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Caring Communities RRG: A Financial Success Story

Long-Term Care Facility
May 11, 2016

The 2015 financial results of Caring Communities, a Reciprocal Risk Retention Group (RRG) are impressive. The RRG had $3.5 million in net income and its long-term care community members received a dividend of $4.4 million. The dividends are not a sudden phenomenon. Over a 10-year period, the dividends issued by Caring Communities have totaled $47.9 million.

The Demotech, Inc., Analysis of Risk Retention Groups Year-End 2015  (Volume 6, Issue 1) reports Caring Communities RRG had $47.8 million in surplus, a loss and loss adjustment expense (LAE) ratio of 45.6 percent, an expense ratio of 24 percent, and combined ratio of 69.6 percent. These ratios were based on the RRG’s direct written premium of $22.9 million, net written premium of $8.2 million, and net earned premium of $8.5 million.

Caring Communities Insurance Company (CCIC) began business in January 2002, pursuant to a license granted by the Cayman Islands Monetary Authority. CCIC was formed to insure the liability risks of a select group of not-for-profit, predominately faith-based, senior care services organizations for the purposes of limiting each insured's dependence on the commercial liability insurance market, stabilizing liability insurance costs, ensuring continuing consistent availability of liability coverage, and developing and improving each insured's risk management programs via customized risk management and claims services.

The objective of CCIC is to secure its long-term financial stability and the safety of its insured/owners' residents. The business model contemplates each insured's high level of interest in loss control and loss mitigation. Professional, general, employee-benefit, and miscellaneous liability coverages, both primary and excess (including excess auto liability), are provided exclusively to not-for-profit, predominately faith-based, senior citizen care organizations that meet strict entry requirements.

These organizations include affordable housing providers, continuing care retirement communities, and other organizations that provide a mix of services, including independent living, assisted living, and skilled nursing, whether on one campus or at several sites. All insured organizations must meet criteria that include, at a minimum, limits on the ratio of skilled nursing beds to total beds/units, loss experience maximums that are significantly below industry averages, and a reputation for providing conscientious quality care to senior citizens.

As of January 1, 2008, CCIC became a 100 percent-owned subsidiary of Caring Communities reciprocal Risk Retention Group (CCrRRG), and all the shareholders of CCIC became member owners (or "subscribers") of CCrRRG. CCIC continued to manage its liabilities from the 2002–2007 policy years and began assuming business under a quota share from CCrRRG covering its net retained liabilities, being those liabilities after CCrRRG has ceded premiums and liabilities to its outside reinsurers. CCIC's reinsurance treaties with its outside reinsurers were renewed in the name of CCrRRG. This domestication strategy shifted the economic engine of the group to CCrRRG.

CCrRRG is domiciled in the District of Columbia. It is operated by an attorney-in-fact that is a wholly owned subsidiary, Caring Communities Shared Services.

Visit the Caring Communities RRG website.

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