euro adhoc: Vienna Insurance Group / Mergers - Acquisitions - Takeovers / Vienna Insurance Group acquires all Insurance Operations from Erste Bank (1) Long-term partnership with Erste Bank in Austr

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Disclosure announcement transmitted by euro adhoc. The issuer is responsible
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26.03.2008

Not for distribution in the United States, Canada, Japan and
Australia.

Please note: this is a translation; only the German version of this
release is legally binding

Vienna Insurance Group has entered into an agreement with Erste Bank
to acquire all of Erste Bank's insurance activities including its
operations in Austria, Czech Republic, Slovakia, Hungary, Croatia
and Romania for a cash consideration of approximately EUR 1.4bn.
As part of the transaction, a long-term distribution
agreement has been entered into, giving Vienna Insurance Group
access to Erste Bank's extensive distribution network with more
than 16m clients and more than 2,900 branches.

Vienna Insurance Group CEO Günter Geyer notes: "With this acquisition
and long- term cooperation, Vienna Insurance Group takes
advantage of a unique opportunity to further implement its
strategy for sustained growth in CEE. This transaction makes us the
No. 1 insurance company among the international insurers
operating in CEE and, importantly, we also become a leading player
in the life insurance segment, which we see as our future growth
engine in Austria and CEE. Two financial groups with extensive
financial services know-how are joining forces in this region to
build a lasting partnership with substantial benefits for
customers, employees and shareholders alike."

Both the acquisition and the long-term agreement are subject to
customary regulatory and anti-trust authority approvals. Closing of
the transaction is expected in the third quarter of 2008.

Transaction Overview

Erste Bank's insurance activities consist of two main entities: s
Versicherung Group with operations in Austria, Czech Republic,
Slovakia, Hungary and Croatia and BCR Asigurari Group with
operations in Romania. s Versicherung Group comprises primarily
life insurance activities, whereas BCR Asigurari Group has
significant presence in both life and non-life insurance. The Vienna
Insurance Group already has small minority stakes in s Versicherung
and s Versicherung's subsidiaries through its subsidiary Donau
Versicherung (3). Post-transaction, Vienna Insurance Group will
own about 95% in s Versicherung and its subsidiaries with
the remaining 5% of the life insurance operations owned by Erste
Bank and its subsidiaries. With regard to BCR Asigurari Group,
Vienna Insurance Group will acquire an 88.5% ownership from Erste
Bank, with the remainder owned by existing minority shareholders.
Overall, the transaction adds almost EUR 1.3bn based on gross
written premiums for fiscal year 2007 to Vienna Insurance Group
- predominantly in the life insurance segment.

Vienna Insurance Group and Erste Bank have also concluded a 15 year
preferred mutual distribution partnership, in all countries in which
the two groups are present. This currently includes Austria,
Croatia, Romania, the Czech Republic, Serbia, Slovakia, Ukraine and
Hungary. The distribution agreement will be automatically
renewed for an additional 10 years, unless terminated by one of
the parties 12 months prior to the initial expiration date.

Transaction rationale

The Vienna Insurance Group believes the transaction offers an
excellent opportunity to substantially reinforce its presence in
CEE with compelling benefits for all stake holders:

- Creates No. 1 international insurance group in CEE

- Long-term agreement with preferred access to Erste Bank's
strong retail distribution platform with more than 16m clients and
more than 2,900 branches - the bancassurance channel is poised
to become the most important distribution channel for life
insurance policies and with its extensive bancassurance
experience, Vienna Insurance Group believes it is ideally
positioned to develop products and services tailored to this channel.
As part of this long-term sales and distribution agreement, the
partners' products will be offered to clients of both Vienna
Insurance Group and Erste Bank

- Significant strengthening of Vienna Insurance Group's life
insurance platform via both the acquisition of the life insurance
operations and also the access to the bank distribution of Erste
Bank. This enables Vienna Insurance Group to capitalise on the
attractive growth prospects in the CEE life insurance markets,
driven by strong economic growth, rapidly increasing life insurance
penetration levels and pension reforms in the region

- Substantial synergy potential resulting from extended product
offering for the distribution channels with considerable
cross-selling potential between Vienna Insurance Group and Erste
Bank

Vienna Insurance Group believes the existing relationship with
Erste Bank, similar corporate culture and both parties' extensive
transaction experience will ensure a smooth execution of the
transaction and integration of the acquired entities.

Capital raising to fund transaction and further growth in the CEE
region

The Vienna Insurance Group strives to have excellent capital
resources at its disposal at all times. In order to fund the
transaction as well as to further expand its growth in CEE and,
especially, to finance further acquisitions in Poland, the
Ukraine and Hungary, the Vienna Insurance Group plans to raise in
total EUR 1.2-1.4bn. The Vienna Insurance Group intends to raise
approximately EUR 0.9 billion to approximately EUR 1.0 billion by
way of a rights issue with the remainder being raised in the
hybrid capital market. Wiener Städtische Wechselseitige
Versicherungsanstalt-Vermögensverwaltung, the main shareholder of
Vienna Insurance Group with about 70%, has informed Vienna
Insurance Group that it will fully support the capital increase and
that it intends to maintain

approximately the same percentage of ownership in Vienna Insurance Group after
the capital increase. The financing has been designed to maintain the strong
capitalisation and financial position of Vienna Insurance Group post-
transaction.

The exact timing and further details of the rights issue and hybrid debt issue
will be announced at a later stage.

(1) Pending official approval by the relevant authorities

(2) CEE region defined as: Bulgaria, Croatia, Poland, Romania, Serbia,

Slovakia, Czech Republic and Hungary

(3) Donau Versicherung owns 10% in s Versicherung in Austria
directly, and 4.5% in Pojišt´ovna Ceské sporitelny in Czech Republic,
3.3% in Poistovna Slovenskej sporitelne in Slovakia, 9.0% in ERSTE
Sparkassen Biztosító Zártkörüen Müködö Részvénytársaság in Hungary
and 7.4% in Erste Sparkassen osiguranje d.d. za životno osiguranje in
Croatia indirectly.

Disclaimer

This information constitutes neither an offer to sell nor a
solicitation to buy any securities of Wiener Städtische
Versicherung AG Vienna Insurance Group ("VIG"). A public offer
would only be made in Austria or in the Czech Republic after
publication of a prospectus prepared in accordance with the
provisions of the Austrian Capital Market Act or the Czech
Capital Markets Act. Any securities orders received prior to the
commencement of a public offer will be rejected. If a public offer
is made in Austria or in the Czech Republic, a prospectus
prepared in accordance with the Austrian Capital Market Act or the
Czech Capital Markets Act will be published and will be
available free of charge (i) at the seat of Wiener Städtische
Versicherung AG Vienna Insurance Group, Schottenring 30, 1010
Vienna, during usual business hours, and, (ii) in case of the
offering in the Czech Republic, the prospectus will be available
also on Vienna Insurance Group's internet pages
http://www.viennainsurancegroup.com and on internet pages of
participating securities brokers.

This press release and the information contained herein are
not for distribution in or into the United States of
America and must not be distributed to U.S. persons (as defined
in Regulation S of the U.S. Securities Act of 1933, as amended
("Securities Act")) or to publications with a general circulation
in the United States. This press release does not constitute an
offer to sell or a solicitation of an offer to purchase any
securities in the United States. The securities of Vienna Insurance
Group have not been and will not be registered under the Securities
Act and may not be offered, sold or delivered within the United
States or to U.S. persons absent registration under or an applicable
exemption from the registration requirements of the Securities Act.
There will be no public offer of securities of Vienna Insurance
Group in the United States.

This press release is directed only to persons (i) who are outside
the United Kingdom or (ii) who have professional experience in
matters relating to investments falling within Article 19(5) of the
Financial Services and Markets Act 2000 (Financial Promotion) Order
2001 (as amended) (the "Order") or (iii) who fall within
Article 49(2)(a) to (d) ("high net worth companies,
unincorporated associations, etc.") of the Order (all such
persons together being referred to as "Relevant Persons"). Any
person who is not a Relevant Person must not act or rely on this
communication or any of its contents. Any investment or
investment activity to which this communication relates is
available only to relevant persons and will be engaged in only
with Relevant Persons.

This press release contains forward-looking statements based on the
currently held beliefs and assumptions of the management of Vienna
Insurance Group, which are expressed in good faith and, in
their opinion, reasonable. These statements may be identified by
words such as "expectation" or "target" and similar expressions,
or by their context. Forward-looking statements involve known and
unknown risks, uncertainties and other factors, which may cause
the actual results, financial condition, performance, or
achievements of Vienna Insurance Group, or results of the
insurance industry generally, to differ materially from the
results, financial condition, performance or achievements express
or implied by such forward-looking statements. Given these
risks, uncertainties and other factors, recipients of this press
release are cautioned not to place undue reliance on these
forward-looking statements. Vienna Insurance Group disclaims any
obligation to update these forward-looking statements to reflect
future events or developments.

end of announcement euro adhoc
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ots Originaltext: Vienna Insurance Group
Im Internet recherchierbar: http://www.presseportal.de

Further inquiry note:

Contact:

WIENER STÄDTISCHE Versicherung AG

Vienna Insurance Group

Barbara Hagen-Grötschnig, MBA

Corporate Communications

Schottenring 30, 1010 Vienna

Tel.: +43 (0)50 350-21027

Fax: +43 (0)50 350 99-21027

E-Mail: b.hagen@staedtische.co.at

Branche: Insurance
ISIN: AT0000908504
WKN: A0ET17
Index: WBI, ATX Prime, ATX
Börsen: Prague Stock Exchange / stock market
Wiener Börse AG / official market