RLI RLI Corp

RLI Corp. (NYSE: RLI) – RLI Corp. reported first quarter 2024 net earnings of $127.9 million ($2.77 per share), compared to $98.8 million ($2.15 per share) for the first quarter of 2023. Operating earnings(1) for the first quarter of 2024 were $87.4 million ($1.89 per share), compared to $75.0 million ($1.63 per share) for the same period in 2023.

 

 

 

 

 

 

 

 

 

First Quarter

Earnings Per Diluted Share

 

2024

 

2023

Net earnings

 

$

2.77

 

$

2.15

Operating earnings (1)

 

$

1.89

 

$

1.63

 

(1) See discussion below: Non-GAAP and Performance Measures.

Highlights for the quarter included:

• Underwriting income(1) of $77.7 million on a combined ratio(1) of 78.5.
• 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 net increase in underwriting income.
• Book value per share of $33.27, an increase of 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 13%, with contributions from all three of our product segments. While property premium growth was more moderate this quarter, sustained rate increases and manageable storm activity resulted in an outstanding 55 combined ratio for the segment. Overall, underwriting income delivered significant margin which complemented investment returns to support an 8% increase in book value. We believe our ownership culture and ability to serve customers from a position of financial strength continue to differentiate us. I want to thank RLI’s talented associates for their ongoing work to deliver value to our shareholders.”

Underwriting Income

RLI achieved $77.7 million of underwriting income in the first quarter of 2024 on a 78.5 combined ratio, compared to $67.9 million on a 77.9 combined ratio in 2023.

Results for both years include favorable development in prior years’ loss reserves, which resulted in a $37.4 million and $44.5 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

 

$

13.7

 

$

31.8

 

Casualty

 

93.1

 

82.9

Property

 

 

57.7

 

 

28.4

 

Property

 

55.4

 

68.0

Surety

 

 

6.3

 

 

7.7

 

Surety

 

80.9

 

76.7

Total

 

$

77.7

 

$

67.9

 

Total

 

78.5

 

77.9

 

(1) See discussion below: Non-GAAP and Performance Measures.

Other Income

Net investment income for the quarter increased 21.3% to $32.8 million, compared to the same period in 2023. The investment portfolio’s total return was 1.8% for the quarter.

RLI’s comprehensive earnings were $115.2 million for the quarter ($2.50 per share), compared to $136.5 million ($2.97 per share) for the same quarter in 2023. In addition to net earnings, comprehensive earnings for 2024 included after-tax unrealized losses from the fixed income portfolio, due to rising interest rates.

Dividends Paid in First Quarter of 2024

On March 20, 2024, the company paid a regular quarterly dividend of $0.27 per share, the same amount as the prior quarter. RLI’s cumulative dividends total more than $816 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

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:

 

 

 

 

 

 

 

 

 

Reserve Development(1) and Catastrophe Losses,

 

 

Net of Reinsurance

 

 

Three Months Ended

 

 

March 31,

(Dollars in millions, except per share amounts)

 

2024

 

2023

Favorable development in casualty prior years' reserves

 

$

18.1

 

 

$

35.9

 

Favorable development in property prior years' reserves

 

$

18.9

 

 

$

12.6

 

Favorable development in surety prior years' reserves

 

$

5.4

 

 

$

3.2

 

 

 

 

 

 

 

 

Net incurred losses related to:

 

 

 

 

 

 

2024 storms

 

$

(12.0

)

 

$

—

 

2023 and prior events

 

$

—

 

 

$

(4.0

)

 

 

 

 

 

 

 

 

 

Operating Earnings Per Share

 

 

Three Months Ended

 

 

March 31,

 

 

2024

 

2023

Operating Earnings Per Share(2)

 

$

1.89

 

 

$

1.63

 

 

 

 

 

 

 

 

Specific items included in operating earnings per share:(1) (3)

 

 

 

 

 

 

Net favorable development in casualty prior years' reserves

 

$

0.24

 

 

$

0.53

 

Net favorable development in property prior years' reserves

 

$

0.30

 

 

$

0.19

 

Net favorable development in surety prior years' reserves

 

$

0.08

 

 

$

0.04

 

 

 

 

 

 

 

 

Net incurred losses related to:

 

 

 

 

 

 

2024 storms

 

$

(0.18

)

 

$

—

 

2023 and prior events

 

$

—

 

 

$

(0.06

)

(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 March 31,

 

SUMMARIZED INCOME STATEMENT DATA:

 

2024

 

2023

 

 

% Change

 

Net premiums earned

 

$

360,676

 

$

307,723

 

 

17.2

%

Net investment income

 

 

32,847

 

 

27,084

 

 

21.3

%

Net realized gains

 

 

5,994

 

 

14,620

 

 

(59.0)

%

Net unrealized gains on equity securities

 

 

45,314

 

 

15,496

 

 

192.4

%

Consolidated revenue

 

$

444,831

 

$

364,923

 

 

21.9

%

Loss and settlement expenses

 

 

143,824

 

 

114,488

 

 

25.6

%

Policy acquisition costs

 

 

110,454

 

 

101,444

 

 

8.9

%

Insurance operating expenses

 

 

28,703

 

 

23,901

 

 

20.1

%

Interest expense on debt

 

 

1,618

 

 

2,008

 

 

(19.4)

%

General corporate expenses

 

 

5,010

 

 

4,214

 

 

18.9

%

Total expenses

 

$

289,609

 

$

246,055

 

 

17.7

%

Equity in earnings of unconsolidated investees

 

 

4,769

 

 

3,923

 

 

21.6

%

Earnings before income taxes

 

$

159,991

 

$

122,791

 

 

30.3

%

Income tax expense

 

 

32,091

 

 

23,980

 

 

33.8

%

Net earnings

 

$

127,900

 

$

98,811

 

 

29.4

%

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive earnings (loss), net of tax

 

 

(12,671)

 

 

37,707

 

 

NM

 

Comprehensive earnings

 

$

115,229

 

$

136,518

 

 

(15.6)

%

 

 

 

 

 

 

 

 

 

 

 

Operating earnings(1):

 

 

 

 

 

 

 

 

 

 

Net earnings

 

$

127,900

 

$

98,811

 

 

29.4

%

Less:

 

 

 

 

 

 

 

 

 

 

Net realized gains

 

 

(5,994)

 

 

(14,620)

 

 

(59.0)

%

Income tax on realized gains

 

 

1,259

 

 

3,071

 

 

(59.0)

%

Net unrealized gains on equity securities

 

 

(45,314)

 

 

(15,496)

 

 

192.4

%

Income tax on unrealized gains on equity securities

 

 

9,516

 

 

3,254

 

 

192.4

%

Operating earnings

 

$

87,367

 

$

75,020

 

 

16.5

%

 

 

 

 

 

 

 

 

 

 

 

Return on Equity:

 

 

 

 

 

 

 

 

 

 

Net earnings (trailing four quarters)

 

 

24.2

%

 

52.2

%

 

 

 

Comprehensive earnings (trailing four quarters)

 

 

25.1

%

 

41.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per Share Data:

 

 

 

 

 

 

 

 

 

 

Diluted:

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding (in 000's)

 

 

46,163

 

 

46,035

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings per share

 

$

2.77

 

$

2.15

 

 

28.8

%

Less:

 

 

 

 

 

 

 

 

 

 

Net realized gains

 

 

(0.13)

 

 

(0.32)

 

 

(59.4)

%

Income tax on realized gains

 

 

0.03

 

 

0.07

 

 

(57.1)

%

Net unrealized gains on equity securities

 

 

(0.98)

 

 

(0.34)

 

 

188.2

%

Income tax on unrealized gains on equity securities

 

 

0.20

 

 

0.07

 

 

185.7

%

Operating earnings per share(1)

 

$

1.89

 

$

1.63

 

 

16.0

%

 

 

 

 

 

 

 

 

 

 

 

Comprehensive earnings per share

 

$

2.50

 

$

2.97

 

 

(15.8)

%

 

 

 

 

 

 

 

 

 

 

 

Cash dividends per share - ordinary

 

$

0.27

 

$

0.26

 

 

3.8

%

 

 

 

 

 

 

 

 

 

 

 

Net cash flow provided by operations

 

$

70,946

 

$

69,219

 

 

2.5

%

 

 

 

 

 

 

 

 

 

 

 

(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)

 

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

December 31,

 

 

 

 

 

2024

 

2023

 

% Change

 

SUMMARIZED BALANCE SHEET DATA:

 

 

 

 

 

 

 

 

 

Fixed income, at fair value

 

$

2,863,321

 

$

2,855,849

 

0.3

%

(amortized cost - $3,082,273 at 3/31/24)

 

 

 

 

 

 

 

 

 

(amortized cost - $3,054,391 at 12/31/23)

 

 

 

 

 

 

 

 

 

Equity securities, at fair value

 

 

643,367

 

 

590,041

 

9.0

%

(cost - $362,527 at 3/31/24)

 

 

 

 

 

 

 

 

 

(cost - $354,022 at 12/31/23)

 

 

 

 

 

 

 

 

 

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

2024 FINANCIAL HIGHLIGHTS

UNDERWRITING SEGMENT DATA

(Unaudited)

(Dollars in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP

 

 

 

 

GAAP

 

 

 

 

GAAP

 

 

 

 

GAAP

 

 

 

Casualty

 

Ratios

 

Property

 

Ratios

 

Surety

 

Ratios

 

Total

 

Ratios

 

2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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