Even in a softening market, the 2005 annual gross written premium for risk retention groups grew to $2,449.1 million, an increase of $252.0 million, or 11.5 percent, compared with 2004 annual premium of $2,197.1 million.

While the rate of increase has slowed in the last two years, reflecting the softening property-casualty market, RRG premium continues its double-digit percentage increases.

RRG premium has nearly doubled since 2002. Since year-end 2001, in fact, the number of RRGs has risen by more than 150, bringing the total number of RRGs to 234 as of July 2006.

RRG formations also increased this year, with the launching of 21 new RRGs since the beginning of 2006 through July, compared with 14 during the same period last year. Premium 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.

Policyholder surplus also grew, totaling $1,424.4 million for 2005, a gain of 21.0 percent over 2004 RRG policyholder surplus of $1,177.2 million. Financial data for policyholder surplus obtained from annual statements filed by RRGs with the National Association of Insurance Commissioners is published in the Risk Retention Group Directory & Guide, 2006. Policyholder surplus is the sum remaining after all liabilities are deducted from asset--essentially an insurer's net worth.

(Bar Graph)

RRG Premium & Number of RRGs, 1999-2005

(table)

RRG Policyholder Surplus Comparison, 2004 & 2005

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