Capitalisation

TrygVesta has the capital resources necessary to operate and develop the Group. We refer to this as our capital requirement.

Two rating agencies, Standard & Poor’s and Moody’s, follow TrygVesta’s performance and financial position closely for rating purposes. Our management reviews the Group’s strategies, plans and performance at annual rating meetings. The rating agencies use these meetings as a basis for their assessment of the Group, and subsequently announce the rating. In 2007, Moody’s upgraded us from A3 to A2, which signifies excellent financial strength, while Standard & Poor’s affirmed their rating of A- based on the Group’s strong financial position.

We determine the Group’s capital requirements based on Standard & Poor’s capital model, aiming to maintain our current rating of A-. This rating reflects strong creditworthiness and excellent financial strength and is a preferred rating among large corporate customers requiring that their insurer is rated.

Standard & Poor’s implemented a new capital model in the autumn of 2007. Redefining the measurement of capital, Standard & Poor’s new model measures available capital relative to a minimum requirement for each rating category. Going forward, we intend to apply the new calculation method, targeting the level of an A rating and a small buffer. Standard & Poor’s new model calculates the buffer at 4-5% of the capital requirement, equivalent to the previous practice of a CAR of 130. Given the current structure of our business and our investment profile, a rating of Areflects a ratio of capital to net premiums of 52-56.

Subordinate loan capital

In 2005, the Group raised a 20-year bond loan in the amount of EUR 150m, which was listed on the London Stock Exchange. The loan, which carries a coupon of 4.5%, is included in the capital base for rating purposes and to a limited extent in the regulatory capital base. Subordinate loan capital accounted for 10% of the capital calculated according to Standard & Poor’s capital model for credit purposes in 2007, with the present limit being 25%.

Credit facility

The Group raised a five-year revolving credit facility of DKK 2,000m subscribed with 10 Danish and international banks in 2005. At 31 December 2007, DKK 600m had been utilised under the facility. Total interest expenses incurred on loan capital were DKK 88m in 2007, which means that our interest expenses were covered 36 times by earnings. Our total debt ratio was 14.5% at 31 December 2007.