Financial position and assets

In the financial year just-ended our shareholder’s equity grew by EUR 679 million or 12% to EUR 6.2 (5.5) billion (for further information on the composition of the shareholders’ equity please see also the statement of changes in shareholders’ equity in the consolidated financial statements). The major changes in shareholders’ equity were due to the following reasons:

Group net income (excluding minorities) climbed by 21% in 2007 to EUR 477 (394) million and was allocated in full to retained earnings.

The "Cumulative other comprehensive income (other reserves)" contracted by a substantial EUR 190 million year-on-year to EUR 25 million. This was due primarily to the decrease in the other changes in shareholders’ equity as a consequence of changes in the ratios of participating interests (–EUR 131 million). The equity item was reduced by EUR 61 million following the squeeze-out at Gerling-Konzern Allgemeine Versicherungs-AG. A further reduction was attributable to the sale of the interest held in E+S Rückversicherung AG to a third party outside the Group, causing a corresponding increase in the minority interests in shareholders’ equity. In addition, the positive balance of unrealized gains and losses on investments decreased slightly by EUR 11 million. The higher interest rate level was reflected in particular in increased unrealized losses relating to our portfolio of available-for-sale securities. The balance of unrealized gains and losses in our equity portfolio decreased following profit-taking in light of the favorable trend on stock markets. With the euro moving sharply higher – especially against the US dollar –, the currency translation reserve fell by
EUR 66 million. This reserve recognizes exchange rate effects arising out of the translation of the assets and liabilities of our foreign subsidiaries into euros.

The minority interests in shareholders’ equity increased by EUR 392 million to around
EUR 2.4 billion. The rise was principally connected with the minority interest in Group net income, which amounted to EUR 522 (333) million. Through retrospective adjustment of shareholders’ equity in an amount of EUR 11 million recognized directly in equity, it was possible to standardize the accounting principles used in the financial statements of all subgroups under common control of the parent company HDI V.a.G.; see here the section entitled "Summary of major accounting policies" in the Notes.