RLI Corporation

07/22/2024 | Press release | Distributed by Public on 07/22/2024 14:23

RLI REPORTS SECOND QUARTER 2024 RESULTS Form 8 K

RLI REPORTS SECOND QUARTER 2024 RESULTS

PEORIA, ILLINOIS, July 22, 2024 - 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.

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.

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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.

Media Contact

Aaron Diefenthaler

Chief Investment Officer & Treasurer

309-693-5846

[email protected]

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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.

4

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

5

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

%

6

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.

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