Group 1: Earnings Performance - RLI Corp. reported quarterly earnings of $0.84 per share, exceeding the Zacks Consensus Estimate of $0.75 per share, but down from $0.86 per share a year ago, representing an earnings surprise of +12.00% [1] - The company posted revenues of $441.32 million for the quarter ended June 2025, missing the Zacks Consensus Estimate by 0.52%, compared to $413.03 million in the same quarter last year [2] - Over the last four quarters, RLI Corp. has surpassed consensus EPS estimates three times [2] Group 2: Stock Performance and Outlook - RLI Corp. shares have declined approximately 14.8% since the beginning of the year, while the S&P 500 has gained 7.1% [3] - The current consensus EPS estimate for the upcoming quarter is $0.51 on revenues of $448.88 million, and for the current fiscal year, it is $2.97 on revenues of $1.78 billion [7] - The estimate revisions trend for RLI Corp. was unfavorable prior to the earnings release, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6] Group 3: Industry Context - The Insurance - Property and Casualty industry, to which RLI Corp. belongs, is currently in the top 37% of over 250 Zacks industries, suggesting a favorable industry outlook [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

[Second Quarter 2025 Results Overview](index=1&type=section&id=Second%20Quarter%202025%20Results%20Overview) This section provides a comprehensive overview of RLI Corp.'s financial, underwriting, and investment performance for the second quarter of 2025 [Financial Performance Summary](index=1&type=section&id=Financial%20Performance%20Summary) RLI Corp. achieved significant net earnings growth in Q2 2025, despite a slight decrease in operating earnings, driven by strong underwriting and investment income Key Financial Metrics Comparison Q2 2025 (Diluted EPS) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net Earnings | $1.34 | $0.89 | 50.6% | | Operating Earnings | $0.84 | $0.86 | -2.3% | | Comprehensive Earnings | $1.55 | $0.80 | 93.8% | - RLI Corp. President and CEO Craig Kliethermes stated the company achieved robust earnings and sustained book value growth in the second quarter, with a combined ratio of **85**, emphasizing underwriting discipline. Increased investment income drove a **16%** growth in book value since year-end 2024[3](index=3&type=chunk)[8](index=8&type=chunk) [Underwriting Performance](index=1&type=section&id=Underwriting%20Performance) RLI's underwriting income in Q2 2025 was $62.2 million with a combined ratio of 84.5, showing varied segment performance but benefiting from favorable prior-year loss reserve development Underwriting Income and Combined Ratio Comparison Q2 2025 (Millions of USD) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Underwriting Income | $62.2 | $70.0 | -11.2% | | Combined Ratio | 84.5 | 81.5 | +3.0 percentage points | | Favorable Prior-Year Loss Reserve Development | $24.4 | $19.8 | 23.2% | Underwriting Income and Combined Ratio by Business Segment Q2 2025 | Business Segment | Underwriting Income (Millions of USD) | Combined Ratio | | :--- | :--- | :--- | | Casualty | $8.3 | 96.5 | | Property | $49.5 | 62.1 | | Surety | $4.4 | 87.9 | | **Total** | **$62.2** | **84.5** | [Investment and Other Income](index=2&type=section&id=Investment%20and%20Other%20Income) RLI's net investment income grew significantly in Q2, with strong total portfolio returns and a substantial increase in comprehensive earnings due to unrealized gains Investment and Comprehensive Earnings Q2 2025 | Metric | Q2 2025 | Q2 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net Investment Income | $39.4 Million | $33.961 Million | 16.1% | | Total Portfolio Return (Quarterly) | 2.9% | N/A | N/A | | Total Portfolio Return (Half-Year) | 4.2% | N/A | N/A | | Comprehensive Earnings | $143.0 Million | $74.1 Million | 92.9% | | Comprehensive Earnings Per Share | $1.55 | $0.80 | 93.8% | - 2025 comprehensive earnings include after-tax unrealized gains from the fixed-income investment portfolio, primarily due to declining interest rates[11](index=11&type=chunk) [Dividends Paid](index=2&type=section&id=Dividends%20Paid) RLI Corp. paid a regular quarterly dividend of $0.16 per share in Q2 2025, an increase from the prior quarter, continuing its long-standing dividend record Dividends Information Q2 2025 | Metric | Amount | | :--- | :--- | | Regular Quarterly Dividend (Per Share) | $0.16 | | Increase from Prior Quarter | $0.01 | | Cumulative Dividends Over Past Five Years | Over $971 Million | [Non-GAAP and Performance Measures Explanation](index=2&type=section&id=Non-GAAP%20and%20Performance%20Measures%20Explanation) This section clarifies non-GAAP financial metrics and performance measures used by management to provide a clearer understanding of RLI Corp.'s operational trends [Non-GAAP and Performance Measures](index=2&type=section&id=Non-GAAP%20and%20Performance%20Measures) Management provides non-GAAP financial metrics like operating earnings and underwriting income to better explain company performance and business trends, supplementing GAAP measures - Operating earnings and operating earnings per share are GAAP net earnings adjusted for realized and unrealized gains and losses and related taxes[16](index=16&type=chunk) - Underwriting income represents the pre-tax profitability of insurance operations, derived by subtracting losses and loss adjustment expenses, policy acquisition costs, and insurance operating expenses from net premiums earned[17](index=17&type=chunk) - The combined ratio is a common performance measure for property and casualty insurance companies, calculated as the sum of losses and loss adjustment expenses, policy acquisition costs, and insurance operating expenses divided by net premiums earned[17](index=17&type=chunk) [Corporate Updates](index=2&type=section&id=Corporate%20Updates) This section highlights RLI Corp.'s recent industry recognition and provides details on upcoming investor communications regarding its quarterly performance [Other News & Recognition](index=2&type=section&id=Other%20News%20%26%20Recognition) RLI Corp. was recognized by Ward Benchmarking as a top insurance company for the 35th consecutive year and plans a conference call to discuss quarterly results - RLI was named one of the top-performing insurance companies by Ward Benchmarking, an Aon business unit, on July 8, 2025, marking its **35th consecutive year** and making it the only property and casualty company to be listed every year since the list's inception in 1991[19](index=19&type=chunk) - RLI management will host a conference call with insurance industry analysts to discuss quarterly results on July 22, 2025, at 10:00 a.m. Central Daylight Time[20](index=20&type=chunk) [About RLI Corp.](index=3&type=section&id=About%20RLI%20Corp.) RLI Corp. is a specialty insurer focused on niche property, casualty, and surety markets, known for its underwriting expertise, service, and long record of dividends and underwriting profitability - RLI Corp. is a specialty insurance company serving niche property, casualty, and surety markets, providing underwriting expertise and quality service through its insurance subsidiaries[23](index=23&type=chunk) - All of RLI's insurance subsidiaries have received an **A+ (Superior)** rating from AM Best Company[23](index=23&type=chunk) - RLI has paid and increased regular dividends for **50 consecutive years** and achieved underwriting profit for **29 consecutive years**[23](index=23&type=chunk) [Detailed Financial Information](index=4&type=section&id=Detailed%20Financial%20Information) This section provides in-depth financial statements and segment data, offering a comprehensive view of RLI Corp.'s financial position and operational performance [Supplemental Earnings Impact Disclosure](index=4&type=section&id=Supplemental%20Earnings%20Impact%20Disclosure) This section details the impact of reserve development and catastrophe losses on RLI Corp.'s operating earnings, showing favorable prior-year reserve development and current-year catastrophe losses Reserve Development and Catastrophe Losses Q2 2025 (Millions of USD) | Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Casualty Prior-Year Reserve Favorable Development | $15.4 | $12.8 | | Property Prior-Year Reserve Favorable Development | $4.9 | $5.3 | | Surety Prior-Year Reserve Favorable Development | $2.3 | $2.4 | | Net Losses from 2025 Catastrophe Events | $(14.0) | — | | Net Losses from 2024 and Prior Catastrophe Events | $5.0 | $(14.0) | Impact of Specific Items on Operating EPS Q2 2025 | Item | Q2 2025 EPS | Q2 2024 EPS | | :--- | :--- | :--- | | Casualty Prior-Year Reserve Favorable Development | $0.11 | $0.10 | | Property Prior-Year Reserve Favorable Development | $0.04 | $0.04 | | Surety Prior-Year Reserve Favorable Development | $0.02 | $0.02 | | Net Losses from 2025 Catastrophe Events | $(0.10) | — | | Net Losses from 2024 and Prior Catastrophe Events | $0.03 | $(0.11) | [Summarized Income Statement](index=5&type=section&id=Summarized%20Income%20Statement) RLI Corp.'s summarized income statement for Q2 2025 shows growth in net premiums earned and net investment income, driving higher consolidated revenue and strong net and comprehensive earnings Summarized Income Statement Data Q2 2025 (Thousands of USD) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net Premiums Earned | $401,904 | $379,065 | 6.0% | | Net Investment Income | $39,418 | $33,961 | 16.1% | | Consolidated Revenue | $499,826 | $416,442 | 20.0% | | Losses and Loss Adjustment Expenses | $184,578 | $167,799 | 10.0% | | Total Expenses | $345,778 | $314,785 | 9.8% | | Net Earnings | $124,336 | $81,992 | 51.6% | | Comprehensive Earnings | $143,037 | $74,149 | 92.9% | | Operating Earnings | $78,118 | $79,292 | -1.5% | Summarized Income Statement Data H1 2025 (Thousands of USD) | Metric | H1 2025 | H1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net Premiums Earned | $800,249 | $739,741 | 8.2% | | Net Investment Income | $76,144 | $66,808 | 14.0% | | Consolidated Revenue | $907,491 | $861,273 | 5.4% | | Losses and Loss Adjustment Expenses | $361,816 | $311,623 | 16.1% | | Total Expenses | $677,860 | $604,394 | 12.2% | | Net Earnings | $187,550 | $209,892 | -10.6% | | Comprehensive Earnings | $236,281 | $189,378 | 24.8% | | Operating Earnings | $162,982 | $166,659 | -2.2% | [Summarized Balance Sheet](index=6&type=section&id=Summarized%20Balance%20Sheet) As of June 30, 2025, RLI Corp. reported growth in total assets and shareholders' equity, primarily due to increased fixed-income and equity securities investments, with liabilities remaining controlled Summarized Balance Sheet Data as of June 30, 2025 (Thousands of USD) | Metric | June 30, 2025 | December 31, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Fixed Maturity Securities (Fair Value) | $3,420,761 | $3,175,796 | 7.7% | | Equity Securities (Fair Value) | $810,959 | $736,191 | 10.2% | | Short-Term Investments | $115,662 | $74,915 | 54.4% | | Total Investments and Cash | $4,426,062 | $4,084,631 | 8.4% | | Total Assets | $5,990,807 | $5,628,802 | 6.4% | | Unpaid Losses and Loss Adjustment Expenses | $2,806,889 | $2,693,470 | 4.2% | | Total Liabilities | $4,256,146 | $4,106,835 | 3.6% | | Shareholders' Equity | $1,734,661 | $1,521,967 | 14.0% | | Book Value Per Share | $18.89 | $16.59 | 13.9% | [Underwriting Segment Data](index=7&type=section&id=Underwriting%20Segment%20Data) RLI Corp.'s underwriting segment data for Q2 2025 shows decreased underwriting income for Casualty and Surety, and a slight reduction for Property, yet all segments maintained healthy combined ratios Underwriting Segment Data Q2 2025 (Thousands of USD) | Business Segment | Gross Premiums Written | Net Premiums Written | Net Premiums Earned | Underwriting Income | Combined Ratio | | :--- | :--- | :--- | :--- | :--- | :--- | | Casualty | $306,610 | $256,245 | $234,638 | $8,289 | 96.5% | | Property | $211,817 | $160,919 | $130,664 | $49,511 | 62.1% | | Surety | $43,854 | $39,895 | $36,602 | $4,430 | 87.9% | | **Total** | **$562,281** | **$457,059** | **$401,904** | **$62,230** | **84.5%** | Underwriting Segment Data H1 2025 (Thousands of USD) | Business Segment | Gross Premiums Written | Net Premiums Written | Net Premiums Earned | Underwriting Income | Combined Ratio | | :--- | :--- | :--- | :--- | :--- | :--- | | Casualty | $585,064 | $491,852 | $463,686 | $10,360 | 97.8% | | Property | $381,869 | $282,655 | $263,208 | $106,426 | 59.6% | | Surety | $86,454 | $79,643 | $73,355 | $15,990 | 78.2% | | **Total** | **$1,053,387** | **$854,150** | **$800,249** | **$132,776** | **83.4%** |

Company Overview - RLI Corp. is expected to report a year-over-year decline in earnings of 12.8%, with projected earnings of $0.75 per share for the quarter ended June 2025, while revenues are anticipated to increase by 7.4% to $443.64 million [3][12]. Earnings Expectations - The earnings report is scheduled for July 21, and the stock may rise if actual results exceed expectations, while a miss could lead to a decline [2][12]. - The consensus EPS estimate has been revised 0.39% lower in the last 30 days, indicating a reassessment by analysts [4]. Earnings Surprise Prediction - RLI Corp. has an Earnings ESP of +2.12%, suggesting a potential for a positive earnings surprise, although it currently holds a Zacks Rank of 4, complicating predictions of an earnings beat [12]. - The company has beaten consensus EPS estimates in three out of the last four quarters, with a previous surprise of +4.55% [13][14]. Industry Comparison - In comparison, Travelers (TRV), another player in the insurance industry, is expected to post earnings of $3.49 per share, reflecting a year-over-year increase of 39%, with revenues projected at $12.2 billion, up 7.5% [18][19]. - Travelers has an Earnings ESP of +8.76% and a Zacks Rank of 3, indicating a strong likelihood of beating consensus EPS estimates [20].

Core Viewpoint - RLI Corp. has experienced a decline of approximately 1.5% in share price over the past month, underperforming the S&P 500, raising questions about its upcoming earnings release and potential for a breakout [1] Earnings Estimates - Estimates for RLI Corp. have trended downward, with the consensus estimate shifting by -9.69% in the past month [2] VGM Scores - RLI Corp. has an average Growth Score of C, a Momentum Score of F, and a Value Score of D, placing it in the bottom 40% for the value investment strategy. The overall aggregate VGM Score for the stock is F [3] Outlook - The downward trend in estimates indicates a negative outlook for RLI Corp., which currently holds a Zacks Rank of 3 (Hold), suggesting an expectation of in-line returns in the coming months [4] Industry Performance - RLI Corp. is part of the Zacks Insurance - Property and Casualty industry. A peer, Chubb (CB), has seen a gain of 1.8% over the past month, reporting revenues of $13.67 billion for the last quarter, reflecting a year-over-year increase of +4.6% [5] - Chubb's earnings per share (EPS) for the last quarter was $3.68, down from $5.41 a year ago, with an expected EPS of $5.85 for the current quarter, indicating a year-over-year change of +8.7% [6]

Group 1: Valuation and Market Performance - RLI Corp. shares are trading at a premium to the Zacks Property and Casualty Insurance industry, with a price-to-book value of 4.28X compared to the industry average of 1.49X and the Finance sector's 4.1X, but at a discount to the Zacks S&P 500 Composite's 7.82X [1] - RLI shares have gained 0.6% in the past year, lagging behind the industry, Finance sector, and Zacks S&P 500 composite returns of 18.7%, 16.2%, and 11%, respectively [2][3] - The stock closed at $74.83, below its 52-week high of $91.14, and is trading below the 50-day and 200-day simple moving averages of $76.04 and $78.11, indicating downward momentum [4] Group 2: Growth Projections - The Zacks Consensus Estimate for RLI's 2025 earnings per share indicates a year-over-year increase of 3.4%, with revenues projected at $1.78 billion, implying a year-over-year improvement of 6.5% [8] - For 2026, the consensus estimates for earnings per share and revenues indicate increases of 3.2% and 5.9%, respectively, from the corresponding 2025 estimates [8] Group 3: Financial Performance and Strategy - RLI's return on equity (ROE) has improved, with a trailing 12 months ROE of 16.2%, significantly higher than the industry average of 7.7% [9] - The company continues to grow through product diversification, a compelling product portfolio, and a conservative underwriting policy, which helps achieve favorable reserve releases despite incurring catastrophe losses [10] - RLI has a strong track record of underwriting profitability, with 29 consecutive years of profitability [11] Group 4: Shareholder Value and Capital Structure - RLI enhances shareholder value through dividend hikes, special dividends, and share buybacks, boasting an impressive dividend track record with regular dividends increased for the last 50 years [12] - The company is strengthening its balance sheet by improving liquidity and leverage, which supports its operations and long-term book value growth [13] Group 5: Conclusion - RLI is recognized as one of the industry's most profitable P&C writers, with a strong local branch network and a focus on specialty insurance lines contributing to its superior profitability [15] - Given its premium valuation, it may be prudent to wait for a better entry point for this stock [16]

[Part I - Financial Information](index=3&type=section&id=Part%20I%20-%20Financial%20Information) This section details RLI Corp.'s financial performance, position, and cash flows for Q1 2025, including management's analysis and market risk disclosures [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) RLI Corp. reported Q1 2025 net earnings of $63.2 million, down from $127.9 million, primarily due to unrealized equity losses, while total assets reached $5.73 billion and operating cash flow increased to $103.5 million [Condensed Consolidated Statements of Earnings and Comprehensive Earnings](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Earnings%20and%20Comprehensive%20Earnings) Q1 2025 net earnings decreased to $63.2 million ($0.68 diluted EPS) from $127.9 million, primarily due to a $42.3 million unrealized equity loss, despite growth in net premiums earned and investment income | Financial Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | Change | | :--- | :--- | :--- | :--- | | Net Premiums Earned | $398,345 | $360,676 | +10.4% | | Net Investment Income | $36,726 | $32,847 | +11.8% | | Net Unrealized Gains (Losses) on Equity Securities | $(42,318) | $45,314 | N/A | | **Net Earnings** | **$63,214** | **$127,900** | **-50.6%** | | **Diluted EPS** | **$0.68** | **$1.39** | **-51.1%** | | Comprehensive Earnings | $93,244 | $115,229 | -19.1% | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets slightly increased to $5.73 billion from $5.63 billion, with shareholders' equity rising to $1.60 billion due to comprehensive earnings | Balance Sheet Item | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Total Investments and Cash | $4,204,238 | $4,084,631 | | **Total Assets** | **$5,729,154** | **$5,628,802** | | Total Liabilities | $4,124,942 | $4,106,835 | | **Total Shareholders' Equity** | **$1,604,212** | **$1,521,967** | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations increased to $103.5 million in Q1 2025, while investing activities used $103.4 million and financing activities used $12.8 million | Cash Flow Activity (in thousands) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $103,514 | $70,946 | | Net cash used in investing activities | $(103,414) | $(53,064) | | Net cash used in financing activities | $(12,832) | $(9,749) | | **Net (decrease) increase in cash** | **$(12,732)** | **$8,133** | [Notes to Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Notes detail investment portfolio fair value, loss reserve development, segment performance, and stock-based compensation, highlighting a two-for-one stock split and $31 million in favorable prior-year loss reserve development - On January 15, 2025, RLI Corp. implemented a **two-for-one stock split**, retroactively adjusting all share and per-share data in the report[22](index=22&type=chunk) - The investment portfolio is measured at fair value, with the vast majority of fixed income securities (**$3.18 billion of $3.27 billion**) classified as Level 2, and Level 3 assets totaling **$98.9 million**[52](index=52&type=chunk) - In Q1 2025, the company recognized **$31 million** of favorable development on prior years' loss reserves, compared to **$42 million** in Q1 2024, driven by Marine, Surety, Commercial Property, and various liability lines[72](index=72&type=chunk) - The effective tax rate for Q1 2025 was **19.6%**, down from **20.1%** in Q1 2024, due to lower pretax income amplifying the positive impact of tax-favored items[74](index=74&type=chunk) [Management's Discussion and Analysis (MD&A)](index=31&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes increased net premiums and investment income to segment growth and higher rates, but a **$42 million** unrealized equity loss reduced net earnings, while underwriting income declined and the combined ratio worsened to **82.3%** [Results of Operations](index=37&type=section&id=Results%20of%20Operations) Q1 2025 net earnings decreased to **$63 million** from **$128 million** due to equity portfolio performance, with underwriting income falling to **$71 million** and the combined ratio rising to **82.3%** due to lower reserve development | Performance Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Underwriting Income (in millions) | $71 | $78 | | Combined Ratio | 82.3% | 78.5% | | Favorable Reserve Development (in millions) | $31 | $42 | | Net Earnings (in millions) | $63 | $128 | - The loss ratio increased to **44.5%** from **39.9%** due to lower favorable reserve development and a business mix shift towards higher loss ratio lines[116](index=116&type=chunk) [Premiums Analysis](index=37&type=section&id=Premiums%20Analysis) Gross premiums written increased **5%** to **$491.1 million**, driven by a **14%** rise in Casualty premiums to **$278.5 million**, while Property premiums declined **6%** to **$170.1 million** due to competition | Segment (Gross Premiums Written) | Q1 2025 (in thousands) | Q1 2024 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Casualty | $278,454 | $245,329 | +14% | | Property | $170,052 | $180,364 | -6% | | Surety | $42,600 | $42,982 | -1% | | **Total** | **$491,106** | **$468,675** | **+5%** | - Casualty growth was driven by positive rate movement, new business in personal umbrella, and expanded marketing in commercial excess[124](index=124&type=chunk) - Property premium decline resulted from falling rates on wind and earthquake exposures due to intensified competition[125](index=125&type=chunk) [Underwriting Income Analysis](index=40&type=section&id=Underwriting%20Income%20Analysis) Total underwriting income decreased to **$70.5 million**, with Casualty income sharply dropping to **$2.1 million** and its combined ratio worsening to **99.1%**, while Surety income significantly improved to **$11.6 million** | Segment (Underwriting Income) | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | Casualty | $2,071 | $13,674 | | Property | $56,915 | $57,716 | | Surety | $11,560 | $6,305 | | **Total** | **$70,546** | **$77,695** | | Segment (Combined Ratio) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Casualty | 99.1% | 93.1% | | Property | 57.1% | 55.4% | | Surety | 68.5% | 80.9% | | **Total** | **82.3%** | **78.5%** | [Liquidity and Capital Resources](index=42&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with operating cash flow increasing to **$103.5 million**, supported by **$1.6 billion** in shareholders' equity and **$100 million** in debt, with **$26 million** available for ordinary dividend distribution - Operating cash flow increased to **$103.5 million** in Q1 2025 from **$70.9 million** in Q1 2024, benefiting from increased premium receipts[140](index=140&type=chunk) - As of March 31, 2025, the company had **$100 million** in debt outstanding, comprising **6%** of total capital[141](index=141&type=chunk)[155](index=155&type=chunk) - The maximum ordinary dividend payable from the principal insurance subsidiary to the holding company without prior regulatory approval was **$26 million** as of March 31, 2025[158](index=158&type=chunk) [Investment Portfolio](index=42&type=section&id=Investment%20Portfolio) The total investment portfolio was **$4.2 billion** as of March 31, 2025, conservatively allocated with **77.9%** in fixed income and **17.3%** in equities, featuring an 'AA' average rating and 4.9-year duration for fixed income | Investment Type | Fair Value (in thousands) | % of Total | | :--- | :--- | :--- | | Fixed income | $3,274,276 | 77.9% | | Equity securities | $725,946 | 17.3% | | Short-term investments | $116,601 | 2.8% | | Other invested assets | $60,357 | 1.4% | | Cash | $27,058 | 0.6% | | **Total** | **$4,204,238** | **100.0%** | - The fixed income portfolio has an average quality rating of **'AA'** and an average duration of **4.9 years**[137](index=137&type=chunk)[146](index=146&type=chunk) - The equity portfolio is well-diversified, with no single company exposure representing more than **1%** of total invested assets[152](index=152&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=49&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) No material changes to market risk exposure were reported since year-end 2024, with primary risks remaining equity price and interest rate fluctuations from investments - There have been no material changes to the company's exposure to market risk since the year-end 2024 report[159](index=159&type=chunk) - Primary market risks remain equity price risk and interest rate risk associated with the investment portfolio[160](index=160&type=chunk) [Controls and Procedures](index=49&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures are effective[161](index=161&type=chunk) - No material changes were made to internal control over financial reporting during the first quarter of 2025[163](index=163&type=chunk) [Part II - Other Information](index=50&type=section&id=Part%20II%20-%20Other%20Information) This section provides other required disclosures, including legal proceedings and information on director and officer trading plans [Other Required Disclosures](index=50&type=section&id=Item%201.%20Legal%20Proceedings) No material changes were reported for legal proceedings or risk factors, and no directors or officers adopted or terminated Rule 10b5-1 trading plans during the quarter - There were no material changes to report for Legal Proceedings (Item 1) or Risk Factors (Item 1A)[166](index=166&type=chunk)[167](index=167&type=chunk) - During Q1 2025, no director or officer adopted or terminated a Rule 10b5-1 trading arrangement[172](index=172&type=chunk)

Financial Data and Key Metrics Changes - The company reported operating earnings of $0.92 per share, supported by solid underwriting performance and a 12% increase in investment income [13] - The total combined ratio was 82.3%, up from 78.5% last year, influenced by lower levels of favorable prior year's reserve releases [14] - Net earnings on a GAAP basis totaled $0.68 per share, down from $1.39 per share in Q1 2024, primarily due to a shift from $45 million in unrealized equity gains to $42 million in unrealized losses [15] Business Line Data and Key Metrics Changes - The property segment experienced a 6% decline in gross premiums, largely due to rate decreases in E&S property, offset by growth in marine and Hawaii homeowners [16] - The casualty segment posted a 99 combined ratio for Q1, with gross premiums up 14% over last year, but a cautious approach was maintained regarding wheel space businesses [18][19] - The securities segment's gross premium was relatively flat, with a combined ratio of 68.5%, down from 80.9% in 2024, benefiting from favorable development [21] Market Data and Key Metrics Changes - The insurance industry is facing challenges from legal system abuse, trade disruption, and economic uncertainty, impacting overall market conditions [10] - Increased competition in several areas has led to slower top-line growth, particularly in the property segment [26] - The property insurance market is experiencing aggressive competition, especially in the Florida wind market, with some competitors slashing rates [38] Company Strategy and Development Direction - The company focuses on opportunities where it can differentiate itself and where the market supports adequate returns, emphasizing a long-term growth strategy [11] - The management is committed to maintaining discipline in underwriting and is prepared to take remedial action in underpriced or underperforming markets [8] - The company is exploring growth opportunities in the casualty segment while being selective in auto coverage due to increased severity [27][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating through economic uncertainties, citing a diversified portfolio as a key advantage [47] - The company anticipates that increased construction activity in the U.S. could create more opportunities, despite potential pressures from economic slowdowns [50] - Management remains cautious about the auto segment due to rising loss severity, while also addressing challenges in the property segment [66][79] Other Important Information - The company announced a 6% increase in book value per share from year-end 2024 and a quarterly dividend increase to $0.15 per share [24] - The company is actively managing its underwriting practices to address loss trends and maintain profitability [41][43] Q&A Session Summary Question: Insights on managing through potential recession due to tariff policy - Management highlighted the diversified portfolio as a significant advantage, noting that while construction may face pressure, overall profitability could be maintained [47][48] Question: Concerns about undisciplined market behavior from MGAs - Management acknowledged aggressive behavior from MGAs but emphasized their consistent market presence and financial strength, which allows them to remain a reliable option for producers [55][56] Question: Update on personal umbrella book regarding frequency and severity - Management confirmed that severity has been increasing for several years, and they are actively addressing this through rate increases and selective underwriting [66][67] Question: Changes in philosophy regarding California residential owners - Management remains hesitant to enter the California market due to challenges in underwriting and regulatory processes, preferring to focus on commercial lines [90][141] Question: Rate pressure on earthquake coverage and reinsurance costs - Management noted competitive pressures in the earthquake market, particularly in California, and indicated that reinsurance costs have been decreasing [96][106] Question: Opportunities in the inland marine market - Management reported profitable growth in the inland marine segment, leveraging local expertise and partnerships to capitalize on construction-related opportunities [110][111] Question: Non-renewal of larger accounts in transportation - Management indicated that non-renewals are based on both unacceptable loss experience and competitive pricing from other insurers [116] Question: Impact of tariffs on transportation coverage and construction underwriting - Management acknowledged potential impacts from tariffs but noted that they are prepared to navigate these challenges based on past experiences [125][132]

Financial Data and Key Metrics Changes - The company reported operating earnings of $0.92 per share, supported by solid underwriting performance and a 12% increase in investment income [13] - The total combined ratio was 82.3%, up from 78.5% last year, influenced by lower levels of favorable prior year's reserve releases [14] - Net earnings on a GAAP basis totaled $0.68 per share, down from $1.39 per share in Q1 2024, primarily due to a shift from $45 million in unrealized equity gains to $42 million in unrealized losses [15] Business Line Data and Key Metrics Changes - The property segment experienced a 6% decline in gross premiums, largely due to rate decreases in E&S property, offset by growth in marine and Hawaii homeowners [16] - The casualty segment posted a 99 combined ratio for Q1, with gross premiums up 14% over last year, but a cautious approach was maintained regarding wheel space businesses [18][19] - The securities segment's gross premium was relatively flat, with a combined ratio of 68.5%, down from 80.9% in 2024, benefiting from favorable development [21] Market Data and Key Metrics Changes - The insurance industry is facing challenges from legal system abuse, trade disruption, and economic uncertainty, impacting overall market conditions [10] - Increased competition in several areas has led to slower top-line growth, particularly in the property segment [26] - The inland marine market has seen growth due to a larger team and better coverage, with opportunities primarily linked to the construction industry [110] Company Strategy and Development Direction - The company emphasizes a diversified portfolio and disciplined underwriting to navigate market disruptions [8] - Management is focused on opportunities where expertise can differentiate the company, particularly in areas where competitors are pulling back [11] - The company is committed to maintaining a consistent risk appetite and underwriting profitability, even in challenging market conditions [58] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating potential economic downturns, citing a diversified product portfolio as a key advantage [47] - The company anticipates that increased construction activity in the U.S. could create more opportunities, despite potential recessionary pressures [50] - Management remains cautious about the auto insurance segment due to increased severity and loss trends [79] Other Important Information - The company announced a 6% increase in book value per share from year-end 2024 and a quarterly dividend increase to $0.15 per share [24] - Operating cash flow for Q1 totaled $103 million, up $33 million from last year, providing a basis for portfolio activity [22] Q&A Session Summary Question: Insights on managing through potential recession due to tariff policy - Management highlighted a diversified portfolio as a significant advantage, noting that while construction may face pressure, overall profitability could be maintained [47][48] Question: Concerns about undisciplined market behavior from MGAs - Management acknowledged aggressive competition from MGAs but emphasized their consistent market presence and financial strength as a stabilizing factor [55][56] Question: Update on personal umbrella book regarding frequency and severity - Management confirmed that severity has been increasing for several years, and they are actively addressing this through rate increases and selective underwriting [66][67] Question: Impact of tariffs on transportation coverage - Management noted that while there could be short-term impacts on shipping and transportation, they are prepared to navigate these challenges based on past experiences [125][126] Question: Opportunities in California residential owners market - Management remains hesitant to enter the California market due to historical underwriting losses and regulatory challenges, preferring to focus on commercial lines [90][141]

Core Insights - RLI Corp. reported first-quarter 2025 operating earnings of 92 cents per share, exceeding the Zacks Consensus Estimate by 4.5%, but down 9.2% from the prior-year quarter [1] - The quarterly results were influenced by higher premiums and improved investment income, which were offset by increased expenses and poor underwriting income [1] Operational Performance - Operating revenues for the quarter reached $436 million, reflecting a 10.7% year-over-year increase, driven by higher net premiums earned and net investment income, although it missed the Zacks Consensus Estimate by 0.9% [2] - Gross premiums written rose 5% year over year to $491 million, primarily due to strong performance in the Casualty segment, which increased by 13.5% [2] - Net investment income increased by 12% year over year to $36.7 million, falling short of the Zacks Consensus Estimate of $38.6 million [3] - Total expenses increased by 14.7% year over year to $332 million, mainly due to higher loss and settlement expenses and policy acquisition costs [3] Underwriting Performance - Underwriting income decreased by 9.3% year over year to $70.5 million, with the combined ratio deteriorating by 380 basis points to 82.3 [4] Dividend Update - On March 20, 2025, RLI paid a regular quarterly dividend of 15 cents per share, with cumulative dividends exceeding $967 million over the last five years [5] Peer Performance - The Travelers Companies reported first-quarter 2025 core income of $1.91 per share, beating the Zacks Consensus Estimate, but down 29.3% year over year [7] - Progressive Corporation's first-quarter 2025 earnings per share of $4.65 missed the Zacks Consensus Estimate, although it increased by 24.6% year over year [9] - W.R. Berkley Corporation's first-quarter 2025 operating income of $1.01 per share matched the Zacks Consensus Estimate, but declined 2.9% year over year [11]

Financial Data and Key Metrics Changes - The company reported operating earnings of $0.92 per share, supported by solid underwriting performance and a 12% increase in investment income [11] - The total combined ratio was 82.3, up from 78.5 last year, influenced by lower levels of favorable prior year's reserve releases [11] - On a GAAP basis, net earnings totaled $0.68 per share compared to $1.39 in Q1 2024, heavily influenced by unrealized losses on equity securities [12] Business Line Data and Key Metrics Changes - The Property segment experienced a 6% decline in gross premium due to rate decreases, offset by growth in marine and Hawaii homeowners [12] - The Casualty segment posted a 99 combined ratio, with gross premium up 14% over last year, but a cautious approach was maintained regarding wheels-based businesses [14] - The Securities segment's gross premium was relatively flat, with a combined ratio of 68.5%, benefiting from favorable development [15] Market Data and Key Metrics Changes - The company noted increased competition in several areas, leading to slower top-line growth, but found opportunities where competitors were pulling back [19] - The inland marine market grew profitably, driven by a healthy construction industry, with a focus on hiring local talent [82] - The E and S property market faced competitive conditions, with a 14% decrease in CAT wind rates, but the company believes this business is still well-priced [29] Company Strategy and Development Direction - The company emphasized a commitment to disciplined underwriting and a focus on long-term profitable growth, navigating through market disruptions [6][8] - Management highlighted the importance of maintaining a healthy balance sheet to thrive during periods of market disruption [6] - The company is continuously refining underwriting guidelines to remain competitive while ensuring profitability [29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating potential economic slowdowns, citing a diversified portfolio as a key advantage [36] - The company acknowledged challenges from legal system abuse and economic uncertainty but remains focused on opportunities for growth [7] - Management noted that while there are pressures from increased costs, they are prepared to adapt and manage through these challenges [99] Other Important Information - The company announced an increase in its ordinary quarterly dividend to $0.15 per share, marking its fiftieth year of paying and increasing dividends [18] - Operating cash flow for Q1 totaled $103 million, up $33 million from last year, providing a basis for portfolio activity [16] Q&A Session Summary Question: Insights on managing through potential recession due to tariff policy - Management highlighted their diversified portfolio and experience in past recessions, indicating they would manage through similar challenges again [36][38] Question: Concerns about undisciplined market behavior from MGAs - Management acknowledged aggressive competition from MGAs but emphasized their consistent market presence and disciplined approach [42][44] Question: Update on personal umbrella auto book and severity trends - Management noted increased severity in personal umbrella claims and ongoing efforts to address this through rate increases and selective underwriting [52][56] Question: Impact of tariffs on transportation coverage - Management indicated that while there could be a slowdown in shipping due to tariffs, they have seen increased shipping activity in the first quarter [94] Question: Opportunities in California residential homeowners market - Management remains cautious about entering the California residential market due to past experiences with claims handling and high-value homes [70][106]