Scope of consolidation

In addition to the annual financial statement of UNIQA Versicherungen AG, the Group financial statements include the financial statements of all subsidiaries at home and abroad. Fortythree affiliated companies did not form part of the consolidated Group. They were of only minor significance, even if taken together, for the presentation of a true and fair view of the Group‘ assets, financial position and income.

The scope of consolidation therefore contains – in addition to the UNIQA Versicherungen AG – 30 domestic and 52 foreign subsidiaries in which UNIQA Versicherungen AG held the majority voting rights.

The scope of consolidation was extended in the reporting period by the following companies:

	Date of initial inclusion	Net profit for the year in € million1)	Acquired shares %	Acquisition costs in € million	Goodwill in € million
Vitosha AD, Sofia	1 Jan. 2006	–1.1	20	6.3	10.0
Vitosha Life AD, Sofia	1 Jan. 2006	0.3	99.7	0.0	0.0
Vitosha Auto OOD, Sofia	1 Jan. 2006	0.0	100	0.0	0.0
Aspernbrücken- gasse Errichtungs- und Betriebs GmbH, Vienna	1 April 2006	–0.1	100	6.1	0.1
Floreasca Tower SRL, Bukarest	1 Jan. 2006	1.1	100	8.8	0.1
Pretium Ingatlan Kft., Budapest	1 Oct. 2006	0.0	100	20.0	0.0
UNIQA poslovni centar korzo d.o.o., Rijeka	1 Oct. 2006	–0.2	100	5.0	0.0
RK Invest Kft., Budapest	1 April 2006	0.0	100	5.2	0.0
Knesebeckstraße 8–9 Grundstücks- gesellschaft mbH, Berlin	1 April 2006	–0.3	100	0.4	1.0
Credo-Classic, Kiew	1 July 2006	0.0	35	14.1	8.8
UNIQA LIFE, Kiew (Neugründung)	1 July 2006	0.0	100	0.8	0.1
Zepter osiguranje A.D., Belgrad	1 Oct. 2006	–0.9	80	14.1	17.0
1) Net profit for the year included in the consolidated statements.

With effect from 25 January 2006, 20% of the shares were acquired in the Vitosha Group (Bulgaria) as were options to buy the majority of all shares at any time. Due to the assumption of control, these companies have already been fully consolidated.

The effects of the change to the scope of consolidation on the main asset and debt positions can be seen under no. 5 of the notes to the consolidated financial statements.

The associated companies refer to fourteen domestic and two foreign companies consolidated at equity; of these, eight companies were of minor significance and were listed at current market value.

During the course of the restructuring within the Austria Hotel Group, four companies inside the Group were merged together (Hotel Burgenland in Eisenstadt Betriebsgesellschaft m.b.H., Seminarhotel Baden Betriebsgesellschaft m.b.H., Grand Hotel Bohemia s.r.o. and Hotel International Praha a.s.).

In applying IAS 39 and in terms of the present interpretation of this statement of the IASB (SIC 12), fully controlled investment funds were included in the consolidation, insofar as their fund volumes were not of minor importance when viewed singularly and in total.

Consolidation principles

Capital consolidation follows the acquisition method. The costs of acquiring shares in the subsidiaries are written as the proportional equity of the subsidiary. The conditions at the time of acquiring the shares in the consolidated subsidiary are taken into consideration for the initial consolidation. To the extent other (non-Group) shareholders hold shares in the subsidiary‘s equity at the reporting date, these are dealt with under minority interests.

If the shareholding was acquired before 1 January 1995, the differences are set off against profits carried forward in line with the applicable transitional provisions.

In compliance with IFRS 3, the goodwill is not subject to any scheduled depreciation. The value of existing goodwill resultant >from the acquisition of holdings is appraised in an annual impairment test.

A fall in value is written off where necessary. In doing so, the cash value of all future contributions to earnings generated by the economic units is contrasted with the deferred goodwill (including a share of the equity) from a discounted perspective by applying a risk-adequate interest rate.

The group of related companies within a country are treated as an economic unit rather than the individual company. An impairment, therefore, only applies if depreciation is deemed necessary at this level.

Negative differences from mergers consummated after 31 March 2004, must be credited with an effect on income immediately after reappraisal.

Shares in associated companies are, as a general rule, valued according to the equity method using the equity held by the Group. Differences are determined according to the principles of capital consolidation and the amounts are recorded under shares in associated companies. The updating of the development of the associated companies is based on the most recent financial statements available.

In establishing the value of shares in associated companies, an IFRS report is generally required. Where no IFRS reports are presented, the adjustment of the entries for these companies to the uniform Group valuation benchmarks must be dispensed with due to a lack of available documentation; however, this does not have any significant impact on the present Group consolidated financial statements.

For debt consolidation, the receivables from Group companies are set off against the payables to Group companies. As a rule, any differences have an effect on income. Group-internal results >from deliveries and services are eliminated if they are of minor significance for giving a true and fair view of the Group‘s assets, financial position and income. Proceeds and other income from deliveries and services within the Group are set off against the corresponding expenditure.

Presentation of balance sheet and income statement

The International Financial Reporting Standards (IFRS) allow a shortened version of the balance sheet and income statement. Summarising many individual items into units enhances the informative quality of the financial statements. Explanatory notes to these items are contained in the Group notes. Because of formatting to thousand €, there may be rounding differences.

Segment reports

The primary segment reports depict the main business segments of property and casualty insurance, life insurance and health insurance. The consolidation principles are applied here to transactions within a segment. In addition, the main items of the income statement are also broken down by regional perspectives.

Foreign currency translation

The reporting currency of UNIQA Versicherungen AG is the euro. All annual financial statements of foreign subsidiaries which are not reported in euros are converted at the rate on the balance sheet closing date according to the following guidelines:

• Assets, liabilities and transition of the annual profit/deficit at the middle rate on the balance sheet closing date



• Income statement at the annual average exchange rate



• Equity capital (except for annual net profit/deficit) at the historic exchange rate

Resulting exchange rate differences are set off against the shareholders’ equity without affecting income.

The most important exchange rates are summarised in the following table:

€ rates on balance sheet closing date	2006	2005
Swiss franc CHF	1.6069	1.5551
Slovakian koruna SKK	34.4350	37.8800
Czech koruna CZK	27.4850	29.0000
Hungarian forint HUF	251.7700	252.8700
Croatian kuna HRK	7.3504	7.3715
Polish zloty PLN	3.8310	3.8600
Bosnia and Herzegovina convertible mark BAM	1.9581	1.9558
Romanian leu (new) RON	3.3840	3.6800
Bulgarian lev (new) BGN	1.9558	1.9563
Ukrainian hrywnja UAH	6.6631
Serbian dinar RSD	79.8438

Estimates

For creation of the Group consolidated financial statements according to IFRS, it is necessary to make assumptions for the future within various items. These estimates can have a considerable influence on the valuation of assets and debts on the balance sheet closing date, as well as the amount of expenses and income in the financial year. The items below carry a not insignificant level of risk that considerable adjustments to asset or debt values may be necessary in the following year:

• Deferred acquisition costs



• Goodwill



• Shares in associated companies/investments – insofar as the valuation does not take place based on stock exchange prices or other market prices



• Technical provisions



• Pension and similar provisions