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Member, Beacon International Group, Ltd.
A review of risk retention groups' performance through the third quarter of 2013 shows them exhibiting financial stability as a group, with growth in admitted assets and policyholder surplus continuing to outpace liabilities.
Since the third quarter of 2009, the analysis that Demotech Inc. released Wednesday finds that RRGs' cash and invested assets increased 25.9% while total net admitted assets increased 19.7%. Meanwhile, liabilities increased only 6.1% during the same period.
The report found that through the third quarter of 2013, RRGs collectively wrote more than $2.4 billion in direct premiums, a 3.9% increase from the first nine months of 2012. RRGs' combined ratio through the third quarter of 2013 was 92.4%, a bit diminished from the 90.1% through the third quarter of 2012.
Through the third quarter of last year, nearly 60% of the RRG's premiums written in nine lines of business was in medical professional liability lines, according to the analysis.
“These third-quarter results of RRGs indicate that these specialty insurers continue to exhibit financial stability,” wrote the report's author, Douglas A. Powell, a senior financial analyst at Dublin, Ohio-based Demotech.
“It is important to note again that while RRGs have reported net underwriting gains and net profits, they have also continued to maintain adequate loss reserves while increasing premium written year over year,” Mr. Powell said.