Bonds

As of 31 December 2008, bonds represented approximately 48% of total investments in the Vienna Insurance Group’s securities portfolio. When the bond portion of unit trusts is included, bonds represent approximately 52% of all investments. Vienna Insurance Group actively manages its bond portfolio using estimates of changes in interest rates, spreads, and credit quality, taking into account limits related to individual issuers, credit quality, maturity, countries, currencies and issue volume. Investments in fixed-interest securities are almost always currency congruent, that is, they are made in the same currency as the obligations to policyholders. With regard to its bond portfolio, the Vienna Insurance Group is currently not planning any changes to its investment strategy.

According to the Group’s investment guidelines for Austria, bond investments are made almost exclusively in investment grade bonds with a Standard & Poor’s rating of AAA to BBB. Investments in non-investment grade bonds are only made in individual cases and in accordance with decisions to this effect by the Management Board. The goal is to achieve the greatest possible diversification among individual issuers, to avoid accumulation risks, to ensure good average credit quality, to control foreign currency effects, and to make the majority of investments in mid- to long-term maturities.