RLI Reports First Quarter 2024 Results

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RLI Corp. reported strong first quarter 2024 results with net earnings of $127.9 million, operating earnings of $87.4 million, and a 13% increase in gross premiums written. The company achieved underwriting income of $77.7 million with a combined ratio of 78.5, and a 21% increase in net investment income. Book value per share increased by 8% to $33.27. RLI's comprehensive earnings were $115.2 million for the quarter. The company paid a regular quarterly dividend of $0.27 per share. Non-GAAP measures were used to explain the results, and the company's A+ financial strength rating was affirmed by AM Best Company.

Positive

• 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.

Negative

• None.

Financial Analyst

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.

Insurance Industry Analyst

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.

Investment Analyst

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.

PEORIA, Ill.--(BUSINESS WIRE)-- 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

Source: RLI Corp.

FAQ

What were RLI Corp.'s net earnings for the first quarter of 2024?

RLI Corp. reported net earnings of $127.9 million ($2.77 per share) for the first quarter of 2024.

What was the increase in gross premiums written for RLI Corp. in the first quarter of 2024?

RLI Corp. saw a 13% increase in gross premiums written in the first quarter of 2024.

What was the underwriting income for RLI Corp. in the first quarter of 2024?

RLI Corp. achieved underwriting income of $77.7 million in the first quarter of 2024.

What was the combined ratio for RLI Corp. in the first quarter of 2024?

RLI Corp. had a combined ratio of 78.5 in the first quarter of 2024.

Did RLI Corp. increase its book value per share in the first quarter of 2024?

Yes, RLI Corp. increased its book value per share by 8% to $33.27 in the first quarter of 2024.