[Financial Highlights](index=1&type=section&id=Financial%20Highlights) RLI Corp. achieved strong Q2 2024 results, with increased net and operating earnings, driven by premium growth and investment income Q2 2024 Earnings Summary | Metric | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Net Earnings (Millions) | $82.0M | $77.7M | | Net Earnings per Share | $1.78 | $1.69 | | Operating Earnings (Millions) | $79.3M | $53.3M | | Operating Earnings per Share | $1.72 | $1.16 | - Gross premiums written increased by **11%** and net investment income grew by **18%** in the second quarter[3](index=3&type=chunk) - Book value per share rose to **$34.64**, marking a **14%** increase (inclusive of dividends) from the end of 2023[3](index=3&type=chunk) - CEO Craig Kliethermes highlighted the excellent results, attributing them to a balanced growth across the product portfolio and a disciplined underwriting approach, particularly in the property segment[14](index=14&type=chunk) [Underwriting Performance](index=1&type=section&id=Underwriting%20Performance) Underwriting income significantly increased to $70.0 million in Q2 2024, with the combined ratio improving to 81.5% Underwriting Income & Combined Ratio by Segment (Q2 2024 vs. Q2 2023) | Segment | Underwriting Income (2024, Millions) | Underwriting Income (2023, Millions) | Combined Ratio (2024) | Combined Ratio (2023) | | :--- | :--- | :--- | :--- | :--- | | Casualty | $10.3M | $7.0M | 95.1% | 96.3% | | Property | $53.2M | $25.9M | 60.3% | 74.6% | | Surety | $6.5M | $8.3M | 81.8% | 75.0% | | **Total** | **$70.0M** | **$41.2M** | **81.5%** | **87.2%** | - Favorable development in prior years' loss reserves contributed a net increase of **$19.8 million** to underwriting income in Q2 2024, compared to **$17.0 million** in Q2 2023[5](index=5&type=chunk) - For the six months ended June 30, 2024, the total underwriting income was **$147.7 million** on a combined ratio of **80.0%**[38](index=38&type=chunk) [Investment and Other Income](index=2&type=section&id=Investment%20and%20Other%20Income) Net investment income grew 18.0% to $34.0 million in Q2 2024, with the investment portfolio achieving a 0.9% total return - Net investment income rose **18.0%** to **$34.0 million** compared to the same period in 2023[28](index=28&type=chunk) - The investment portfolio's total return was **0.9%** for the second quarter and **2.7%** for the six months ended June 30, 2024[28](index=28&type=chunk) [Capital Management and Shareholder Returns](index=2&type=section&id=Capital%20Management%20and%20Shareholder%20Returns) RLI increased its quarterly dividend to $0.29 per share, with cumulative dividends exceeding $819 million over five years - On June 20, 2024, the company paid a regular quarterly dividend of **$0.29 per share**, a **$0.02** increase over the prior quarter[7](index=7&type=chunk) - Cumulative dividends paid over the last five years exceed **$819 million**[7](index=7&type=chunk) [Financial Statements and Data](index=4&type=section&id=Financial%20Statements%20and%20Data) This section provides detailed unaudited financial data for Q2 and H1 2024, including income statements, balance sheets, and non-GAAP reconciliation [Summarized Income Statement](index=5&type=section&id=Summarized%20Income%20Statement) Q2 2024 consolidated revenue grew 9.1% to $416.4 million, with net premiums earned up 17.6% and net earnings rising 5.6% Q2 2024 Income Statement Highlights (in thousands) | Metric | Q2 2024 | Q2 2023 | % Change | | :--- | :--- | :--- | :--- | | Net Premiums Earned | $379,065 | $322,280 | 17.6% | | Net Investment Income | $33,961 | $28,788 | 18.0% | | Consolidated Revenue | $416,442 | $381,862 | 9.1% | | Total Expenses | $314,785 | $287,345 | 9.5% | | Net Earnings | $81,992 | $77,652 | 5.6% | [Summarized Balance Sheet](index=6&type=section&id=Summarized%20Balance%20Sheet) As of June 30, 2024, total assets increased 6.4% to $5.51 billion, and shareholders' equity grew 12.1% to $1.58 billion Balance Sheet Highlights (in thousands) | Metric | June 30, 2024 | Dec 31, 2023 | % Change | | :--- | :--- | :--- | :--- | | Total Investments and Cash | $3,887,349 | $3,676,318 | 5.7% | | Total Assets | $5,511,673 | $5,180,221 | 6.4% | | Total Liabilities | $3,926,966 | $3,766,707 | 4.3% | | Shareholders' Equity | $1,584,707 | $1,413,514 | 12.1% | [Non-GAAP Reconciliation](index=5&type=section&id=Non-GAAP%20Reconciliation) Q2 2024 operating earnings, a non-GAAP measure, increased 48.7% to $79.3 million, adjusted from GAAP net earnings Reconciliation of Net Earnings to Operating Earnings (Q2, in thousands) | Metric | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Net Earnings | $81,992 | $77,652 | | Less: Adjustments for securities gains/losses (net of tax) | ($2,700) | ($24,328) | | **Operating Earnings** | **$79,292** | **$53,324** | [Corporate Information and Outlook](index=2&type=section&id=Corporate%20Information%20and%20Outlook) RLI Corp. was recognized as a top-performing insurer for the 34th consecutive year, operating as a specialty insurer with A+ rated subsidiaries - For the **34th consecutive year**, RLI was named a Ward's 50® P&C Top Performer, being the only company to achieve this recognition every year since the list's inception in 1991[9](index=9&type=chunk) - RLI is a specialty insurer serving niche property, casualty, and surety markets, with all its insurance subsidiaries rated **A+ (Superior)** by AM Best Company[21](index=21&type=chunk) - The earnings release contains forward-looking statements, and readers are advised that actual results could differ materially due to various risk factors detailed in the company's SEC filings[20](index=20&type=chunk)

The market expects RLI Corp. (RLI) to deliver a year-over-year increase in earnings on higher revenues when it reports results for the quarter ended June 2024. This widely-known consensus outlook is important in assessing the company's earnings picture, but a powerful factor that might influence its near-term stock price is how the actual results compare to these estimates. Zacks Consensus Estimate Estimate Revisions Trend Earnings Whisper Thus, a positive or negative Earnings ESP reading theoretically indi ...

RLI Corp.'s (RLI) strong product portfolio, rate increases, improved retention, higher premium receipts and sufficient liquidity make it worth adding to one's portfolio. The consensus estimate for 2025 earnings per share and revenues indicates an increase of 3.8% and 9.2%, respectively, from the corresponding 2024 estimates. Estimate Revision The Zacks Consensus Estimate for 2024 and 2025 earnings has moved 1.9% and 2.7% north, respectively, in the past 60 days. This should instill investors' confidence in ...

Core Viewpoint - RLI Corp. has been upgraded to a Zacks Rank 1 (Strong Buy), indicating a positive earnings outlook that may lead to increased stock price [1][3][11] Earnings Estimates and Revisions - The Zacks Consensus Estimate for RLI Corp. is projected at $5.84 per share for the fiscal year ending December 2024, reflecting an 18.2% year-over-year increase [8] - Over the past three months, the Zacks Consensus Estimate for RLI Corp. has risen by 5.4%, indicating a trend of increasing earnings estimates [8] Zacks Rating System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with only the top 5% receiving a 'Strong Buy' rating, highlighting RLI Corp.'s strong position [7][9] - The Zacks Rank has a proven track record, with Zacks Rank 1 stocks generating an average annual return of +25% since 1988, suggesting potential for significant returns [7] Market Implications - The upgrade reflects an improvement in RLI Corp.'s underlying business, which is expected to drive buying pressure and increase the stock price [5][11] - The correlation between earnings estimate revisions and stock price movements is emphasized, indicating that tracking these revisions can be beneficial for investment decisions [6][4]

The Zacks Consensus Estimate for PLMR's 2024 and 2025 earnings implies year-over-year growth of 25.7% and 17.8%, respectively. NMI Holdings has a solid track record of beating earnings estimates in each of the trailing four quarters, the average being 8.60%. In the past year, NMIH has jumped 25.6%. The Zacks Consensus Estimate for NMIH's 2024 and 2025 earnings implies year-over-year growth of 10.6% and 7.6%, respectively. RLI Corp. (RLI) is well-poised to gain from a compelling product portfolio, rate incre ...

A month has gone by since the last earnings report for RLI Corp. (RLI) . Shares have added about 1% in that time frame, underperforming the S&P 500. Will the recent positive trend continue leading up to its next earnings release, or is RLI Corp. due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts. RLI's Q1 Earnings Top Estimates on Strong Segmental Res ...

PART I - FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) RLI Corp.'s Q1 2024 and 2023 unaudited interim financial statements detail earnings, balance sheets, equity, cash flows, and related accounting notes [Condensed Consolidated Statements of Earnings and Comprehensive Earnings](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Earnings%20and%20Comprehensive%20Earnings) RLI Corp. saw increased Q1 2024 net earnings and revenue from higher premiums and investment income, but comprehensive earnings fell due to fixed income losses | Metric | Q1 2024 (in millions) | Q1 2023 (in millions) | Change (%) | | :-------------------------------- | :-------------------- | :-------------------- | :--------- | | Net premiums earned | **$360.7** | $307.7 | **17.2%** | | Consolidated revenue | **$444.8** | $364.9 | **21.9%** | | Net earnings | **$127.9** | $98.8 | **29.4%** | | Basic net earnings per share | **$2.80** | $2.17 | **29.0%** | | Diluted net earnings per share | **$2.77** | $2.15 | **28.8%** | | Comprehensive earnings | **$115.2** | $136.5 | **-15.6%** | | Net unrealized gains on equity securities | **$45.3** | $15.5 | **192.4%** | | Net investment income | **$32.8** | $27.1 | **21.3%** | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) RLI Corp.'s total assets and shareholders' equity grew from December 2023 to March 2024, driven by investments and cash, with liabilities also rising from unpaid losses | Metric | March 31, 2024 (in billions) | December 31, 2023 (in billions) | Change (%) | | :------------------------------------------ | :--------------------------- | :------------------------------ | :--------- | | Total Assets | **$5.34** | $5.18 | **3.05%** | | Total Liabilities | **$3.82** | $3.77 | **1.35%** | | Total Shareholders' Equity | **$1.52** | $1.41 | **7.59%** | | Total investments and cash | **$3.76** | $3.68 | **2.21%** | | Unpaid losses and settlement expenses | **$2.53** | $2.45 | **3.52%** | [Condensed Consolidated Statements of Shareholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) Shareholders' equity significantly increased from January to March 2024, driven by net earnings and share-based compensation, partially offset by comprehensive losses and dividends | Metric | March 31, 2024 (in millions) | January 1, 2024 (in millions) | Change (%) | | :-------------------------------- | :--------------------------- | :---------------------------- | :--------- | | Total Shareholders' Equity | **$1,520.8** | $1,413.5 | **7.59%** | | Net earnings (Q1 2024) | **$127.9** | N/A | N/A | | Other comprehensive earnings (loss), net of tax (Q1 2024) | **$(12.7)** | N/A | N/A | | Share-based compensation (Q1 2024) | **$4.4** | N/A | N/A | | Dividends and dividend equivalents (Q1 2024) | **$(12.3)** | N/A | N/A | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) RLI Corp. saw a net cash increase in Q1 2024, primarily from strong operating cash flows, offsetting investing and financing activities | Cash Flow Activity | Q1 2024 (in millions) | Q1 2023 (in millions) | Change (%) | | :-------------------------------- | :-------------------- | :-------------------- | :--------- | | Net cash provided by operating activities | **$70.9** | $69.2 | **2.5%** | | Net cash used in investing activities | **$(53.1)** | $(57.8) | **-8.2%** | | Net cash used in financing activities | **$(9.7)** | $(11.5) | **-14.9%** | | Net increase (decrease) in cash | **$8.1** | $(0.05) | N/A | | Cash at March 31, | **$44.6** | $22.8 | **95.7%** | [Notes to Unaudited Condensed Consolidated Interim Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Interim%20Financial%20Statements) This section details disclosures for interim financial statements, covering accounting policies, investments, loss development, income taxes, stock compensation, segments, leases, and acquisitions [1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=9&type=section&id=1.%20BASIS%20OF%20PRESENTATION%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) Interim financial statements follow GAAP, with no material 2024 impact from new standards, and comprehensive earnings showed unrealized losses due to higher interest rates - ASU 2023-07 (Segment Reporting) and ASU 2023-09 (Income Taxes) are prospective accounting standards effective for fiscal years beginning after December 15, 2024, and are expected to be disclosure-related without material financial impact[23](index=23&type=chunk)[24](index=24&type=chunk) - Allowances for uncollectible reinsurance balances were **$16 million** (paid) and **$11 million** (unpaid) at March 31, 2024, with no write-offs in Q1 2024[28](index=28&type=chunk) - Goodwill and intangible assets totaled **$53.6 million** at March 31, 2024, with no impairment identified[29](index=29&type=chunk) - Other comprehensive earnings (loss), net of tax, was **$(12.7) million** in Q1 2024, compared to **$37.7 million** in Q1 2023, primarily due to unrealized losses on fixed income securities from increased interest rates[32](index=32&type=chunk)[33](index=33&type=chunk)[34](index=34&type=chunk) - Fair value measurements are categorized into **Level 1** (unadjusted quoted prices in active markets), **Level 2** (observable inputs), and **Level 3** (unobservable inputs)[36](index=36&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk) [2. INVESTMENTS](index=17&type=section&id=2.%20INVESTMENTS) The investment portfolio, primarily fixed income and equity, saw Q1 2024 net realized gains from equities, while fixed income had losses, and credit loss allowance decreased | Sales Type | Q1 2024 Net Realized Gain (Loss) (in millions) | Q1 2023 Net Realized Gain (Loss) (in millions) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Fixed income securities | **$(0.5)** | $(0.05) | | Equity securities | **$7.1** | $2.3 | | Investment Type (March 31, 2024) | Level 1 (in millions) | Level 2 (in millions) | Level 3 (in millions) | Total (in millions) | | :------------------------------- | :-------------------- | :-------------------- | :-------------------- | :------------------ | | Fixed income securities | $— | **$2,800.8** | **$62.6** | **$2,863.3** | | Equity securities | **$641.8** | $— | **$1.6** | **$643.4** | - The allowance for credit losses on available-for-sale fixed income securities decreased from **$0.3 million** at January 1, 2024, to **$0.2 million** at March 31, 2024, with no losses recognized on securities for which the intent to hold until recovery was lost in Q1 2024, compared to **$2 million** in Q1 2023[57](index=57&type=chunk) - As of March 31, 2024, the fixed income portfolio contained 1,336 securities with **$228 million** in unrealized losses, representing **7%** of the portfolio's cost basis, with **86.4%** of these securities rated NAIC 1 (AAA/AA/A)[58](index=58&type=chunk)[61](index=61&type=chunk) - Other invested assets totaled **$59 million** at March 31, 2024, including **$9 million** in LIHTC interests, **$12 million** in HTC investment, and **$27 million** in private funds[62](index=62&type=chunk)[65](index=65&type=chunk)[66](index=66&type=chunk)[68](index=68&type=chunk) - Investments in unconsolidated investees were **$66 million** at March 31, 2024, primarily in Prime Holdings Insurance Services, Inc[69](index=69&type=chunk) - Cash and short-term investments increased to **$45 million** and **$147 million**, respectively, at March 31, 2024, from **$36 million** and **$135 million** at December 31, 2023[70](index=70&type=chunk) [3. HISTORICAL LOSS AND LAE DEVELOPMENT](index=24&type=section&id=3.%20HISTORICAL%20LOSS%20AND%20LAE%20DEVELOPMENT) RLI Corp. reported **$42.4 million** favorable development on prior years' loss reserves in Q1 2024, mainly from 2016-2019 and 2023 accident years, a decrease from **$51.8 million** in Q1 2023 | Metric | Q1 2024 (in millions) | Q1 2023 (in millions) | | :-------------------------------- | :-------------------- | :-------------------- | | Favorable development on prior accident years | **$42.4** | $51.8 | - Drivers of favorable development in Q1 2024 included Marine, commercial property, personal umbrella, general liability, executive products, transportation, and surety, with no products experiencing significant adverse development in either period[71](index=71&type=chunk)[72](index=72&type=chunk) [4. INCOME TAXES](index=24&type=section&id=4.%20INCOME%20TAXES) The effective tax rate for Q1 2024 increased to **20.1%** from **19.5%** in Q1 2023, primarily due to higher pretax income reducing the proportional impact of tax-favored adjustments | Metric | Q1 2024 | Q1 2023 | | :---------------- | :------ | :------ | | Effective tax rate | **20.1%** | 19.5% | - The increase in the effective tax rate was due to higher pretax income decreasing the percentage impact of tax-favored adjustments[73](index=73&type=chunk) [5. STOCK BASED COMPENSATION](index=25&type=section&id=5.%20STOCK%20BASED%20COMPENSATION) RLI Corp.'s 2023 LTIP replaced the 2015 plan, with Q1 2024 equity award compensation expense decreasing, and **$5 million** unrecognized expense to be recognized over **2.63 years** - The 2023 RLI Corp. Long-Term Incentive Plan (LTIP) replaced the 2015 LTIP, with **4,004,891 shares** available for equity-based compensation, and **28,475 awards** granted in Q1 2024[77](index=77&type=chunk) | Metric | Q1 2024 (in millions) | Q1 2023 (in millions) | | :-------------------------------- | :-------------------- | :-------------------- | | Total compensation expense (equity awards) | **$1.8** | $2.5 | | Total income tax benefit | **$0.3** | $0.4 | - Total unrecognized compensation expense relating to outstanding and unvested awards was **$5 million**, to be recognized over a weighted average vesting period of **2.63 years**[78](index=78&type=chunk) - As of March 31, 2024, **1,574,750 stock options** were outstanding with a weighted average exercise price of **$95.04**, and **45,650 nonvested Restricted Stock Units (RSUs)** with a weighted average grant date fair value of **$125.43**[82](index=82&type=chunk)[85](index=85&type=chunk) [6. OPERATING SEGMENT INFORMATION](index=28&type=section&id=6.%20OPERATING%20SEGMENT%20INFORMATION) RLI Corp. saw increased Q1 2024 net premiums earned across all segments, led by Property, which also drove overall underwriting income growth, while Property's combined ratio improved | Segment | Q1 2024 Net Premiums Earned (in millions) | Q1 2023 Net Premiums Earned (in millions) | Change (%) | | :-------- | :-------------------------------------- | :-------------------------------------- | :--------- | | Casualty | **$198.3** | $186.0 | **7%** | | Property | **$129.4** | $88.8 | **46%** | | Surety | **$33.0** | $32.9 | **0%** | | Total | **$360.7** | $307.7 | **17%** | | Segment | Q1 2024 Net Underwriting Income (in millions) | Q1 2023 Net Underwriting Income (in millions) | Change (%) | | :-------- | :------------------------------------------ | :------------------------------------------ | :--------- | | Casualty | **$13.7** | $31.8 | **-57%** | | Property | **$57.7** | $28.4 | **103%** | | Surety | **$6.3** | $7.7 | **-18%** | | Total | **$77.7** | $67.9 | **14%** | | Segment | Q1 2024 Combined Ratio | Q1 2023 Combined Ratio | | :-------- | :--------------------- | :--------------------- | | Casualty | **93.2** | 82.9 | | Property | **55.3** | 68.0 | | Surety | **80.8** | 76.7 | | Total | **78.5** | 77.9 | [7. LEASES](index=30&type=section&id=7.%20LEASES) RLI Corp.'s Q1 2024 operating lease costs decreased, while ROU assets and liabilities increased, with obligations primarily for branch office facilities | Metric | Q1 2024 (in millions) | Q1 2023 (in millions) | Change (%) | | :-------------------------------- | :-------------------- | :-------------------- | :--------- | | Total lease cost | **$1.4** | $1.6 | **-10.3%** | | Operating lease ROU assets (Mar 31) | **$16.1** | N/A | N/A | | Operating lease liabilities (Mar 31) | **$17.4** | N/A | N/A | - Operating lease ROU assets increased to **$16.1 million** at March 31, 2024, from **$13.7 million** at December 31, 2023, and operating lease liabilities increased to **$17.4 million** at March 31, 2024, from **$14.9 million** at December 31, 2023[89](index=89&type=chunk) - The weighted-average remaining lease term for operating leases was **6.16 years**, with a weighted-average discount rate of **3.48%** as of March 31, 2024[89](index=89&type=chunk) [8. ACQUISITIONS AND DISPOSITIONS](index=30&type=section&id=8.%20ACQUISITIONS%20AND%20DISPOSITIONS) RLI Corp. recognized a **$14 million** gain in Q1 2023 from the Maui Jim, Inc. sale escrow payout, with no similar gains in Q1 2024 - A **$14 million** gain was recognized in Q1 2023 from the working capital escrow payout of the Maui Jim, Inc. sale[90](index=90&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses RLI Corp.'s Q1 2024 financial condition and operations, covering business overview, results, investments, income taxes, and liquidity, highlighting key drivers [Overview](index=32&type=section&id=OVERVIEW) RLI Corp. is a specialty insurer focused on niche property, casualty, and surety markets, achieving its 28th consecutive year of underwriting profitability in 2023 with an **88.2** average combined ratio - RLI Corp. is a U.S.-based specialty insurance company focused on niche markets, underwriting property, casualty, and surety products[93](index=93&type=chunk) - The company achieved its **28th consecutive year** of underwriting profitability in 2023, with an average combined ratio of **88.2** over that period[93](index=93&type=chunk) - Key performance measures include underwriting income and combined ratio (loss ratio + expense ratio)[94](index=94&type=chunk)[103](index=103&type=chunk) - The company's primary focus is on underwriting profitability, with a secondary focus on premium growth where underwriting profit exists[100](index=100&type=chunk) [Results of Operations](index=36&type=section&id=RESULTS%20OF%20OPERATIONS) RLI Corp. reported improved Q1 2024 net earnings, driven by a **17%** increase in net premiums earned and equity gains, with underwriting income rising to **$78 million** despite a **78.5%** combined ratio - Net premiums earned increased **17%** in Q1 2024, driven by property and casualty segments[108](index=108&type=chunk) | Metric | Q1 2024 (in millions) | Q1 2023 (in millions) | Change (%) | | :-------------------------------- | :-------------------- | :-------------------- | :--------- | | Net earnings | **$128.0** | $99.0 | **29.3%** | | Comprehensive earnings | **$115.0** | $137.0 | **-16.1%** | | Underwriting income | **$78.0** | $68.0 | **14.7%** | | Combined Ratio | **78.5%** | 77.9% | **+0.6 pts** | | Loss Ratio | **39.9%** | 37.2% | **+2.7 pts** | | Expense Ratio | **38.6%** | 40.7% | **-2.1 pts** | - Q1 2024 results included **$12 million** of pretax storm losses (vs **$4 million** in Q1 2023) and **$42 million** of favorable development on prior years' loss reserves (vs **$52 million** in Q1 2023)[109](index=109&type=chunk) - Gross premiums written increased **$54 million** (**13%**) in Q1 2024, with growth across all three segments: Casualty (**+13%**), Property (**+14%**), and Surety (**+12%**)[116](index=116&type=chunk)[117](index=117&type=chunk) - Casualty underwriting income decreased due to lower prior accident years' reserve releases, Property underwriting income significantly increased due to larger reserve releases and low attritional losses, despite higher storm losses, and Surety underwriting income decreased due to reinsurance reinstatement premium and higher expense ratio[123](index=123&type=chunk)[125](index=125&type=chunk)[126](index=126&type=chunk)[127](index=127&type=chunk)[129](index=129&type=chunk)[130](index=130&type=chunk) [Investment Income](index=42&type=section&id=Investment%20Income) Net investment income increased **21%** in Q1 2024 due to higher interest rates and an expanded asset base, with the diversified portfolio comprising **76.2%** fixed income and **17.1%** equity - Net investment income increased by **21%** to **$33 million** in Q1 2024, driven by higher interest rates and an increased average asset base[131](index=131&type=chunk) | Investment Type (March 31, 2024) | % of Total Fair Value | | :------------------------------- | :-------------------- | | Fixed income | **76.2%** | | Equity securities | **17.1%** | | Short-term investments | **3.9%** | | Other invested assets | **1.6%** | | Cash | **1.2%** | - The average fixed income duration was **4.6 years** at March 31, 2024, and the equity portfolio increased by **$53 million** due to positive market performance[133](index=133&type=chunk) - The equity portfolio had a dividend yield of **1.9%** at March 31, 2024, compared to **1.4%** for the S&P 500 index, benefiting from a **13.1%** effective tax rate on dividends due to the corporate dividend-received-deduction[148](index=148&type=chunk) [Income Taxes](index=42&type=section&id=Income%20Taxes) The effective tax rate for Q1 2024 increased to **20.1%** from **19.5%** in Q1 2023, primarily due to higher pretax income reducing the proportional impact of tax-favored adjustments | Metric | Q1 2024 | Q1 2023 | | :---------------- | :------ | :------ | | Effective tax rate | **20.1%** | 19.5% | - The higher effective tax rate in Q1 2024 was due to increased pretax income, which decreased the percentage impact of tax-favored adjustments[134](index=134&type=chunk) [Liquidity and Capital Resources](index=42&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) RLI Corp. generated **$70.9 million** in Q1 2024 operating cash flows, increasing net cash, and maintains **$100 million** in debt, with sufficient liquidity expected from its diversified investment portfolio | Cash Flow Activity | Q1 2024 (in millions) | Q1 2023 (in millions) | | :-------------------------------- | :-------------------- | :-------------------- | | Operating cash flows | **$70.9** | $69.2 | | Net increase (decrease) in cash | **$8.1** | $(0.05) | - As of March 31, 2024, RLI Corp. had **$100 million** in debt outstanding, including **$50 million** from a revolving line of credit with PNC Bank and **$50 million** borrowed from the Federal Home Loan Bank of Chicago (FHLBC)[138](index=138&type=chunk) - The investment portfolio increased by **$81 million** from December 31, 2023, to March 31, 2024, and cash and other investments maturing within one year totaled approximately **$378 million**[140](index=140&type=chunk)[142](index=142&type=chunk) - The capital structure at March 31, 2024, consisted of **$100 million** in debt and **$1.5 billion** in shareholders' equity, with debt comprising **6%** of total capital[151](index=151&type=chunk) - RLI Corp. paid a regular quarterly cash dividend of **$0.27 per share** on March 20, 2024, marking **48 consecutive years** of dividend increases[152](index=152&type=chunk) - Ordinary dividends from the principal insurance subsidiary (RLI Ins.) to RLI Corp. were **$17 million** in Q1 2024, and as of March 31, 2024, **$5 million** of RLI Ins.'s net assets were unrestricted for ordinary dividend distribution[154](index=154&type=chunk) [Item 3. 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 RLI Corp.'s market risk exposure from the 2023 10-K, with primary risks remaining equity price and interest rate, focused on high credit quality securities - No material changes to market risk exposure from the 2023 Annual Report on Form 10-K[156](index=156&type=chunk) - Primary market risks are **equity price risk** and **interest rate risk**, with investments consistently in high credit quality, investment-grade securities[157](index=157&type=chunk) [Item 4. Controls and Procedures](index=49&type=section&id=Item%204.%20Controls%20and%20Procedures) RLI Corp.'s management confirmed effective disclosure controls and procedures as of March 31, 2024, with no material changes to internal control over financial reporting during the quarter - Disclosure controls and procedures were deemed **effective** as of March 31, 2024[158](index=158&type=chunk) - No material changes were made to internal control over financial reporting during the last fiscal quarter[160](index=160&type=chunk) PART II - OTHER INFORMATION [Item 1. Legal Proceedings](index=50&type=section&id=Item%201.%20Legal%20Proceedings) There were no material changes to report regarding legal proceedings - No material changes to report[163](index=163&type=chunk) [Item 1A. Risk Factors](index=50&type=section&id=Item%201A.%20Risk%20Factors) There were no material changes to report regarding risk factors - No material changes to report[164](index=164&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=50&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item is not applicable for the reporting period - Not applicable[165](index=165&type=chunk) [Item 3. Defaults upon Senior Securities](index=50&type=section&id=Item%203.%20Defaults%20upon%20Senior%20Securities) This item is not applicable for the reporting period - Not applicable[166](index=166&type=chunk) [Item 4. Mine Safety Disclosures](index=50&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable for the reporting period - Not applicable[167](index=167&type=chunk) [Item 5. Other Information](index=50&type=section&id=Item%205.%20Other%20Information) No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during Q1 2024 - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the three months ended March 31, 2024[169](index=169&type=chunk) [Item 6. Exhibits](index=50&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including Sarbanes-Oxley certifications and Inline XBRL documents | Exhibit Number | Description of Document | | :------------- | :---------------------------------------------------------- | | 31.1 | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | | 31.2 | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | | 32.1 | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | | 32.2 | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | | 101.INS | Inline XBRL Instance Document | | 101.SCH | Inline XBRL Taxonomy Extension Schema | | 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase | | 101.DEF | Inline XBRL Taxonomy Definition Linkbase | | 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase | | 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase | | 104 | Cover Page Interactive Data File | [SIGNATURES](index=52&type=section&id=Signatures) This section contains the required Form 10-Q signatures, certifying its submission on behalf of RLI Corp. by its Chief Financial Officer - The report was signed by **Todd W. Bryant**, Chief Financial Officer (Principal Financial and Chief Accounting Officer) on **April 24, 2024**[175](index=175&type=chunk)

RLI Corporation (NYSE:RLI) Q1 2024 Earnings Conference Call April 23, 2024 11:00 AM ET Company Participants Aaron Diefenthaler - CIO & Treasurer Craig Kliethermes - President, CEO & Director Todd Bryant - CFO Jen Klobnak - COO Conference Call Participants Charles Peters - Raymond James & Associates Andrew Andersen - Jefferies Scott Heleniak - RBC Capital Markets Fiona Diamond - William Blair & Company Operator Good morning, and welcome to the RLI Corp. First Quarter Earnings Teleconference. After management ...

EXHIBIT 99.1 RLI REPORTS FIRST QUARTER 2024 RESULTS PEORIA, ILLINOIS, April 22, 2024 – 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 Sh ...

Part I [Business](index=3&type=section&id=Item%201.%20Business) RLI Corp. is a specialty insurer founded in 1965, operating through three subsidiaries across Casualty, Property, and Surety segments, focusing on underwriting profit and conservative investments [Company and Market Overview](index=3&type=section&id=Company%20and%20Market%20Overview) RLI Corp. underwrites specialty P&C products through subsidiaries, focusing on admitted and E&S markets for unique risks - RLI Corp. operates through three insurance companies: **RLI Insurance Company** (admitted lines), **Mt. Hawley Insurance Company** (excess and surplus lines), and **Contractors Bonding and Insurance Company** (admitted lines)[10](index=10&type=chunk) 2023 Gross Premiums Written by Market | Market | Gross Premiums Written (2023) | Percentage of Total | | :--- | :--- | :--- | | Specialty Admitted | $992 million | 55% | | Excess and Surplus | $794 million | 44% | | Specialty Reinsurance | $21 million | 1% | [Business Segments](index=4&type=section&id=Business%20Segments) Operations are segmented into Casualty (59% of net premiums earned), Property (31%), and Surety (10%), each with distinct product offerings Net Premiums Earned by Segment (2021-2023) | Segment | 2023 Net Premiums Earned | % of Total (2023) | 2022 Net Premiums Earned | 2021 Net Premiums Earned | | :--- | :--- | :--- | :--- | :--- | | Casualty | $758,346,000 | 59% | $711,832,000 | $633,639,000 | | Property | $401,530,000 | 31% | $307,886,000 | $231,837,000 | | Surety | $134,430,000 | 10% | $124,718,000 | $115,427,000 | | **Total** | **$1,294,306,000** | **100%** | **$1,144,436,000** | **$980,903,000** | - The Casualty segment offers diverse products including commercial excess, personal umbrella, transportation, and professional services[19](index=19&type=chunk)[20](index=20&type=chunk)[21](index=21&type=chunk) - The Property segment primarily covers commercial property, including E&S lines for fire, earthquake, and wind, alongside marine and specialized homeowners' insurance[26](index=26&type=chunk)[27](index=27&type=chunk)[28](index=28&type=chunk) - The Surety segment provides commercial, transactional (e.g., license and permit bonds), and contract bonds for small to medium-sized contractors[29](index=29&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk) [Marketing, Competition, and Ratings](index=8&type=section&id=Marketing%2C%20Competition%2C%20and%20Ratings) RLI distributes products via brokers and agents, competing on service and pricing, maintaining strong financial strength ratings like **A+ from AM Best** - The company's primary distribution channels are wholesale/retail brokers, independent agents, and carrier partners[32](index=32&type=chunk) - RLI competes on innovative coverages, service quality, and fair pricing, prioritizing underwriting standards over market share[38](index=38&type=chunk) Financial Strength Ratings (as of Dec 31, 2023) | Rating Agency | RLI Ins., Mt. Hawley, CBIC | Rating Description | | :--- | :--- | :--- | | AM Best | A+ | Superior | | Standard & Poor's | A | Strong | | Moody's | A2 | Low Credit Risk | [Reinsurance](index=9&type=section&id=Reinsurance) RLI uses reinsurance to diversify risk, limit losses, and reduce volatility, ceding **$378.9 million** in premiums in 2023 Premiums Written and Earned (2021-2023) | (in thousands) | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | **Premiums Written** | | | | | Direct and Assumed | $1,806,660 | $1,565,486 | $1,347,354 | | Reinsurance ceded | ($378,913) | ($323,950) | ($289,821) | | **Net** | **$1,427,747** | **$1,241,536** | **$1,057,533** | | **Premiums Earned** | | | | | Direct and Assumed | $1,699,419 | $1,460,845 | $1,253,296 | | Reinsurance ceded | ($405,113) | ($316,409) | ($272,393) | | **Net** | **$1,294,306** | **$1,144,436** | **$980,903** | 2024 Catastrophe Coverage (in millions) | Peril | First-Dollar Retention | Limit | | :--- | :--- | :--- | | California earthquake | $25 | $850 | | Non-California earthquake | $50 | $850 | | Other perils (incl. hurricane) | $50 | $750 | - Based on the January 1, 2024 treaty, there is a **99.6% likelihood** that net loss from a single catastrophic event will be less than **8.0% of policyholders' statutory surplus**[55](index=55&type=chunk) [Operating Ratios](index=14&type=section&id=Operating%20Ratios) RLI maintains a conservative capital position with a **0.9 to 1** premiums-to-surplus ratio and a strong **86.6 GAAP combined ratio** in 2023 Premiums to Surplus Ratio (2019-2023) | Year | Statutory Net Premiums Written | Policyholders' Surplus | Ratio | | :--- | :--- | :--- | :--- | | 2023 | $1,427,747,000 | $1,520,135,000 | 0.9 to 1 | | 2022 | $1,241,536,000 | $1,407,925,000 | 0.9 to 1 | | 2021 | $1,057,533,000 | $1,240,649,000 | 0.9 to 1 | | 2020 | $892,088,000 | $1,121,592,000 | 0.8 to 1 | | 2019 | $860,337,000 | $1,029,671,000 | 0.8 to 1 | Combined Ratio (2019-2023) | Year | Loss Ratio | Expense Ratio | Combined Ratio | | :--- | :--- | :--- | :--- | | 2023 | 46.7 | 39.9 | 86.6 | | 2022 | 44.9 | 39.5 | 84.4 | | 2021 | 46.5 | 40.3 | 86.8 | | 2020 | 51.2 | 40.8 | 92.0 | | 2019 | 49.3 | 42.6 | 91.9 | [Investments](index=15&type=section&id=Investments) RLI's investment strategy prioritizes capital preservation and book value growth, with **78%** in fixed income and **16%** in equity as of 2023 - The investment strategy prioritizes capital preservation and book value growth through total return, with no derivatives in the portfolio[62](index=62&type=chunk) Investment Portfolio Allocation (as of Dec 31, 2023) | Asset Class | Percentage of Total Portfolio | | :--- | :--- | | Fixed Income | 78% | | Equity | 16% | | Cash & Short-term | 5% | | Other Invested Assets | 1% | - As of December 31, 2023, **81%** of the fixed income portfolio was rated 'A' or better, with **58%** rated 'AA' or better[64](index=64&type=chunk) [Regulation](index=15&type=section&id=Regulation) RLI and its subsidiaries are subject to extensive state regulation, primarily by the IDOI, covering solvency, market conduct, and dividend payments - The company is primarily regulated at the state level, with the **Illinois Department of Insurance (IDOI)** as its principal regulator[70](index=70&type=chunk) - State regulations restrict insurance subsidiaries' ability to pay dividends to RLI Corp., requiring prior approval for extraordinary dividends[71](index=71&type=chunk) - As of December 31, 2023, RLI's principal insurance subsidiary had **$1.5 billion** in statutory capital, over five times its **$273 million** authorized control level RBC[74](index=74&type=chunk) [Human Capital](index=21&type=section&id=Human%20Capital) RLI employed **1,099 associates** in 2023, fostering an ownership culture through ESOP and LTIP, with insiders owning **9%** of shares - The company's workforce grew to **1,099 employees** in 2023 from **1,001** in 2022, with an average tenure of **8.8 years**[92](index=92&type=chunk) - An **Employee Stock Ownership Plan (ESOP)** and **long-term incentive plan (LTIP)** align employee and shareholder interests[97](index=97&type=chunk) - As of December 31, 2023, insiders owned **9%** of RLI Corp. shares[97](index=97&type=chunk) [Risk Factors](index=23&type=section&id=Item%201A.%20Risk%20Factors) RLI faces risks from industry cyclicality, competition, producer concentration, inadequate loss reserves, catastrophes, climate change, and cybersecurity threats [Insurance Industry Risks](index=23&type=section&id=Insurance%20Industry%20Risks) RLI faces P&C industry cyclicality, competition, producer concentration (**42%** from six entities), geographic concentration, and catastrophic loss unpredictability - The property and casualty insurance industry is cyclical, with results fluctuating due to competitive pressures, loss costs, and economic conditions[100](index=100&type=chunk) - In 2023, **42%** of gross premiums written were generated through six producer entities, indicating concentration risk[104](index=104&type=chunk) - Business is geographically concentrated, with **57%** of 2023 direct premiums earned from Florida (**20%**), California (**17%**), Texas (**11%**), and New York (**9%**)[105](index=105&type=chunk) - Estimating loss reserves is inherently uncertain; if actual losses exceed reserves, profitability will be negatively impacted[119](index=119&type=chunk)[120](index=120&type=chunk) - The company is exposed to unpredictable catastrophic events, and climate change may increase the frequency and severity of weather-related losses[125](index=125&type=chunk)[128](index=128&type=chunk) [Financial and Investment Risks](index=31&type=section&id=Financial%20and%20Investment%20Risks) RLI's financial performance is exposed to adverse economic conditions, dividend restrictions from subsidiaries, and investment portfolio market fluctuations - Adverse economic conditions can reduce demand for insurance products, as premiums depend on customer revenues, payroll, and construction spending[132](index=132&type=chunk) - RLI Corp. relies on dividends from its insurance subsidiaries, which are restricted by state laws, potentially limiting parent company cash flow[134](index=134&type=chunk) - The investment portfolio's value can fluctuate due to interest rate changes, credit risk, and stock market movements, impacting financial condition[136](index=136&type=chunk) [Operational Risks](index=33&type=section&id=Operational%20Risks) Operational risks include internal procedure failures, talent retention, third-party vendor reliance, cybersecurity threats, litigation, and potential pandemics - The company's success depends on managing operational risks like fraud, errors, and compliance failures through its **enterprise risk management (ERM)** framework[137](index=137&type=chunk) - The business depends on attracting and retaining experienced underwriting and claims talent[140](index=140&type=chunk) - RLI relies on third-party vendors for key components like catastrophe modeling software and claims processing, creating dependency risk[141](index=141&type=chunk) - Cybersecurity threats pose significant risk, potentially disrupting operations, compromising data, and leading to litigation and financial penalties[144](index=144&type=chunk)[146](index=146&type=chunk) [Unresolved Staff Comments](index=39&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments - None[153](index=153&type=chunk) [Cybersecurity](index=39&type=section&id=Item%201C.%20Cybersecurity) RLI manages cybersecurity risks using the NIST Framework, with oversight from the Board's audit committee and a management risk committee - The company's cybersecurity risk management is based on the **NIST Cybersecurity Framework**[154](index=154&type=chunk) - The Board's audit committee provides primary cybersecurity oversight, receiving quarterly updates from the **CIO/CISO**[156](index=156&type=chunk) - A management risk committee, chaired by the CEO, provides management-level oversight of cybersecurity risks[157](index=157&type=chunk) [Properties](index=41&type=section&id=Item%202.%20Properties) RLI owns its Peoria, Illinois headquarters, featuring a **1.8-megawatt solar field**, while other offices are leased - RLI owns its **173,000 square foot** corporate headquarters on a **23-acre campus** in Peoria, Illinois[162](index=162&type=chunk) - The Peoria campus features a **1.8-megawatt solar field** designed to cover the headquarters' annual electrical needs[163](index=163&type=chunk) [Legal Proceedings](index=41&type=section&id=Item%203.%20Legal%20Proceedings) Legal proceedings information is detailed in Note 10 to the Consolidated Financial Statements - Details on legal proceedings are available in **Note 10** to the Consolidated Financial Statements[164](index=164&type=chunk) [Mine Safety Disclosures](index=41&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[165](index=165&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=41&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) RLI common stock trades on NYSE, boasts **190 consecutive quarterly dividends**, and a **17.7% five-year annualized total return**, outperforming benchmarks - RLI has paid dividends for **190 consecutive quarters** and increased its quarterly dividend for **48 consecutive years**[167](index=167&type=chunk) - A special cash dividend of **$2.00 per share** was paid in December 2023, compared to **$7.00 per share** in December 2022[167](index=167&type=chunk) Five-Year Annualized Total Return Comparison | Index | 5-Year Annualized Total Return | | :--- | :--- | | RLI | 17.7% | | S&P 500 | 15.7% | | S&P 500 P&C Index | 15.7% | - The board terminated its **$100 million** share repurchase program in 2023, with no shares repurchased during the year[173](index=173&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=43&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) RLI achieved its **28th consecutive year of underwriting profitability** with an **86.6 combined ratio** in 2023, driven by **15% gross premium growth** and **40% net investment income increase** [Overview and Key Performance Measures](index=43&type=section&id=Overview%20and%20Key%20Performance%20Measures) RLI, a specialty insurer, achieved **28 consecutive years of underwriting profitability**, with **$173.2 million** in underwriting income in 2023 - The company achieved its **28th consecutive year of underwriting profitability** in 2023, with a **28-year average combined ratio of 88.2**[176](index=176&type=chunk) Reconciliation of Net Earnings to Underwriting Income | (in thousands) | 2023 | 2022 | | :--- | :--- | :--- | | Net earnings | $304,611 | $583,411 | | Earnings before income taxes | $377,265 | $720,678 | | **Underwriting income** | **$173,185** | **$178,216** | [Critical Accounting Policies](index=43&type=section&id=Critical%20Accounting%20Policies) Critical accounting policies involve significant estimates for unpaid losses, investment valuation, reinsurance recoverability, and deferred policy acquisition costs - Critical accounting policies involve significant estimates for unpaid losses, investment valuation, reinsurance balances, deferred policy acquisition costs, and deferred taxes[182](index=182&type=chunk) - Loss reserves are estimates for reported (case) and incurred but not yet reported (IBNR) claims, involving significant judgment and subject to economic and legal variables[183](index=183&type=chunk)[187](index=187&type=chunk) - The company uses multiple actuarial methods, including Paid Loss Development, Incurred Loss Development, and Bornhuetter/Ferguson (BF), weighted by accident year maturity and product characteristics[201](index=201&type=chunk)[211](index=211&type=chunk) [Results of Operations](index=59&type=section&id=Results%20of%20Operations) Consolidated revenue was **$1.5 billion** in 2023, with **13% net premium growth**, **$173 million** underwriting income, and **40% net investment income increase** Consolidated Revenue (2022-2023) | (in thousands) | 2023 | 2022 | | :--- | :--- | :--- | | Net premiums earned | $1,294,306 | $1,144,436 | | Net investment income | $120,383 | $86,078 | | Net realized gains | $32,518 | $588,515 | | Net unrealized gains (losses) on equity securities | $64,787 | ($121,037) | | **Total consolidated revenue** | **$1,511,994** | **$1,697,992** | Net Earnings (2022-2023) | (in thousands) | 2023 | 2022 | | :--- | :--- | :--- | | Underwriting income | $173,185 | $178,216 | | Earnings before income taxes | $377,265 | $720,678 | | **Net earnings** | **$304,611** | **$583,411** | - Gross premiums written increased by **15%** in 2023, with all three segments contributing, notably **40% growth** in the Property segment[251](index=251&type=chunk)[257](index=257&type=chunk)[262](index=262&type=chunk) - The 2023 combined ratio was **86.6**, up from **84.4** in 2022, driven by higher net retained catastrophe losses, including **$49 million** from Hawaiian wildfires[252](index=252&type=chunk)[253](index=253&type=chunk) [Liquidity and Capital Resources](index=72&type=section&id=Liquidity%20and%20Capital%20Resources) RLI maintains strong liquidity with **$464.3 million** in operating cash flow in 2023, and a capital structure of **$100 million** debt and **$1.4 billion** equity Summary of Cash Flows (2022-2023) | (in thousands) | 2023 | 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $464,257 | $250,448 | | Net cash provided by (used in) investing activities | ($211,803) | $48,879 | | Net cash used in financing activities | ($238,848) | ($365,313) | - As of December 31, 2023, total contractual obligations were approximately **$2.57 billion**, primarily **$2.45 billion** in estimated loss and settlement expense reserves[313](index=313&type=chunk) - The capital structure at year-end 2023 included **$100 million** in debt and **$1.4 billion** in shareholders' equity, with debt comprising **7%** of total capital[325](index=325&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=78&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) RLI's primary market risks are interest rate and equity price risks, managed through duration matching and diversification, with sensitivity analysis provided - The most significant market risk is interest rate risk on the fixed income portfolio, managed by matching asset and liability durations[330](index=330&type=chunk) Market Risk Sensitivity Analysis (as of Dec 31, 2023) | Hypothetical Event | Portfolio | Pretax Reduction in Fair Value | | :--- | :--- | :--- | | +100 basis-point interest rate increase | Fixed Income | ($132 million) | | +200 basis-point interest rate increase | Fixed Income | ($255 million) | | -10% S&P 500 Index decline | Equity | ($55 million) | | -20% S&P 500 Index decline | Equity | ($110 million) | [Financial Statements and Supplementary Data](index=82&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents RLI Corp.'s consolidated financial statements, including balance sheets, earnings, equity, cash flows, and notes, along with the independent auditor's report [Consolidated Financial Statements](index=83&type=section&id=Consolidated%20Financial%20Statements) Consolidated financial statements show **$5.18 billion** in total assets, **$1.41 billion** in equity, and **$304.6 million** net earnings for 2023 Key Balance Sheet Data (as of Dec 31) | (in thousands) | 2023 | 2022 | | :--- | :--- | :--- | | Total Investments and Cash | $3,676,318 | $3,272,301 | | Total Assets | $5,180,221 | $4,767,068 | | Unpaid Losses and Settlement Expenses | $2,446,025 | $2,315,637 | | Total Liabilities | $3,766,707 | $3,589,727 | | Total Shareholders' Equity | $1,413,514 | $1,177,341 | Key Earnings Data (for year ended Dec 31) | (in thousands, except per share) | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Total Consolidated Revenue | $1,511,994 | $1,697,992 | $1,179,245 | | Net Earnings | $304,611 | $583,411 | $279,354 | | Diluted Net Earnings Per Share | $6.61 | $12.74 | $6.11 | [Notes to Consolidated Financial Statements](index=87&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail accounting policies, the **$3.7 billion** investment portfolio, reinsurance program, loss reserve development, debt, and confirm strong subsidiary capital levels - The investment portfolio's fair value was **$3.7 billion** as of December 31, 2023, with **$198.5 million** unrealized losses in fixed income and **$236.0 million** unrealized gains in equity[282](index=282&type=chunk) - The company's reinsurance program limits net loss on any individual risk to a maximum of **$10 million**[450](index=450&type=chunk) - For 2023, the company recognized **$108.5 million** in favorable development on prior accident years' loss reserves, with the Casualty segment contributing **$78.5 million**[454](index=454&type=chunk)[467](index=467&type=chunk) - As of December 31, 2023, the company had **$100 million** in debt outstanding, comprising **$50 million** from a revolving line of credit and **$50 million** from the FHLBC[444](index=444&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=135&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with accountants on accounting or financial disclosure matters - There were no changes in or disagreements with accountants[537](index=537&type=chunk) [Controls and Procedures](index=135&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2023 - Management concluded that disclosure controls and procedures were effective as of December 31, 2023[538](index=538&type=chunk) - Management concluded that internal control over financial reporting was effective as of December 31, 2023[539](index=539&type=chunk) [Other Information](index=135&type=section&id=Item%209B.%20Other%20Information) No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during 2023 - No director or officer adopted or terminated a **Rule 10b5-1** trading plan during 2023[542](index=542&type=chunk) Part III Part III incorporates information by reference from the 2024 proxy statement, covering directors, executive compensation, and security ownership [Directors, Executive Officers, Corporate Governance, Compensation, and Other Matters](index=135&type=section&id=Items%2010-14) Information for Items 10-14 is incorporated by reference from the 2024 definitive proxy statement - Item 10 (Directors, Executive Officers and Corporate Governance) is incorporated by reference from the proxy statement[545](index=545&type=chunk) - Item 11 (Executive Compensation) is incorporated by reference from the proxy statement[546](index=546&type=chunk) - Items 12, 13, and 14 are also incorporated by reference from the proxy statement[547](index=547&type=chunk)[548](index=548&type=chunk) Part IV Part IV lists financial statements, schedules, and exhibits filed with the Form 10-K, including consolidated financials and supplementary data [Exhibits and Financial Statement Schedules](index=136&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all financial statements, schedules, and exhibits filed with the annual report, including corporate governance documents - This item lists the financial statements, financial statement schedules, and exhibits filed as part of the Form 10-K[549](index=549&type=chunk)[551](index=551&type=chunk) [Form 10-K Summary](index=138&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company indicates no Form 10-K summary is provided - None[555](index=555&type=chunk)