Risk Retention Groups First Quarter 2015 Underwriting Profit Reported

Risk retention group (RRG) policyholders’ surplus has increased 64.7 percent over the 5-year period from the first quarter of 2011 through the first quarter of 2015, reports Douglas A Powell, senior financial analyst at Demotech, Inc., in its Analysis of Risk Retention Groups First Quarter 2015, which has just been released.

The loss ratio (losses and loss adjustment expenses/net premiums earned) through the first quarter of 2015 deteriorated from 81.8 percent in 2014 to 83.1 percent. However, overall RRGs had a decrease in the expense ratio to 11.5 percent from 16.7 percent through the same quarter in 2014. As a result, the RRGs experienced an underwriting net profit as reflected by a combined ratio of 94.6 percent through the first quarter of 2015.

“Despite political and economic uncertainty, RRGs remain financially stable and continue to provide specialized coverage to their insureds,” Mr. Powell concludes in the report.