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
R&Q completes assignment of deductible liabilities
21 September 2017 | London | Reporter: Jenna Lomax
The liabilities relate to workers’ compensation policies issued between 1988 and 2012 to a US corporate from a large US carrier
NCCIA clarifies 831(b) memo
20 September 2017 | Charlotte | Reporter: Becky Butcher
The North Carolina Captive Insurance Association has issued a statement to clarify a memo discussing the 831(b) tax election and the impact on the state’s captive insurance industry should Congress repeal the election
XL Group selects Dublin as post-Brexit location
20 September 2017 | London | Reporter: Becky Butcher
XL Group has revealed its plans to move its principal EU insurance company, XL Insurance Company, from the UK to Ireland in 2018, in response to Brexit
R&Q completes novation from Cayman captive
20 September 2017 | Cayman Islands | Reporter: Becky Butcher
Randall & Quilter (R&Q) Holdings has completed the novation of reinsurance policies issued between 2006 and 2011 from a Cayman domiciled group captive
Cayman captives gain strength from teamwork, says IMAC panels
18 September 2017 | Grand Cayman | Reporter: Jenna Lomax
The Cayman Islands’ strength in captive insurance comes from “its team approach to captives”, according to a panel of experts
Recent disasters put spotlight on the role of captive insurance
15 September 2017 | Vermont | Reporter: Jenna Lomax
The recent spate of natural disasters has focused a spotlight on catastrophic losses and how captive insurance can play an "important role" in helping organisations “defray” some of the related financial losses
BA pension scheme uses captive
15 September 2017 | London | Reporter: Becky Butcher
The British Airways (BA) Airways Pensions Scheme (APS) has used a captive to insure £1.6 billion of pension liabilities against longevity risk