Risk Management

Risk management is a key element for any insurance business and an integral part of our business model. 



How we work  

Risk management in Tryg is organised on the basis of three lines of defence:

  1. The business managers
    The first line of defence is the business managers, who manage and control all significant risks associated with their own activities. 
  2. The risk management function
    The risk management function is a part of the second line of defence and ensures a consistent risk management approach across business areas. The risk management function is charged with maintaining the general overview of the company’s most important risks and reporting on an ongoing basis on the development to the Supervisory Board and the Management.
  3. The internal audit
    The third line of defence is the internal audit, the most important task of which is to carry out independent assessments of the control environment for the Supervisory Board.

Capital management

The capital management of Tryg is supported by Tryg's partial internal model which operates with a safety level of 99.5%. This means that Tryg is able to honour claims in 199 out of 200 years. The purpose of capital management in Tryg is to support the key business objectives:

  • A solid capital base, supporting both the statutory requirements and the ambition of keeping, as a minimum, the ‘A2’ rating from Moody’s. 
  • A steadily rising nominal dividend per share with a distribution of 60-90% of the net profit for the year after tax.
  • Return on the average equity of 20% after tax.

Read about risk

Underwriting risk

The underwriting risk is the risk relating to the conclusion of insurance contracts and thus the risk that premium income does not adequately cover the claims that Tryg is obliged to pay when damage has occurred. This risk can to a certain extent be assessed based on statistical analyses of historical experience within various business sectors. 

The insurance premium must be adequate to cover expected claims, but must also comprise a risk premium equal to the return on the part of Tryg’s capital that is used to protect against random fluctuations. All things being equal, this means that insurance sectors or areas which, from experience, are subject to major fluctuations, must comprise a larger risk premium as these require a larger capital base. 

The Supervisory Board defines the overall framework for the underwriting risk.


Reinsurance is used to reduce the risk in areas where a special need for this exists. The need for reinsurance is assessed on an ongoing basis using Tryg’s internal capital model, in which the price of reinsurance is compared with the reduction in the capital requirement that can be achieved. 

The Supervisory Board defines the framework for the reinsurance programme.

Provisioning risk

At the end of the term of insurance, the insurance risk relates to the claims provisions made to cover future payments in respect of damage which has already occurred. When damage occurs, there may be a certain delay before the customer submits a claim. Depending on the complexity of the claim, a longer or shorter period of time may pass before the size of the claim is finally agreed. This may be a prolonged process, particularly for personal injuries. Even once the claim has been settled, there is a risk that it will be reopened at a later date, triggering further payments. 

The calculation of claims provisions will always be subject to uncertainty. Historically, many insurers have experienced substantial positive as well as negative impacts on profit (run-off) resulting from provisioning risk, and this is also expected to be the case in future. 

The Supervisory Board defines the overall framework for managing provision risk in Tryg’s policy for insurance risk.

Investment risk

The investment risk is defined as the risk of loss as a consequence of volatility in the financial markets. 

In overall terms, Tryg’s investment portfolio is divided into a match portfolio and a free portfolio. 

The match portfolio corresponds to the value of the discounted claims provisions and is designed to hedge the interest rate sensitivity of these to the widest possible extent. 

The free portfolio is subject to the framework defined by the Supervisory Board through the investment policy. Tryg’s largest investment risks pertain to its shareholdings, property investments as well as high yield bonds. 

The Supervisory Board defines the framework for the investment risk.

Operational risk

Operational risk relates to errors or failures in internal procedures, fraud, breakdown of infrastructure, IT security and similar factors. As operational risks are mainly internal, Tryg focuses on establishing an adequate control environment for its operations. In practice, this work is organised by means of procedures, controls and guidelines that cover the various aspects of Tryg’s operations, including the IT security policy. Tryg has also set up a security and investigation unit to handle internal fraud, IT security, physical security and contingency plans. 

The Supervisory Board defines the framework for the operational risk.

Strategic risk

Strategic risk relates to Tryg’s choice of strategic position, including IT strategy, flexibility relative to the market, business partners and reputation, as well as changed market conditions. 

The Supervisory Board is closely involved in the management of strategic risk. 


Annual Report 2022

Read more about Tryg's risk management in the annual report on page 31-32 and note 1 on page 60.

SFCR report

Download Tryg's Solvency & Financial Condition Report 2021.