EX-99.1 2 a07-11643_1ex99d1.htm EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

CONTACT: John Robison

 

 

(309) 693-5846

John_Robison@rlicorp.com www.rlicorp.com

 

RLI sets first quarter earnings record

PEORIA, ILLINOIS, April 18, 2007 — RLI Corp. (NYSE: RLI) — RLI Corp. reported first quarter 2007 net earnings of $32.5 million ($1.32 per share), compared to $25.7 million ($0.97 per share) from the same period last year.

 

Earnings Per Diluted Share

 

2007

 

2006

 

Net earnings

 

$

1.32

 

$

0.97

 

Operating earnings

 

$

1.20

 

$

0.86

 

 

Highlights for the quarter included:

·                  $29.5 million ($1.20 per share) operating earnings

·                  $25.3 million net operating cash flow

·                  $12.3 million ($0.32 per share) favorable development in prior years’ casualty loss reserves, net of bonus and profit sharing-related expenses

·                  81.4 combined ratio

·                  13.7% investment income growth

·                  2.7% growth in book value per share, to $32.00 per share

·                  $100 million share repurchase program completed, at an average cost of $51.08 per share

“We are proud of these results in a challenging environment,” said RLI Corp. President & CEO Jonathan E. Michael. “While portions of the marketplace have softened, we continue to find advantageous opportunities. Our underwriters have displayed the discipline we expect of them and delivered strong first quarter results.”

First quarter underwriting results

RLI achieved $25.6 million of underwriting income in the first quarter of 2007 on an 81.4 combined ratio, compared to $15.9 million of underwriting income on an 87.5 combined ratio in the first quarter of 2006. The following results incorporate the favorable loss development noted above and favorable loss development from prior years’ casualty loss reserves of $2.3 million ($0.06 per share) from the same period last year.

Gross Premiums

 

First Quarter

 

 

 

First Quarter

Written        (in millions)

 

2007

 

2006

 

Combined Ratio

 

2007

 

2006

Casualty

 

$11.4

 

$115.2

 

Casualty

 

878.8

 

89.8

Property

 

42.1

 

42.9

 

Property

 

88.6

 

80.2

Surety

 

17.8

 

17.1

 

Surety

 

80.3

 

86.5

Total

 

$171.3

 

$175.2

 

Total

 

81.4

 

87.5

 

-- more --



Other income

First quarter investment income grew 13.7% to $19.0 million due to continued strong operating cash flows. The investment portfolio’s total return for the quarter was 1.6%, with the bond and equity portfolios’ returns both 1.6%.

During the quarter, equity in earnings of unconsolidated investees was $1.3 million, all related to Maui Jim, Inc. The first quarter of 2006 reflected $2.7 million in income, which included $1.9 million related to Maui Jim, Inc. and $0.8 million from Taylor Bean & Whitaker. In the fourth quarter of 2006, RLI sold its equity interest in Taylor Bean & Whitaker. Comprehensive earnings, which include after-tax unrealized gains/losses from the investment portfolio, were $33.1 million for the quarter ($1.34 per share) compared to $22.1 million ($0.84 per share) over the same period in 2006.

Other RLI news

In the first quarter of 2006, RLI announced a stock repurchase program for up to $100 million of RLI common stock. During the first quarter of 2007, we repurchased 333,494 shares at an average cost of $56.77 per share. This completed the buyback program at an average per share cost of $51.08.

The company paid a quarterly cash dividend of $0.20 per share on April 13, 2007, the same amount as in the prior quarter. This payment brings RLI’s cumulative return to shareholders to more than $137 million over 123 consecutive quarterly dividends. Over the last five years, the company’s quarterly dividend has grown by an average of 20.1%, and by an average of 13.6% over the last 10 years. Mergent’s Dividend Achievers currently ranks RLI 83rd among 11,000 public companies for having the longest record of consecutive dividend increases. The company has increased dividends for 32 straight years.

At 10 a.m. CDT today, April 18, 2007, RLI management will hold a conference call to discuss quarterly results with insurance industry analysts. Interested parties may listen to the discussion through the Internet at RLI’s website, www.rlicorp.com.

Operating earnings and earnings per share (EPS) from operations and other per share items are non-GAAP financial measures, and we believe that investors’ understanding of RLI’s core operating performance is enhanced by our disclosure of these financial measures. Operating earnings and EPS from operations consist of our net earnings reduced by net realized investment gains and taxes related to net realized gains. Our definitions of these items may not be comparable to the definitions used by other companies. Net earnings and net earnings per share are the GAAP financial measures that are most directly comparable to operating earnings and EPS from operations. All earnings per share data are calculated using fully diluted shares. Combined ratio refers to a GAAP combined ratio.



Except for historical information, this news release may include forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934) including, without limitation, statements reflecting our current expectations about the future performance of our company or our business segments or about future market conditions. These statements are subject to certain risk factors that could cause actual results to differ materially. Various risk factors that could affect future results are listed in the company’s filings with the Securities and Exchange Commission, including the Form 10-K Annual Report for the year ended December 31, 2006.

RLI, a specialty insurance company, offers a diversified portfolio of property and casualty coverages and surety bonds serving “niche” or underserved markets. RLI operates in all 50 states from 25 office locations. The company’s talented associates have delivered underwriting profits in 26 of the last 30 years, including the last 11. RLI’s insurance subsidiaries — RLI Insurance Company, Mt. Hawley Insurance Company and RLI Indemnity Company — are rated A+ “Superior” by A.M. Best Company and A+ “Strong” by Standard & Poor’s.

For additional information, contact Treasurer John Robison at (309) 693-5846 or at john_robison@rlicorp.com or visit our website at www.rlicorp.com.

-- more --



RLI CORP.
2007 FINANCIAL HIGHLIGHTS
(Unaudited)
(Dollars in thousands, except per share amounts)

 

 

 

Three Months Ended March 31,

 

 

 

2007

 

2006

 

% Change

 

SUMMARIZED INCOME STATEMENT DATA:

 

 

 

 

 

 

 

Net premiums earned

 

$

137,977

 

$

127,387

 

8.3

%

Net investment income

 

18,990

 

16,708

 

13.7

%

Net realized investment gains

 

4,625

 

4,442

 

4.1

%

Consolidated revenue

 

161,592

 

148,537

 

8.8

%

 

 

 

 

 

 

 

 

Loss and settlement expenses

 

63,060

 

66,677

 

-5.4

%

Policy acquisition costs

 

39,764

 

35,599

 

11.7

%

Other insurance expenses

 

9,556

 

9,201

 

3.9

%

Interest expense on debt

 

1,510

 

1,682

 

-10.2

%

General corporate expenses

 

1,877

 

1,855

 

1.2

%

Total expenses

 

115,767

 

115,014

 

0.7

%

 

 

 

 

 

 

 

 

Equity in earnings of

 

 

 

 

 

 

 

 unconsolidated investees

 

1,313

 

2,740

 

-52.1

%

 

 

 

 

 

 

 

 

Earnings before income taxes

 

47,138

 

36,263

 

30.0

%

Income tax expense

 

14,621

 

10,607

 

37.8

%

Net Earnings

 

$

32,517

 

$

25,656

 

26.7

%

Other comprehensive earnings (loss), net of tax

 

600

 

(3,595

)

116.7

%

Comprehensive earnings

 

$

33,117

 

$

22,061

 

50.1

%

 

 

 

 

 

 

 

 

Operating Earnings:(1)

 

 

 

 

 

 

 

Net Earnings

 

$

32,517

 

$

25,656

 

26.7

%

Less: Realized investment gains, net of tax

 

3,006

 

2,887

 

4.1

%

Operating earnings

 

$

29,511

 

$

22,769

 

29.6

%

 

 

 

 

 

 

 

 

Return on Equity:

 

 

 

 

 

 

 

Net earnings (trailing four quarters)

 

19.9

%

15.3

%

 

 

Comprehensive earnings (trailing four quarters)

 

23.7

%

13.5

%

 

 

 

 

 

 

 

 

 

 

Per Share Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted:

 

 

 

 

 

 

 

Weighted average shares outstanding (in 000's)

 

24,702

 

26,400

 

 

 

 

 

 

 

 

 

 

 

EPS from operations (1)

 

$

1.20

 

$

0.86

 

39.5

%

Realized gains, net of tax

 

0.12

 

0.11

 

9.1

%

Net earnings per share

 

$

1.32

 

$

0.97

 

36.1

%

 

 

 

 

 

 

 

 

Comprehensive earnings per share

 

$

1.34

 

$

0.84

 

59.5

%

 

 

 

 

 

 

 

 

Cash dividends per share

 

$

0.20

 

$

0.17

 

17.6

%

 

 

 

 

 

 

 

 

Net Cash Flow from Operations

 

$

25,310

 

$

21,709

 

16.6

%

 

(1)            See discussion on page 2.



RLI CORP.
2007 FINANCIAL HIGHLIGHTS
(Unaudited)
(Dollars in thousands, except per share amounts)

 

 

 

March 31,

 

December 31,

 

 

 

 

 

2007

 

2006

 

% Change

 

SUMMARIZED BALANCE SHEET DATA:

 

 

 

 

 

 

 

Fixed income and short-term investments

 

$

1,463,086

 

$

1,460,046

 

0.2

%

(amortized cost - $1,468,087 at 3/31/07)

 

 

 

 

 

 

 

(amortized cost - $1,465,660 at12/31/06)

 

 

 

 

 

 

 

Equity securities

 

374,668

 

368,195

 

1.8

%

(cost - $209,621 at 3/31/07)

 

 

 

 

 

 

 

(cost - $201,443 at 12/31/06)

 

 

 

 

 

 

 

Total investments

 

1,837,754

 

1,828,241

 

0.5

%

 

 

 

 

 

 

 

 

Premiums and reinsurance balances receivable

 

104,737

 

126,021

 

-16.9

%

Ceded unearned premiums

 

87,494

 

97,596

 

-10.4

%

Reinsurance recoverable on unpaid losses

 

527,700

 

525,671

 

0.4

%

Deferred acquisition costs

 

71,206

 

73,817

 

-3.5

%

Property and equipment

 

20,068

 

20,590

 

-2.5

%

Investment in unconsolidated investees

 

32,022

 

36,667

 

-12.7

%

Goodwill

 

26,214

 

26,214

 

0.0

%

Other assets

 

43,941

 

36,479

 

20.5

%

Total assets

 

$

2,751,136

 

$

2,771,296

 

-0.7

%

 

 

 

 

 

 

 

 

Unpaid losses and settlement expenses

 

1,333,523

 

1,318,777

 

1.1

%

Unearned premiums

 

359,232

 

387,811

 

-7.4

%

Reinsurance balances payable

 

74,365

 

85,046

 

-12.6

%

Long-term debt - bonds payable

 

100,000

 

100,000

 

0.0

%

Income taxes - deferred

 

27,179

 

27,069

 

0.4

%

Other liabilities

 

90,062

 

96,073

 

-6.3

%

Total liabilities

 

1,984,361

 

2,014,776

 

-1.5

%

Shareholders' equity

 

766,775

 

756,520

 

1.4

%

Total liabilities & shareholders' equity

 

$

2,751,136

 

$

2,771,296

 

-0.7

%

 

 

 

 

 

 

 

 

OTHER DATA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares outstanding (in 000's)

 

23,961

 

24,273

 

 

 

 

 

 

 

 

 

 

 

Book Value per share

 

$

32.00

 

$

31.17

 

2.7

%

Closing stock price per share

 

$

54.93

 

$

56.42

 

-2.6

%

 

 

 

 

 

 

 

 

Statutory Surplus

 

$

779,563

 

$

746,905

 

4.4

%

 



RLI CORP.
2007 FINANCIAL HIGHLIGHTS
UNDERWRITING SEGMENT DATA
(Unaudited)
(Dollars in thousands, except per share amounts)

 

Three Months Ended March 31,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP

 

 

 

GAAP

 

 

 

GAAP

 

 

 

GAAP

 

 

 

Casualty

 

Ratios

 

Property

 

Ratios

 

Surety

 

Ratios

 

Total

 

Ratios

 

2007

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross premiums written

 

$

111,357

 

 

 

$

42,152

 

 

 

$

17,807

 

 

 

$

171,316

 

 

 

Net premiums written

 

79,694

 

 

 

23,140

 

 

 

16,666

 

 

 

119,500

 

 

 

Net premiums earned

 

88,015

 

 

 

34,609

 

 

 

15,353

 

 

 

137,977

 

 

 

Net loss & settlement expenses

 

42,782

 

48.6

%

17,550

 

50.7

%

2,728

 

17.8

%

63,060

 

45.7

%

Net operating expenses

 

26,616

 

30.2

%

13,110

 

37.9

%

9,594

 

62.5

%

49,320

 

35.7

%

Underwriting income

 

$

18,617

 

78.8

%

$

3,949

 

88.6

%

$

3,031

 

80.3

%

$

25,597

 

81.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross premiums written

 

$

115,156

 

 

 

$

42,892

 

 

 

$

17,105

 

 

 

$

175,153

 

 

 

Net premiums written

 

80,504

 

 

 

24,703

 

 

 

15,961

 

 

 

121,168

 

 

 

Net premiums earned

 

87,266

 

 

 

25,622

 

 

 

14,499

 

 

 

127,387

 

 

 

Net loss & settlement expenses

 

53,691

 

61.5

%

9,674

 

37.8

%

3,312

 

22.8

%

66,677

 

52.3

%

Net operating expenses

 

24,689

 

28.3

%

10,870

 

42.4

%

9,241

 

63.7

%

44,800

 

35.2

%

Underwriting income

 

$

8,886

 

89.8

%

$

5,078

 

80.2

%

$

1,946

 

86.5

%

$

15,910

 

87.5

%