Core Viewpoint - AM Best has revised the outlooks for Mercury Casualty Group to stable from negative and affirmed their credit ratings based on the assessment of net ultimate losses and reinsurance recoveries following the January 2025 California wildfires [1][4]. Group 1: Credit Ratings and Outlook - The Financial Strength Rating of A (Excellent) and Long-Term Issuer Credit Ratings of "a" (Excellent) have been affirmed for the members of Mercury [2]. - The Long-Term Issuer Credit Rating of "bbb" (Good) for Mercury General Corporation has also been affirmed, with its outlook revised to stable [3]. Group 2: Financial Performance and Losses - For Q1 2025, Mercury General Corporation reported a net loss of $108.3 million due to the wildfires, with net catastrophe losses and loss adjustment expenses totaling $380 million after reinsurance recoverables [5]. - The company recorded gross catastrophe losses of $2.2 billion before taxes, plus an additional $100.6 million for reinstatement premium [5]. Group 3: Reinsurance and Subrogation - Mercury has exhausted its catastrophe reinsurance limits for the 2025 treaty year, necessitating the payment of a reinstatement premium [6]. - The company is pursuing subrogation against Southern California Edison for the Eaton fire, estimating $538 million in recoveries, and has sold subrogation rights for the Palisades fire for $48 million [6]. Group 4: Balance Sheet and Ratios - At year-end 2025, Mercury reported a policyholder surplus of $2.4 billion, an increase of $362 million from the previous year, with a financial leverage of 19.2% and a combined ratio of 96.3% despite the wildfires [7]. - The catastrophe reinsurance program was renewed on July 1, 2025, providing $2.14 billion in limits, an increase from the previous $1.29 billion [7]. Group 5: Members of Mercury Casualty Group - AM Best affirmed the credit ratings and revised the outlooks to stable for various members of Mercury Casualty Group, including American Mercury Insurance Company and Mercury Insurance Company of Texas among others [8].

Core Insights - RLI Insurance Company has reduced its catastrophe reinsurance limit by $150 million for 2026, indicating lower exposure and a soft market environment described as a "buyer's market" for property [1][2] - The company achieved a 15%–20% rate reduction on its catastrophe program and modest pricing relief on property working layers during the January renewals [2] - The competitive environment has led to a modest premium growth for RLI, with casualty rates down around 5% [3] Financial Performance - RLI reported underwriting income of $70.9 million for Q4 2025, with a combined ratio (CoR) of 82.6%, an improvement from $22.2 million and 94.4% in Q4 2024 [5] - For the full year, RLI posted underwriting income of $264.2 million and a CoR of 83.6%, compared to $210.7 million and 86.2% in 2024 [6] - The favorable results for both periods were supported by prior-year loss reserve development, contributing a net $87.4 million to underwriting income in 2025 and $84.1 million in 2024 [6] Strategic Approach - The company remains open to midterm market opportunities, reflecting a cautious yet flexible approach to risk management [3][5] - RLI emphasizes the importance of sustainable growth over rapid expansion, focusing on long-term decision-making [4] - The firm maintains a diversified specialty portfolio and a strong balance sheet, providing confidence in navigating market conditions [5]