Risk retention groups (RRGs) have a great deal of financial stability and remain committed to maintaining adequate capital to handle losses, according to Demotech.
Demotech senior financial analyst Douglas Powell’s review of Q3 2015 financial results revealed that between Q3 2011 and Q3 2015, RRGs collectively increased policyholders’ surplus by 65.8 percent.
This increase represents the addition of more than $1.8 billion to policyholders’ surplus. Powell said: “These reported results indicate that RRGs are adequately capitalised in aggregate and able to remain solvent if faced with adverse economic conditions or increased losses.”
Liquidity for Q3 2015 was approximately 68.8 percent. Powell believes that this also indicates an increase for RRGs collectively as liquidity was reported at 66.4 percent in Q3 2014.
