We have set challenging goals for ourselves in coming years.

Dear Shareholders, Dear Madam/Sir!

The crisis in the financial markets over the last few months has had a significantly negative impact on many large companies, especially in the financial sector. Precisely in times such as these, it becomes clear that the Vienna Insurance Group is on the right track. We have had no involvement with financial instruments of the sort that have led to substantial losses for other market participants. Rather, we have focussed on solid, steady investments offering stable earnings and hence a high degree of security. This security represents the foundation of our business and justifies the trust that our shareholders, customers and business partners have placed in us.

Dr. Günter Geyer, General Manager (photo)
Dr. Günter Geyer, General Manager

Security and profitability
Our shareholders expect from us not only security but also regular profitability. In the last few years I have reported to you again and again on our company’s new record results – something that I am able to do on this occasion as well:

In fiscal year 2007 we were able to expand our business volume by 17.5%, to almost EUR 7 billion in premiums written. At the same time, we once again strengthened our market position in our core market of Austria, with EUR 3.7 billion in premiums generated. Thus, we have once again met the challenge of expanding our market leadership in Austria. Very much in keeping with our motto: Promises made, promises kept!

However, the major momentum driving the expansion of our business was in the CEE region. With premium volume of approximately EUR 3.0 billion (equal to a gain of 34.4%), this dynamic region already contributed nearly 43% of the Group's premiums, with the property/casualty business even reaching EUR 2.12 billion, i.e., nearly 58%.

With these numbers, we are not just one of the fastest-growing insurance companies in Europe but in our core markets – the countries of the CEE region which have achieved a high degree of economic stability – we are No. 1 among those insurance companies that operate on an international basis.

It is our desire to continue with this gratifying development. Now is precisely the time that the boom in life insurance in the CEE countries is beginning. Our company numbers clearly reflect the growing importance of this segment: With growth rates of about 40%, last year the life insurance business in the CEE region made up about 30% of the Group’s total life insurance business. As before in the property/casualty business, we wish to partake vigorously of these dynamics. With new, sustainable and attractive sales channels, we shall carry on and expand our history of success in this business segment.

The earnings trend of the Vienna Insurance Group over the last fiscal year is, to my mind, impressive as well: In 2007, profit before taxes amounted to EUR 437 million, a roughly 40% increase. The strongly growing volume of business in the CEE region – despite the investments that continue to be necessary – has already a positive effect on the profitability of our Group companies.

Business expansion through acquisition
This is to our shareholders’ benefit: Because of the welcome trend in profits, the Managing Board of the Vienna Insurance Group will make a recommendation to the Annual General Meeting of Shareholders for a 2007 dividend of EUR 1.10 per share – i.e. more than one third higher than the prior year.

How do we achieve such dynamic numbers? By continually seeking out new business opportunities. Thus, for example, even over the last few months we have once again significantly expanded our sphere of activity through the acquisition of attractive companies.

With Turkey, Albania, Macedonia and the Baltic states of Estonia, Latvia and Lithuania we have recently added on a number of countries in our natural CEE region, thereby continuing down a path which has proven itself for us for nearly two decades. After a long and intensive review of the market situation, we explore new countries with an initial, cautious step through the takeover of smaller, attractive companies whose business fundamentals are a good fit with our own. In so doing we acquire experience in the business practices of these countries, which will later drive further expansion on a secure basis.

This is what we did recently in Romania, for example, where in 2007 we acquired the insurance company Asirom. Thus, we were able to significantly expand our top position in that country, one of the region’s fastest growing markets and one in which we now have an almost 30% market share overall. This acquisition was especially important for us because the name Asirom in Romania is virtually synonymous with insurance. This company has roots that run especially deep and wide in the Romanian market – a key component for the continuation of our dynamic growth in the future.

Group-wide integration
However, making acquisitions is not enough to ensure successful expansion of our company over the long term. Steps are also needed to cross-integrate individual countries and companies with which we wish to develop new possibilities. I would like to cite two current examples in this regard:

The management of the Vienna Insurance Group recently decided to form a reinsurance company in the Czech Republic. Over time, our wish is to concentrate the reinsurance activities of all Group companies into this company, first of all in order to design reinsurance agreements and their terms centrally and efficiently. Second, we can thereby place risks on a broader basis throughout the Group, by utilizing VIG’s growing capacity to bear risk. This will also give us the opportunity to offer the unique expertise we have acquired in the CEE business to additional business partners in the context of reinsurance.

In the near future we also wish to devote special attention to the employees of our roughly 45 Group companies. With its expansion into a large and fresh area of Europe, our business model should provide dynamic individuals with opportunities for development, something only a few companies offer in this form.

For that reason, we have created the International Human Resource Development department, whose task is to find and foster new management talent. As part of individually tailored programs, employees are deployed globally to give them the opportunity to get to know all facets of the Vienna Insurance Group and to prove themselves in a wide variety of challenging situations.

Over the next few years, I am convinced that in this way we can offer young people outstanding opportunities for development, thereby making us especially attractive as an employer.

People are at the heart of all our success. This success gives our employees the ability to constantly seek out and avail themselves of new opportunities for business expansion.

Employees stand for success
I would like to give special thanks to all employees of the Vienna Insurance Group for their tireless efforts over this past fiscal year on behalf of our customers and business partners. The motivation of our colleagues in all member companies of the Group makes the Vienna Insurance Group a special business enterprise and will also fortify us in the future.

A look into the future
And we believe in that future. That is why we have once again set new and challenging goals for the coming years. For example, by 2010 we wish to achieve premium volume already significantly above EUR 10 billion. In terms of profit before taxes, we wish to show even stronger growth over the same period and have set the mark for 2010 at EUR 770 million.

This will not take place easily, but we have already proven that we are successfully able to take on new challenges.

Together with you, ladies and gentlemen, with our customers, business partners, shareholders and employees, we will make this happen.


Signature Dr. Günter Geyer, General Director (handwriting)

Günter Geyer