PEORIA, Ill.--(BUSINESS WIRE)--RLI Corp. (NYSE: RLI) - RLI Corp. reported third quarter 2024 net earnings of $95.0 million ($2.06 per share), compared to $13.5 million ($0.29 per share) for the third quarter of 2023. Operating earnings(1) for the third quarter of 2024 were $60.4 million ($1.31 per share), compared to $28.3 million ($0.61 per share) for the same period in 2023.
Third Quarter | Year to Date | |||||||||||
Earnings Per Diluted Share | 2024 | 2023 | 2024 | 2023 | ||||||||
Net earnings | $ | 2.06 | $ | 0.29 | $ | 6.60 | $ | 4.12 | ||||
Operating earnings (1) | $ | 1.31 | $ | 0.61 | $ | 4.92 | $ | 3.40 | ||||
(1) | See discussion below: Non-GAAP and Performance Measures. |
Highlights for the quarter included:
- Underwriting income(1) of $40.7 million on a combined ratio(1) of 89.6.
- 13% increase in gross premiums written.
- 15% increase in net investment income.
- Favorable development in prior years' loss reserves resulted in a $18.1 million net increase in underwriting income.
- Losses from Hurricanes Beryl and Helene, resulting in a $32.7 million net decrease in underwriting income.
- Book value per share of $38.17, an increase of 26% (inclusive of dividends) from year-end 2023.
"Our primary focus has been to assist customers affected by recent hurricanes," said RLI Corp. President & CEO Craig Kliethermes. "When catastrophes occur, we quickly deploy our claim experts to assess damage and help policyholders begin recovering. Despite the storm activity in the third quarter, we continued to find opportunities for balanced top line growth across our portfolio. Our diversified business model, sound risk selection and disciplined underwriting resulted in a solid 90 combined ratio. I want to thank all RLI associates for their commitment to maintaining our financial strength and ensuring RLI remains a stable partner for our customers."
Underwriting Income
RLI achieved $40.7 million of underwriting income in the third quarter of 2024 on an 89.6 combined ratio, compared to $4.2 million on a 98.7 combined ratio in 2023.
Results for both years include favorable development in prior years' loss reserves, which resulted in a $18.1 million and $19.8 million net increase to underwriting income in 2024 and 2023, respectively. The favorable development was offset by a $32.7 million net reduction to underwriting income for losses from Hurricanes Beryl and Helene, compared to $58.2 million for losses from Hawaiian wildfires in 2023.
The following table highlights underwriting income and combined ratios by segment for the third quarter.
Underwriting Income(1) | Combined Ratio(1) | |||||||||||
(in millions) | 2024 | 2023 | 2024 | 2023 | ||||||||
Casualty | $ | 2.6 | $ | 18.7 | Casualty | 98.8 | 90.1 | |||||
Property | 30.4 | (20.7) | Property | 77.2 | 121.8 | |||||||
Surety | 7.7 | 6.2 | Surety | 78.8 | 81.7 | |||||||
Total | $ | 40.7 | $ | 4.2 | Total | 89.6 | 98.7 | |||||
(1) | See discussion below: Non-GAAP and Performance Measures. |
Other Income
Net investment income for the quarter increased 15% to $36.7 million, compared to the same period in 2023. The investment portfolio's total return was 4.8% for the quarter and 7.6% for the nine months ended September 30, 2024.
RLI's comprehensive earnings were $175.3 million for the quarter ($3.79 per share), compared to a comprehensive loss of $43.3 million (-$0.94 per share) for the same quarter in 2023. In addition to net earnings, comprehensive earnings included after-tax unrealized gains from the fixed income portfolio in 2024, due to declining interest rates.
Dividends Paid in Third Quarter of 2024
On September 20, 2024, the company paid a regular quarterly dividend of $0.29 per share, the same amount as the prior quarter. RLI's cumulative dividends total more than $822 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
At 10 a.m. central daylight time (CDT) on October 22, 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/811172831.
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 | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
(Dollars in millions, except per share amounts) | 2024 | 2023 | 2024 | 2023 | ||||||||||||
Favorable development in casualty prior years' reserves | $ | 9.0 | $ | 22.1 | $ | 40.0 | $ | 67.0 | ||||||||
Favorable (unfavorable) development in property prior years' reserves | $ | 4.4 | $ | (1.9 | ) | $ | 28.5 | $ | 14.3 | |||||||
Favorable development in surety prior years' reserves | $ | 3.1 | $ | 0.8 | $ | 10.9 | $ | 8.2 | ||||||||
Net incurred losses related to: | ||||||||||||||||
2024 storms | $ | (2.0 | ) | $ | - | $ | (30.0 | ) | $ | - | ||||||
Hurricanes Beryl and Helene | $ | (37.0 | ) | $ | - | $ | (37.0 | ) | $ | - | ||||||
2023 and prior events | $ | 4.0 | $ | (55.2 | ) | $ | 6.0 | $ | (74.1 | ) | ||||||
Reinstatement premium from events | $ | - | $ | (14.4 | ) | $ | - | $ | (14.4 | ) | ||||||
Operating Earnings Per Share | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||
Operating Earnings Per Share(2) | $ | 1.31 | $ | 0.61 | $ | 4.92 | $ | 3.40 | ||||||||
Specific items included in operating earnings per share:(1) (3) | ||||||||||||||||
Net favorable development in casualty prior years' reserves | $ | 0.12 | $ | 0.33 | $ | 0.55 | $ | 1.00 | ||||||||
Net favorable (unfavorable) development in property prior years' reserves | $ | 0.07 | $ | (0.04 | ) | $ | 0.44 | $ | 0.20 | |||||||
Net favorable development in surety prior years' reserves | $ | 0.05 | $ | 0.01 | $ | 0.17 | $ | 0.12 | ||||||||
Net incurred losses related to: | ||||||||||||||||
2024 storms | $ | (0.03 | ) | $ | - | $ | (0.44 | ) | $ | - | ||||||
Hurricanes Beryl and Helene | $ | (0.54 | ) | $ | - | $ | (0.54 | ) | $ | - | ||||||
2023 and prior events (incurred loss and reinstatement premium) | $ | 0.06 | $ | (1.02 | ) | $ | 0.09 | $ | (1.31 | ) | ||||||
(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 September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||
SUMMARIZED INCOME STATEMENT DATA: | 2024 | 2023 | % Change | 2024 | 2023 | % Change | |||||||||||||||||||
Net premiums earned | $ | 389,489 | $ | 318,409 | 22.3 | % | $ | 1,129,230 | $ | 948,412 | 19.1 | % | |||||||||||||
Net investment income | 36,694 | 31,963 | 14.8 | % | 103,502 | 87,835 | 17.8 | % | |||||||||||||||||
Net realized gains | 5,420 | 6,558 | (17.4 | ) | % | 11,222 | 26,758 | (58.1 | ) | % | |||||||||||||||
Net unrealized gains (losses) on equity securities | 38,392 | (25,236 | ) | NM | 87,314 | 15,474 | NM | ||||||||||||||||||
Consolidated revenue | $ | 469,995 | $ | 331,694 | 41.7 | % | $ | 1,331,268 | $ | 1,078,479 | 23.4 | % | |||||||||||||
Loss and settlement expenses | 202,118 | 189,558 | 6.6 | % | 513,741 | 457,989 | 12.2 | % | |||||||||||||||||
Policy acquisition costs | 117,811 | 103,013 | 14.4 | % | 342,186 | 307,083 | 11.4 | % | |||||||||||||||||
Insurance operating expenses | 28,868 | 21,591 | 33.7 | % | 84,892 | 70,002 | 21.3 | % | |||||||||||||||||
Interest expense on debt | 1,617 | 1,873 | (13.7 | ) | % | 4,839 | 5,928 | (18.4 | ) | % | |||||||||||||||
General corporate expenses | 3,994 | 2,372 | 68.4 | % | 13,144 | 10,805 | 21.6 | % | |||||||||||||||||
Total expenses | $ | 354,408 | $ | 318,407 | 11.3 | % | $ | 958,802 | $ | 851,807 | 12.6 | % | |||||||||||||
Equity in earnings of unconsolidated investees | 1,238 | 1,732 | (28.5 | ) | % | 7,653 | 7,169 | 6.8 | % | ||||||||||||||||
Earnings before income taxes | $ | 116,825 | $ | 15,019 | NM | $ | 380,119 | $ | 233,841 | 62.6 | % | ||||||||||||||
Income tax expense | 21,798 | 1,483 | NM | 75,200 | 43,842 | 71.5 | % | ||||||||||||||||||
Net earnings | $ | 95,027 | $ | 13,536 | NM | $ | 304,919 | $ | 189,999 | 60.5 | % | ||||||||||||||
Other comprehensive earnings (loss), net of tax | 80,293 | (56,834 | ) | NM | 59,779 | (38,848 | ) | NM | |||||||||||||||||
Comprehensive earnings (loss) | $ | 175,320 | $ | (43,298 | ) | NM | $ | 364,698 | $ | 151,151 | 141.3 | % | |||||||||||||
Operating earnings(1): | |||||||||||||||||||||||||
Net earnings | $ | 95,027 | $ | 13,536 | NM | $ | 304,919 | $ | 189,999 | 60.5 | % | ||||||||||||||
Less: | |||||||||||||||||||||||||
Net realized gains | (5,420 | ) | (6,558 | ) | (17.4 | ) | % | (11,222 | ) | (26,758 | ) | (58.1 | ) | % | |||||||||||
Income tax on realized gains | 1,139 | 1,377 | (17.3 | ) | % | 2,357 | 5,619 | (58.1 | ) | % | |||||||||||||||
Net unrealized (gains) losses on equity securities | (38,392 | ) | 25,236 | NM | (87,314 | ) | (15,474 | ) | NM | ||||||||||||||||
Income tax on unrealized gains (losses) on equity securities | 8,062 | (5,299 | ) | NM | 18,335 | 3,250 | NM | ||||||||||||||||||
Operating earnings | $ | 60,416 | $ | 28,292 | 113.5 | % | $ | 227,075 | $ | 156,636 | 45.0 | % | |||||||||||||
Return on Equity: | |||||||||||||||||||||||||
Net earnings (trailing four quarters) | 27.7 | % | 22.1 | % | |||||||||||||||||||||
Comprehensive earnings (trailing four quarters) | 38.4 | % | 20.3 | % | |||||||||||||||||||||
Per Share Data: | |||||||||||||||||||||||||
Diluted: | |||||||||||||||||||||||||
Weighted average shares outstanding (in 000's) | 46,220 | 46,065 | 46,185 | 46,067 | |||||||||||||||||||||
Net earnings per share | $ | 2.06 | $ | 0.29 | NM | $ | 6.60 | $ | 4.12 | 60.2 | % | ||||||||||||||
Less: | |||||||||||||||||||||||||
Net realized gains | (0.12 | ) | (0.14 | ) | (14.3 | ) | % | (0.24 | ) | (0.58 | ) | (58.6 | ) | % | |||||||||||
Income tax on realized gains | 0.02 | 0.03 | (33.3 | ) | % | 0.05 | 0.13 | (61.5 | ) | % | |||||||||||||||
Net unrealized (gains) losses on equity securities | (0.83 | ) | 0.55 | NM | (1.89 | ) | (0.34 | ) | NM | ||||||||||||||||
Income tax on unrealized gains (losses) on equity securities | 0.18 | (0.12 | ) | NM | 0.40 | 0.07 | NM | ||||||||||||||||||
Operating earnings per share(1) | $ | 1.31 | $ | 0.61 | 114.8 | % | $ | 4.92 | $ | 3.40 | 44.7 | % | |||||||||||||
Comprehensive earnings (loss) per share | $ | 3.79 | $ | (0.94 | ) | NM | $ | 7.90 | $ | 3.28 | 140.9 | % | |||||||||||||
Cash dividends per share - ordinary | $ | 0.29 | $ | 0.27 | 7.4 | % | $ | 0.85 | $ | 0.80 | 6.3 | % | |||||||||||||
Net cash flow provided by operations | $ | 219,368 | $ | 98,597 | 122.5 | % | $ | 432,139 | $ | 342,192 | 26.3 | % | |||||||||||||
(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) | ||||||||||
September 30, | December 31, | |||||||||
2024 | 2023 | % Change | ||||||||
SUMMARIZED BALANCE SHEET DATA: | ||||||||||
Fixed income, at fair value | $ | 3,176,073 | $ | 2,855,849 | 11.2 | % | ||||
(amortized cost - $3,302,684 at 9/30/24) | ||||||||||
(amortized cost - $3,054,391 at 12/31/23) | ||||||||||
Equity securities, at fair value | 729,738 | 590,041 | 23.7 | % | ||||||
(cost - $405,663 at 9/30/24) | ||||||||||
(cost - $354,022 at 12/31/23) | ||||||||||
Short-term investments | 203,296 | 134,923 | 50.7 | % | ||||||
Other invested assets | 53,993 | 59,081 | (8.6 | ) | % | |||||
Cash and cash equivalents | 60,634 | 36,424 | 66.5 | % | ||||||
Total investments and cash | $ | 4,223,734 | $ | 3,676,318 | 14.9 | % | ||||
Accrued investment income | 26,711 | 24,062 | 11.0 | % | ||||||
Premiums and reinsurance balances receivable | 241,311 | 221,206 | 9.1 | % | ||||||
Ceded unearned premiums | 120,845 | 112,257 | 7.7 | % | ||||||
Reinsurance balances recoverable on unpaid losses | 759,540 | 757,349 | 0.3 | % | ||||||
Deferred policy acquisition costs | 172,069 | 146,566 | 17.4 | % | ||||||
Property and equipment | 44,644 | 46,715 | (4.4 | ) | % | |||||
Investment in unconsolidated investees | 65,271 | 56,966 | 14.6 | % | ||||||
Goodwill and intangibles | 53,562 | 53,562 | 0.0 | % | ||||||
Income taxes - deferred | - | 15,872 | (100.0 | ) | % | |||||
Other assets | 84,068 | 69,348 | 21.2 | % | ||||||
Total assets | $ | 5,791,755 | $ | 5,180,221 | 11.8 | % | ||||
Unpaid losses and settlement expenses | $ | 2,611,941 | $ | 2,446,025 | 6.8 | % | ||||
Unearned premiums | 1,010,760 | 892,326 | 13.3 | % | ||||||
Reinsurance balances payable | 43,423 | 71,507 | (39.3 | ) | % | |||||
Funds held | 98,585 | 101,446 | (2.8 | ) | % | |||||
Income taxes - current | 4,369 | 3,757 | 16.3 | % | ||||||
Income taxes - deferred | 15,369 | - | NM | |||||||
Debt | 100,000 | 100,000 | - | % | ||||||
Accrued expenses | 105,813 | 108,880 | (2.8 | ) | % | |||||
Other liabilities | 53,145 | 42,766 | 24.3 | % | ||||||
Total liabilities | $ | 4,043,405 | $ | 3,766,707 | 7.3 | % | ||||
Shareholders' equity | 1,748,350 | 1,413,514 | 23.7 | % | ||||||
Total liabilities & shareholders' equity | $ | 5,791,755 | $ | 5,180,221 | 11.8 | % | ||||
OTHER DATA: | ||||||||||
Common shares outstanding (in 000's) | 45,810 | 45,640 | ||||||||
Book value per share | $ | 38.17 | $ | 30.97 | 23.2 | % | ||||
Closing stock price per share | $ | 154.98 | $ | 133.12 | 16.4 | % | ||||
Statutory surplus | $ | 1,806,660 | $ | 1,520,135 | 18.8 | % | ||||
NM = Not Meaningful | ||||||||||
RLI CORP | ||||||||||||||||||||||
2024 FINANCIAL HIGHLIGHTS | ||||||||||||||||||||||
UNDERWRITING SEGMENT DATA | ||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||
(Dollars in thousands, except per share amounts) | ||||||||||||||||||||||
Three Months Ended September 30, | ||||||||||||||||||||||
GAAP | GAAP | GAAP | GAAP | |||||||||||||||||||
Casualty | Ratios | Property | Ratios | Surety | Ratios | Total | Ratios | |||||||||||||||
2024 | ||||||||||||||||||||||
Gross premiums written | $ | 294,267 | $ | 173,813 | $ | 39,710 | $ | 507,790 | ||||||||||||||
Net premiums written | 242,650 | 122,428 | 36,466 | 401,544 | ||||||||||||||||||
Net premiums earned | 219,638 | 133,266 | 36,585 | 389,489 | ||||||||||||||||||
Net loss & settlement expenses | 137,951 | 62.8 | % | 60,991 | 45.8 | % | 3,176 | 8.7 | % | 202,118 | 51.9 | % | ||||||||||
Net operating expenses | 79,138 | 36.0 | % | 41,873 | 31.4 | % | 25,668 | 70.1 | % | 146,679 | 37.7 | % | ||||||||||
Underwriting income (loss)(1) | $ | 2,549 | 98.8 | % | $ | 30,402 | 77.2 | % | $ | 7,741 | 78.8 | % | $ | 40,692 | 89.6 | % | ||||||
2023 | ||||||||||||||||||||||
Gross premiums written | $ | 254,307 | $ | 158,590 | $ | 36,427 | $ | 449,324 | ||||||||||||||
Net premiums written | 207,177 | 93,207 | 34,340 | 334,724 | ||||||||||||||||||
Net premiums earned | 189,305 | 94,988 | 34,116 | 318,409 | ||||||||||||||||||
Net loss & settlement expenses | 101,750 | 53.7 | % | 81,932 | 86.3 | % | 5,876 | 17.2 | % | 189,558 | 59.5 | % | ||||||||||
Net operating expenses | 68,885 | 36.4 | % | 33,727 | 35.5 | % | 21,992 | 64.5 | % | 124,604 | 39.2 | % | ||||||||||
Underwriting income (loss)(1) | $ | 18,670 | 90.1 | % | $ | (20,671 | ) | 121.8 | % | $ | 6,248 | 81.7 | % | $ | 4,247 | 98.7 | % | |||||
Nine Months Ended September 30, | |||||||||||||||||||||
GAAP | GAAP | GAAP | GAAP | ||||||||||||||||||
Casualty | Ratios | Property | Ratios | Surety | Ratios | Total | Ratios | ||||||||||||||
2024 | |||||||||||||||||||||
Gross premiums written | $ | 826,152 | $ | 590,191 | $ | 123,495 | $ | 1,539,838 | |||||||||||||
Net premiums written | 687,170 | 439,052 | 112,854 | 1,239,076 | |||||||||||||||||
Net premiums earned | 627,014 | 396,774 | 105,442 | 1,129,230 | |||||||||||||||||
Net loss & settlement expenses | 369,273 | 58.9 | % | 134,950 | 34.0 | % | 9,518 | 9.0 | % | 513,741 | 45.5 | % | |||||||||
Net operating expenses | 231,203 | 36.9 | % | 120,526 | 30.4 | % | 75,349 | 71.5 | % | 427,078 | 37.8 | % | |||||||||
Underwriting income (loss)(1) | $ | 26,538 | 95.8 | % | $ | 141,298 | 64.4 | % | $ | 20,575 | 80.5 | % | $ | 188,411 | 83.3 | % | |||||
2023 | |||||||||||||||||||||
Gross premiums written | $ | 723,198 | $ | 539,325 | $ | 109,777 | $ | 1,372,300 | |||||||||||||
Net premiums written | 597,356 | 395,903 | 103,591 | 1,096,850 | |||||||||||||||||
Net premiums earned | 562,384 | 285,596 | 100,432 | 948,412 | |||||||||||||||||
Net loss & settlement expenses | 296,633 | 52.7 | % | 149,508 | 52.3 | % | 11,848 | 11.8 | % | 457,989 | 48.3 | % | |||||||||
Net operating expenses | 208,273 | 37.1 | % | 102,499 | 35.9 | % | 66,313 | 66.0 | % | 377,085 | 39.7 | % | |||||||||
Underwriting income (loss)(1) | $ | 57,478 | 89.8 | % | $ | 33,589 | 88.2 | % | $ | 22,271 | 77.8 | % | $ | 113,338 | 88.0 | % | |||||
(1) | See discussion above: Non-GAAP and Performance Measures. |
Category: Earnings Release
Contacts
Aaron Diefenthaler
Chief Investment Officer & Treasurer
309-693-5846
Aaron.Diefenthaler@rlicorp.com
