Ohio
17 May 2017
Reporter: Becky Butcher
RRGs continue stable run
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.”

More Industry 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
Arkansas captive tweaks a 'positive step forward', say lawyers
21 July 2017 | Little Rock | Reporter: Becky Butcher
Recent modifications to the captive insurance law in Arkansas are “a positive move forward to support and grow” the industry in the state
Notice 2016-66 missing from Treasury list
20 July 2017 | Washington DC | Reporter: Becky Butcher
Notice 2016-66 is a notable absence from the US Treasury’s Donald Trump-ordered review of tax regulations, despite the Self-Insurance Institute of America (SIIA) asking for its inclusion
North Carolina captive industry sees ‘rapid growth’
19 July 2017 | Raleigh | Reporter: Becky Butcher
The North Carolina captive insurance industry experienced rapid growth in 2016, according to the state’s Department of Insurance
NSU to launch new surety captive
17 July 2017 | Philadelphia | Reporter: Stephanie Palmer
National Surety Underwriters has raised $11.5 million in funding for the capitalisation of a new special-purpose surety reinsurance captive, the National Fidelity Reinsurance Company
Risk Strategies snaps up employee benefits duo
13 July 2017 | Boston | Reporter: Becky Butcher
Risk Strategies Company has welcomed Kate Genovese and Pauline Sobelman to its employee benefits practice group
Severe US weather outbreaks cause £3bn in losses
13 July 2017 | Chicago | Reporter: Becky Butcher
Worldwide economic and insured losses during June were largely driven by several major severe weather outbreaks in the US, according to Aon Benfield’s Impact Forecasting
ILS continues to drive innovation
11 July 2017 | Zurich | Reporter: Becky Butcher
The insurance-linked securities (ILS) market will continue to drive innovation and efficiency in risk financing for the benefit of protecting buyers and investors, according to Christoph Buerer of Twelve Capital