Demotech Report: RRGs Report Favorable Results in 2021

Demotech Inc. has released its Analysis of Risk Retention Groups—Year-End 2021. The report finds that risk retention groups continue to exhibit a “great deal of financial stability.” The risk retention group industry saw its strongest premium growth since 2003 in 2021 with premium increasing by $519.3 million.

According to the report, risk retention groups have maintained an appropriate balance sheet ratios as the industry has grown in the current hard market. “Over the past five years, RRGs have aggressively increased assets and policyholders’ surplus while maintain sufficient liquidity and leverage as well as other balance sheet ratios,” said report author and Demotech Senior Financial Analyst Douglas Powell.

Liquidity, a measure of cash and invested assets to liabilities, was 151% for risk retention groups in 2021. The report notes that liquidity for risk retention groups has ranged from 151 to 158% over the past five years.

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