12 February 2018
Reporter: Ned Holmes

RRGs remain financially stable, says Powell

Risk retention groups (RRGs) collectively reported almost $2.8 billion of direct premium written (DPW) through Q3 last year, a 3.5 percent increase over the same period in 2016, according to a report by Demotech’s senior financial analyst Douglas Powell.

Powell’s analysis of RRGs in Q3 2017 also found that the DPW to policyholders’ surplus ratio was 76.2 percent, while the net premium written to policyholders’ surplus ratio was 45.6 percent.

Since Q3 2016, there has been an increase in cash and invested assets (2 percent), total admitted assets (2.5 percent), policyholders’ surplus (2.5 percent) and liabilities (2.5 percent).

According to Powell, these increases demonstrate that RRGs remain adequately capitalised in aggregate and can remain solvent if faced with adverse economic conditions or increased losses.

The quarterly analysis also found that liquidity, as measured by cash and invested assets, was 68.4 percent for Q3 2017.

In the report, Powell commented: “A review of the reported financial results of RRGs reveals insurers that continue to collectively provide specialised coverage to their insureds while remaining financially stable.”

Analysis of the income statement reveals RRGs reported a $9.8 million underwriting loss through Q3 2017.

Powell concluded: “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.”

“Despite political and economic uncertainty, RRGs remain financially stable and continue to provide specialised coverage to their insureds.”

More news
The latest news from Captive Insurance Times
Join Our Newsletter

Sign up today and never
miss the latest news or an issue again

Subscribe now
Funds approved for ‘crumbling foundations’ captive
21 February 2018 | Connecticut | Reporter: Ned Holmes
The Connecticut State Bond Commission has approved $350,000 to set up a non-profit captive insurer, which is a state government solution for an issue impacting a reported 5000 homes in the state
Crawford launches workers compensation service
20 February 2018 | Atlanta | Reporter: Ned Holmes
Crawford & Company has expanded its service portfolio in Australia to include workers’ compensation.
Kansas to alter captive laws
20 February 2018 | Kansas | Reporter: Ned Holmes
The Kansas state government has submitted a bill to update and modernise captive insurance laws in the state
ZIC and Zale Life ratings downgraded
19 February 2018 | New Jersey | Reporter: Ned Holmes
A.M. Best has downgraded the financial strength rating of Zale Indemnity Company (ZIC) and its wholly-owned subsidiary, Zale Life
Tax shelter micro captives bubble set to burst, says Adkisson
16 February 2018 | Las Vegas | Reporter: Ned Holmes
The tax shelter micro captive bubble is set to burst in 2018, resulting in large numbers of such companies to surrender their licenses, as many did last year, predicts Jay Adkisson, partner at Riser Adkisson
Leadership shuffle at Captive Resources
15 February 2018 | Illinois | Reporter: Ned Holmes
Group captive insurance consultant Captive Resources has appointed former Zurich North America CEO Mike Foley to its board of directors
Vermont proposes branch captive legislation updates
14 February 2018 | Montpelier | Reporter: Becky Butcher
Vermont has proposed to update its branch captive legislation to require branch captives to designate the state’s commissioner of the Department of Financial Regulation as its agent for service of process