The provisions for severance pay, pensions, and anniversary bonuses are based on the pension insurance calculation principles of the Actuarial Association of Austria (AVÖ), AVÖ 2008-P (Employees), using a discount rate of 4% p.a. Company pension plan obligations are measured using the actuarial entry age normal method (Teilwertverfahren). The retirement age used to calculate the provisions for anniversary bonuses and severance pay is the statutory minimum retirement age as stipulated in the Austrian General Social Security Act (ASVG) (2004 reform), subject to a maximum age of 62 years for the provision for anniversary bonuses. The retirement age used to calculate the provision for pensions is based on each individual agreement. The following percentages were used for employee turnover based on age: <31 7.5%, %, %, %, % and %. (<31 7.5%, %, %, %, % and %) The severance entitlement used to calculate the provision for severance obligations is based on each individual agreement or on the collective agreement. The following percentages were used for employee turnover based on age: <30 7.5%, %, %, %, % and % (<30 7.5%, %, %, %, % and %) The interest expenses for personnel provisions of EUR 4,550,000 (EUR 4,921,000) are reported under investment and interest expenses. A portion of the direct pension obligations, in the amount of EUR 25,368,000 (EUR 25,689,000), is administered as an occupational group insurance plan under an insurance policy concluded in accordance with 18f to 18j VAG. Provisions are formed for another portion (actuarial pension amount of EUR 9,603 thousand (EUR 9,804 thousand)). As permitted under the Austrian Federal Ministry of Finance decree of 3 August 2001, an amount of EUR 295,000 (EUR 273,000) was transferred to an outside insurance company to outsource severance pay obligations. The severance pay provision required under Austrian corporate law for 2011 was EUR 71,715,000 (EUR 70,216,000). The amount earmarked for satisfying the outsourced severance pay obligations that was held by the outside insurance company was EUR 63,590,000 (EUR 60,682,000). The difference of EUR 14,461,000 (EUR 14,721,000) between the size of the severance pay provisions to be formed under Austrian corporate law and the deposit held by the outside insurance company is reported in the provisions for severance pay in the balance sheet. Amounts denominated in foreign currencies are translated to euros using the appropriate mean rate of exchange. A portion of the underwriting items for assumed reinsurance business and the associated retrocessions for property/casualty and life insurance is deferred for one year before being shown in the annual financial statements. The following disclosures are provided for off-balance sheet contingent liabilities: Letters of comfort and liability undertakings totalling EUR 40,582,000 (EUR 38,904,000) have been issued in connection with a real estate purchase and borrowing. Liability undertakings totalling EUR 278,000 (EUR 72,000) have been issued in connection with loan repayments and bank guarantees. A total of EUR 29,149,000 (EUR 29,149,000) relates to letters of comfort with affiliated companies. III. NOTES TO THE BALANCE SHEET The value of developed and unimproved properties was EUR 74,135,000 (EUR 73,788,000) as of 31 December The carrying amount of owner occupied property was EUR 53,272,000 (EUR 53,444,000). D 85

88 D 86 Other loans not secured by insurance contracts were composed of the following: loans to the Republic of Austria in the amount of EUR 28,408,000 (EUR 31,813,000), loan receivables from other public bodies in the amount of EUR 26,653,000 (EUR 30,885,000) and loan receivables from other borrowers in the amount of EUR with 188,428,000 (EUR 159,300,000). The fair values of the investments are: Items under 81c Abs. 2 VAG Market value 31/12/11 Market value 31/12/10 In EUR '000 Land and buildings 410, ,548 Shares in affiliated companies 1,814,938 1,743,071 Bonds and other securities of and loans to affiliated companies 925, ,908 Participations 290, ,939 Bonds and other securities of and loans to other companies in which an ownership interest exists 36,716 37,306 Shares and other non-fixedinterest securities 2,631,971 3,066,979 Bonds an other fixed-income securities 3,762,691 3,897,843 Shares in joint investments 32,107 40,787 Mortgage receivables 352, ,803 Policy prepayments 16,981 18,026 Other loans 243, ,998 Bank balances 49, ,409 Deposit receivables 3,377 18,306 10,570,180 11,078,923 Hidden reserves totalled EUR 463,129,000 (EUR 792,320,000) as of 31 December The fair value of the shares in affiliated companies and shares in companies in which a participation is held is equal to the stock exchange value or other available market value (up-to-date internal measurement calculations). If no stock exchange value or other market value is available, the purchase price is used as the fair value, if necessary reduced by any write-downs or a proportionate share of the publicly reported equity capital, whichever is greater. For shares and other securities, stock exchange values or carrying amounts (purchase price, reduced by write-downs if necessary) are used as the fair value. The remaining investments were valued at their nominal values, reduced by write-downs where necessary. The fair value of EUR 410,899,000 (EUR 373,548,000) for land and buildings is composed of market value appraisals for the years 2007 to 2011 as follows: 2011: EUR 139,434,000, 2010: EUR 124,275,000 (EUR 124,275,000), 2009: EUR 59,857,000 (EUR 69,547,000), 2008: EUR 44,017,000, (EUR 99,124,000), 2007: EUR 43,316,000, (EUR 80,602,000). In health insurance, the mathematical reserve is calculated using actuarial principles in accordance with 18c VAG for all portfolio groups. For individual insurance, the mathematical reserve is calculated exclusively for each individual policy. This also applies to new business in the group insurance area affected by the 1994 amendment to the Austrian Insurance Contract Act (VersVG). A lump-sum mathematical reserve is formed for the remaining group policies. The mathematical reserve is generally calculated using the prospective method. The calculation of the mathematical reserve takes into account the fact that the mathematical reserve for a policy is forfeited in favour of the community of the insured (Versichertengemeinschaft) in the event of early policy termination or death of the insured. The fair values of land and buildings were determined in accordance with the recommendations of the Austrian Association of Insurance Companies. All properties are individually valued during a 5-year period.

89 HIGHLIGHTS & MANAGEMENT COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 The claims frequencies used for the actuarial calculation of the mathematical provision are primarily derived from analyses of the Company's own claims experience. Mortality rates were mainly taken from the Austrian 2000/2002 general mortality tables. Consistent with the premium calculation, the mathematical reserve is generally calculated using a discount rate of 3% p.a. In life insurance, the mathematical reserve is calculated using principles laid down in business plans and approved by the supervisory authority and using calculation bases submitted to the supervisory authority. The mathematical reserve is calculated for each individual case, with the prospective method being used almost exclusively. The main probability tables used are the following: For endowment insurance policies DM 24/26 ÖVM 80/82 ÖVM/ÖVF 90/92 ÖVM/ÖVF 00/02 For annuity insurance policies EROM/EROF AVÖ 1996 R AVÖ 2005 R For a large portion of the portfolio, the mathematical reserve is calculated using a discount rate of 3% p.a. Starting in 1995, a discount rate of 4% p.a. was used for certain policies, and between 1 July 2000 and 31 December 2003 a discount rate of 3.25% p.a. was used. For policies with coverage beginning on or after 1 January 2004 the discount rate is 2.75% p.a., and on or after 23 September 2005 the discount rate is 2.25% for employer group policies. The discount rate is 2.25% for policies concluded on or after 1 January 2006, and 2.0% p.a. on or after 1 April The amount shown under other liabilities includes EUR 24,137,000 (EUR 22,953,000) in tax liabilities and EUR 3,186,000 (EUR 3,167,000) in social security liabilities. D 87

90 The following balance sheet items are accounted for by affiliated companies and companies in which an ownership interest is held: Affiliated companies Companies in which an ownership interest existis In EUR ' Mortgage receivables 33,513 37,761 5,067 5,064 Deposit receivables 10,247 10, Receivables from direct insurance business 2,681 12,356 1,417 1,358 Receivables from reinsurance business 14,373 23, Other receivables 108, , Deposits retained 173, , Liabilities from direct insurance business 1, Liabilities from reinsurance business 10,106 12, Other liabilities 902, , Liabilities arising from the use of off-balance sheet tangible assets were EUR 31,622,000 (EUR 25,097,000) for the following financial year and EUR 166,032,000 (EUR 148,922,000) for the following five years. The book values of intangible assets, land and buildings, investments in affiliated companies and ownership interests have changed as follows: D 88 Intangible assets Land and buildings Shares in affiliated companies Bonds and other securities of and loans to affiliated companies Participations Bonds and other securities of and loans to companies in which an ownership interest is held In EUR '000 As of 31 December , ,844 1,484, , ,068 37,306 Additions 2,465 3,417 97,435 71, Disposals ,147 3,227 1,302 Rebooking , Appreciation Capital consumption 3,669 8,175 16, Change due to value adjustments , As of 31 December , ,779 1,565, , ,592 36,716

91 HIGHLIGHTS & MANAGEMENT COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 IV. NOTES TO THE INCOME STATEMENT The premiums written, earned premiums, expenses for insurance claims, operating expenses and reinsurance balance in property/casualty insurance in 2011 are broken down as follows: Gross Net earned premiums Expenses for claims and insurance benefits Administrative expenses Reinsurance balance Premiums written In EUR '000 Direct business Fire and fire business interruption insurance 203, , ,230 38,976 54,664 Liability insurance 114, ,270 63,660 32, Household insurance 76,803 76,804 37,852 19,973 2,578 Motor liability insurance 190, , ,396 36,081 1,193 Legal expenses insurance 26,949 26,963 12,698 6, Marine, aviation, and transport insurance 32,799 31,979 20,827 7,673 4,885 Other insurances 33,955 33,963 39,906 6,812 10,147 Other motor vehicle insurance 123, ,264 96,294 26,764 3,285 Other non-life insurance 161, , ,309 39,352 13,242 Casuality insurance 96,352 96,770 57,248 22,290 2,170 1,060,883 1,056, , ,059 71,573 Previous year value 1,037,091 1,044, , , ,703 Indirect business Marine, aviation, and transport insurance Other insurances 5,258 5,355 11,430 1,665 2,540 5,295 5,392 11,356 1,678 2,548 Previous year value 9,425 9,504 11,180 1, Direct and indirect business 1,066,178 1,062, , ,737 69,025 Previous year value 1,046,516 1,053, , , ,687 D 89 The reinsurance balance includes earned reinsurance premiums, effective reinsurance claims and reinsurance commissions. Premiums written for health insurance in 2011 are broken down as follows: In EUR ' Direct business Individual insurance 235, ,122 Group insurance 99,657 97,566 Indirect business Group insurance , ,763

92 Premiums written had the following breakdown for life insurance in 2011: In EUR '000 Direct business 869,568 1,055,076 Indirect business 3,360 3, ,928 1,058,516 Direct premiums for life insurance were composed of the following: In EUR '000 Individual insurance 794, ,289 Group insurance 74,917 70, ,568 1,055,076 Single premium policies 233, ,703 Policies with regular premium payments 636, , ,568 1,055,076 Policies with profit participation 410, ,253 Policies without profit participation 2,951 3,260 Unit-linked life insurance policies 412, ,730 Index-linked life insurance policies 43,312 45, ,568 1,055,076 D 90 The branch office in Italy wrote direct premiums of EUR 8,963,000 (EUR 59,653,000) and had an underwriting result of EUR 198,000 (EUR 4,798,000). The exception rule of 81o(6) VAG was used. The reinsurance balance for life insurance was negative in 2011, with a value of EUR 1,499,000 (EUR 1,717,000). The result from indirect business was EUR 212,000 (EUR 540,000). The reinsurance balance for health insurance was negative in 2011, with a value of EUR 8,010,000 (EUR 9,109,000). The result from indirect business was EUR 75,000 (EUR 64,000). A portion of the net earned premiums of EUR 5,392,000 (EUR 9,504,000) from indirect property/casualty insurance business had been deferred one year before being recognized in the income statement. Of the EUR 3,364,000 (EUR 3,443,000) in net earned premiums from indirect life insurance business, EUR 332,000 (EUR 391,000) was deferred for one year before being shown in the income statement.

93 HIGHLIGHTS & MANAGEMENT COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 Of the income from participations, income from other investments and income from land and buildings shown in the income statement, affiliated companies accounted for the following amounts: In EUR '000 Income from participations Property/casualty insurance 42,631 26,061 Life insurance 10,808 4,388 Total 53,439 30,449 Income from other investments Property/casualty insurance 21,454 20,415 Health insurance 1,199 2,112 Life insurance 15,449 14,909 Total 38,102 37,436 Income from land and builing Property/casualty insurance 62 0 Health insurance Life insurance Total All of the investment income in the life insurance and health insurance segments was transferred to the underwriting account, as investment income is a component of the underwriting calculations in both segments. In the property/casualty segment, only deposit interest income for indirect business was transferred to the underwriting account. The expenses for insurance claims and benefits, administrative expenses, other underwriting expenses and investment expenses include: In EUR '000 Wages and salaries 119, ,932 Expenses for severance benefits and payments to company pension plans 4,038 7,980 Expenses for retirement provisions 15,831 13,428 Expenses for statutory social contributions and income-related contribution and mandatory contributions 40,970 46,788 Other social security expenses 1,476 1,807 D 91 Commissions of EUR 180,057,000 (EUR 174,553,000) were incurred for indirect business in Losses on disposals of investments were EUR 7,436,000 (EUR 1,882,000) in financial year 2011.

94 The valuation reserve shown on the balance sheet as of 31 December 2011 and releases over the fiscal year are broken down by asset item as follows: As of 31/12/2010 Release As of 31/12/2011 In EUR '000 Land and buildings 51,605 1,263 50,342 Shares in affiliated companies Shares and other non-fixed-income securities 26,456 23,244 3,212 78,287 24,507 53,780 The formation and release of untaxed reserves resulted in an increase in income tax expenses of EUR 316,000 (EUR 7,682,000) for the financial year. D 92

95 HIGHLIGHTS & MANAGEMENT COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 V. PROFIT PARTICIPATION HEALTH INSURANCE All policies with an adjustment clause whose premiums were not increased by the required actuarial amount when 2011 premium adjustments were performed receive a special profit share on 31 December The size of the profit share equals the single-premium amount that is necessary to provide relief to elderly persons covered by health insurance. Under 7 of the Financial Market Authority (FMA) regulation on profit participation in the health insurance industry (GBVKVU) of 12 June 2007, this regulation is applicable to policies whose actuarial bases were submitted after 30 June 2007 and whose terms provide for profit participation. The expenses for profit-related premium refunds plus any direct credits must be at least 85% of the assessment basis for the health insurance policies concerned. The assessment basis within the meaning of 3(1) GBVKVU is calculated as follows for health insurance policies eligible for profit participation: In EUR 000 Earned premiums 6,013 Expenses for insurance claims including changes to underwriting reserves -5,114 Operating expenses -2,320 Other underwriting and non-underwriting income/expenses -20 Investment and interest income and expenses 271 Assessment base as at 31/12/2011-1,170 As a general rule, the listed income and expense items were calculated directly. Where this was not possible, an allocation was performed as far as possible on the basis of origin in accordance with the provisions of 3(2) GBVKVU. The option provided for in 3(3) GBVKVU to apply a prior deduction to the calculation of the assessment basis was used. Since the assessment basis is negative, the percentage rate specified in 6(1) GBVKVU was not calculated. LIFE INSURANCE Under the FMA regulation of 20 October 2006 on profit participation in the life insurance sector (GBVVU), the expenses for profit-related premium refunds and policyholder profit participation plus any direct credits must be at least 85% of the assessment base. The assessment basis within the meaning of 3(1) GBVVU is calculated as follows for life insurance policies eligible for profit participation: In EUR 000 Earned premiums 405,522 Expenses for insurance claims including changes to underwriting reserves -478,605 Operating expenses -66,324 Other underwriting and non-underwriting income/expenses -3,780 Investment and interest income and expenses 165,366 Assessment base as at 31/12/ ,179 As a general rule, the listed income and expense items were calculated directly. Where this was not possible, an allocation was performed as far as possible on the basis of origin in accordance with the provisions of 3(2) GBVVU. Expenses for profit participation, including direct credits, were EUR 23,744,000 in 2011 (EUR 21,279,000), representing 107.1% of the assessment basis. The Managing Board of Wiener Städtische Versicherung AG has adopted a resolution providing the following earnings appropriation as of 31 December 2011 for the insurance policies in the following various profit classes depending on the guaranteed actuarial interest rate: D 93

96 D 94 Profit Class A 1. In accordance with policy terms and conditions, all insurance policies in Profit Class A that belong to Settlement Class 92 receive the following profit shares: a) An interest profit share equal to 0.25% of the mathematical reserve specified in the business plan at the beginning of the current insurance year. b) A total profit share equal to 2.5% of the sum insured upon death for policies that have a proper adjustment letter and no regular premium payments outstanding, and 1% for all other policies. c) A final profit share upon maturity of the endowment sum in 2012 equal to an interest profit share as per point a) on the total matured capital. 2. In accordance with policy terms and conditions, all insurance policies in Profit Class A that belong to Settlement Class 96 (single-premium insurance policies) receive the following profit shares: a) An interest profit share equal to 0.25% of the mathematical reserve specified in the business plan at the beginning of the current insurance year. b) A final profit share upon maturity of the endowment sum in 2012 equal to an interest profit share as per point a) on the total matured capital. 3. In accordance with policy terms and conditions, all insurance policies in Profit Class A, with the exception of policies in Settlement Classes 92 and 96, receive the following profit shares: a) An interest profit share equal to 0.25% of the mathematical reserve specified in the business plan at the beginning of the current insurance year. Profit Class B In accordance with policy terms and conditions, all insurance policies in Profit Class B receive profit shares equal to 15% of the annual net premium. Ordinary life insurance policies with a sum insured of at least EUR and a policy term of at least 12 years that are included in Profit Class B also receive a final profit share equal to 20% of the sum insured upon maturity of the sum insured in 2012 in the case of survival. The special profit shares approved in 1983 and 1984 are counted toward this final profit share. Profit Class D In accordance with policy terms and conditions, all insurance policies in Profit Class D receive the following profit shares: a) An interest profit share equal to 0.00% of the mathematical reserve specified in the business plan at the beginning of the current insurance year. b) A total profit share equal to 2% of the sum insured upon death for policies that have a proper adjustment letter and no regular premium payments outstanding, and 1% for all other policies. c) A final profit share upon maturity of the endowment sum in 2012 equal to a single interest profit share as per point a) on the total matured capital for single-premium policies, and equal to a single interest profit share as per point a) on the total matured capital for policies with regular premiums and a premium payment period of less than 20 years, or equal to double the interest profit share for policies with a premium payment period of 20 years or more. b) A total profit share equal to 3.5% of the sum insured upon death for policies that have a proper adjustment letter and no regular premium payments outstanding, and 2% for all other policies. c) A final profit share upon maturity of the endowment sum in 2012 equal to an interest profit share as per point a) on the total matured capital.

97 HIGHLIGHTS & MANAGEMENT COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 Profit Classes F, H, I, J, L, X, Y and S 1. In accordance with policy terms and conditions, all insurance policies in Profit Classes F, H, I, J, L, X, Y and S that belong to Settlement Class 2004 receive the following profit shares: a) An interest profit share equal to 0.50% of the contractual mathematical reserve at the beginning of the current insurance year. b) A total or additional profit share equal to 1% of the sum insured upon death, the contractual annuity redemption value or the endowment sum for policies with no regular premium payments outstanding. c) A final profit share upon maturity of the endowment sum in 2012 equal to the interest profit share as per point a) on the contractual mathematical reserve and, in the case of Profit Class F or S, an additional 3.25% of the profit reserve existing as at the balance sheet date, regardless of whether payout is in the form of an annuity or a lump-sum payment. 2. In accordance with policy terms and conditions, all insurance policies in Profit Classes F, H, I, J, L, X, Y and S that belong to Settlement Class 2006 receive the following profit shares: a) An interest profit share equal to 1.00% of the contractual mathematical reserve at the beginning of the current insurance year. b) A total or additional profit share equal to 1% of the sum insured upon death, the contractual annuity redemption value or the endowment sum for policies with no regular premium payments outstanding. c) A final profit share on maturity of the endowment sum in 2012 equal to a single interest profit share as per point a) on the contractual mathematical reserve for singlepremium policies, and equal to a single interest profit share as per point a) on the contractual mathematical reserve for policies with regular premiums and a premium payment period of less than 15 years, or equal to double the interest profit share as per point a) on the contractual mathematical reserve for policies with a premium payment period of 15 years or more and, in the case of Profit Class F or S, an additional 3.25% of the profit reserve existing as at the balance sheet date. In the case of annuity contracts, the corresponding final profit share is allocated only if the payout is made in the form of an annuity. d) Special profit share as additional final profit share upon maturity of the endowment sum for policies with regular premium payments equal to the interest profit share applicable at the time. In the case of annuity contracts, this special profit share is allocated only if the payout is made in the form of an annuity. 3. In accordance with policy terms and conditions, all insurance policies in Profit Classes F, H, I, J, L, X, Y and S that belong to Settlement Class 2007 receive the following profit shares: a) An interest profit share equal to 1.00% of the contractual mathematical reserve at the beginning of the current insurance year. b) A total or additional profit share for policies with no regular premium payments outstanding, equal to 1% of the sum insured upon death or the contractual annuity redemption value or the endowment sum, plus an administrative cost bonus equal to 0.15% of the sum insured upon death or the contractual redemption value or the endowment sum for each year of the policy term and/or period of deferment, distributed over the last five years of the policy term and/or period of deferment. c) A final profit share upon maturity of the endowment sum in 2012 equal to a single interest profit share as per point a) on the contractual mathematical reserve for single-premium policies, or equal to double the interest profit share as per point a) on the contractual mathematical reserve for policies with regular premium payments plus, in the case of Profit Class F or S, 3.25% of the profit reserve existing as at the balance sheet date. In the case of annuity contracts, the corresponding final profit share is allocated only if the payout is made in the form of an annuity. D 95

98 D In accordance with policy terms and conditions, all insurance policies in Profit Class F that belong to Settlement Class 2008 receive the following profit shares: a) An interest profit share equal to 1.00% of the contractual mathematical reserve at the beginning of the current insurance year. b) A total or additional profit share for policies with no regular premium payments outstanding, equal to 1% of the sum insured upon death or the contractual annuity redemption value or the endowment sum, plus an administrative cost bonus equal to 0.15% of the sum insured upon death or the contractual annuity redemption value or the endowment sum for each year of the policy term and/or period of deferment, distributed over the last five years of the policy term and/or period of deferment. c) A final profit share upon maturity of the endowment capital in 2012 equal to a single interest profit share as per point item a) on the contractual actuarial reserve, plus 3.25% of the profit reserve existing as at the balance sheet date. In addition to this final profit share, a "goal" bonus of EUR for each EUR of monthly premiums is credited to policies with Annex TBL, provided the contractual premium is paid as agreed until policy expiration. 5. In accordance with policy terms and conditions, all insurance policies in Profit Classes F, H, I, J, L, X, Y and S that belong to Settlement Class 2011G receive the following profit shares: a) An interest profit share equal to 1.25% of the contractual mathematical reserve at the beginning of the current insurance year. b) A total or additional profit share for policies with no regular premium payments outstanding, equal to 1 of the sum insured upon death, plus an administrative cost bonus equal to 0.15% of the sum insured upon death or the annuity present value or the endowment sum for each year of the policy term and/or period of deferment for policies with a term and/or deferment period of 15 years or more, distributed over the last five years of the policy term and/or period of deferment. c) A final profit share upon maturity of the endowment sum in 2012 equal to a single interest profit share as per point a) on the contractual mathematical reserve for single-premium policies, or equal to double the interest profit share as per point a) on the contractual mathematical reserve for policies with regular premium payments plus, in the case of Profit Class F or S, 3.25% of the profit reserve existing as at the balance sheet date. 6. In accordance with policy terms and conditions, all insurance policies in Profit Classes F, H, I, J, L, X, Y and S that belong to Settlement Class 2011E or 2011R receive the following profit shares: a) An interest profit share equal to 1.25% of the contractual mathematical reserve at the beginning of the current insurance year. b) A total or additional profit share for policies with no premium payments outstanding, equal to 0.5% of the contractual annuity redemption value or the endowment sum, plus an administrative cost bonus equal to 0.15% of the contractual annuity redemption value or the endowment sum for each year of the policy term and/or period of deferment for policies with a term and/or deferment period of 15 years or more, distributed over the last five years of the policy term and/or period of deferment. c) A final profit share upon maturity of the endowment sum in 2012 equal to a single interest profit share as per point a) on the contractual mathematical reserve for single-premium policies, or equal to double the interest profit share as per point a) on the contractual mathematical reserve for policies with regular premium payments plus, in the case of Profit Class F or S, 3.25% of the profit reserve existing as at the balance sheet date, regardless of whether payout is in the form of an annuity or a lump-sum payment.

99 HIGHLIGHTS & MANAGEMENT COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS In accordance with policy terms and conditions, all insurance policies in Profit Classes F, H, I, J, L, X, Y and S, with the exception of policies in Settlement Classes 2004, 2006, 2007, 2008, 2011E, 2011G and 2011R, receive the following profit shares: a) An interest profit share equal to 0.00% of the contractual mathematical reserve at the beginning of the current insurance year. b) A total or additional profit share equal to 1 of the sum insured upon death, the contractual annuity redemption value or the endowment sum for policies with no regular premium payments outstanding. c) A final profit share upon maturity of the endowment sum in 2012 equal to the interest profit share as per point a) on the contractual mathematical reserve and, in the case of Profit Class F or S, an additional 3.25% of the profit reserve existing as at the balance sheet date, regardless of whether payout is in the form of an annuity or a lump-sum payment. Profit Class WVN 1. In accordance with policy terms and conditions, all whole life endowment insurance policies in Profit Class WVN that belong to Settlement Class 2004 receive the following profit shares: a) An interest profit share equal to 0.50% of the mathematical reserve specified in the business plan at the beginning of the current insurance year. b) An additional profit share equal to 25% of the risk premium included in the total premium for the current insurance year for policies with no regular premium payments outstanding. 2. In accordance with policy terms and conditions, all whole life endowment insurance policies in Profit Class WVN that belong to Settlement Class 2006 receive the following profit shares: a) An interest profit share equal to 1.00% of the mathematical reserve specified in the business plan at the beginning of the current insurance year. b) An additional profit share equal to 25% of the risk premium included in the total premium for the current insurance year for policies with no regular premium payments outstanding. 3. In accordance with policy terms and conditions, all whole life endowment insurance policies in Profit Class WVN that belong to Settlement Class 2011 receive the following profit shares: a) An interest profit share equal to 1.25% of the mathematical reserve specified in the business plan at the beginning of the current insurance year. b) An additional profit share equal to 25% of the risk premium included in the total premium for the current insurance year for policies with no regular premium payments outstanding. 4. In accordance with policy terms and conditions, all whole life endowment insurance policies in Profit Class WVN, with the exception of policies in Settlement Classes 2004, 2006 and 2011, receive the following profit shares: a) An interest profit share equal to 0.25% of the mathematical reserve specified in the business plan at the beginning of the current insurance year. b) An additional profit share equal to 25% of the risk premium included in the total premium for the current insurance year for policies with no regular premium payments outstanding. Profit Class FLV 1. In accordance with policy terms and conditions, all insurance policies in Profit Class FLV that belong to Settlement Class 2008 receive the following profit shares: 0.3% p.a. of the assets of the fund in question will be distributed as profit for policies with no premium payments outstanding. 2. In accordance with policy terms and conditions, all insurance policies in Profit Class FLV that belong to Settlement Class 2010 receive the following profit shares: 0.3% p.a. of the assets of the fund in question will be distributed as profit for policies with no premium payments outstanding. D 97

100 D In accordance with policy terms and conditions, all insurance policies in Profit Class FLV, with the exception of policies in Settlement Classes 2008 and 2010, receive the following profit shares: a) Policies with regular premium payments: A profit share equal to 3% of the premium set for the insurance year beginning in b) Single-premium policies: A profit share equal to 3 of the single premium of the master insurance policy at the beginning of the insurance year falling in the year For premium shares and capital shares invested in the cover fund (Deckungsstock) of the traditional life insurance policy, the approved total interest is distributed equally over all of the days of the calendar year and partial amounts credited continuously to their portion of the cover fund. Total interest of 3.25% p.a. will be credited to the corresponding mathematical reserve in Profit Class ZV Retirement provision For premium shares and capital shares invested in the cover fund (Deckungsstock) of the traditional life insurance policy, the approved total interest is distributed equally over all of the days of the calendar year and partial amounts credited continuously to their portion of the cover fund. Total interest of 3.25% p.a. will be credited to the corresponding mathematical reserve in Profit Class BU with profit participation In accordance with policy terms and conditions, all occupational disability policies in Profit Class BU with profit participation receive profit shares equal to 35% of the insurance premium, accumulated with interest at 3.25% and paid out at the end of the policy term. Profit Class BU with premium bonus In accordance with policy terms and conditions, all occupational disability insurance policies and supplementary occupational disability insurance policies with regular premium payments in Profit Class BU with premium bonus receive a premium bonus equal to 35% of the policy premium or supplementary policy premium set for the insurance year beginning in Profit Class K / DD supplementary policy 1. In accordance with policy terms and conditions, all risk insurance policies with regular premium payments in Profit Class K that belong to Settlement Class 99 receive a premium bonus equal to 65% of the premium set for the insurance year beginning in In accordance with policy terms and conditions, all risk insurance policies with regular premium payments in Profit Class K that belong to Settlement Class 05 receive the following premium bonus: a) 65% of the premium set for the insurance year beginning in 2011 for policies 3GP, 3FP, H3P, H3G, K3P and K3G b) 20% of the premium set for the insurance year beginning in 2012 for all remaining policies. 3. In accordance with policy terms and conditions, all risk insurance policies with regular premium payments and supplementary risk insurance policies in Profit Class K, with the exception of policies in Settlement Classes 99 and 05, receive a premium bonus equal to 25% of the premium set for the insurance year beginning in In accordance with policy terms and conditions, all dread disease supplementary insurance policies with regular premium payments for lump-sum payment and premium waiver in the event of serious illnesses or need for extensive nursing care receive a premium bonus equal to 10% of the supplementary policy premium set for the insurance year beginning in Profit Class R 1. In accordance with policy terms and conditions, all insurance policies in Profit Class R (including policies in Settlement Classes 87 and 99), with the exception of policies whose annuity payments have already started, receive the following profit shares: a) An interest profit share equal to 0.25% of the mathematical reserve specified in the business plan at the beginning of the current insurance year. b) An additional profit share equal to 1 of the contractual annuity redemption value or endowment sum for policies with no regular premium payments outstanding. c) A final profit share upon maturity of the endowment sum in 2012 equal to an interest profit share as per point a) on the total matured capital.

101 HIGHLIGHTS & MANAGEMENT COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS In the case of insurance policies in Settlement Class 2000 whose annuity payments have already started and are in their second year of payments or later, annuities whose payments have already started receive an increase starting as of 1 January 2011 equal to 0.00% of the last annuity payment. The bonus interest rate is 3.25% for bonus annuity agreements. 3. In the case of insurance policies in Settlement Class 2004 whose annuity payments have already started and are in their second year of payments or later, annuities whose payments have already started receive an increase starting as of 1 January 2012 equal to 0.50% of the last annuity payment. The bonus interest rate is 3.25% for bonus annuity agreements. 4. In the case of insurance policies in Settlement Class 2006 whose annuity payments have already started and are in their second year of payments or later, annuities whose payments have already started receive an increase starting as of 1 January 2011 equal to 1.00% of the last annuity payment. The bonus interest rate is 3.25% for bonus annuity agreements. 5. In the case of insurance policies in Settlement Class 2011 whose annuity payments have already started and are in their second year of payments or later, annuities whose payments have already started receive an increase starting as of 1 January 2012 equal to 1.25% of the last annuity payment. The bonus interest rate is 3.25% for bonus annuity agreements. 6. For insurance policies that are not in Settlement Classes 2000, 2004, 2006 and 2011 whose annuity payments have already started and are in their second year of payments or later, annuities whose payments have already started receive an increase starting as of 1 January 2012 equal to 0.25% of the last annuity payment. The bonus interest rate is 3.25% for bonus annuity agreements. Profit Class Z 1. In accordance with policy terms and conditions, all supplementary pension insurance policies in Profit Class Z, with the exception of policies whose annuity payments have already started, receive the following profit shares: a) A profit share equal to 0.25% of the mathematical reserve specified in the business plan at the beginning of the current insurance year. b) An additional profit share equal to 1 of the contractual annuity redemption value for policies with no regular premium payments outstanding. c) A final profit share on maturity of the endowment sum in 2012 equal to an interest profit share as per point a) on the total mathematical reserve. 2. In the case of insurance policies in Profit Class Z whose annuity payments have already started and are in their second year of payments or later, annuities whose payments have already started receive an increase starting as of 1 January 2011 equal to 0.25% of the last annuity payment. Profit Class FPZ 1. In accordance with policy terms and conditions, all insurance policies in Profit Class FPZ in the Single policy form receive profit shares equal to 25% of the risk premium at the beginning of the current insurance year, provided the first annuity payment has not yet become payable. These will be transferred to an investment fund for the acquisition of fund units. 2. Insurance policies in Profit Class FPZ are subject to the provisions of Profit Class Z starting as of the time of liquidation. Profit Class BKV 1. In accordance with policy terms and conditions, all insurance policies in Profit Class BKV that belong to Settlement Class 2006 with equal distribution receive the following profit shares: The profit share approved for the entire calendar year and the guaranteed minimum interest are distributed equally over all of the days of the calendar year and partial amounts credited continuously to their portion of the cover fund. Total interest of 4.00% p.a., equal to the sum of the profit share and guaranteed minimum interest, will be credited to the corresponding mathematical reserve in In accordance with policy terms and conditions, all insurance policies in Profit Class BKV that belong to Settlement Class 2011 with equal allocation receive the following profit shares: The profit share approved for the entire calendar year and the guaranteed minimum interest are distributed equally over all of the days of the calendar year and partial amounts D 99

102 credited continuously to their portion of the cover fund. Total interest of 4.00% p.a., equal to the sum of the profit share and guaranteed minimum interest, will be credited to the corresponding mathematical reserve in In accordance with policy terms and conditions, all insurance policies in Profit Class BKV - classic that belong to Settlement Class 2006 with reporting date allocation receive the following profit shares: An interest profit share equal to 1.75% of the mathematical reserve specified in the business plan at the beginning of the current insurance year. 4. In accordance with policy terms and conditions, all insurance policies in Profit Class BKV that belong to Settlement Class 2011 with reporting date allocation receive the following profit shares: An interest profit share equal to 2.00% of the mathematical reserve specified in the business plan at the beginning of the current insurance year. 5. In the case of insurance policies in Profit Class BKV that belong to Settlement Class 2006 whose annuity payments have already started and are in their second year of payments or later, annuities whose payments have already started receive an increase starting as of 1 January 2012 equal to 1.75% of the last annuity payment. There is no increase for bonus annuity agreements. The bonus annuity interest rate is 4%. 6. In the case of insurance policies in Profit Class BKV that belong to Settlement Class 2011 whose annuity payments have already started and are in their second year of payments or later, annuities whose payments have already started receive an increase starting as of 1 January 2012 equal to 2.00% of the last annuity payment. There is no increase for bonus annuity agreements. The bonus annuity interest rate is 4%. The following applies to all profit classes: The Managing Board will decide towards the end of 2012 on the size of the profit allocation for 31 December D 100

103 HIGHLIGHTS & MANAGEMENT COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 VI. SIGNIFICANT PARTICIPATIONS Participations were held in the following companies as of 31 December 2011: Name, Location Direct share in % Net income fort he year in EUR 000 Equity capital in EUR 000 Last Annul Financial Statements I. Direct interests in affiliated companies Andel Investment Praha s.r.o., Prag , ARITHMETICA Versicherungs- und Finanzmathematische Beratungs-Gesellschaft m.b.h., Wien BML Versicherungsmakler GmbH, Wien , , CENTER Hotelbetriebs GmbH, Wien DBR-Liegenschaften GmbH & Co KG, Stuttgart , DBR-Liegenschaften Verwaltungs GmbH, Stuttgart DIRECT-LINE Direktvertriebs-GmbH, Wien EXPERTA Schadenregulierungs-Gesellschaft m.b.h., Wien HORIZONT Personal-, Team- und Organisationsentwicklung GmbH, Wien KÁLVIN TOWER Immobilienentwicklungs- und Investitionsgesellschaft m.b.h., Budapest , PFG Holding GmbH, Wien 60-8, , PFG Liegenschaftsbewirtschaftungs GmbH, Wien 50 0, Projektbau Holding GmbH, Wien , Senioren Residenz gemeinnützige Betriebsgesellschaft mbh, Wien Senioren Residenz Veldidenapark Errichtungs- und Verwaltungs GmbH, Innsbruck , Sparkassen Versicherung AG Vienna Insurance Group, Wien 17 84, , VICE-Beteiligungs GmbH, Wien Wiener Verein Bestattungs- und Versicherungsservice Gesellschaft m.b.h., Wien , WPWS Vermögensverwaltung GmbH, Wien , , II. More than 20%,ownership, where a direct ownership interest exists Österreichisches Verkehrsbüro Aktiengesellschaft, Wien 36 10, , D 101 The exception provided for in 241 (2) and (3) of the Austrian Corporate Code (Unternehmensgesetzbuch UGB) was used.

104 D 102 VII. OTHER INFORMATION The Company has EUR 10,000, in share capital that is divided into 100,000 no-par value registered voting shares, with each share participating equally in the share capital. The Company has subordinated liabilities in the form of supplementary capital bond 2009 in accordance with 73c(2) VAG with a total nominal value of EUR 100,000, This bond does not have a fixed term, and pays a variable rate of interest. On 22 December 2010, the Company issued supplementary capital bond 2010 in accordance with 73c(2) VAG with a total nominal value of EUR 175,000, This bond does not have a fixed term, pays a fixed interest rate of 8% p.a., and can be called starting as of 28 December The auditor has verified that these supplementary capital bonds satisfy the requirements of 73b (2)(4) VAG. The Company also issued bond with a nominal value of EUR 150,000, in September The bond has a term of ten years and pays a fixed interest rate of 3.63% p.a. THE SUPERVISORY BOARD HAD THE FOLLOWING MEMBERS IN FINANCIAL YEAR 2011: Chairman: Günter Geyer Deputy Chairman: Hans-Peter Hagen Members: Rudolf Ertl Christian Haidinger Werner Muhm Gabriele Payr Martin Simhandl Sonja Zwazl Employee representatives: Peter Grimm Franz Urban Gerd Wiehart Peter Winkler THE MANAGING BOARD HAD THE FOLLOWING MEMBERS IN FINANCIAL YEAR 2011: Chairman: Robert Lasshofer Members: Christine Dornaus Judit Havasi Peter Höfinger (until 30 June 2011) Ralph Müller (starting 1 April 2011) Erich Leiß THE FOLLOWING INDIVIDUALS WERE APPOINTED AS TRUSTEES IN FINANCIAL YEAR 2011 IN ACCORDANCE WITH 22(1) VAG: Trustee: (cover funds 20(2)(1) VAG): Oskar Ulreich Deputy: Nicole Schweizer Trustee: (except for cover funds 20(2)(1) VAG): Wolfgang Pechriggl Deputy: Michael Hysek

105 HIGHLIGHTS & MANAGEMENT COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 The average number of employees (including cleaning staff) was 3,480 (3,528). 1,935 (1,992) of these employees were active in sales resulting in personnel expenses of EUR 85,305,000 (EUR 89,815,000), and 1,545 (1,536) were in operations resulting in personnel expenses of EUR 96,112,000 (EUR 93,119,000). No loans were outstanding to members of the Managing Board on 31 December 2011 (EUR 0). Supervisory Board members received no loans in 2011 (EUR 0). No guarantees were outstanding for members of the Managing Board or Supervisory Board as of 31 December The Company is a group member within the meaning of 9 of the Austrian Corporate Tax Act (Körperschaftssteuergesetz KStG) of WIENER STÄDTISCHE WECHSELSEITIGER VERSICHERUNGSVEREIN VERMÖGENSVERWALTUNG Vienna Insurance Group, Vienna. The taxable earnings of group members are attributed to the parent company. The parent company has entered into agreements with each group member governing the allocation of positive and negative tax amounts for the purpose of allocating corporate income tax charges according to their origin. A liability of EUR 5,935,000 (EUR 11,792,000) is owed to the parent company for tax allocations. Use was made of the election to capitalise deferred profit taxes arising due to temporary differences between earnings under corporate law and taxable earnings. A 25% tax rate was chosen for deferred taxes. In 2011, the total expenses for severance pay and pensions of EUR 19,869,000 (EUR 21,408,000) included severance pay and pension expenses of EUR 9,074,000 (EUR 29,000) for members of the Managing Board and senior management in accordance with 80(1) of the Austrian Stock Corporation Act (Aktiengesetz AktG). The members of the Managing Board received EUR 2,760,000 (EUR 1,760,000) in remuneration for their services to the Company during the reporting period. The members of the Managing Board received EUR 805,000 (EUR 458,000) from affiliated companies during the reporting period. EUR 544,000 (EUR 436,000) of this amount was charged to the Company in the form of an intercompany charge. D 103 The total compensation paid to former members of the Managing Board (including surviving dependants) during the reporting period was EUR 3,472,000 (EUR 1,655,000). The members of the Supervisory Board received EUR 173,000 (EUR 99,000) in remuneration for their services to the Company in A summary of auditing fees is provided in the notes to the consolidated financial statements of VIENNA INSURANCE GROUP AG Wiener Versicherung Gruppe, Vienna.

106 The Company is a 99.9% subsidiary of VIENNA INSURANCE GROUP AG Wiener Versicherung Gruppe, Vienna, and is therefore part of the group formed by this shareholder and its affiliated companies. The remaining 0.1% of the shares belong to Wiener Städtische Wechselseitiger Versicherungsverein Vermögensverwaltung Vienna Insurance Group, Vienna. Wiener Städtische Wechselseitiger Versicherungsverein Vermögensverwaltung Vienna Insurance Group, Vienna, prepares consolidated financial statements that include most of the companies. These consolidated financial statements have been disclosed and are available for inspection at the business premises of this company located at Schottenring 30, 1010 Vienna. VIENNA INSURANCE GROUP AG Wiener Versicherung Gruppe, Vienna, prepares consolidated financial statements for a small number of companies. These consolidated financial statements have been disclosed and are available for inspection at the business premises of this company located at Schottenring 30, 1010 Vienna. The Managing Board: Robert Lasshofer D 104 Christine Dornaus Judit Havasi Ralph Müller Erich Leiß Vienna, 9 March 2012

107 HIGHLIGHTS & MANAGEMENT COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 AUDITOR'S REPORT REPORT ON THE ANNUAL FINANCIAL STATEMENTS We have audited the accompanying annual financial statements, including the accounting, of WIENER STÄDTISCHE VERSICHERUNG AG Vienna Insurance Group, Vienna, for the financial year from 1 January to 31 December These annual financial statements comprise the balance sheet as of 31 December 2011, the income statement for the financial year ended 31 December 2011, and the notes to the financial statements. Management s responsibility for the annual financial statements and the accounting The management of the Company is responsible for the accounting and for the preparation of annual financial statements giving a true and fair view of the Company's net assets, financial position and results of operation in accordance with the requirement of Austrian corporate and insurance supervisory law. This responsibility includes: designing, implementing and maintaining an internal control system for the purpose of preparing annual financial statements that give a true and fair view of the Company's net assets, financial position and results of operation and are free from material misstatements, whether due to fraud or unintentional error; selecting and applying appropriate accounting policies; making estimates that are reasonable in the circumstances given. Auditor s responsibility and description of type and scope of the statutory audit Our responsibility is to express an opinion on these annual financial statements based on our audit. We conducted our audit in accordance with the statutory requirements applicable in Austria and Austrian generally accepted principles for financial statement auditing. Those standards require that we comply with professional guidelines and plan and perform the audit to obtain reasonable assurance that the financial statements are free from material misstatement. An audit involves performing audit procedures to obtain audit evidence about the amounts and disclosures in the annual financial statements. The choice of audit procedures is within the auditor s discretion, based on an assessment of the risk of material misstatements, whether due to fraud or unintentional error. The auditor takes the internal control system into account when performing this risk assessment, to the extent it is relevant to the preparation of annual financial statements that give a true and fair view of the Company's net assets, financial position and results of operations, in order to determine audit procedures that are suitable under the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company s internal control system. An audit also includes an assessment of the appropriateness of the accounting policies used and the accounting estimates made by management, and an evaluation of the overall presentation of the annual financial statements. D 105

108 We believe that we have obtained sufficient and suitable audit evidence to provide a reasonable basis for our audit opinion. Opinion Our audit did not give rise to any objections. In our opinion, based on the findings of our audit, the annual financial statements comply with the statutory requirements and give a true and fair view of the Company's net assets and financial position as of 31 December 2011 and the Company's results of operations for the financial year from 1 January to 31 December 2011 in accordance with Austrian generally accepted accounting principles. COMMENTS ON THE MANAGEMENT REPORT The management report is to be audited based on the statutory requirements to determine whether it is consistent with the annual financial statements and whether the other disclosures in the management report are misleading with respect to the situation of the Company. The auditor s report must also include a statement as to whether the management report is consistent with the annual financial statements. In our opinion, the management report is consistent with the annual financial statements. Vienna, 9 March 2012 PwC INTER-TREUHAND GmbH Wirtschaftsprüfungs- und Steuerberatungsgesellschaft D 106 signed: Günter Wiltschek Austrian Certified Public Accountant signed: Liane Hirner Austrian Certified Public Accountant Disclosure, publication and reproduction of the annual financial statements together with the auditor s report within the meaning of 281(2) UGB in a form that is not in accordance with statutory requirements and differing from the version audited by us is not permitted. Reference to our audit may not be made without out prior written permission.

109 HIGHLIGHTS & MANAGEMENT COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 DECLARATION BY THE MANAGING BOARD We declare to the best of our knowledge that the annual financial statements of WIENER STÄDTISCHE Versicherung AG Vienna Insurance Group, prepared in accordance with the requirements of Austrian corporate law and the Austrian Insurance Supervision Act, give a true and fair view of the Company s net assets, financial position and results of operations, the management report presents the business development, performance and position of the Company so as to give a true and fair view of its net assets, financial position and results of operations, and the management report provides a description of the principal risks and uncertainties to which the Company is exposed. The Managing Board: Robert Lasshofer D 107 Christine Dornaus Judit Havasi Ralph Müller Erich Leiß Vienna, 9 March 2012

110 D 108 SUPERVISORY BOARD REPORT The Supervisory Board reports that it has taken the opportunity to comprehensively review the management of the Company, both acting as a whole and also regularly through its committees, Chairman and Deputy Chairman. Detailed presentations and discussions during meetings of the Supervisory Board and its committees served this purpose, as did recurring meetings with the members of the Managing Board, who provided detailed explanations and supporting documentation relating to the management and financial position of the Company. The strategy, business development, risk management, internal control system and activities of the internal audit department of the Company were also discussed in these meetings. The Supervisory Board has formed four committees from among its members. Information on the responsibilities and composition of these committees is available on the Company s website and in the corporate governance report. One Annual General Meeting, one extraordinary General Meeting and four Supervisory Board meetings were held in Three meetings of the Audit Committee were also held. The Committee for Urgent Matters held no meetings in 2011 but was contacted in writing with regard to three matters. The Supervisory Board was informed of any resolutions passed by the committees at the next Supervisory Board meeting. The auditor, PwC INTER-TREUHAND GmbH Wirtschaftsprüfungsund Steuerberatungsgesellschaft (PwC), attended three Audit Committee meetings and one Supervisory Board meeting, namely the meeting dealing with the auditing and formal approval of the annual financial statements, as well as the Annual General Meeting. In addition, one meeting of the Committee for Managing Board Matters was also held in No agenda items were discussed in the Supervisory Board and committee meetings without the participation of members of the Managing Board. No member of the Supervisory Board attended fewer than half of the Supervisory Board meetings. By inspection of appropriate documents, meetings with the Managing Board and discussions with the auditor, the Supervisory Board Audit Committee was able to form a satisfactory view of the accounting process and found no reasons for objection. The Audit Committee also reviewed the effectiveness of the internal control system, the internal auditing system and the risk management system by requesting descriptions of the processes and organisation of these systems from the Managing Board, the auditor and the individuals directly responsible for these areas. The Audit Committee reported on these monitoring activities to the Supervisory Board and stated that no deficiencies had been identified. In order to prepare the Supervisory Board s proposal for selection of the auditor for the annual financial statements, the Audit Committee requested that PwC INTER-TREUHAND GmbH Wirtschaftsprüfungs- und Steuerberatungsgesellschaft submit documents concerning its license to audit. A written report was prepared stating that there were no grounds for exclusion or circumstances that could provide cause for concern regarding partiality. In addition, a list of services grouped by category showing the total revenues that PwC received from the Company in the previous financial year was requested and reviewed, and it was verified that PwC was included in a statutory quality assurance system. The Audit Committee reported to the Supervisory Board on the findings gained from these investigations and proposed to the Supervisory Board and subsequently to the General Meeting that PwC INTER-TREUHAND GmbH Wirtschaftsprüfungs- und Steuerberatungsgesellschaft be selected as auditor for the annual financial statements. In addition, the Supervisory Board Audit Committee received the 2011 annual financial statements and management report from the Managing Board, and reviewed and carefully examined them. The Managing Board s proposal for appropriation of profits was also debated and discussed during the course of this examination. As a result of this examination and discussion, a unanimous resolution was adopted to recommend to the Supervisory Board that they be accepted without qualification. The committee chairman informed the Supervisory Board of the resolutions adopted by the committee.

111 HIGHLIGHTS & MANAGEMENT COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 The 2011 annual financial statements and management report, and the Managing Board's proposal for appropriation of profits were then taken up, thoroughly discussed, and examined by the Supervisory Board. In addition, the auditor s reports prepared by PwC INTER-TREUHAND GmbH Wirtschaftsprüfungs- und Steuerberatungsgesellschaft for the 2011 annual financial statements and 2011 management report were reviewed by the Audit Committee and the Supervisory Board, and debated and discussed in detail with PwC INTER-TREUHAND GmbH Wirtschaftsprüfungs- und Steuerberatungsgesellschaft. The final findings of the audit provided no reason for objections. The Supervisory Board declared that it had nothing to add to the auditor's reports. After a thorough examination, the Supervisory Board therefore unanimously adopted a resolution to approve the annual financial statements prepared by the Managing Board, to raise no objections to the management report, and to declare its agreement with the Managing Board proposal for appropriation of profits. The 2011 annual financial statements have therefore been approved in accordance with 96(4) of the Austrian Stock Corporation Act. The Supervisory Board proposes to the General Meeting that it approve the Managing Board proposal for appropriation of profits and formally approve the actions of the Managing Board and Supervisory Board. Vienna, March 2012 The Supervisory Board D 109 Günter Geyer (Chairman)

112 D 110 STATE ADVISORY BOARDS The advisory boards for the federal states of Austria provided for in the Articles of Association to advise the Managing Board have the following members: STATE ADVISORY BOARD FOR VIENNA Martin Bachlechner Peter Bosek Ilse Brandner-Radinger Ismail H. Ergener Michael Hafner René Alfons Haiden Peter Hanke Brigitte Jank Helmut Jonas Hans Judmann Willibald Keusch Michael Landau Michael Ludwig Sigi Menz Walter Nettig Ernst Nonhoff Carl Ludwig Richard Michael Schottenberg Günter Wandl Udo Weinberger Wilhelm Wohatschek STATE ADVISORY BOARD FOR LOWER AUSTRIA Christian Aichinger Gertrude Baumgartner Rupert Dworak Burkhard Ellegast Wilhelm Gelb Helmut Guth Berthold Heigl Herwig Hofstätter Karl Jurtschitsch Herbert Kaufmann Herbert Klenk Hans Knoll Otto Korten Werner Magyer Josef Panis Elisabeth Schubrig Matthias Stadler Dietmar Steinbrenner Karl Th. Trojan Johann Trost jun. Wolfgang Wiedermann Gerhard Zinner STATE ADVISORY BOARD FOR UPPER AUSTRIA Othmar Bruckmüller Herbert Brunsteiner Robert Ebner Othmar Friedl Alois Froschauer Peter Glatzmeier Manfred Haimbucher Peter Halatschek Norbert Haudum Heinz Hillinger Manfred Hochhauser Hermann Kepplinger Anette Klinger Richard Kirchweger Markus Limberger Johann Mayr Josef Peischer Ludwig Scharinger Adolf Scheuchenpflug Wolfgang Schneckenreither Ernst Strauss Gerda Weichsler-Hauer STATE ADVISORY BOARD FOR STYRIA Wolfgang Bartosch Herbert Beiglböck Gerhard Deutsch Gerhard Fabisch Horst Hilmer Andrea Hirschenberger Karl-Franz Maier Ernst Meixner Wolfgang Messner Paul Nussbaumer Hermann Retter Ulrike Retter Bernhard Rosenberger Wolfram Sacherer Alois Samer Horst Schachner

113 HIGHLIGHTS & MANAGEMENT COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 Christoph Stark Gerald Stoiser Josef Wallner Manfred Wegscheider STATE ADVISORY BOARD FOR CARINTHIA AND EAST TYROL Ingo Appé Helmut Eder Hermann Egger Horst Felsner Günter Goach Reinhard Iro Rudolf Kandussi Franz Kreuzer Johann Lintner Franz Liposchek Helmut Manzenreiter Claudia Mischensky Hans Michael Offner Anton Peternel Herwig Rettenbacher Hans Schönegger Oskar Seidler Arno Sorger Andrea Springer Michael Stattmann STATE ADVISORY BOARD FOR SALZBURG Wolfgang Bell Franz Blum August Hirschbichler Hildegund Maier Alois Johann Nindl Regina Ovesny-Straka Ferdinand Saller Günter Schied Harald Seiss Christian Stöckl Josef Treml STATE ADVISORY BOARD FOR TYROL Martin Baltes Christian Bernard Manfried Gantner Hannes Gschwentner Markus Jochum Walter Kircher Hansjörg Mölk Hermann Nagiller Jakob Ringler Elmar Schmid Harald Schneider Karl Schranz Raimund Schreier Hans Unterdorfer Elisabeth Zanon STATE ADVISORY BOARD FOR VORARLBERG Wilfried Berchtold Werner Böhler Michael Diem Horst Fritz Jürgen Gabrieli Werner Gunz Guntram Jäger Edgar Mayer Peter Mennel Wilhelm Muzyczyn Ewald Netzer Peter Oksakowski Kuno Riedmann Anton Steinberger Walter Thöny STATE ADVISORY BOARD FOR BURGENLAND Mario De Martin De Gobbo Hannes Frech Michael Gerbavsits Oswald Hackl Erich Horvath Christian Illedits D 111

114 Michael Koch Helmut Löffler Hans Niessl Frank Pfnier Matthias Reiner Ingrid Salamon Nikolaus Sauer Ernst Schmid Johann Schmidt Peter Schmitl Rudolf Simandl Gerhard Steier Georg Stiegelmar Csaba Szekely Robert Tauber Josef Wein ADVISORY BOARD FOR FUNERAL INSURANCE The advisory board provided for in the Articles of Association to advise the Managing Board on funeral matters and funeral insurance has the following members: D 112 Walter Egger Christian Fertinger Wilhelm Fuchs Peter Kotzbauer Othmar Lechner Hansjörg Lein Peter Marent Ulrich Mayerhofer Franz Nechansky Gerfried Redlich Wolfgang Saiko Peter Schlaffer Eduard Schreiner Mario Wagenhuber Karl Wagner Gregor Zaki

115 HIGHLIGHTS & MANAGEMENT COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 STATE HEAD OFFICES STATE HEAD OFFICE FOR VIENNA 1020 Vienna, Obere Donaustrasse Phone: +43 (0) Fax: +43 (0) Hermann Fried, State Director STATE HEAD OFFICE FOR LOWER AUSTRIA 3100 St. Pölten, Europaplatz 2 Phone: +43 (0) Fax: +43 (0) [email protected] Helmut Maurer, State Director STATE HEAD OFFICE FOR UPPER AUSTRIA 4020 Linz, Untere Donaulände 40 Phone: +43 (0) Fax: +43 (0) [email protected] Günther Erhartmaier, State Director STATE HEAD OFFICE FOR STYRIA 8010 Graz, Brockmanngasse 32 Phone: +43 (0) Fax: +43 (0) [email protected] Gerald Krainer, State Director STATE HEAD OFFICE FOR CARINTHIA AND EAST TYROL 9020 Klagenfurt, St. Veiter-Ring 13 Phone: +43 (0) Fax: +43 (0) [email protected] Erich Obertautsch, State Director STATE HEAD OFFICE FOR SALZBURG 5020 Salzburg, Max-Ott-Platz 3 Phone: +43 (0) Fax: +43 (0) [email protected] Hans Vierziger, State Director STATE HEAD OFFICE FOR TYROL 6020 Innsbruck, Südtiroler Platz 4 Phone: +43 (0) Fax: +43 (0) [email protected] Ida Wander, State Director STATE HEAD OFFICE FOR VORARLBERG 6800 Feldkirch, Waldfriedgasse 2 Phone: +43 (0) Fax: +43 (0) [email protected] Burkhard Berchtel, State Director STATE HEAD OFFICE FOR BURGENLAND 7000 Eisenstadt, Kalvarienbergplatz 7 Phone: +43 (0) Fax: +43 (0) [email protected] Gerold Stagl, State Director BRANCH OFFICES ITALY Wiener Städtische Versicherung AG Vienna Insurance Group I Rome Via Cristoforo Colombo 149 Phone: +39 (0) [email protected] Website: Gernot Isak, Managing Director Paolo Masci, Managing Director SLOVENIA Wiener Städtische zavarovalnica podružnica SI-1000 Ljubljana Masarykova 14 Phone: +386 (0) [email protected] Website: Tomo Mrden, Managing Director Thomas Schmidtmeier, Managing Director D 113

116 D 114 CONTACTS AND ADDRESSES LIFE/HEALTH ACTUARIAL DEPARTMENT Josef Hiller Phone: +43 (0) Fax: +43 (0) PROPERTY/CASUALTY ACTUARIAL DEPARTMENT Michael Schlögl Phone: +43 (0) Fax: +43 (0) ALTERNATIVE DISTRIBUTION Gerhard Heine Phone: +43 (0) Fax: +43 (0) PARTICIPATION MANAGEMENT AND LOANS Christine Dornaus Phone: +43 (0) Fax: +43 (0) BUSINESS ORGANISATION Robert Redl Phone: +43 (0) Fax: +43 (0) CONTROLLING Szabolcs Nagy Phone: +43 (0) Fax: +43 (0) ENTERPRISE RISK MANAGEMENT Alexander Schuh Phone: +43 (0) Fax: +43 (0) FINANCE AND ACCOUNTING Hans Meixner Phone: +43 (0) Fax: +43 (0) CORPORATE AND LARGE CUSTOMER BUSINESS Underwriting Wolfgang Petschko Phone: +43 (0) Fax: +43 (0) Claims Josef Aigner Phone: +43 (0) Fax: +43 (0) GENERAL SECRETARIAT Doris Janik Phone: +43 (0) Fax: +43 (0) COMPANY LAW Helene Kanta Phone: +43 (0) Fax: +43 (0) IT MANAGEMENT AND PROVIDER MANAGEMENT Klaus Krebs Phone: +43 (0) Fax: +43 (0)

117 HIGHLIGHTS & MANAGEMENT COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 MOTOR VEHICLE INSURANCE (UNDERWRITING) Michael Schlögl Phone: +43 (0) Fax: +43 (0) HEALTH INSURANCE Peter Kranz Phone: +43 (0) Fax: +43 (0) LIFE AND CASUALTY INSURANCE Mathias Frisch Phone: +43 (0) Fax: +43 (0) REAL ESTATE AND REAL ESTATE-RELATED PARTICIPATIONS Anton-Leonhard Werner Phone: +43 (0) Fax: +43 (0) OMBUDSPERSON Julia Christanell Phone: +43 (0) Fax: +43 (0) HUMAN RESOURCES / HUMAN RESOURCES DEVELOPMENT Robert Bilek Phone: +43 (0) Fax: +43 (0) [email protected] COMMUNICATIONS / INTERNAL COMMUNICATIONS Claudia Riebler Phone: +43 (0) Fax: +43 (0) [email protected] LEGAL EXPENSES INSURANCE (CLAIMS) Günther Bauer Phone: +43 (0) Fax: +43 (0) [email protected] AUDIT Herbert Allram Phone: +43 (0) Fax: +43 (0) [email protected] REINSURANCE Eduard Oberleithner Phone: +43 (0) Fax: +43 (0) [email protected] NON-LIFE, GENERAL LIABILITY AND LEGAL EXPENSES INSURANCE PRIVATE AND COMMERCIAL BUSINESS (UNDERWRITING) Robert Ulbing Phone: +43 (0) Fax: +43 (0) [email protected] COLLECTIONS SERVICE CENTRE Andreas Weninger Phone: +43 (0) Fax: +43 (0 ) [email protected] D 115

118 PERSONAL INSURANCE SERVICE CENTRE Sabine Pfeffer Phone: +43 (0) Fax: +43 (0) PROPERTY INSURANCE SERVICE CENTRE Annemarie Ulbing Phone: +43 (0) Fax: +43 (0) SPECIAL CLAIMS Wolfgang Reisinger Phone: +43 (0) Fax: +43 (0) DISTRIBUTION D 116 Walter Wichtel Phone: +43 (0) Fax: +43 (0) [email protected] ADVERTISING / SPONSORING Sabine Weiss Phone: +43 (0) Fax: +43 (0) [email protected] SECURITIES AND FUNDS Reza Kazemi Tabrizi Phone: +43 (0) Fax: +43 (0) [email protected]

119 HIGHLIGHTS & MANAGEMENT COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 BUSINESS OFFICES Wiener Städtische is available throughout Austria for the cost of a local call 24 hours a day, 7 days a week. Phone +43 (0) (direct line), Fax: +43 (0) (direct line) Offices with motor vehicle registration VIENNA Headquarters Direct dial Schottenring Vienna [email protected] State Head Office for Vienna Direct dial Obere Donaustrasse Vienna [email protected] Customer retirement provisions office Direct dial Zelinkagasse Vienna [email protected] Donaustadt Direct dial Bernoullistrasse Vienna [email protected] Floridsdorf Direct dial Am Spitz Vienna [email protected] Landstraße Direct dial Rochusgasse Vienna [email protected] Liesing Direct dial Breitenfurter Strasse Vienna [email protected] Ottakring Direct dial Thaliastrasse Vienna [email protected] LOWER AUSTRIA State Head Office Lower Austria Direct dial Europaplatz St. Pölten [email protected] Amstetten Direct dial Waidhofner Strasse Amstetten [email protected] Aspang Direct dial Mönichkirchner Strasse Aspang [email protected] Baden Direct dial Bahngasse Baden [email protected] Bruck/Leitha Direct dial Fischamender Strasse Bruck/Leitha [email protected] Gänserndorf Direct dial Bahnstrasse Gänserndorf [email protected] Gföhl Direct dial Hauptplatz Gföhl [email protected] Gmünd Direct dial Stadtplatz Gmünd [email protected] Groß Enzersdorf Direct dial Bischof Berthold-Platz Groß Enzersdorf [email protected] Herzogenburg Direct dial St. Pöltner Strasse Herzogenburg [email protected] D 117

120 Hollabrunn Direct dial Bahnstrasse Hollabrunn Mistelbach Direct dial Ernstbrunnerstrasse Mistelbach [email protected] Stockerau Direct dial Hauptstrasse Stockerau [email protected] Horn Direct dial Schützenplatz Horn [email protected] Mödling Direct dial Klostergasse Mödling [email protected] Ternitz Direct dial Hans Czettel-Platz Ternitz [email protected] Klosterneuburg Direct dial Am Renninger Klosterneuburg [email protected] Neulengbach Direct dial Hauptplatz Neulengbach [email protected] Tulln Direct dial Königstetter Strasse Tulln [email protected] Korneuburg Direct dial Wiener Ring Korneuburg [email protected] Neunkirchen Direct dial Schwarzottstrasse 2a 2620 Neunkirchen [email protected] Waidhofen/Thaya Direct dial Bahnhofstrasse Waidhofen/Thaya [email protected] D 118 Krems Direct dial Ringstrasse Krems [email protected] Laa/Thaya Direct dial Stadtplatz Laa/Thaya [email protected] Poysdorf Direct dial Brunngasse Poysdorf [email protected] Retz Direct dial Hauptplatz Retz [email protected] Waidhofen/Ybbs Direct dial Riedmüllerstrasse 3a/ Waidhofen/Ybbs [email protected] Wolkersdorf Direct dial Wiener Strasse Wolkersdorf [email protected] Lilienfeld Direct dial Babenbergerstrasse Lilienfeld [email protected] Scheibbs Direct dial Rathausplatz Scheibbs [email protected] Wr. Neustadt Direct dial Ferdinand Porsche-Ring Wr. Neustadt [email protected] Melk Direct dial Hauptstrasse Melk [email protected] Schwechat Direct dial Wiener Strasse Schwechat [email protected] Zistersdorf Direct dial Schlossgasse Zistersdorf [email protected]

121 HIGHLIGHTS & MANAGEMENT COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 Zwettl Direct dial Neuer Markt Zwettl UPPER AUSTRIA Head Office for Upper Austria Direct dial Untere Donaulände Linz Bad Ischl Direct dial Karl Wiesinger-Strasse Bad Ischl [email protected] Bad Leonfelden Direct dial Böhmerstrasse Bad Leonfelden [email protected] Braunau/lnn Direct dial Ringstrasse Braunau/lnn [email protected] Eferding Direct dial Bahnhofstrasse Eferding [email protected] Freistadt Direct dial Zemannstrasse Freistadt [email protected] Gmunden Direct dial Schiffslände Gmunden [email protected] en Direct dial Roßmarkt Grieskirchen [email protected] Kirchdorf/Krems Direct dial Linzer Strasse Kirchdorf/Krems [email protected] Kremsmünster Direct dial Rathausplatz Kremsmünster [email protected] Leonding Direct dial Michaelsbergstrasse Leonding [email protected] Linz, Kleinmünchen Direct dial Zeppelinstrasse Linz, Kleinmünchen [email protected] Linz, Urfahr Direct dial Freistädter Strasse Linz, Urfahr [email protected] Mondsee Direct dial Herzog-Odilostrasse Mondsee [email protected] Perg Direct dial Dr. Schober-Strasse Perg [email protected] Ried/lnnkreis Direct dial Thurnerstrasse Ried/lnnkreis [email protected] Rohrbach Direct dial Pfarrgasse Rohrbach [email protected] Schärding Direct dial Linzer Strasse Schärding [email protected] Scharnstein Direct dial Hauptstrasse Scharnstein [email protected] Schörfling Direct dial Hauptstrasse 7b/Top Schörfling [email protected] Steyr Direct dial Leopold-Werndl-Strasse 10a 4400 Steyr [email protected] Traun Direct dial Kremstalerstrasse Traun [email protected] Vöcklabruck Direct dial Linzerstrasse Vöcklabruck [email protected] D 119

122 Wels Direct dial Bauernstrasse Wels [email protected] Fürstenfeld Direct dial Realschulstrasse 2a 8280 Fürstenfeld [email protected] Judenburg Direct dial Jägersteig Judenburg [email protected] Windischgarsten Direct dial Gleinkerseestrasse Windischgarsten [email protected] Gleisdorf Direct dial Businesspark Gleisdorf [email protected] Kapfenberg Direct dial Mariazellerstrasse Kapfenberg [email protected] D 120 STYRIA State Head Office for Styria Direct dial Brockmanngasse Graz [email protected] Bad Aussee Direct dial Kirchengasse Bad Aussee [email protected] Bad Radkersburg Direct dial Emmenstrasse Bad Radkersburg [email protected] Bruck/Mur Direct dial Mittergasse Bruck/Mur [email protected] Deutschlandsberg Direct dial Frauentalerstrasse Deutschlandsberg [email protected] Feldbach Direct dial Bismarckstrasse Feldbach [email protected] Gratkorn Direct dial Grazer Strasse Gratkorn [email protected] Graz, Andritz Direct dial Andritzer Reichstrasse Graz [email protected] Graz, Elisabethstrasse Direct dial Elisabethstrasse Graz [email protected] Graz, Seiersberg Direct dial Kärnterstrasse Seiersberg [email protected] Gröbming Direct dial Poststrasse Gröbming [email protected] Hartberg Direct dial Ressavarstrasse Hartberg [email protected] Knittelfeld Direct dial Hauptplatz Knittelfeld [email protected] Leibnitz Direct dial Bahnhofstrasse Leibnitz [email protected] Leoben Direct dial Franz Josef-Strasse Leoben [email protected] Liezen Direct dial Werkstrasse Liezen [email protected] Murau Direct dial Anna-Neumann-Strasse Murau [email protected] Mürzzuschlag Direct dial Kirchengasse Mürzzuschlag [email protected]

123 HIGHLIGHTS & MANAGEMENT COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 Voitsberg Direct dial Hauptplatz Voitsberg [email protected] Villach Direct dial Moritschstrasse Villach [email protected] Bischofshofen Direct dial Franz-Mohshammer-Platz Bischofshofen [email protected] Weiz Direct dial Marburgerstrasse Weiz [email protected] Völkermarkt Direct dial Klagenfurter Strasse Völkermarkt [email protected] Hallein Direct dial Bürgermeisterstrasse Hallein [email protected] CARINTHIA State Head Office for Carinthia Direct dial St. Veiter-Ring Klagenfurt [email protected] Feldkirchen Direct dial Dr.-Arthur-Lemisch-Strasse Feldkirchen [email protected] Ferlach Direct dial Hauptplatz Ferlach [email protected] Hermagor Direct dial Hauptstrasse Hermagor [email protected] Spittal/Drau Direct dial Bahnhofstrasse Spittal/Drau [email protected] St. Veit/Glan Direct dial Platz am Graben St. Veit/Glan [email protected] Wolfsberg Direct dial Wiener Strasse Wolfsberg [email protected] EAST TYROL Lienz Direct dial Andreas-Hofer-Strasse 1a 9900 Lienz [email protected] SALZBURG State Head Office for Salzburg Direct dial Max-Ott-Platz Salzburg [email protected] Abtenau Direct dial Au Abtenau [email protected] Bad Gastein Direct dial Bahnhofsplatz Bad Gastein [email protected] Mattighofen (Upper Austria) Direct dial Stadtplatz Mattighofen [email protected] Saalfelden Direct dial Bahnhofstrasse 12/Top Saalfelden [email protected] Salzburg, Lasserstrasse Direct dial Lasserstrasse Salzburg [email protected] Seekirchen Direct dial Bahnhofstrasse Seekirchen [email protected] St. Johann/Pongau Direct dial Hans Kappacherstrasse St. Johann/Pongau [email protected] Tamsweg Direct dial Kirchengasse Tamsweg [email protected] D 121

124 Zell am See Direct dial Brucker Bundesstrasse Zell am See Wörgl Direct dial Steinbacherstrasse Wörgl wö[email protected] Jennersdorf Direct dial Eisenstädter Strasse Jennersdorf [email protected] D 122 TYROL State Head Office for Tyrol Direct dial Dr. Carl Pfeiffenbergerstrasse Innsbruck [email protected] Imst Direct dial Pfarrgasse Imst [email protected] Kufstein Direct dial Arkadenplatz Kufstein [email protected] Landeck Direct dial Malser Strasse Landeck [email protected] VORARLBERG State Head Office for Vorarlberg Direct dial Waldfriedgasse Feldkirch [email protected] Bludenz Direct dial Färberstrasse Bludenz [email protected] Bregenz Direct dial Rheinstrasse Bregenz [email protected] Dornbirn Direct dial Schwefel Dornbirn [email protected] Mattersburg Direct dial Schubertstrasse Mattersburg [email protected] Neusiedl/See Direct dial Altenburgerstrasse 20/Top Neusiedl/See [email protected] Oberpullendorf Direct dial Hauptstrasse Oberpullendorf [email protected] Oberwart Direct dial Waldmüllergasse Oberwart [email protected] Reutte Direct dial Mühlerstrasse Reutte [email protected] Schwaz Direct dial Swarovskistrasse 25a 6130 Schwaz [email protected] Telfs Direct dial Anton Auer Str Telfs [email protected] BURGENLAND State Head Office for Burgenland Direct dial Kalvarienbergplatz Eisenstadt [email protected] Güssing Direct dial Hauptplatz Güssing [email protected]

125 HIGHLIGHTS & MANAGEMENT COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 GLOSSARY Ceded reinsurance premiums Share of the premiums to which the reinsurer is entitled in return for reinsuring certain risks. Net earned premiums The portion of premiums written that is allocated to the current financial year. Administrative expenses Commissions, personnel expenses, cost of materials and other expenses for distribution and administration of insurance policies. Expenses for claims and insurance benefits Paid insurance benefits plus the change in provisions for losses that have already occurred, but are not yet processed, plus the costs for claim settlement, loss investigation (e.g. Fees for expert witnesses, legal fees) and loss prevention. Gross/net In insurance terminology, gross/net means before or after reinsurance has been deducted ( net is also used to mean for own account ). In connection with income from participations, the term net is used when related expenses have been deducted from income (e.g., depreciation, amortisation, write-downs and disposal losses). This means that (net) income from participations is the profit or loss on these shares. Combined ratio Ratio for assessing development of the property and casualty insurance business. All actuarial expenses after deducting reinsurers' shares, except for the change in the equalisation provision, as a percentage of net earned premiums after deducting reinsurers' shares (=sum of net expense ratio and net claim ratio). Does not include any financial income. Mathematical reserve A reserve calculated according to mathematical principles for future insurance benefits in the life and health insurance segments. In the health insurance segment, this is also referred to as an ageing reserve. Direct business Business acquired in-house, including coinsurance shares assumed, less surrendered coinsurance shares. Result from ordinary activities Result from ordinary activities Sum of the the underwriting result, financial result and other non-actuarial income and expenses before tax expense. Equity Consists of share capital and reserves. Single-premium policy Policy where the policyholder is obligated to make a single lump-sum premium payment at the beginning of the term of the policy that covers the entire term of the policy. Financial result Investment and interest income less expenses. This includes, for example, income from securities, loans, real estate, participations, and bank interest, and expenses incurred in the financial area, such as scheduled depreciation on owned real estate, write-downs of securities to stock exchange prices, bank fees, etc. Financial Market Authority (FMA) See insurance supervisory authority. Fund-linked life insurance In this special form of life insurance, the amount of the benefit payment depends on the performance of a portfolio of assets in a fund. The policyholder bears the investment risk and therefore has the opportunity to directly participate in above-average performance of the fund, but must also take into account the risk of losses. GBVVU Financial Market Authority (FMA) regulation of 20 October 2006 on profit participation in the life insurance industry (Gewinnbeteiligungs-Verordnung). Profit participation See Premium refund (profit-related). Retained earnings Retained earnings are profits earned by the Company that are not distributed as dividends or carried forward to the following year. Indirect business Assumed reinsurance business (inwards reinsurance). D 123

126 D 124 Index-linked life insurance Life insurance where income depends upon the performance of an underlying stock index. Investments Assets such as securities, loans, real estate and participations that are primarily used to cover obligations arising from the insurance business. Consolidation The parent company combines its annual financial statements and those of its subsidiaries when preparing its consolidated financial statements. During this process, equity holdings, interim results, receivables and payables, and income and expenses within the Group are eliminated. Group of consolidated companies Consists of the parent company and all subsidiaries included in the consolidated financial statements. Consolidated financial statements Annual financial statements prepared by the parent company that present the net assets, financial position and results of operations of the group. Also see Consolidation. Expense ratio Ratio of administrative expenses to net earned premiums. Market value The value of a balance sheet item that can be realised by selling it in the market to a third party. Non-life Non-life insurance includes the property & casualty and health insurance segments. Non-motor vehicle classes Non-motor vehicle classes are property & casualty classes that are not motor vehicle related. Premium Agreed fee paid in exchange for assumption of risk by an insurance company. Premium refund (profit-related) The policyholder s profit participation in the profit of the insurance class in question (mandatory for traditional life insurance) Premium refund (profit-unrelated) Contractual refund of premiums to the policyholder. Unearned premiums The portion of premium income that represents fees paid for the policy term following the balance sheet date, i.e. premiums that have not yet been earned as of the balance sheet date. Unearned premiums are reported in the balance sheet under underwriting provisions. Annuity tables Annuity tables are the most important calculation tool used in life and health insurance. The annuity tables used by insurers are based on the mortality tables derived from the population census. These are revised every ten years to take into account changing conditions, such as medical advances and improved living conditions. Risks/risk Insured individuals, objects, hazards or interests Reinsurance Insurance coverage for insurance companies, whereby one insurance company uses another insurance company, the reinsurer, to insure a portion of its risk. Reinsurance company A company that will assume risks from a primary insurer or another reinsurer (retrocession) for an agreed premium. Loss reserve Provision for outstanding claims (claims incurred but not yet settled or only partially settled). Claim ratio Ratio of expenses for claims and insurance benefits to net earned premiums. Equalisation provision The equalisation provision is an underwriting provision used to smooth out fluctuations in future claims. It is built up in years with below-average claims and used in years with above-average claims. Secondary market yield The secondary market yield is the average return on all fixedinterest securities in circulation with an agreed term of more than four years. The secondary market yield therefore reflects level of capital market interest rates.

127 HIGHLIGHTS & MANAGEMENT COMPANY & STRATEGY MANAGEMENT REPORT 2011 ANNUAL FINANCIAL STATEMENTS 2011 Solvency Solvency is the capital available to an insurance company (free and unencumbered assets). It is governed by 53c(1) VAG. Incurred but not reported (IBNR) Claims incurred in the current financial year but not reported until following years. Hidden reserve A hidden reserve is created when the actual value (market value) of a balance sheet asset is higher than its carrying amount, e.g. if the price of a security rises, but the security is not written up in the balance sheet. UGB Austrian Corporate Code (Unternehmensgesetzbuch) Insurance benefits See Expenses for claims and insurance benefits VersVG The Austrian Insurance Contract Act (Versicherungsvertragsgesetz), which governs general insurance contract law. Volatility Fluctuations in security prices, exchange rates, and interest rates. VVO The Austrian Insurance Association (Versicherungsverband Österreich) is an umbrella association for Austrian insurance companies in the Austrian Federal Economic Chamber (Wirtschaftskammer Österreich). VAG The Austrian Insurance Supervision Act (Versicherungsaufsichtsgesetz) includes provisions governing the organisation and supervision of insurance companies. Affiliated company A parent company and its subsidiaries are considered to be affiliated companies if the parent company is able to exert control over the business policies of the subsidiary. Examples of this are where the parent company directly or indirectly holds more than half of all voting rights, a controlling agreement exists, or it is possible to appoint the majority of the members of the managing board or other executive bodies of the subsidiary ( 244 UGB). D 125 Premiums written Policyholder premiums stipulated in the insurance policies, not including taxes, levies and fees. Insurance supervisory authority The Austrian insurance supervisory authority is the Financial Market Authority (FMA), an independent government agency that supervises the operations of all insurance companies, banks, and employee retirement and pension funds in Austria. Underwriting provisions These consist of the provision for outstanding claims (mathematical reserve), unearned premiums, provisions for profit-related and profit-unrelated premium refunds, the equalisation provision, and other underwriting provisions.

128 D 126 ADDRESS WIENER STÄDTISCHE Versicherung AG Vienna Insurance Group Schottenring Vienna Phone: +43 (0) General Secretariat WIENER STÄDTISCHE Versicherung AG Vienna Insurance Group Contact person: Doris Janik NOTICE This annual report includes forward-looking statements based on current assumptions and estimates that were made by the management of WIENER STÄDTISCHE Versicherung AG Vienna Insurance Group to the best of its knowledge. Statements using the words expectation, target or similar formulations indicate such forward-looking statements. Forecasts related to the future development of the Company are estimates made on the basis of information available as of the date this annual report went to press. Actual results may differ from the forecasts if the assumptions underlying the forecast prove to be wrong or if unexpectedly high risks occur. Rounding differences may occur when rounded amounts or percentages are added. The annual report was prepared with great care to ensure that all information was complete and accurate. The possibility of rounding, type-setting or printing errors can, however, not be ruled out completely. GENERAL INFORMATION Editor and media owner WIENER STÄDTISCHE Versicherung AG Vienna Insurance Group Company register: i Data Processing Register No (DVR): Production & Design be.public Werbung Finanzkommunikation GmbH Produced in-house using FIRE.sys Michael Konrad GmbH Corporate Media Solutions Photos Ian Ehm Young & Rubicam Christian Hofer / Fernwärme Wiener Städtische Printing Gutenberg GmbH, Wiener Neustadt Environmentally responsible paper: Forest Stewardship Council (FSC), from sustainably managed forests was used. 17PG001/AGE11 Editorial deadline: 29 February 2012

129 Foresight Annual Report 2011 Wiener Städtische Versicherung AG shown.