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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 22, 2024

Graphic

RLI Corp.

(Exact name of registrant as specified in its charter)

Delaware

001-09463

37-0889946

(State or other jurisdiction

(Commission

(IRS Employer

of incorporation)

File Number)

Identification No.)

9025 North Lindbergh Drive, Peoria, IL

61615

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (309) 692-1000

Not applicable

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

Title of each class

    

Trading Symbol

    

Name of each exchange on which registered

Common Stock $0.01 par value

RLI

New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02 Results of Operations and Financial Condition.

On July 22, 2024, RLI Corp. announced its results of operations for the second quarter of 2024. Furnished as Exhibit 99.1 and incorporated herein by reference is the press release issued by RLI Corp.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.

    

Description

99.1

Press Release dated July 22, 2024.

This Exhibit is furnished pursuant to Item 2.02 hereof and should not be deemed to be “filed” under the Securities Exchange Act of 1934.

104

Cover Page Interactive Data File (embedded within the Inline XBRL document).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

RLI CORP.

Date: July 22, 2024

By:

/s/ Todd W. Bryant

Todd W. Bryant

Chief Financial Officer

EX-99.1 2 rli-20240722xex99d1.htm EX-99.1

EXHIBIT 99.1

Graphic

RLIREPORTS 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.

Graphic


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.

2


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 Supplemental disclosure regarding the earnings impact of specific items:

309-693-5846

Aaron.Diefenthaler@rlicorp.com

3


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.

7