RRG premium growth slows: Analysis

Premiums written by risk retention groups continue to increase, though the increase is much lower than in recent years, according to a new analysis by the Risk Retention Reporter.

Based on annual financial statements filed by RRGs, the analysis conducted by the Pasadena, Calif.-based newsletter found that RRGs produced about $2.64 billion in premiums in 2006, up 7.7% over the previous year.

That increase compares with an 11.5% premium volume increase in 2005 and a 26.4% increase in 2004, when conditions were tougher in the traditional market.

The increase in the number of risk retention groups operating also slowed. At the end of 2006, 238 RRGs were operating, an increase of 22 RRGs from the end of 2005. By contrast, between year-end 2004 and year-end 2005, the number of RRGs operating increased to 216 from 186, an increase of 30 RRGs.

Through July 2007, 19 new RRGs have been launched, down from 21 during the first seven months of 2006.

A risk retention group is a multiple-owner captive, which, under the federal laws that created them, can provide coverage to policyholders in any state--with minimal interference from state regulators--after meeting the licensing requirements of one domestic state.