RISK RETENTION GROUP PREMIUM SOARS ABOVE $2B:

As the number of risk retention groups has skyrocketed in the past three years, so has the premium generated by these member-owned insurers enabled by the 1986 Liability Risk Retention Act. Since year-end 2001, the number of RRGs has risen by more than 100, bringing the total number of RRGs to 186 at year-end 2004, and to 194 as of June 2005, according to Risk Retention Reporter. Annual premium for RRGs in 2004 totaled $2,197.1 million, as compared to 2003 premium of $1,737.7 million, an increase of $459.4 million. Over the last three years, year-to-year percentage increases have been in the double digits, with RRG premium increasing by 34 percent in 2002, 37.4 percent in 2003, and 26.4 percent in 2004. RRG premium development reflects hard and soft market cycles. By contrast to the last three “hard market” years, year-to-year percentage increases during the last of the “soft market” years were in the single digits, with RRG premium increasing by 1.7 percent in 1998, 0.7 percent in 1999, and 4.3 percent in 2000. While RRG formations have slowed in the first half of 2005–11 compared to 25 in 2004 for the same periodpremium generated by these entities can be expected to continue an upward trend, as existing RRGs expand their scope of operations and new RRGs continue to form.