RLI Reports First Quarter 2024 Results
- Strong net earnings of $127.9 million in Q1 2024, compared to $98.8 million in Q1 2023.
- Operating earnings of $87.4 million in Q1 2024, compared to $75.0 million in Q1 2023.
- 13% increase in gross premiums written.
- Underwriting income of $77.7 million with a combined ratio of 78.5.
- 21% increase in net investment income.
- Book value per share increased by 8% to $33.27.
- Comprehensive earnings of $115.2 million for the quarter.
- Regular quarterly dividend of $0.27 per share.
- Use of non-GAAP measures to explain results.
- A+ financial strength rating affirmed by AM Best Company.
- None.
Insights
The disclosed net earnings of $127.9 million, compared to last year's $98.8 million, indicate a robust 29.5% increase. This is a substantial growth rate that suggests effective cost management and potentially successful underwriting strategies during the quarter. With operating earnings jumping from $75.0 million to $87.4 million, the per share increase from $1.63 to $1.89 signals a solid upward trend that merits attention for its possible influence on shareholder value.
The reported 13% surge in gross premiums written and a 21% upswing in net investment income may point to a dual momentum in both core operations and financial investment activities. This would generally be perceived favorably by the market, as it indicates the company's ability to generate revenue from multiple streams. These figures are particularly impressive given the broader industry context, where such growth rates could outpace many competitors.
The combined ratio of 78.5, slightly higher than last year's 77.9, remains well below the 100 threshold. This indicates that RLI Corp. is maintaining profitability in its underwriting operations—a promising sign for investors who look for efficient operational management. The growth in underwriting income to $77.7 million from $67.9 million further reflects this efficiency and suggests that the company has kept its loss and expenses under control despite a dynamic insurance market.
Moreover, the property segment showing a combined ratio of 55.4, down from 68.0, speaks to an exceptional performance. The improvement suggests that the company's property segment has successfully managed risk, even amid potentially challenging industry circumstances such as natural disasters or economic shifts. For investors, such robust underwriting performance might indicate a favorable risk profile and management's adeptness at navigating market uncertainties.
It is notable that the net investment income has posted a significant increase of 21%, showcasing the company's efficient capital allocation. This could reflect a well-managed investment portfolio capable of generating steady income streams in various market conditions. The total return of 1.8% for the quarter, however, needs to be contextualized within current interest rate environments and market performances to assess its relative success.
Furthermore, given the mention of after-tax unrealized losses from the fixed income portfolio, investors should be aware of the potential impact of interest rate volatility on their investments. While such unrealized losses are not realized and hence not affecting the cash position, they do affect comprehensive earnings and can influence the company's book value in the short term.
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First Quarter |
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Earnings Per Diluted Share |
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2024 |
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2023 |
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Net earnings |
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$ |
2.77 |
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$ |
2.15 |
Operating earnings (1) |
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$ |
1.89 |
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$ |
1.63 |
(1) See discussion below: Non-GAAP and Performance Measures. |
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Highlights for the quarter included:
-
Underwriting income(1) of
$77.7 million -
13% increase in gross premiums written. -
21% increase in net investment income. -
Favorable development in prior years’ loss reserves resulted in a
$37.4 million -
Book value per share of
$33.27 8% (inclusive of dividends) from year-end 2023.
“We are pleased to report continued top line premium growth and excellent bottom line results in the first quarter of 2024,” said RLI Corp. President & CEO Craig Kliethermes. “Gross premiums written increased
Underwriting Income
RLI achieved
Results for both years include favorable development in prior years’ loss reserves, which resulted in a
The following table highlights underwriting income and combined ratios by segment.
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Underwriting Income(1) |
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Combined Ratio(1) |
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(in millions) |
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2024 |
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2023 |
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2024 |
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2023 |
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Casualty |
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$ |
13.7 |
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$ |
31.8 |
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Casualty |
|
93.1 |
|
82.9 |
Property |
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57.7 |
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28.4 |
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Property |
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55.4 |
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68.0 |
Surety |
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6.3 |
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7.7 |
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Surety |
|
80.9 |
|
76.7 |
Total |
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$ |
77.7 |
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$ |
67.9 |
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Total |
|
78.5 |
|
77.9 |
(1) See discussion below: Non-GAAP and Performance Measures. |
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Other Income
Net investment income for the quarter increased
RLI’s comprehensive earnings were
Dividends Paid in First Quarter of 2024
On March 20, 2024, the company paid a regular quarterly dividend of
Non-GAAP and Performance Measures
Management has included certain non-generally accepted accounting principles (non-GAAP) financial measures in presenting the company’s results. Management believes that these non-GAAP measures further explain the company’s results of operations and allow for a more complete understanding of the underlying trends in the company’s business. These measures should not be viewed as a substitute for those determined in accordance with generally accepted accounting principles (GAAP). In addition, our definitions of these items may not be comparable to the definitions used by other companies.
Operating earnings and operating earnings per share (EPS) consist of our GAAP net earnings adjusted by net realized gains/(losses), net unrealized gains/(losses) on equity securities and taxes related thereto. Net earnings and net earnings per share are the GAAP financial measures that are most directly comparable to operating earnings and operating EPS. A reconciliation of the operating earnings and operating EPS to the comparable GAAP financial measures is included in the 2024 financial highlights below.
Underwriting income or profit represents the pretax profitability of our insurance operations and is derived by subtracting loss and settlement expenses, policy acquisition costs and insurance operating expenses from net premium earned, which are all GAAP financial measures. The combined ratio, which is derived from components of underwriting income, is a performance measure commonly used by property and casualty insurance companies and is calculated as the sum of loss and settlement expenses, policy acquisition costs and insurance operating expenses, divided by net premiums earned, which are all GAAP measures.
Other News
During the first quarter, the company’s A+ (Superior) financial strength rating was affirmed by AM Best Company for the company’s insurance subsidiaries – RLI Insurance Company, Mt. Hawley Insurance Company and Contractors Bonding and Insurance Company.
At 10 a.m. central daylight time (CDT) on April 23, 2024, RLI management will hold a conference call to discuss quarterly results with insurance industry analysts. Interested parties may listen to the discussion at https://events.q4inc.com/attendee/397005913.
Except for historical information, this news release may include forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934) including, without limitation, statements reflecting our current expectations about the future performance of our company or our business segments or about future market conditions. These statements are subject to certain risk factors that could cause actual results to differ materially. Various risk factors that could affect future results are listed in the company's filings with the Securities and Exchange Commission, including the Form 10-K Annual Report for the year ended December 31, 2023.
About RLI
RLI Corp. (NYSE: RLI) is a specialty insurer serving niche property, casualty and surety markets. The company provides deep underwriting expertise and superior service to commercial and personal lines customers nationwide. RLI’s products are offered through its insurance subsidiaries – RLI Insurance Company, Mt. Hawley Insurance Company and Contractors Bonding and Insurance Company. All of RLI’s insurance subsidiaries are rated A+ (Superior) by AM Best Company. RLI has paid and increased regular dividends for 48 consecutive years and delivered underwriting profits for 28 consecutive years. To learn more about RLI, visit www.rlicorp.com.
Supplemental disclosure regarding the earnings impact of specific items:
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Reserve Development(1) and Catastrophe Losses, |
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Net of Reinsurance |
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Three Months Ended |
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March 31, |
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(Dollars in millions, except per share amounts) |
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2024 |
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2023 |
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Favorable development in casualty prior years' reserves |
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$ |
18.1 |
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$ |
35.9 |
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Favorable development in property prior years' reserves |
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$ |
18.9 |
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$ |
12.6 |
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Favorable development in surety prior years' reserves |
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$ |
5.4 |
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$ |
3.2 |
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Net incurred losses related to: |
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2024 storms |
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$ |
(12.0 |
) |
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$ |
— |
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2023 and prior events |
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$ |
— |
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$ |
(4.0 |
) |
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Operating Earnings Per Share |
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Three Months Ended |
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March 31, |
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2024 |
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2023 |
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Operating Earnings Per Share(2) |
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$ |
1.89 |
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$ |
1.63 |
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Specific items included in operating earnings per share:(1) (3) |
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Net favorable development in casualty prior years' reserves |
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$ |
0.24 |
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$ |
0.53 |
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Net favorable development in property prior years' reserves |
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$ |
0.30 |
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$ |
0.19 |
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Net favorable development in surety prior years' reserves |
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$ |
0.08 |
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$ |
0.04 |
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Net incurred losses related to: |
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2024 storms |
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$ |
(0.18 |
) |
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$ |
— |
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2023 and prior events |
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$ |
— |
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$ |
(0.06 |
) |
(1) |
Reserve development reflects changes from previously estimated losses. |
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(2) |
See discussion above: Non-GAAP and Performance Measures. |
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(3) |
Items included in operating earnings per share are after tax and incorporates incentive and profit sharing-related impacts which affected policy acquisition, insurance operating and general corporate expenses. |
RLI CORP |
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2024 FINANCIAL HIGHLIGHTS |
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(Unaudited) |
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(Dollars in thousands, except per share amounts) |
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Three Months Ended March 31, |
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SUMMARIZED INCOME STATEMENT DATA: |
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2024 |
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2023 |
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% Change |
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Net premiums earned |
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$ |
360,676 |
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$ |
307,723 |
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17.2 |
% |
Net investment income |
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|
32,847 |
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|
27,084 |
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21.3 |
% |
Net realized gains |
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5,994 |
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|
14,620 |
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(59.0) |
% |
Net unrealized gains on equity securities |
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45,314 |
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15,496 |
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192.4 |
% |
Consolidated revenue |
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$ |
444,831 |
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$ |
364,923 |
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21.9 |
% |
Loss and settlement expenses |
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143,824 |
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114,488 |
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25.6 |
% |
Policy acquisition costs |
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110,454 |
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|
101,444 |
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8.9 |
% |
Insurance operating expenses |
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|
28,703 |
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|
23,901 |
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20.1 |
% |
Interest expense on debt |
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1,618 |
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|
2,008 |
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(19.4) |
% |
General corporate expenses |
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|
5,010 |
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|
4,214 |
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18.9 |
% |
Total expenses |
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$ |
289,609 |
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$ |
246,055 |
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17.7 |
% |
Equity in earnings of unconsolidated investees |
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4,769 |
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3,923 |
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21.6 |
% |
Earnings before income taxes |
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$ |
159,991 |
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$ |
122,791 |
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30.3 |
% |
Income tax expense |
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|
32,091 |
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|
23,980 |
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33.8 |
% |
Net earnings |
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$ |
127,900 |
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$ |
98,811 |
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29.4 |
% |
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Other comprehensive earnings (loss), net of tax |
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(12,671) |
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|
37,707 |
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NM |
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Comprehensive earnings |
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$ |
115,229 |
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$ |
136,518 |
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(15.6) |
% |
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Operating earnings(1): |
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Net earnings |
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$ |
127,900 |
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$ |
98,811 |
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|
29.4 |
% |
Less: |
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Net realized gains |
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|
(5,994) |
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|
(14,620) |
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(59.0) |
% |
Income tax on realized gains |
|
|
1,259 |
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|
3,071 |
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(59.0) |
% |
Net unrealized gains on equity securities |
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|
(45,314) |
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|
(15,496) |
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|
192.4 |
% |
Income tax on unrealized gains on equity securities |
|
|
9,516 |
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|
3,254 |
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|
192.4 |
% |
Operating earnings |
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$ |
87,367 |
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$ |
75,020 |
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16.5 |
% |
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Return on Equity: |
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Net earnings (trailing four quarters) |
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24.2 |
% |
|
52.2 |
% |
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Comprehensive earnings (trailing four quarters) |
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25.1 |
% |
|
41.9 |
% |
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Per Share Data: |
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Diluted: |
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Weighted average shares outstanding (in 000's) |
|
|
46,163 |
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|
46,035 |
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Net earnings per share |
|
$ |
2.77 |
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$ |
2.15 |
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|
28.8 |
% |
Less: |
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|
|
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Net realized gains |
|
|
(0.13) |
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|
(0.32) |
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|
(59.4) |
% |
Income tax on realized gains |
|
|
0.03 |
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|
0.07 |
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|
(57.1) |
% |
Net unrealized gains on equity securities |
|
|
(0.98) |
|
|
(0.34) |
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|
188.2 |
% |
Income tax on unrealized gains on equity securities |
|
|
0.20 |
|
|
0.07 |
|
|
185.7 |
% |
Operating earnings per share(1) |
|
$ |
1.89 |
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$ |
1.63 |
|
|
16.0 |
% |
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Comprehensive earnings per share |
|
$ |
2.50 |
|
$ |
2.97 |
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|
(15.8) |
% |
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Cash dividends per share - ordinary |
|
$ |
0.27 |
|
$ |
0.26 |
|
|
3.8 |
% |
|
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|
|
|
|
|
|
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Net cash flow provided by operations |
|
$ |
70,946 |
|
$ |
69,219 |
|
|
2.5 |
% |
|
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|
|
|
|
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|
(1) See discussion above: Non-GAAP and Performance Measures. |
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NM = Not Meaningful |
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RLI CORP |
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2024 FINANCIAL HIGHLIGHTS |
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(Unaudited) |
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(Dollars in thousands, except per share amounts) |
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March 31, |
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December 31, |
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2024 |
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2023 |
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% Change |
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SUMMARIZED BALANCE SHEET DATA: |
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Fixed income, at fair value |
|
$ |
2,863,321 |
|
$ |
2,855,849 |
|
0.3 |
% |
(amortized cost - |
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|
|
(amortized cost - |
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|
|
|
|
|
|
|
|
Equity securities, at fair value |
|
|
643,367 |
|
|
590,041 |
|
9.0 |
% |
(cost - |
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|
|
|
|
|
|
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(cost - |
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|
|
|
|
|
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Short-term investments |
|
|
147,186 |
|
|
134,923 |
|
9.1 |
% |
Other invested assets |
|
|
59,273 |
|
|
59,081 |
|
0.3 |
% |
Cash and cash equivalents |
|
|
44,557 |
|
|
36,424 |
|
22.3 |
% |
Total investments and cash |
|
$ |
3,757,704 |
|
$ |
3,676,318 |
|
2.2 |
% |
|
|
|
|
|
|
|
|
|
|
Accrued investment income |
|
|
25,353 |
|
|
24,062 |
|
5.4 |
% |
Premiums and reinsurance balances receivable |
|
|
230,537 |
|
|
221,206 |
|
4.2 |
% |
Ceded unearned premiums |
|
|
107,822 |
|
|
112,257 |
|
(4.0) |
% |
Reinsurance balances recoverable on unpaid losses |
|
|
814,676 |
|
|
757,349 |
|
7.6 |
% |
Deferred policy acquisition costs |
|
|
152,924 |
|
|
146,566 |
|
4.3 |
% |
Property and equipment |
|
|
46,536 |
|
|
46,715 |
|
(0.4) |
% |
Investment in unconsolidated investees |
|
|
66,134 |
|
|
56,966 |
|
16.1 |
% |
Goodwill and intangibles |
|
|
53,562 |
|
|
53,562 |
|
0.0 |
% |
Income taxes - deferred |
|
|
10,700 |
|
|
15,872 |
|
(32.6) |
% |
Other assets |
|
|
72,461 |
|
|
69,348 |
|
4.5 |
% |
Total assets |
|
$ |
5,338,409 |
|
$ |
5,180,221 |
|
3.1 |
% |
|
|
|
|
|
|
|
|
|
|
Unpaid losses and settlement expenses |
|
$ |
2,532,190 |
|
$ |
2,446,025 |
|
3.5 |
% |
Unearned premiums |
|
|
904,848 |
|
|
892,326 |
|
1.4 |
% |
Reinsurance balances payable |
|
|
35,157 |
|
|
71,507 |
|
(50.8) |
% |
Funds held |
|
|
106,430 |
|
|
101,446 |
|
4.9 |
% |
Income taxes - current |
|
|
25,455 |
|
|
3,757 |
|
NM |
|
Debt |
|
|
100,000 |
|
|
100,000 |
|
— |
% |
Accrued expenses |
|
|
68,216 |
|
|
108,880 |
|
(37.3) |
% |
Other liabilities |
|
|
45,361 |
|
|
42,766 |
|
6.1 |
% |
Total liabilities |
|
$ |
3,817,657 |
|
$ |
3,766,707 |
|
1.4 |
% |
Shareholders' equity |
|
|
1,520,752 |
|
|
1,413,514 |
|
7.6 |
% |
Total liabilities & shareholders' equity |
|
$ |
5,338,409 |
|
$ |
5,180,221 |
|
3.1 |
% |
|
|
|
|
|
|
|
|
|
|
OTHER DATA: |
|
|
|
|
|
|
|
|
|
Common shares outstanding (in 000's) |
|
|
45,710 |
|
|
45,640 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Book value per share |
|
$ |
33.27 |
|
$ |
30.97 |
|
7.4 |
% |
Closing stock price per share |
|
$ |
148.47 |
|
$ |
133.12 |
|
11.5 |
% |
|
|
|
|
|
|
|
|
|
|
Statutory surplus |
|
$ |
1,670,595 |
|
$ |
1,520,135 |
|
9.9 |
% |
RLI CORP |
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2024 FINANCIAL HIGHLIGHTS |
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UNDERWRITING SEGMENT DATA |
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(Unaudited) |
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(Dollars in thousands, except per share amounts) |
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|
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|
|
|
|
Three Months Ended March 31, |
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|
GAAP |
|
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|
GAAP |
|
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|
|
GAAP |
|
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|
|
GAAP |
|
|
|
Casualty |
|
Ratios |
|
Property |
|
Ratios |
|
Surety |
|
Ratios |
|
Total |
|
Ratios |
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||||
2024 |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross premiums written |
|
$ |
245,329 |
|
|
|
$ |
180,364 |
|
|
|
$ |
42,982 |
|
|
|
$ |
468,675 |
|
|
|
Net premiums written |
|
|
205,628 |
|
|
|
|
133,171 |
|
|
|
|
38,834 |
|
|
|
|
377,633 |
|
|
|
Net premiums earned |
|
|
198,276 |
|
|
|
|
129,411 |
|
|
|
|
32,989 |
|
|
|
|
360,676 |
|
|
|
Net loss & settlement expenses |
|
|
109,472 |
|
55.2 |
% |
|
32,577 |
|
25.2 |
% |
|
1,775 |
|
5.4 |
% |
|
143,824 |
|
39.9 |
% |
Net operating expenses |
|
|
75,130 |
|
37.9 |
% |
|
39,118 |
|
30.2 |
% |
|
24,909 |
|
75.5 |
% |
|
139,157 |
|
38.6 |
% |
Underwriting income(1) |
|
$ |
13,674 |
|
93.1 |
% |
$ |
57,716 |
|
55.4 |
% |
$ |
6,305 |
|
80.9 |
% |
$ |
77,695 |
|
78.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross premiums written |
|
$ |
217,834 |
|
|
|
$ |
158,846 |
|
|
|
$ |
38,332 |
|
|
|
$ |
415,012 |
|
|
|
Net premiums written |
|
|
181,201 |
|
|
|
|
124,866 |
|
|
|
|
36,518 |
|
|
|
|
342,585 |
|
|
|
Net premiums earned |
|
|
186,031 |
|
|
|
|
88,767 |
|
|
|
|
32,925 |
|
|
|
|
307,723 |
|
|
|
Net loss & settlement expenses |
|
|
84,688 |
|
45.5 |
% |
|
26,437 |
|
29.8 |
% |
|
3,363 |
|
10.2 |
% |
|
114,488 |
|
37.2 |
% |
Net operating expenses |
|
|
69,512 |
|
37.4 |
% |
|
33,947 |
|
38.2 |
% |
|
21,886 |
|
66.5 |
% |
|
125,345 |
|
40.7 |
% |
Underwriting income(1) |
|
$ |
31,831 |
|
82.9 |
% |
$ |
28,383 |
|
68.0 |
% |
$ |
7,676 |
|
76.7 |
% |
$ |
67,890 |
|
77.9 |
% |
(1) See discussion above: Non-GAAP and Performance Measures. |
|||||||||||||||||||||
Category: Earnings Release
View source version on businesswire.com: https://www.businesswire.com/news/home/20240422266603/en/
Aaron Diefenthaler
Chief Investment Officer & Treasurer
309-693-5846
Aaron.Diefenthaler@rlicorp.com
Source: RLI Corp.
FAQ
What were RLI Corp.'s net earnings for the first quarter of 2024?
What was the increase in gross premiums written for RLI Corp. in the first quarter of 2024?
What was the underwriting income for RLI Corp. in the first quarter of 2024?
What was the combined ratio for RLI Corp. in the first quarter of 2024?
Did RLI Corp. increase its book value per share in the first quarter of 2024?
