Notes to the consolidated income statement

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30 | Premiums written

Direct business		2007 € 000	2006 € 000
1.	Property and casualty insurance	2,157,697	1,996,674
2.	Health insurance	907,375	888,902
3.	Life insurance	1,393,344	1,577,346
Total (fully consolidated values)		4,458,416	4,462,923
Of which written in:
1.	Austria	3,036,834	3,071,160
2.	Other member states of the EU and other signatory states of the Treaty on the European Economic Area	1,271,167	1,280,195
3.	Other countries	150,415	111,568
Total (fully consolidated values)		4,458,416	4,462,923

Indirect business		2007 € 000	2006 € 000
1.	Property and casualty insurance	40,052	40,473
2.	Health insurance	384	898
3.	Life insurance	29,037	27,844
Total (fully consolidated values)		69,473	69,214

	2007 € 000	2006 € 000
Total (fully consolidated values)	4,527,889	4,532,137

Premiums written in property and casualty insurance	2007 € 000	2006 € 000
Direct business
Fire and business interruption insurance	179,233	166,131
Household insurance	166,501	157,768
Other property insurance	203,727	188,244
Motor TPL insurance	554,404	511,755
Other motor insurance	373,768	335,076
Casualty insurance	240,664	224,076
Liability insurance	219,831	210,712
Legal expenses insurance	49,568	44,663
Marine, aviation and transport insurance	102,136	100,525
Other insurance	67,865	57,725
Total	2,157,697	1,996,674

Indirect business
Marine, aviation and transport insurance	2,407	2,529
Other insurance	37,645	37,943
Total	40,052	40,473

Total direct and indirect business (fully consolidated values)	2,197,749	2,037,147

Reinsurance premiums ceded	2007 € 000	2006 € 000
Property and casualty insurance	307,547	293,678
Health insurance	1,397	1,085
Life insurance	79,505	77,603
Total (fully consolidated values)	388,449	372,366

33 | Net investment income

By segment
I.	Properties held as financial investments
II.	Shares in associated companies
III.	Variable-yield securities
	1. Available for sale
	2. Reported in the income statement
IV.	Fixed interest securities
	1. Held to maturity
	2. Available for sale
	3. Reported in the income statement
V.	Loans and other investments
	1. Loans
	2. Other investments
VI.	Derivative financial instruments
VII.	Expenditures for asset management, interest expenditures and other
Total (fully consolidated values)

Property and casualty insurance		Health insurance		Life insurance		Consolidated financial statements
2007 € 000	2006 € 000	2007 € 000	2006 € 000	2007 € 000	2006 € 000	2007 € 000	2006 € 000
–19,336	2,757	8,399	8,726	6,344	3,370	–4,593	14,852
201,148	36,426	64,383	–496	37,544	9,088	303,075	45,017
50,086	69,131	14,454	53,930	222,522	302,237	287,062	425,298
45,460	63,100	9,886	47,015	168,165	257,310	223,511	367,425
4,626	6,031	4,568	6,915	54,357	44,927	63,551	57,873
31,721	33,156	15,050	28,231	180,141	209,024	226,912	270,411
0	0	0	0	0	0	0	0
31,509	32,284	14,570	25,663	172,587	188,906	218,666	246,853
212	872	480	2,568	7,554	20,118	8,247	23,559
20,684	13,877	17,690	20,244	11,543	27,735	49,917	61,856
10,259	13,107	13,770	16,074	11,426	14,835	35,455	44,017
10,425	770	3,920	4,169	117	12,900	14,462	17,839
14,170	8,753	14,851	6,882	128,762	80,599	157,783	96,233
–16,777	–12,448	–1,306	–3,717	–9,068	–7,160	–27,152	–23,326
281,696	151,652	133,521	113,798	577,788	624,892	993,005	890,342

By income type
I.	Properties held as financial investments
II.	Shares in associated companies
III.	Variable-yield securities
	1. Available for sale
	2. Reported in the income statement
IV.	Fixed interest securities
	1. Held to maturity
	2. Available for sale
	3. Reported in the income statement
V.	Loans and other investments
	1. Loans
	2. Other investments
VI.	Derivative financial instruments
VII.	Expenditures for asset management, interest expenditures and other
Total (fully consolidated values)

Ordinary income		Write-ups and unrealised capital gains		Realised capital gains		Write-offs and unrealised capital losses		Realised capital losses		Consolidated financial statements		Of which value adjustment
2007 € 000	2006 € 000	2007 € 000	2006 € 000	2007 € 000	2006 € 000	2007 € 000	2006 € 000	2007 € 000	2006 € 000	2007 € 000	2006 € 000	2007 € 000	2006 € 000
48,223	43,985	0	0	1,516	8,820	–54,251	36,630	–81	–1,323	–4,593	14,852	–25,000	–11,451
18,288	45,017	211,416	0	73,593	0	0	0	–222	0	303,075	45,017	0	0
129,863	153,107	107,174	44,400	318,192	333,091	–192,286	–88,807	–75,881	–16,493	287,062	425,298	–40,832	–32,530
109,757	122,585	8,178	661	265,103	303,447	–94,063	–53,011	–65,465	–6,257	223,511	367,425	–40,832	–32,530
20,106	30,522	98,996	43,739	53,089	29,644	–98,223	–35,797	–10,416	–10,235	63,551	57,873	0	0
518,154	440,069	75,851	2,141	38,099	43,857	–358,301	–166,729	–46,891	–48,928	226,912	270,411	–140,012	–91,154
0	0	0	0	0	0	0	0	0	0	0	0	0	0
488,146	410,441	66,638	1,553	35,578	42,017	–327,715	–159,091	–43,982	–48,068	218,666	246,853	–140,012	–91,154
30,008	29,627	9,213	589	2,521	1,840	–30,587	–7,638	–2,909	–860	8,247	23,559	0	0
62,171	67,740	162	2,399	0	0	–12,414	–8,283	–3	0	49,917	61,856	0	0
39,703	49,901	0	2,399	0	0	–4,245	–8,283	–3	0	35,455	44,017	0	0
22,468	17,839	162	0	0	0	–8,169	0	0	0	14,462	17,839	0	0
–22,707	–26,327	117,997	65,361	153,434	139,993	–66,217	–22,420	–24,724	–60,373	157,783	96,233	0	0
–27,152	–23,326	0	0	0	0	0	0	0	0	–27,152	–23,326	0	0
726,840	700,265	512,601	114,302	584,834	525,761	–683,469	–322,869	–147,801	–127,116	993,005	890,342	–205,844	–135,136

The updating of the value correction applies to both appreciation and depreciation of financial investments, with the exception of the trading portfolio and financial assets at fair value through profit or loss. The interest income from impaired portfolio items amounts to €42.415 million (31 Dec. 2006: €116.578 million).

The amortisations and unrealised losses of €683.469 million include expenses from currency fluctuations to the value of €207.818 million. These expenses from currency fluctuations are offset by income from hedging business amounting to €178.131 million, which are shown under income from derivative financial instruments.

Of which securities, available for sale Type of investment
III.	Variable-yield securities
	1. Available for sale
	Shares in associated companies
	Shares
	Equity fonds
	Debenture bonds. not capital guaranteed
	Other variable-yield securities
	Participating interests and other investments
IV.	Fixed interest securities
	2. Available for sale
	Fixed interests

Ordinary income		Write-ups and unrealised capital gains		Realised capital gains		Write-offs and unrealised capital losses		Realised capital losses		Consolidated financial statements		Of which value adjustment
2007 € 000	2006 € 000	2007 € 000	2006 € 000	2007 € 000	2006 € 000	2007 € 000	2006 € 000	2007 € 000	2006 € 000	2007 € 000	2006 € 000	2007 € 000	2006 € 000

109,757	122,585	8,178	661	265,103	303,447	–94,063	–53,011	–65,465	–6,257	223,511	367,425	–40,832	–32,530
1,709	–1,264	0	0	3,984	9	0	0	–31	–9	5,662	–1,263	0	0
17,107	20,498	597	35	132,013	217,794	–45,166	–18,482	–42,935	–527	61,615	219,318	–33,982	–16,221
12,513	11,126	0	0	67,280	52,053	–8,501	–1	–12,174	–2,081	59,119	61,097	–5,427	0
21,636	29,528	129	581	42,731	24,233	–31,776	–17,860	–1,646	–99	31,075	36,382	0	0
51,353	26,622	7,452	84	347	117	–4,942	–2,229	–8,202	–2,920	46,007	21,675	2,254	–2,229
5,439	36,074	0	–39	18,749	9,240	–3,677	–14,438	–476	–621	20,035	30,216	–3,677	–14,080


488,146	410,441	66,638	1,553	35,578	42,017	–327,715	–159,091	–43,982	–48,068	218,666	246,853	–140,012	–91,154

Glossary

Close Glossary

Acquisition costs		The amount paid in currency or currency equivalent in acquiring an asset, or the current fair value of another form of payment at the time of acquisition.
Actuarial provision		Provision in the amount of the existing obligation to pay insurance claims and premium refunds, mainly in life and health insurance. The provision is calculated in line with actuarial methods as the balance of the cash value of future obligations less the cash value of future premiums.
Affiliated companies		Affiliated companies are the parent and its subsidiaries. Subsidiaries are companies in which the parent may exercise a controlling influence on business policy. This is the case, for instance, if the parent directly or indirectly holds more than half of the voting rights, if control agreements have been concluded or if the parent is in a position to nominate the majority of the members of the Management Board, or of other controlling bodies of the subsidiary.
Asset allocation		The structure of the investments, i.e. the portion of the total investments invested in the different vehicles of investment (e.g. shares, fixed income securities, holdings, real estate, money market instruments).
Asset liability management		Management concept in which decisions regarding company assets and liabilities are coordinated. This involves a continuous process in which strategies for assets and liabilities are formulated, implemented, monitored and revised, in order to achieve the financial goals with defined risk tolerances and restrictions.
Associated companies		These are participating interests consolidated at equity, i.e. by including them in the consolidated financial statements with the corresponding share in the equity. The major prerequisite for doing so is the possibility of the Group exercising a decisive influence on the operating and financial policy of the associated companies, regardless of whether the Group actually exercises that influence.
At amortised cost		Recognised on the balance sheets at the amortised cost, i.e. the difference between acquisition costs and the redemption amount is spread out over the corresponding pro rata term or capital share.
Benchmark method		An accounting and valuation method preferred under IFRS.
Book value (amortised acquisition costs)		The original acquisition costs minus lasting reduction in value and differences between acquisition costs and redemption amount are credited or debited to acquisition costs, with an effect on income until the amount falls due.
Cash flow statement		Shows the cash surplus from operating, investing and financing activities generated by the company during a specific period (source and use of funds).
Combined ratio		Sum of the operating expenses and the insurance benefits (both retained) in relation to the premiums earned in property and casualty insurance.
Corporate governance		Corporate governance refers to the legal and factual framework of the management and monitoring of companies. Corporate governance regulations are geared towards transparency and thus strengthen the trust in management and control focusing on value creation.
Cost ratio		Operating expenses (retained) in relation to premiums earned.
Deferred acquisition costs		These comprise the expenses incurred by an insurance company for concluding new insurance policies or renewing existing policies. Amongst other costs, they include acquisition commissions and expenses for handling the proposal form and risk underwriting.
Deferred taxes (active/passive)		Deferred taxes arise from temporary differences between the commercial balance sheet and the balance sheet for tax purposes, and those resulting from uniform valuation standards throughout the Group. The calculation of deferred taxes is based on the specific tax rates of each country that the Group companies are based in; changes in the tax rate that have been decided on as at the balance sheet date are included.
Deposits receivable/payable under reinsurance business		Amount receivable by the reinsurance company from the ceding company on the basis of the reinsurance business accepted by the reinsurer and which, for the latter, is similar to an investment. The amount equals the amount the ceding company provides as collateral. Analogously: deposits payable.
Derivatives		Financial contracts whose value depends on the price development of an underlying asset.
Direct insurance business		Insurance contract taken out by a direct (primary) insurance company with a private person or company, as opposed to reinsurance business accepted (indirect business) which refers to the business accepted from another direct (primary) insurer or reinsurance company.
Diversification		Diversification is a business policy instrument that generally involves positioning or distributing the activities of a company over various areas to avoid dependence on single factors.
Duration		The weighted average maturity of an interest-sensitive financial investment or a portfolio. It is a risk measure of the sensitivity of financial investments to changes in the rate of interest.
Earnings per share		The consolidated profit for the year divided by the average number of shares outstanding. Diluted earnings per share include subscription rights exercised or to be exercised in the number of shares, and in the consolidated profit for the year.
Earned premiums		The premiums earned on an accrual basis, which determine the year's income. For calculating the amount of earned premiums, in addition to gross premiums written, the change in unearned premiums in the business year, the provision for expected cancellations and other receivables from unwritten premiums are considered.
Equity method		Method used for recognising the interests in associated companies. They are, in principle, valued at the Group's share in the equity of these companies. In the case of interests in companies which also prepare consolidated financial statements, the valuation is based on the share in Group equity. Under current valuation, this measurement is to be adjusted for proportional equity changes, with the interest in the net income for the year being allocated to the consolidated result.
FAS		US Financial Accounting Standards laying down specifics of US GAAP (Generally Accepted Accounting Principles).
Goodwill		Excess over the purchase price for a subsidiary and the share in its equity after winding up the hidden reserves attributable to the purchaser on the date of acquisition.
Gross amounts		Presentation of the balance sheet items prior to the deduction of the amount which is allocated to the business ceded to a reinsurer.
Hedging		A way of insuring oneself against unwanted price fluctuations by the use of adequate counter positions, particularly in derivatives.
IAS		International Accounting Standards.
IFRS		International Financial Reporting Standards. As of 2002, the term IFRS refers to the entire concept of standards adopted by the International Accounting Standards Board. Standards that were adopted before that are still called International Accounting Standards (IAS).
Insurance benefits		Expenses (net of the reinsurer's share) arising from claim settlement, premium refunds and profit participation, and from changes in the actuarial provisions.
Loss ratio		Retained insurance benefits in property and casualty insurance, in relation to premiums earned.
Minority interests		Shares in the equity of associated companies that are not held by Group companies.
Minority interests in net profit		The share of net profit allocated not to the Group, but to shareholders outside of the Group holding interests in associated companies.
Multitranches		Bonds involving a put option under which the seller can sell additional bonds (with an identical or shorter term) to the buyer. The buyer receives a premium which increases the yield on the security as opposed to a 'normal' security having the same term and yield.
Operating expenses		This item includes acquisition expenses, the handling of the policy portfolio and reinsurance expenses. After deduction of commissions and profit participations received under reinsurance business ceded, the remaining expenses are the net operating expenses.
Premiums		Total premiums written. All compulsory premiums in the financial year, from insurance policies in direct business and reinsurance business accepted.
Profit participation		In life and health insurance, the policyholders are entitled by law and by contract to an adequate share in the profits generated by the company. The amount is reset every year.
Provision for outstanding claims		This provision includes the obligations for payment of insurance claims which have already occurred on the reporting date, but which are not yet completely settled.
Provision for premium refunds and profit participation		The part of the profit to be distributed to the policyholders is appropriated to a provision for premium refunds and/or profit participation. The provision also includes deferred amounts.
Reinsurance		An insurance company would cede parts of its own risk to another insurance company.
Reinsurance premiums ceded		Share of the premiums paid to the reinsurer as a consideration for insuring certain risks.
Retention		The part of the risks assumed which the (re)insurer does not cede.
Retrocession		Retrocession is the ceding of reinsurance business accepted to a retrocessionaire. Professional reinsurance companies and also other insurance companies, within their internal reinsurance business, use retrocession as an instrument for spreading and controlling risks.
Return on equity		The return on equity (before tax) is the profit on ordinary activities in relation to the average total equity (without consideration of the contained net profit). It is used as a general indication of the company' s efficiency.
Revaluation reserves		Unrealised profits and losses resulting from the difference in the present market value and acquisition value and/or the amortised acquisition costs for fixed interest securities are allocated to this reserve, without affecting income, after the deduction of deferred taxes and provisions for deferred profit participation (in life insurance).
Risk		The possibility that negative factors could influence the future financial situation of the company. Furthermore, in the insurance business, risk is understood as the possibility that a claim will arise because a danger that has been ensured against occurs. The insured object or insured person is also frequently referred to as a risk.
Risk management		Ongoing, systematic and continuous identification, analysis, evaluation and management of potential risks that could endanger the assets, financial situation and profits of a company over the medium and long terms. Target: to ensure the continued existence of a company, secure the company goals against disruptive events, with the aid of appropriate measures, and improve the company value.
Securities available for sale		Available-for-sale securities are securities that are neither meant to be held until maturity nor have they been acquired for short-term trading purposes. Available for sale at any time, they are recognised at par value on the balance sheet date.
Securities held to maturity		Securities representing money claims which are held with the intention of keeping them to maturity. They are recognised at amortised cost.
Solvability		Level of own funds in an insurance company.
Stress test		Stress tests are a special form of scenario analysis with the goal of being able to quantify the potential loss of portfolios during extreme fluctuations in the market.
Subordinate debt		Debt which is honoured in the case of winding up or bankruptcy only after all the other debts have been settled.
Supplementary capital		Capital paid in which is agreed to remain at the insurance company's disposal for at least five years, with no cancellation possible; it accrues interest only to the extent that this is covered by the net profit for the year. It can only be repaid prior to liquidation after a pro rata deduction of the net losses incurred during the retention period; in the case of liquidation, it can only be redeemed after those payables have been settled or secured that do not constitute equity or participation capital.
Trading portfolio		Debt securities, shares and other securities (primarily derivatives and structured products) which are held mainly for short-term trading purposes. They are recognised at current market value.
Unearned premiums		That part of the premium income of the year which refers to periods of insurance that lie after the reporting date, i.e. which have not yet been earned on the reporting date. In the balance sheet, with the exception of life insurance, unearned premiums have to be shown as a separate line item under the actuarial provisions.
US GAAP		US Generally Accepted Accounting Principles.
Value at risk		A method for measuring market risks in order to calculate the expected value of a loss that might occur in an unfavourable market situation, with a determined probability within a defined period of time.

Close Glossary

Notes to the consolidated income statement

30 | Premiums written

31 | Premiums earned

32 | Income from fees and provisions

33 | Net investment income

34 | Other income

35 | Insurance benefits

36 | Operating expenses

37 | Other expenses

38 | Tax expenditure

Glossary