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RRGs continue stable run
17 May 2017 | Ohio | Reporter: Becky Butcher
Risk retention groups (RRGs) remained financially stable throughout 2016, according to Douglas Powell, senior financial analyst at Demotech.

RRGs’ cash and invested assets and total admitted assets both increased by 3 percent since year-end 2015.

Over the last year, RRGs collectively added $216.6 million in policyholders’ surplus.

According to Powell, the level of policyholders’ surplus becomes increasingly important in times of difficult economic conditions by allowing an insurer to remain solvent when facing uncertain economic conditions.

He suggested that the results indicate that RRGs remain adequately capitalised in aggregate and able to remain solvent if faced with adverse economic conditions or increased losses.

Liquidity, as measured by liabilities to cash and invested assets, for year-end 2016 was 65.7 percent compared to 66.5 percent at year-end 2015.

RRGs collectively reported almost $3.1 billion of direct premium written through year-end 2016, an increase of 4.7 percent over 2015.

It also found that RRGs reported close to $1.8 billion of net premium written through year-end 2016, an increase of 4 percent over 2015.

The direct premium written to policyholders’ surplus ratio for RRGs collectively through year-end 2016 was 65 percent, down slightly from 65.1 percent in 2015.

The net premium written to policyholders’ surplus ratio for RRGs through year-end 2016 was 38.3 percent, indicating a decrease from 2015’s 38.6 percent.

Powell said: “Despite political and economic uncertainty, RRGs remain financially stable and continue to provide specialised coverage to their insureds. The financial ratios calculated based on the reported results of RRGs appear to be reasonable, keeping in mind that it is typical and expected that insurers’ financial ratios tend to fluctuate over time.”

He added: “The results of RRGs indicate that these specialty insurers continue to exhibit financial stability. It is important to note again that while RRGs have reported net income, they have also continued to maintain adequate loss reserves while increasing premium written year over year. RRGs continue to exhibit a great deal of financial stability.”



Texas captive bill ready to be signed into law
The Texas legislature has passed the state's new captive bill to allow for non-affiliated reinsuranc Read more

KBRA hires Carol Pierce for director of insurance role
Kroll Bond Rating Agency (KBRA) has named Carol Pierce as the new director of the agency’s insuran Read more

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