Risk management

Being an insurance business, our concept is to create peace of mind for our customers by helping them manage and handle risk. Risk management is at the core of our business, and it is therefore only natural that we also focus in-house on managing the risks our operations expose us to. Structured and competent risk management is fundamental to maintaining our customers’ confidence and living up to our vision of being perceived as the leading peace-of-mind provider in the Nordic region.

Capital and risk

We rely on our capital base and financial strength to assume risks from our customers and for our customers to be confident that we are able to meet our obligations if and when they report a claim. Our aim is for our capital base to match our risk profile and support natural growth.

We base our capital resources on relevant regulatory requirements and our wish to maintain a rating of A- from Standard & Poor’s. We regularly assess our capital resources, including calculate our capital requirement based on a model used by Standard & Poor’s. The results of these calculations are posted quarterly at www.trygvesta.com. We also regurlarly assess capital and risk in our internal model, which simulates results of investments, insurance operations and reinsurance. We use the model as the basis to evaluate investment strategies and purchases of reinsurance and to determine riskbased return requirements for the individual business areas based on their specific risk profile.

Risk management and control

Our Supervisory Board has overall responsibility for the Group’s risk management (see also the section on Corporate governance). In 2007, our Supervisory Board revised the structure of its instructions in which it defines our risk management framework with the purpose of optimising the control, monitoring and handling of our present and future risk exposure. The supreme body of this structure is the risk management committee which, in addition to the Group CEO and Group CFO, consists of the persons responsible for the various risk management areas: insurance risk, investment risk and operational risk.

In addition to the risk management committee we have set up a number of special committees to handle the risk management process within the areas of

• underwriting and reinsurance
• provisioning
• investments, and
• operational risk and security.

The special committees report to the risk management committee, and their chairmen are also members of the risk management committee.

The investment risk committee primarily handles areas of risk related to the portfolio on the asset side, mainly market and credit risk. The underwriting and reinsurance committee handles risk management in connection with determination of tariffs and reinsurance, mainly of an insurance and credit nature. The provisioning risk committee handles issues related to the determination of provisions, and the operational risk committee handles issues within fields such as errors or breakdowns of internal systems and processes. All committees focus on risk management and have no commercial responsibility.