S-8

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As filed with the Securities and Exchange Commission on July 28, 2004

Registration No. 333-      

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

RLI CORP.
(Exact name of registrant as specified in its charter)

Illinois (State or Other Jurisdiction of Incorporation or Organization)	37-0889946 (I.R.S. Employer Identification No.)
9025 North Lindbergh Drive, Peoria, Illinois (Address of Principal Executive Offices)	61615 (Zip Code)

RLI CORP. NONEMPLOYEE DIRECTORS' STOCK PLAN
(Full Title of the Plan)

Kim J. Hensey
Vice President and Corporate Secretary
9025 North Lindbergh Drive, Peoria, Illinois 61615
(Name and address of agent for service)
(309) 692-1000
(Telephone Number, including area code, of agent for service)

Copies to:
Kurt W. Florian, Jr., Esq.
Katten Muchin Zavis Rosenman
525 West Monroe Street, Suite 1600
Chicago, Illinois 60661-3693
(312) 902-5580

CALCULATION OF REGISTRATION FEE

Title of Securities to be Registered	Amount to be Registered	Proposed Maximum Offering Price Per Share(1)	Proposed Maximum Aggregate Offering Price(1)	Amount of Registration Fee(1)
Common Stock, par value $1 per share	200,000 shares(2)	$36.07 per share	$7,214,000	$914.01

(1)

Estimated pursuant to Rule 457(h) solely for the purpose of calculating the aggregate offering price and the amount of the registration fee based upon the average of the high and low prices reported for the shares on the New York Stock Exchange on July 26, 2004.

(2)

Pursuant to Rule 416 under the Securities Act of 1933, as amended, the number of shares of the issuer's common stock registered hereunder will be adjusted in the event of stock splits, stock dividends or similar transactions.

PART I
 
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS

        The documents containing information specified in Part I (Plan information and Registrant information) will be sent or given to each director participating in the RLI Corp. Nonemployee Directors' Stock Plan as specified by Rule 428(b)(1) under the Securities Act of 1933, as amended ("Securities Act"). Such documents need not be filed with the Securities and Exchange Commission ("Commission") either as part of this Registration Statement or as prospectuses or prospectus supplements pursuant to Rule 424 under the Securities Act. These documents and the documents incorporated by reference in this Registration Statement, pursuant to Item 3 of Part II of this Registration Statement, taken together, constitute a prospectus that meets the requirements of Section 10(a) of the Securities Act.

PART II
 
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3.    Incorporation of Documents by Reference.

        The following documents filed by RLI Corp. ("Company") with the Commission are incorporated herein by reference, except to the extent that any statement or information therein is modified, superseded or replaced by a statement or information contained in this document, or in any other subsequently filed document incorporated by reference:

        1.     The Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2003.

        2.     The Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2004 and June 30, 2004.

        3.     The Company's current reports on Form 8-K filed on January 22, 2004, April 15, 2004 and July 14, 2004.

        4.     The description of the Company's Common Stock, par value $1.00 per share ("Common Stock"), contained in Item 4 of the Company's Registration Statement on Form 8-A filed with the Commission pursuant to Section 12 of the Exchange Act, on June 11, 1993.

        5.     All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act after the date hereof and prior to the filing of a post effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference herein and to be a part hereof from the date of filing of such document.

Item 4.    Description of Securities.

        Not applicable.

Item 5.    Interests of Named Experts and Counsel.

        Not applicable.

Item 6.    Indemnification of Directors and Officers.

        RLI Corp. is incorporated under the laws of the State of Illinois.

        Under Section 8.75 of the Business Corporation Act of 1983 of the State of Illinois ("Act"), an Illinois corporation may indemnify any person who was or is a party, or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, or who is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts to be paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, if such person acted in good faith and in a manner such person reasonably believed to be in, or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe that such person's conduct was unlawful.

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        The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the corporation or, with respect to any criminal action or proceeding, that such person had reasonable cause to believe that such person's conduct was unlawful.

        An Illinois corporation may indemnify any person who was or is a party, or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit, if such person acted in good faith and in a manner that such person reasonably believed to be in, or not opposed to, the best interest of the corporation, provided that no indemnification shall be made with respect to any claim, issue, or matter as to which such person has been adjudged to have been liable to the corporation, unless, and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability, but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses as the court shall deem proper.

        To the extent that a director, officer, employee or agent of a corporation has been successful, on the merits or otherwise, in the defense of any action, suit or proceeding referred to above, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection therewith.

        The Company's Articles of Incorporation and By-Laws provide for the indemnification of directors and officers of the Company to the fullest extent permitted by Section 8.75 of the Act; however, both provide that, notwithstanding anything in Section 8.75 of the Act to the contrary, no director or officer shall be indemnified or insured against any liability to the Company or to its shareholders to which such person would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence with respect to the duties involved in the conduct of such person's office.

        The Company maintains directors' and officers' liability insurance with an annual aggregate limit of $45,000,000 for the current policy period, subject to a $250,000 deductible at the corporate level and $500,000 deductible for securities claims, for each wrongful act where corporate reimbursement is not available to any director or officer. In addition, the Company has entered into indemnification agreements with each of its directors and officers which provide for the indemnification of such directors and officers to the fullest extent authorized or permitted by Illinois law.

Item 7.    Exemption from Registration Claimed.

        Not applicable.

Item 8.    Exhibits.

        4.1   Articles of Incorporation (incorporated by reference to the Company's Quarterly Report on Form 10-Q for the Second Quarter ended June 30, 1997).

        4.2   By-Laws of the Company (incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ending December 31, 2002).

        4.3   RLI Corp. Nonemployee Directors' Stock Plan.

        4.4   Form of Certificate representing shares of Common Stock of RLI Corp., an Illinois corporation (incorporated by reference to Exhibit 4.3 of the Amendment No. 1 to the Company's Registration Statement on Form S-3 as filed June 11, 1993, Registration Number 33-61788).

        5.1   Opinion of Katten Muchin Zavis Rosenman as to the legality of certain shares of the Common Stock being registered.

        23.1 Consent of KPMG LLP.

        23.2 Consent of Katten Muchin Zavis Rosenman (included in the opinion filed as Exhibit 5.1).

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        24.1 Powers of Attorney (included in signature page).

Item 9.    Undertakings

        The Company hereby undertakes:

        (1)   To file, during any period in which offers or sales are being made a post-effective amendment to this Registration Statement:

        i.      To include any Prospectus required by Section 10(a)(3) of the Securities Act.

        ii.     To reflect in the Prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement;

        iii.    To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement;

        Provided, however, that paragraphs 1(i) and 1(ii) shall not apply if the information required to be included in a post effective amendment by such paragraphs is contained in periodic reports filed by the Company pursuant to Section 13 or Section 15(d) of the Exchange Act that are incorporated by reference in this Registration Statement.

        (2)   For the purpose of determining any liability under the Securities Act, each such post effective amendment shall be deemed to be a new Registration Statement relating to the securities to be offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

        (3)   To remove from registration by means of a post-effective amendment to the Registration Statement any of the securities being registered which remain unsold at the termination of the offering.

        The Company hereby undertakes that, for the purposes of determining any liability under the Securities Act, each filing of the Company's annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the Registration Statement shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

        Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Company pursuant to the foregoing provisions, or otherwise, the Company has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Company of expenses incurred or paid by a director, officer, or controlling person of the Company in the successful defense of any action, suit or proceeding) is asserted by such director, officer, or controlling person in connection with the securities being registered, the Company will, unless in the opinion of counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

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SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe it meets all of the requirements for filing on form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Peoria, State of Illinois.

Dated: July 26, 2004	RLI Corp.
	By:	/s/  KIM J. HENSEY Kim J. Hensey, Vice President and Corporate Secretary

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POWER OF ATTORNEY

        KNOW ALL MEN BY THESE PRESENTS, the undersigned constitute and appoint each of Joseph E. Dondanville and Camille J. Hensey their true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for the undersigned, in any and all capacities (including any capacity as a director and/or officer of RLI Corp.), to sign any and all amendments (including, post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting upon said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

        Pursuant to the requirements of the Securities Act of 1933, this Registration Statement and Power of Attorney have been signed by the undersigned in the capacities and on the dates indicated.

Signature	Capacity	Date
/s/  JONATHAN E. MICHAEL Jonathan E. Michael	President and Chief Executive Officer/Director (Principal Executive Officer)	07/08/04
/s/  JOSEPH E. DONDANVILLE Joseph E. Dondanville	Senior Vice President, Chief Financial Officer (Principal Financial and Accounting Officer)	07/08/04
/s/  JOHN T. BAILY John T. Baily	Director	07/09/04
/s/  RICHARD H. BLUM Richard H. Blum	Director	07/12/04
/s/  WILLIAM R. KEANE William R. Keane	Director	07/12/04
/s/  GERALD I. LENROW Gerald I. Lenrow	Director	07/08/04
/s/  CHARLES M. LINKE Charles M. Linke	Director	07/08/04
/s/  F. LYNN MCPHEETERS F. Lynn McPheeters	Director	07/08/04
/s/  EDWIN S. OVERMAN Edwin S. Overman	Director	07/09/04
/s/  GERALD D. STEPHENS Gerald D. Stephens	Chairman of the Board	07/08/04
/s/  EDWARD F. SUTKOWSKI Edward F. Sutkowski	Director	07/08/04
/s/  ROBERT O. VIETS Robert O. Viets	Director	07/09/04

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EXHIBIT INDEX

Exhibit Number	Description of Exhibit	Sequentially Numbered Page
4.1	Articles of Incorporation	(1)
4.2	By-Laws of the Company	(2)
4.3	RLI Corp. Nonemployee Directors' Stock Plan
4.4	Form of Certificate representing shares of Common Stock of RLI Corp.	(3)
5.1	Opinion of Katten Muchin Zavis Rosenman
23.1	Consent of KPMG LLP
23.2	Consent of Katten Muchin Zavis Rosenman(included in Exhibit 5.1)
24.1	Powers of Attorney (included in signature page of this Registration Statement)

(1)

Incorporated by reference to the Company's Quarterly Form 10-Q for the Second Quarter ended June 30, 1997.

(2)

Incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ending December 31, 2002.

(3)

Incorporated by reference to Exhibit 4.3 of the Amendment No. 1 to the Company's Registration Statement on Form S-3 as filed June 11, 1993, Registration Number 33-61788.

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PART I INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3. Incorporation of Documents by Reference.
Item 4. Description of Securities.
Item 5. Interests of Named Experts and Counsel.
Item 6. Indemnification of Directors and Officers.
Item 7. Exemption from Registration Claimed.
Item 8. Exhibits.
Item 9. Undertakings

SIGNATURES
POWER OF ATTORNEY
EXHIBIT INDEX

EX-4.3

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Exhibit 4.3

RLI Corp.
RLI Corp. Nonemployee Directors' Stock Plan

ARTICLE I
PURPOSE

        This RLI Corp. Nonemployee Directors' Stock Plan is intended to advance the interests of RLI Corp. and its shareholders by attracting, retaining, compensating and motivating the performance of nonemployee directors of RLI Corp. and to encourage and enable such directors to acquire and retain a proprietary interest in RLI Corp. by ownership of its stock.

ARTICLE II
ADMINISTRATION; GRANTS

        2.1   Board Authority. Subject to the express provisions of the Plan and the powers granted to the Board, the Committee shall have discretionary authority to interpret the Plan, to prescribe, amend and rescind rules and regulations relating to it, to determine the details and provisions of each Stock Grant, and to make all the determinations necessary or advisable in the administration of the Plan. All such actions and determinations by the Committee shall be conclusively binding for all purposes and upon all persons. The Committee shall not be liable for any action or determination made in good faith with respect to the Plan or any Stock Grant under the Plan.

        2.2   Stock Grants. Each Stock Grant shall be issued in the name of the Nonemployee Director. Upon the issuance of a Stock Grant, the Nonemployee Director shall be entitled to vote the shares of Common Stock and to receive any dividends paid thereon.

ARTICLE III
SHARES OF STOCK SUBJECT TO PLAN

        3.1   Number of Shares. Subject to adjustment pursuant to the provisions of this Section 3.1, the maximum number of shares of Common Stock which may be issued and sold hereunder shall be 200,000 shares; provided, that in the event of a recapitalization, reclassification, stock dividend, stock split, stock combination or other relevant change affecting the capitalization of the Company, the number of shares issuable under the Plan shall be appropriately adjusted. Shares of Common Stock issued and sold under the Plan may be either authorized but unissued shares or shares held in the Company's treasury, which includes shares repurchased in the open market.

ARTICLE IV
STOCK GRANTS

        4.1   New Director Fee. From time to time, the Committee shall recommend for approval by the Board the dollar amount of the fee to be paid to each new Nonemployee Director who joins the Board (the "New Director Fee"). Commencing with the 2004 Annual Meeting, each new Nonemployee Director who joins the Board shall receive a Stock Grant having a Fair Market Value equal to the New Director Fee, such that the number of shares of Common Stock subject to the Stock Grant shall be equal to the number determined by dividing the New Director Fee by the Fair Market Value of a share of Common Stock on the date of grant. The Stock Grant shall be made as of the date of the Nonemployee Director's election to the Board.

        4.2   Annual Fee. From time to time, the Committee shall recommend for approval by the Board the dollar amount of the fee to be paid to each Nonemployee Director for service during the fiscal year (the "Annual Fee"). For each fiscal quarter ending during the fiscal year, the Company shall issue to each Nonemployee Director a Stock Grant having a Fair Market Value equal to one-fourth of the Annual Fee (the "Quarterly Fee"), such that the number of shares of Common Stock subject to such Stock Grant shall be equal to the number determined by dividing the Quarterly Fee by the Fair Market Value of a share of Common Stock on the date of grant. Stock Grants issued as payment of the Quarterly Fee shall be made on the tenth calendar day prior to the end of each fiscal quarter, provided that if such grant date falls on a weekend or a holiday, the grant date shall be the immediately preceding business day. If a Nonemployee Director is elected or terminated (other than removal for cause) during the fiscal quarter, the Nonemployee Director shall receive a Stock Grant equal to the Quarterly Fee

times a fraction, the numerator of which is the number of days during such quarter that the Nonemployee Director serves as a director and the denominator of which is 90.

        4.3   2004 Transition Year. The Annual Fee for the 2004 fiscal year, as recommended by the Committee and approved by the Board, shall be made in two grants, each of which shall be one-half of the Annual Fee, on the issuance dates (as determined under Section 4.2 above) for the quarters ending September 30, 2004 and December 31, 2004.

        4.4   Discretionary Grants. In addition to the automatic grants provided for above, the Committee may recommend for Board approval discretionary Stock Grants to any Nonemployee Director in accordance with the provisions of this Section 4.4. The Committee shall select the Nonemployee Directors who will receive any such Stock Grants under this Section 4.4 and determine the number of shares subject to any such Stock Grant, which shall be subject to Board approval.

        4.5   Fractional Shares. The Company shall not be required to issue fractions of shares of Common Stock. Whenever under the terms of the Plan a fractional share would be required to be issued, an amount in lieu thereof shall be paid in cash for such fractional share based upon the same Fair Market Value as was utilized to determine the number of shares to be issued on the relevant issuance date.

ARTICLE V
EFFECTIVE DATE, TERMINATION AND AMENDMENT

        5.1   Effective Date. The Plan shall become effective after its adoption by the Board and on the date of its approval by the shareholders of the Company in accordance with applicable state law, the Articles of Incorporation and By-laws of the Company and the rules of the NYSE.

        5.2   Termination. The Plan shall terminate on the date of the Annual Meeting in 2014, provided that the Board may at any time terminate the Plan earlier. Notwithstanding the foregoing, no termination of the Plan shall in any manner affect any previously issued Stock Grant without the consent of the Nonemployee Director who received the Stock Grant.

        5.3   Amendment. The Board may at any time and from time to time and in any respect, amend or modify the Plan; provided, however, that shareholder approval shall be required to the extent necessary to comply with the rules of NYSE. Notwithstanding the foregoing, no amendment or modification of the Plan shall in any manner affect any previously issued Stock Grant without the consent of the Nonemployee Director who received the Stock Grant.

ARTICLE VI
MISCELLANEOUS

        6.1   Rights as Shareholder. Nothing contained herein relating to any grant of a Stock Grant shall create an obligation on the part of the Company to repurchase any shares of Common Stock granted hereunder.

        6.2   Service on Board. Nothing in the Plan or any Stock Grant shall confer upon any Nonemployee Director the right to continue service as a member of the Board, nor shall it create any obligation on the part of the Board or the Committee to nominate any Nonemployee Director for reelection by the Company's shareholders.

        6.3   Compliance with Law. The Plan and the obligations of the Company to issue or transfer shares of Common Stock as Stock Grants shall be subject to all applicable laws and regulations and to approvals by any governmental or regulatory agency as may be required. The Committee may revoke a Stock Grant if it is contrary to law or modify a Stock Grant to bring it into compliance with any valid and mandatory law or government regulation.

        6.4   Plan Binding on Successors. The Plan shall be binding upon the Company, its successors and assigns, and each Nonemployee Director, such Nonemployee Director's executor, administrator and transferees.

        6.5   Construction and Interpretation. Whenever used herein, nouns in the singular shall include the plural, and the masculine pronoun shall include the feminine gender. Headings of Articles and Sections hereof are inserted for convenience and reference and constitute no part of the Plan.

        6.6   Severability. If any provision of the Plan or any Stock Grant shall be determined to be illegal or unenforceable by any court of law in any jurisdiction, the remaining provisions hereof and thereof shall be severable and enforceable in accordance with their terms, and all provisions shall remain enforceable in any other jurisdiction.

        6.7   Governing Law. The validity and construction of the Plan and of any Stock Grant shall be governed by the laws of the State of Illinois.

ARTICLE VII
DEFINITIONS

        7.1   "Annual Fee" shall have the meaning set forth in Section 4.2.

        7.2   "Annual Meeting" means an Annual Meeting of Shareholders of the Company.

        7.3   "Board" means the Board of Directors of the Company.

        7.4   "Committee" means the Nominating/Corporate Governance Committee of the Board.

        7.5   "Common Stock" means the Company's common stock.

        7.6   "Company" means RLI Corp.

        7.7   "Fair Market Value" means the average of the highest and lowest sale prices of a share of Common Stock on the NYSE on the date as of which fair market value is to be determined or, in the absence of any reported sales of Common Stock on such date, on the first preceding date on which any such sale shall have been reported. If Common Stock is not listed on the NYSE on the date as of which fair market value is to be determined, the Board shall determine in good faith the fair market value in whatever manner it considers appropriate.

        7.8   "New Director Fee" shall have the meaning set forth in Section 4.1.

        7.9   "Nonemployee Director" means any member of the Board who is not an employee of the Company.

        7.10 "NYSE" means the New York Stock Exchange.

        7.11 "Plan" means this RLI Corp. Nonemployee Directors' Stock Plan.

        7.12 "Quarterly Fee" shall have the meaning set forth in Section 4.2

        7.13 "Stock Grant" means a grant of Common Stock under the Plan.

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Exhibit 4.3

EX-5.1

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Exhibit 5.1

July 26, 2004

RLI Corp.
9025 North Lindbergh Drive
Peoria, Illinois 61615

Re:

RLI Corp. Registration Statement on Form S-8

Ladies and Gentlemen:

        We have acted as special counsel to RLI Corp. (the "Company") in connection with the proposed registration by the Company of 200,000 shares of the Company's Common Stock, par value $1 per share (the "Common Stock"), which are issuable under the RLI Corp. Nonemployee Directors' Stock Plan (the "Plan"), pursuant to a Registration Statement on Form S-8 filed with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Act") (such Registration Statement, as amended or supplemented, is hereinafter referred to as the "Registration Statement").

        The opinions contained in this letter (herein called "our opinion") are based exclusively upon the Business Corporation Act of 1983 of the State of Illinois, as now constituted. We express no opinion as to the applicability of, compliance with, or effect of any other law or governmental requirement with respect to the Company. For purposes of our opinions we have assumed without independent investigation that factual information supplied to us for purposes of our opinions is complete and accurate.

        Based upon and subject to the foregoing, we hereby advise you that in our opinion:

        (1)   The Company is a corporation existing and in good standing under the laws of the State of Illinois.

        (2)   Each share of Common Stock registered under the Registration Statement and issuable under the Plan, when issued as authorized by the Company upon payment of the consideration to be paid therefor pursuant to the Plan, will be validly issued, fully paid and non-assessable.

        For purposes of this letter we have relied upon (i) information contained in one or more certificates provided by the Illinois Secretary of State and (ii) factual information supplied to us by the Company. We have assumed without investigation that there has been no relevant change or development between the dates as of which the information cited in the preceding sentence was given and the date of this letter and that the information upon which we have relied is accurate and does not omit disclosures necessary to prevent such information from being misleading. For purposes of each opinion in paragraph 1, we have relied exclusively upon a certificate issued by the Illinois Secretary of State, and such opinion is not intended to provide any conclusion or assurance beyond that conveyed by that certificate.

        We hereby consent to the filing of this opinion with the Commission as Exhibit 5.1 to the Registration Statement. We also consent to the reference to our firm in the Registration Statement. In giving this consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Act or the rules and regulations of the Commission thereunder.

        We do not find it necessary for the purposes of this opinion, and accordingly we do not purport to cover herein, the application of the securities or "Blue Sky" laws of the various states to the issuance and sale of each share of Common Stock registered under the Registration Statement.

        This opinion is limited to the specific issues addressed herein, and no opinion may be inferred or implied beyond that expressly stated herein. We assume no obligation to revise or supplement this opinion should the present laws of the State of Illinois be changed by legislative action, judicial decision or otherwise.

Sincerely,

/s/ Katten Muchin Zavis Rosenman

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Exhibit 5.1

EX-23.1

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Exhibit 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

The Board of Directors
RLI Corp.:

        We consent to the use of our reports incorporated herein by reference in this Registration Statement of RLI Corp. on Form S-8 (relating to the registration of 200,000 RLI Corp. Common Shares for the Nonemployee Directors' Stock Plan).

        Our reports refer to a 2002 change in accounting principle related to adopting the provisions of Statement of Financial Accounting Standards (SFAS) 142, "Goodwill and Other Intangible Assets" and a 2001 change in accounting principle related to adopting the provisions of SFAS 133, "Accounting for Derivative Instruments and Hedging Activities."

/s/ KPMG LLP

Chicago, Illinois
July 26, 2004

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Exhibit 23.1