Summary of Significant Accounting Policies

General information

The Wiener Städtische Versicherung AG Vienna Insurance Group is the leading Austrian insurance company in Central and Eastern Europe and thus the largest listed insurance group in Austria as well. Its registered office is located at Schottenring 30, 1010 Vienna. As the ultimate parent company, Wiener Städtische Wechselseitige Versicherungsanstalt-Vermögensverwaltung includes Wiener Städtische Versicherung AG Vienna Insurance Group in its consolidated financial statements.

The insurance companies of the Vienna Insurance Group offer high-quality insurance services in both the life and non-life segments in 23 countries of Central and Eastern Europe.

The primary segments in which the Vienna Insurance Group operates are property/casualty, life and health insurance. Its secondary segments are the regions Austria, Czech Republic, Slovakia, Poland, Romania, Other CEE markets and Other markets.

Significant accounting policies

The consolidated financial statements as of 31 December 2008 have been prepared in accordance with the International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”), including the applicable interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”). The consolidated financial statements were prepared based on the published IFRS adopted by EU regulation, application of which was mandatory as of 31 December 2008. The present consolidated financial statements therefore implement the following changes in requirements: In October 2008, the IASB published changes to IAS 39 (Financial instruments: recognition and valuation) and IFRS 7 (Financial instruments: disclosures) under the title “Reclassification of financial assets” that entered into force retroactively as of 1 July 2008. Since 2002, the designation IFRS has stood for the overall framework of all standards adopted by the IASB. Previously adopted standards continue to be referred to as International Accounting Standards (IAS). By the time the consolidated financial statements were prepared, additional standards, as well as changes to standards and interpretations, respectively approved by the IASB or IFRIC had been adopted by the EU and published in its Official Journal. Application of these standards and interpretations was not yet mandatory in financial year 2008, and the Vienna Insurance Group likewise did not apply them in advance of their dates of mandatory application. The effect of these provisions is insignificant and in some cases cannot yet be reliably estimated.

The consolidated financial statements are prepared in thousands of euros (“EUR ‘000”, using commercial rounding). As a rule, the consolidated financial statements were prepared using historical cost accounting, with the exception of the following assets and liability items, which are measured at fair value:

• Financial investments available for sale
• Financial instruments measured at fair value through profit or loss, including financial assets held for trading purposes
• Investments of unit-linked and index-linked life insurance and underwriting provisions of unit-linked and index-linked life insurance

The accounting policies described below have been applied uniformly during the entire reporting period and all prior reporting periods since preparation of the IFRS opening balance sheet as of 1 January 2004. This applies similarly to all fully consolidated companies included in the consolidated financial statements. The sole exception to this Group-wide uniform application of accounting policies concerns the valuationof insurance policies in accordance with IFRS 4, as discussed in more detail in the section titled “Classification of insurance policies”.