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DJ 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 Austria and CEE (1)Creating the leading insurance company in CEE (2)

Vienna Insurance Group / Mergers - Acquisitions - Takeovers 

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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 Pojist´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
 ivotno 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

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March 26, 2008 15:45 ET (19:45 GMT)

DJ euro adhoc: Vienna Insurance Group / Mergers – -2-

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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March 26, 2008 15:45 ET (19:45 GMT)