A.M. Best Issues Initial Financial Strength Ratings to Two Risk Retention Groups in First Half of 2004.

OLDWICK, N.J. -- During the first half of 2004, A.M. Best Co. issued initial financial strength ratings to two risk retention groups (RRG), Consumer Specialties Insurance Company (RRG) and Pinnacle Consortium of Higher Education, a Vermont Reciprocal Risk Retention Group. Currently, 24 risk retention groups carry a letter rating from A.M. Best, with some having received their initial rating as early as 1992.

Based on year-end 2003 data, the rated RRGs have aggregate policyholder surplus of $475 million and net premiums written of $337 million. Although RRGs have the legal ability to write a wide variety of commercial casualty lines of business, the focus of many is to address specific issues of concern to their membership. These are frequently the abnormally difficult or expensive exposures reflective of the insurance market conditions at the time of the groups' formation.

The liability insurance crisis of the mid-1980s and the ensuing passage of the Liability Risk Retention Act of 1986 provided the legal framework for the creation of RRGs. An RRG is an alternative risk transfer mechanism established by a group sharing common interests and insurable exposures. The group provides a means of risk retention and risk sharing through a federally authorized captive insurance mechanism. The law permits the group to cover all forms of commercial liability insurance, with the exception of workers' compensation and employers' liability.

A.M. Best will publish more details on the rated RRGs, as well as rated U.S.-based captives in early August.

For current Best's Ratings and independent data on the captive and alternative insurance market, please visit http://www.ambest.com/captive/.

A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com.