RLI Reports Second Quarter 2024 Results

Rhea-AI Summary

RLI Corp. reported strong Q2 2024 results with net earnings of $82.0 million ($1.78 per share), up from $77.7 million in Q2 2023. Key highlights include:

- Underwriting income of $70.0 million with an 81.5 combined ratio
- 11% increase in gross premiums written
- 18% increase in net investment income to $34.0 million
- Favorable development in prior years' loss reserves, adding $19.8 million to underwriting income
- Book value per share up 14% to $34.64 from year-end 2023

The company achieved balanced growth across its portfolio, with strong performance in casualty and surety segments. RLI's underwriting-focused business model and diversified portfolio contributed to its success. The company also increased its quarterly dividend to $0.29 per share.

Positive

• Net earnings increased to $82.0 million ($1.78 per share) from $77.7 million in Q2 2023
• Underwriting income rose to $70.0 million with an improved combined ratio of 81.5
• Gross premiums written grew by 11%
• Net investment income increased by 18% to $34.0 million
• Book value per share increased by 14% to $34.64 from year-end 2023
• Favorable development in prior years' loss reserves added $19.8 million to underwriting income
• Quarterly dividend increased to $0.29 per share

Negative

• None.

Financial Analyst

The financial results reported by RLI Corp. for the second quarter of 2024 indicate strong performance improvements compared to the previous year. The net earnings rose to $82.0 million from $77.7 million and operating earnings increased significantly from $53.3 million to $79.3 million, showing a robust growth trajectory. The substantial rise in operating earnings suggests that the company's core operations are becoming more efficient and profitable.

Notably, the underwriting income and combined ratio improvements across different segments, particularly in the property sector, indicate that RLI's risk management and pricing strategies are effective. The property segment's combined ratio of 60.3% is particularly impressive, showing a substantial improvement from 74.6% in the same quarter last year. This suggests that RLI is managing its underwriting risk exceptionally well in this sector.

The 11% increase in gross premiums written and an 18% increase in net investment income reflect a healthy expansion and diversification of revenue streams. The book value per share also saw a notable increase of 14%, showing solid value creation for shareholders. For retail investors, this data indicates a positive financial health trend for RLI, potentially making it an attractive investment in both short and long terms.

Market Research Analyst

From a market perspective, the consistent performance of RLI Corp. in improving their underwriting income and combined ratios across multiple segments is a strong indicator of their competitive edge in the property and casualty insurance market. The company's ability to find growth opportunities in the casualty and surety segments while maintaining disciplined underwriting in the property segment highlights a well-balanced approach to market expansion and risk management.

The favorable development in prior years' loss reserves contributing to the underwriting income underscores effective reserve management practices. The increase in net investment income by 18% indicates RLI's strategic investment decisions are yielding positive results even in a volatile interest rate environment. This comprehensive performance suggests market confidence in RLI's ongoing strategies and resilience, which can attract more investor interest.

Insurance Industry Expert

RLI Corp.'s results showcase their strong underwriting proficiency and strategic management within the insurance industry. The combined ratio of 81.5% is well below the industry average, which typically hovers around 100%, indicating better operational efficiency and profitability. The property segment's combined ratio improvement from 74.6% to 60.3% is particularly noteworthy, demonstrating RLI's adeptness in managing claims and operational costs.

The recognition by Ward Benchmarking as a top-performing company for the 34th consecutive year reinforces RLI's longstanding reputation for excellence in the industry. This accolade, coupled with strong financial performance, suggests that RLI is not only maintaining but also building on its leadership position. This continued recognition can enhance RLI's brand value and attract more high-quality business, further driving future growth.

PEORIA, Ill.--(BUSINESS WIRE)-- RLI Corp. (NYSE: RLI) – RLI Corp. reported second quarter 2024 net earnings of $82.0 million ($1.78 per share), compared to $77.7 million ($1.69 per share) for the second quarter of 2023. Operating earnings⁽¹⁾ for the second quarter of 2024 were $79.3 million ($1.72 per share), compared to $53.3 million ($1.16 per share) for the same period in 2023.

		Second Quarter						Year to Date
Earnings Per Diluted Share		2024			2023			2024			2023
Net earnings		$	1.78		$	1.69		$	4.55		$	3.83
Operating earnings (1)		$	1.72		$	1.16		$	3.61		$	2.79
(1) See discussion below: Non-GAAP and Performance Measures.

See discussion below: Non-GAAP and Performance Measures.

Highlights for the quarter included:

• Underwriting income⁽¹⁾ of $70.0 million on a combined ratio⁽¹⁾ of 81.5.
• 11% increase in gross premiums written.
• 18% increase in net investment income.
• Favorable development in prior years’ loss reserves resulted in a $19.8 million net increase in underwriting income.
• Book value per share of $34.64, an increase of 14% (inclusive of dividends) from year-end 2023.

“We delivered excellent results in the second quarter and reported an 82 combined ratio, 11% growth in gross premiums written and 18% increase in investment income," said RLI Corp. President & CEO Craig Kliethermes. “We are pleased with the balanced growth we achieved across our product portfolio. The casualty and surety segments continued to find opportunities for expansion, while market conditions in our property segment allowed us to demonstrate our underwriting discipline. Our performance during the quarter highlights the value of RLI’s underwriting-focused business model and strength of our diversified portfolio.”

Underwriting Income

RLI achieved $70.0 million of underwriting income in the second quarter of 2024 on an 81.5 combined ratio, compared to $41.2 million on an 87.2 combined ratio in 2023.

Results for both years include favorable development in prior years’ loss reserves, which resulted in a $19.8 million and $17.0 million net increase to underwriting income in 2024 and 2023, respectively.

The following table highlights underwriting income and combined ratios by segment.

Underwriting Income(1)								Combined Ratio(1)
(in millions)		2024			2023					2024		2023
Casualty		$	10.3		$	7.0		Casualty		95.1		96.3
Property			53.2			25.9		Property		60.3		74.6
Surety			6.5			8.3		Surety		81.8		75.0
Total		$	70.0		$	41.2		Total		81.5		87.2
(1) See discussion below: Non-GAAP and Performance Measures.

Other Income

Net investment income for the quarter increased 18.0% to $34.0 million, compared to the same period in 2023. The investment portfolio’s total return was 0.9% for the quarter and 2.7% for the six months ended June 30, 2024.

RLI’s comprehensive earnings were $74.1 million for the quarter ($1.61 per share), compared to $57.9 million ($1.26 per share) for the same quarter in 2023. In addition to net earnings, comprehensive earnings included after-tax unrealized losses from the fixed income portfolio, due to rising interest rates.

Dividends Paid in Second Quarter of 2024

On June 20, 2024, the company paid a regular quarterly dividend of $0.29 per share, a $0.02 increase over the prior quarter. RLI’s cumulative dividends total more than $819 million paid over the last five years.

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

On July 11, 2024, RLI was named one of the insurance industry’s top-performing companies by Ward Benchmarking, a business unit of Aon, for the 34th consecutive year. RLI is the only property & casualty insurance company to be recognized as a Ward’s 50® P&C Top Performer every year since the list’s inception in 1991.

At 10 a.m. central daylight time (CDT) on July 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/427115749.

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 49 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:

		Reserve Development(1) and Catastrophe Losses,
		Net of Reinsurance
		Three Months Ended								Six Months Ended
		June 30,								June 30,
(Dollars in millions, except per share amounts)		2024				2023				2024				2023
Favorable development in casualty prior years' reserves		$	12.8			$	9.0			$	31.0			$	44.9
Favorable development in property prior years' reserves		$	5.3			$	3.5			$	24.1			$	16.1
Favorable development in surety prior years' reserves		$	2.4			$	4.2			$	7.8			$	7.4
Net incurred losses related to:
2024 storms		$	(16.0	)		$	—			$	(28.0	)		$	—
2023 and prior events		$	2.0			$	(15.0	)		$	2.0			$	(18.9	)
		Operating Earnings Per Share
		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2024				2023				2024				2023
Operating Earnings Per Share(2)		$	1.72			$	1.16			$	3.61			$	2.79
Specific items included in operating earnings per share:(1) (3)
Net favorable development in casualty prior years' reserves		$	0.19			$	0.14			$	0.42			$	0.66
Net favorable development in property prior years' reserves		$	0.08			$	0.05			$	0.38			$	0.24
Net favorable development in surety prior years' reserves		$	0.04			$	0.07			$	0.12			$	0.11
Net incurred losses related to:
2024 storms		$	(0.24	)		$	—			$	(0.41	)		$	—
2023 and prior events		$	0.03			$	(0.23	)		$	0.03			$	(0.28	)

(1)	Reserve development reflects changes from previously estimated losses.
(2)	See discussion above: Non-GAAP and Performance Measures.
(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
2024 FINANCIAL HIGHLIGHTS
(Unaudited)
(Dollars in thousands, except per share amounts)
		Three Months Ended June 30,												Six Months Ended June 30,
SUMMARIZED INCOME STATEMENT DATA:		2024				2023				% Change				2024				2023					% Change
Net premiums earned		$	379,065			$	322,280			17.6		%		$	739,741			$	630,003				17.4		%
Net investment income			33,961				28,788			18.0		%			66,808				55,872				19.6		%
Net realized gains (losses)			(192	)			5,580			NM					5,802				20,200				(71.3	)	%
Net unrealized gains on equity securities			3,608				25,214			(85.7	)	%			48,922				40,710				20.2		%
Consolidated revenue		$	416,442			$	381,862			9.1		%		$	861,273			$	746,785				15.3		%
Loss and settlement expenses			167,799				153,943			9.0		%			311,623				268,431				16.1		%
Policy acquisition costs			113,921				102,626			11.0		%			224,375				204,070				10.0		%
Insurance operating expenses			27,321				24,510			11.5		%			56,024				48,411				15.7		%
Interest expense on debt			1,604				2,047			(21.6	)	%			3,222				4,055				(20.5	)	%
General corporate expenses			4,140				4,219			(1.9	)	%			9,150				8,433				8.5		%
Total expenses		$	314,785			$	287,345			9.5		%		$	604,394			$	533,400				13.3		%
Equity in earnings of unconsolidated investees			1,646				1,514			8.7		%			6,415				5,437				18.0		%
Earnings before income taxes		$	103,303			$	96,031			7.6		%		$	263,294			$	218,822				20.3		%
Income tax expense			21,311				18,379			16.0		%			53,402				42,359				26.1		%
Net earnings		$	81,992			$	77,652			5.6		%		$	209,892			$	176,463				18.9		%
Other comprehensive earnings (loss), net of tax			(7,843	)			(19,721	)		(60.2	)	%			(20,514	)			17,986				NM
Comprehensive earnings		$	74,149			$	57,931			28.0		%		$	189,378			$	194,449				(2.6	)	%
Operating earnings(1):
Net earnings		$	81,992			$	77,652			5.6		%		$	209,892			$	176,463				18.9		%
Less:
Net realized (gains) losses			192				(5,580	)		NM					(5,802	)			(20,200	)			(71.3	)	%
Income tax on realized gains (losses)			(41	)			1,171			NM					1,218				4,242				(71.3	)	%
Net unrealized gains on equity securities			(3,608	)			(25,214	)		(85.7	)	%			(48,922	)			(40,710	)			20.2		%
Income tax on unrealized gains on equity securities			757				5,295			(85.7	)	%			10,273				8,549				20.2		%
Operating earnings		$	79,292			$	53,324			48.7		%		$	166,659			$	128,344				29.9		%
Return on Equity:
Net earnings (trailing four quarters)															23.6		%		56.9		%
Comprehensive earnings (trailing four quarters)															25.3		%		53.1		%
Per Share Data:
Diluted:
Weighted average shares outstanding (in 000's)			46,179				46,044								46,169				46,045
Net earnings per share		$	1.78			$	1.69			5.3		%		$	4.55			$	3.83				18.8		%
Less:
Net realized (gains) losses			—				(0.12	)		NM					(0.13	)			(0.44	)			(70.5	)	%
Income tax on realized gains (losses)			—				0.03			NM					0.03				0.09				(66.7	)	%
Net unrealized gains on equity securities			(0.08	)			(0.55	)		(85.5	)	%			(1.06	)			(0.88	)			20.5		%
Income tax on unrealized gains on equity securities			0.02				0.11			(81.8	)	%			0.22				0.19				15.8		%
Operating earnings per share(1)		$	1.72			$	1.16			48.3		%		$	3.61			$	2.79				29.4		%
Comprehensive earnings per share		$	1.61			$	1.26			27.8		%		$	4.10			$	4.22				(2.8	)	%
Cash dividends per share - ordinary		$	0.29			$	0.27			7.4		%		$	0.56			$	0.53				5.7		%
Net cash flow provided by operations		$	141,825			$	174,376			(18.7	)	%		$	212,771			$	243,595				(12.7	)	%
(1) See discussion above: Non-GAAP and Performance Measures.
NM = Not Meaningful

RLI CORP
2024 FINANCIAL HIGHLIGHTS
(Unaudited)
(Dollars in thousands, except per share amounts)
		June 30,			December 31,
		2024			2023			% Change
SUMMARIZED BALANCE SHEET DATA:
Fixed income, at fair value		$	2,989,527		$	2,855,849		4.7		%
(amortized cost - $3,217,866 at 6/30/24)
(amortized cost - $3,054,391 at 12/31/23)
Equity securities, at fair value			666,563			590,041		13.0		%
(cost - $381,138 at 6/30/24)
(cost - $354,022 at 12/31/23)
Short-term investments			125,865			134,923		(6.7	)	%
Other invested assets			55,364			59,081		(6.3	)	%
Cash and cash equivalents			50,030			36,424		37.4		%
Total investments and cash		$	3,887,349		$	3,676,318		5.7		%
Accrued investment income			26,683			24,062		10.9		%
Premiums and reinsurance balances receivable			294,774			221,206		33.3		%
Ceded unearned premiums			114,893			112,257		2.3		%
Reinsurance balances recoverable on unpaid losses			782,288			757,349		3.3		%
Deferred policy acquisition costs			167,295			146,566		14.1		%
Property and equipment			46,574			46,715		(0.3	)	%
Investment in unconsolidated investees			67,249			56,966		18.1		%
Goodwill and intangibles			53,562			53,562		0.0		%
Income taxes - deferred			12,291			15,872		(22.6	)	%
Other assets			58,715			69,348		(15.3	)	%
Total assets		$	5,511,673		$	5,180,221		6.4		%
Unpaid losses and settlement expenses		$	2,544,622		$	2,446,025		4.0		%
Unearned premiums			992,754			892,326		11.3		%
Reinsurance balances payable			38,968			71,507		(45.5	)	%
Funds held			107,235			101,446		5.7		%
Income taxes - current			7,610			3,757		102.6		%
Debt			100,000			100,000		—		%
Accrued expenses			83,805			108,880		(23.0	)	%
Other liabilities			51,972			42,766		21.5		%
Total liabilities		$	3,926,966		$	3,766,707		4.3		%
Shareholders' equity			1,584,707			1,413,514		12.1		%
Total liabilities & shareholders' equity		$	5,511,673		$	5,180,221		6.4		%
OTHER DATA:
Common shares outstanding (in 000's)			45,746			45,640
Book value per share		$	34.64		$	30.97		11.9		%
Closing stock price per share		$	140.69		$	133.12		5.7		%
Statutory surplus		$	1,708,501		$	1,520,135		12.4		%

RLI CORP
2024 FINANCIAL HIGHLIGHTS
UNDERWRITING SEGMENT DATA
(Unaudited)
(Dollars in thousands, except per share amounts)
Three Months Ended June 30,
					GAAP					GAAP					GAAP					GAAP
		Casualty			Ratios		Property			Ratios		Surety			Ratios		Total			Ratios
2024
Gross premiums written		$	286,556				$	236,014				$	40,803				$	563,373
Net premiums written			238,892					183,453					37,554					459,899
Net premiums earned			209,100					134,097					35,868					379,065
Net loss & settlement expenses			121,850		58.3	%		41,382		30.9	%		4,567		12.7	%		167,799		44.3	%
Net operating expenses			76,935		36.8	%		39,535		29.4	%		24,772		69.1	%		141,242		37.2	%
Underwriting income(1)		$	10,315		95.1	%	$	53,180		60.3	%	$	6,529		81.8	%	$	70,024		81.5	%
2023
Gross premiums written		$	251,057				$	221,889				$	35,018				$	507,964
Net premiums written			208,978					177,830					32,733					419,541
Net premiums earned			187,048					101,841					33,391					322,280
Net loss & settlement expenses			110,195		58.9	%		41,139		40.4	%		2,609		7.8	%		153,943		47.8	%
Net operating expenses			69,876		37.4	%		34,825		34.2	%		22,435		67.2	%		127,136		39.4	%
Underwriting income(1)		$	6,977		96.3	%	$	25,877		74.6	%	$	8,347		75.0	%	$	41,201		87.2	%

Six Months Ended June 30,
					GAAP					GAAP					GAAP					GAAP
		Casualty			Ratios		Property			Ratios		Surety			Ratios		Total			Ratios
2024
Gross premiums written		$	531,885				$	416,378				$	83,785				$	1,032,048
Net premiums written			444,520					316,624					76,388					837,532
Net premiums earned			407,376					263,508					68,857					739,741
Net loss & settlement expenses			231,322		56.8	%		73,959		28.1	%		6,342		9.2	%		311,623		42.1	%
Net operating expenses			152,065		37.3	%		78,653		29.8	%		49,681		72.2	%		280,399		37.9	%
Underwriting income(1)		$	23,989		94.1	%	$	110,896		57.9	%	$	12,834		81.4	%	$	147,719		80.0	%
2023
Gross premiums written		$	468,891				$	380,735				$	73,350				$	922,976
Net premiums written			390,179					302,696					69,251					762,126
Net premiums earned			373,079					190,608					66,316					630,003
Net loss & settlement expenses			194,883		52.2	%		67,576		35.5	%		5,972		9.0	%		268,431		42.6	%
Net operating expenses			139,388		37.4	%		68,772		36.0	%		44,321		66.8	%		252,481		40.1	%
Underwriting income(1)		$	38,808		89.6	%	$	54,260		71.5	%	$	16,023		75.8	%	$	109,091		82.7	%
(1) See discussion above: Non-GAAP and Performance Measures.

Category: Earnings Release.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240722476008/en/

Aaron Diefenthaler

Chief Investment Officer & Treasurer

309-693-5846

Aaron.Diefenthaler@rlicorp.com

Source: RLI Corp.

FAQ

What were RLI's Q2 2024 earnings per share?

RLI reported net earnings of $1.78 per share for Q2 2024, compared to $1.69 per share in Q2 2023.

How much did RLI's gross premiums written increase in Q2 2024?

RLI reported an 11% increase in gross premiums written for Q2 2024 compared to the same period in 2023.

What was RLI's combined ratio for Q2 2024?

RLI achieved a combined ratio of 81.5 for Q2 2024, an improvement from 87.2 in Q2 2023.

How much did RLI's net investment income grow in Q2 2024?

RLI's net investment income increased by 18% to $34.0 million in Q2 2024 compared to the same period in 2023.

What was RLI's book value per share at the end of Q2 2024?

RLI's book value per share was $34.64 at the end of Q2 2024, representing a 14% increase from year-end 2023.