Core Insights - The FPA Queens Road Small Cap Value Fund reported a return of 7.46% in Q3 2025, underperforming the Russell 2000 Value Index which returned 12.60% during the same period [1] - For the first three quarters of 2025, the fund achieved a return of 13.77%, outperforming the index's return of 9.04% [1] - The fund's investment strategy emphasizes a disciplined and patient approach, expecting to perform better in down markets and lag in speculative markets [1] Company Overview: RLI Corp. - RLI Corp. (NYSE:RLI) is an insurance holding company with a one-month return of 7.17% but has seen a significant decline of 29.74% over the past 52 weeks [2] - As of November 24, 2025, RLI Corp.'s stock closed at $63.55 per share, with a market capitalization of $5.836 billion [2] - RLI Corp. specializes in property and casualty insurance, focusing on niche markets such as public and school buses and Hawaii homeowners [3] Financial Performance - RLI Corp. has maintained a strong financial performance, with an average combined ratio of 89.3% and a return on equity (ROE) of 16.6% from 2015 to 2024 [3] - The company is known for its selective underwriting and willingness to forgo unprofitable business, which contributes to its premium valuation, typically around 20 times this year's earnings [3] Hedge Fund Interest - RLI Corp. was held by 29 hedge fund portfolios at the end of Q2 2025, a decrease from 32 in the previous quarter [4] - While RLI Corp. is recognized for its investment potential, certain AI stocks are considered to offer greater upside potential with less downside risk [4]

Financial Data and Key Metrics Changes - The company reported core net operating earnings of $2.69 per share, a 16% increase from $2.31 per share in the prior year period [7] - The annualized core operating return on equity for the third quarter was 19% [4] - Net investment income increased by 5% year-over-year, attributed to higher interest rates and increased balances of invested assets [7][8] Business Line Data and Key Metrics Changes - Underwriting profit in specialty property and casualty insurance businesses grew 19%, with a combined ratio of 93, improving by 1.3 points from the prior year [15] - Gross and net written premiums in specialty property and casualty businesses decreased by 2% and 4% respectively compared to the previous year [15] - In the specialty financial group, the combined ratio was 81.1, which is 11.2 percentage points better than the comparable period in 2024 [22] Market Data and Key Metrics Changes - Average renewal pricing across the property and casualty group increased by approximately 5% in the third quarter [15] - The property and transportation group achieved a combined ratio of 94.1, improving by 2.7 points from the comparable 2024 period [16] - The specialty casualty group reported a combined ratio of 95.8, which is 3.7 percentage points higher than the 92.1 reported in the comparable period in 2024 [19] Company Strategy and Development Direction - The company aims to maintain a disciplined underwriting approach while seeking growth opportunities in specialty property and casualty businesses [12] - There is a focus on evaluating acquisitions and maintaining a pipeline of startups that could become new business units [13] - The company expects to generate significant excess capital throughout 2025 and into 2026, allowing for potential acquisitions, special dividends, or share repurchases [10] Management Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the recovery in multifamily investments and expects higher rental and occupancy rates by the end of 2026 [9] - The company anticipates premium growth to rebound in 2026, driven by startups and underwriting actions taken in specialty casualty businesses [14] - Management noted that while some loss ratio trends have improved, others, particularly in social inflation-exposed businesses, remain stable [30] Other Important Information - The company returned $66 million to shareholders through regular quarterly dividends and announced a special dividend of $2 per share [10] - The company has declared $54 per share or $4.6 billion in special dividends since the beginning of 2021 [10] Q&A Session Summary Question: Why were there no buybacks in the quarter? - Management indicated that they become active in buybacks when the stock is trading at a significant discount to its value and have retained capital for future opportunities [25] Question: Can you elaborate on pricing trends in the P&C side? - Management stated that a 5% price increase is still exceeding prospective loss ratio trends, with a diverse portfolio mitigating risks [28] Question: What is the outlook for crop premium and pricing? - Management suggested that trade aspects are reflected in futures prices, leading to stable or potentially increasing premiums for crops [39] Question: Is there an impact from new participating insurance companies on crop premiums? - Management believes the impact is marginal, with new entrants likely taking on less desirable business [47]

Financial Data and Key Metrics Changes - AFG reported core net operating earnings of $2.69 per share, a 16% increase from $2.31 per share in the prior year period [6] - The annualized core operating return on equity was 19% for the third quarter [4] - Net investment income increased by 5% year over year, attributed to higher interest rates and increased balances of invested assets [6][8] Business Line Data and Key Metrics Changes - Underwriting profit in specialty property and casualty insurance businesses grew 19%, with a combined ratio of 93, improving by 1.3 points from the prior year [13] - Gross and net written premiums in specialty property and casualty businesses decreased by 2% and 4% respectively compared to the previous year [13] - In the specialty financial group, the combined ratio was 81.1, 11.2 percentage points better than the comparable period in 2024, with gross and net written premiums up 3% and 1% respectively [20] Market Data and Key Metrics Changes - Average renewal pricing across the property and casualty group increased approximately 5% in the third quarter [14] - The property and transportation group achieved a combined ratio of 94.1, improving by 2.7 points from the previous year [15] - The specialty casualty group reported a combined ratio of 95.8, 3.7 percentage points higher than the prior year [18] Company Strategy and Development Direction - The company aims to maintain underwriting discipline and prudent growth while exploring new business opportunities and acquisitions [11] - AFG plans to continue generating significant excess capital, providing opportunities for acquisitions, special dividends, or share repurchases [9] - The company is optimistic about the prospects of attractive returns from its alternative investment portfolio, expecting annual returns averaging 10% or better [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of reserves and the overall underwriting profitability in specialty property and casualty businesses [11] - The company anticipates premium growth to rebound in 2026, driven by startups and underwriting actions taken in specialty casualty businesses [12] - Management noted that while some loss ratio trends have improved, others, particularly in social inflation-exposed businesses, require careful pricing adjustments [29] Other Important Information - AFG returned $66 million to shareholders through regular quarterly dividends, with a 10% increase in the quarterly dividend to $0.88 per share [9] - A special dividend of $2 per share was declared, amounting to approximately $167 million [9] Q&A Session Summary Question: Why were there no material buybacks in the quarter? - Management indicated that share repurchases are more active when the stock is trading at a significant discount to its value, and they have retained capital for future opportunities [24] Question: Can you elaborate on pricing trends in relation to prospective loss ratios? - Management stated that a 5% price increase is still exceeding prospective loss ratio trends, with a diverse portfolio mitigating risks [25][26] Question: What is the outlook for crop premium and pricing? - Management suggested that crop pricing should be stable or potentially increasing, depending on trade relationships and market conditions [36] Question: Is there an impact from new participating insurance companies on premiums? - Management noted that the impact is marginal, with new entrants likely taking on less desirable business [44]