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 the core of our business. Therefore it is 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. We also regularly assess capital and risk in our internal model, which stimulates results of investments, insurance operations and reinsurance. We use the model as the basis to evaluate investment strategies and purchases of reinsurance. We also use the model to determine risk based return requirements for the individual business areas based on their specific risk profile.
Risk management and control
Our Supervisory Board has the overall responsibility for the Group's risk management. The supreme body of the risk management 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 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.
Solvency II and Individual Solvency
The new EU solvency rules, Solvency II are expected to some into force in 2012. These rules will make it possible for companies such as TrygVesta with operations in several countries to benefit from the risk diversification that typically exists between different geographical areas when determining their solvency requirements.
We have for several years taken part in the Solvency II hearings through the Danish Insurance Association, Forsikring & Pension. With these efforts and the work with our internal models we aim to provide the best possible preparation for the introduction of the new solvency rules.
In preparation for the introduction on Solvency II, companies are required as from 1 January 2008 to make their own determination of the necessary capital, the Individual Solvency Requirements, and report it to the Danish Financial Supervisory Authority. For purposes of determining the Individual Solvency Requirement we apply our internal model and Standard & Poor's capital model in combination with several other quantitative assessments.
Last update: 07 April 2008