EX-99.1 2 a10-8377_1ex99d1.htm EX-99.1

Exhibit 99.1

 


■ RLI Corp.


NEWS RELEASE

9025 N. Lindbergh Drive  |  Peoria, IL 61615-1431
P: 309-692-1000  |  F: 309-692-1068  |  www.rlicorp.com

 

FOR IMMEDIATE RELEASE

CONTACT: John Robison

 

 

(309) 693-5846

 

 

John.Robison@rlicorp.com

 

 

www.rlicorp.com

 

 

RLI reports first quarter results

PEORIA, ILLINOIS, April 19, 2010 — RLI Corp. (NYSE: RLI) — RLI Corp. reported first quarter 2010 operating earnings of $20.0 million ($0.94 per share), compared to $22.5 million ($1.03 per share) for the first quarter of 2009.

 

 

 

First Quarter

 

Earnings Per Diluted Share

 

2010

 

2009

 

Operating earnings

 

$

0.94

 

$

1.03

 

Net earnings (loss)

 

$

1.13

 

$

(0.08

)

 

Highlights for the quarter included:

·                  Operating earnings of $20.0 million ($0.94 per share).

·                  Underwriting income of $12.7 million.

·                  Combined ratio of 89.1.

·                  Book value per share of $40.28, an increase of 2.9% in the first quarter.

·                  $6.6 million pretax favorable development in prior years’ loss reserves, net of effects on bonus and profit sharing-related expenses.

·                  Return on equity for the trailing four quarters was 15.0%.

 

“Our outstanding combined ratio demonstrates our ability to navigate in challenging market conditions, which carried through the 1st quarter,”  said RLI Corp. President & CEO Jonathan E. Michael.  “We continue our efforts to diversify RLI’s products, reflected in premium growth in our property and surety segments.  Our investment in talented people and systems capabilities will serve us well as we remain committed to future opportunities for market and product expansion.”

 

Underwriting income

RLI achieved $12.7 million of underwriting income in the first quarter of 2010 on an 89.1 combined ratio, compared to $15.2 million of underwriting income on an 87.9 combined ratio in the same quarter for 2009.

 

Underwriting Income

 

First Quarter

 

(in millions)

 

2010

 

2009

 

Casualty

 

$

1.0

 

$

6.0

 

Property

 

8.1

 

6.2

 

Surety

 

3.6

 

3.0

 

Total

 

$

12.7

 

$

15.2

 

 

 

 

First Quarter

 

Combined Ratio

 

2010

 

2009

 

Casualty

 

98.3

 

91.5

 

Property

 

79.0

 

83.4

 

Surety

 

80.7

 

83.3

 

Total

 

89.1

 

87.9

 

 

Other income

For the quarter, investment income declined 6.2% to $16.6 million. The investment portfolio’s total return was 2.4%. The bond portfolio gained 1.9% and the equity portfolio’s return was 4.9%.  The decrease in investment income is the result of lower reinvestment yields.

 

Comprehensive earnings, which include after-tax unrealized gains/losses from the investment portfolio, were $33.5 million for the quarter ($1.57 per share) compared to $1.8 million ($0.08 per share) for the same quarter in 2009.

 

— more —

 

 


 

During the quarter, equity in earnings of unconsolidated investee was $2.3 million compared to $1.4 million from the same period last year. These results are related to Maui Jim, Inc., a producer of premium sunglasses, which has experienced improved market conditions.

 

Other news

 

Share repurchase program

In the first quarter of 2010, we repurchased 213,933 of our shares at an average cost of $52.79 per share ($11.3 million). As of March 31, 2010, we had $6.7 million of remaining capacity from the $200 million repurchase program approved in 2007.

 

Dividend increase over 1st Quarter 2009

The company paid a first quarter cash dividend of $0.28 per share on April 15, 2010, a 7.7% increase over the same period in 2009. RLI’s cumulative dividends, including this recent payment, are more than $210 million paid in 135 consecutive quarters. The company’s dividend yield would be 1.9% based on the $1.12 annualized dividend and today’s closing stock price of $59.49. The company’s quarterly dividend has grown by an average of 15.1% over the last 10 years.

 

At 10 a.m. CDT tomorrow, April 20, 2010, 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.

 

Underwriting income, operating earnings, 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. Underwriting income or profit represents the pretax profitability of our insurance operations and is derived by subtracting losses and settlement expenses, policy acquisition costs, and insurance operating expenses from net premium earned. Operating earnings and EPS from operations consist of our net earnings adjusted by net realized investment gains/ (losses) and taxes related to net realized gains/ (losses). 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, 2009.

 

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 office locations across the country. The company’s talented associates have delivered underwriting profits in 29 of the last 33 years, including the last 14 consecutive years. 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. RLI is recognized as one of the insurance industry’s top performing companies by the Ward’s 50® Top P&C Performers and has been a member of the group for 19 straight years since its inception in 1991.

 

For additional information, contact John Robison, Chief Investment Officer at 309-693-5846 or at john.robison@rlicorp.com or visit our website at www.rlicorp.com.

 

2


 

Supplemental disclosure regarding the earnings impact of specific items

 

 

 

Operating Earnings Per Diluted Share

 

 

 

2010

 

2009

 

 

 

1st Qtr

 

1st Qtr

 

Operating Earnings Per Diluted Share

 

$

0.94

 

$

1.03

 

 

 

 

 

 

 

Specific items included in operating earnings per share: (1) (2)

 

 

 

 

 

 

 

 

 

 

 

·  Gain from casualty prior years’ reserve development

 

$

0.15

 

$

0.29

 

 

 

 

 

 

 

·  Loss from property prior years’ reserve development

 

—

 

$

(0.09

)

 

 

 

 

 

 

·  Gain from surety prior years’ reserve development

 

$

0.05

 

—

 

 

(1)   Includes bonus and profit sharing-related impacts which affected other insurance and general corporate expenses.

 

(2)   Reserve developments reflect revisions for previously estimated losses.

 

3


 

RLI CORP.

2010 FINANCIAL HIGHLIGHTS

(Unaudited)

(Dollars in thousands, except per share amounts)

 

 

 

Three Months Ended March 31,

 

 

 

2010

 

2009

 

% Change

 

SUMMARIZED INCOME STATEMENT DATA:

 

 

 

 

 

 

 

Net premiums earned

 

$

116,264

 

$

125,682

 

-7.5

%

Net investment income

 

16,600

 

17,703

 

-6.2

%

Net realized investment gains (losses)

 

6,463

 

(33,528

)

 

 

Consolidated revenue

 

139,327

 

109,857

 

26.8

%

 

 

 

 

 

 

 

 

Loss and settlement expenses

 

54,257

 

61,221

 

-11.4

%

Policy acquisition costs

 

40,465

 

41,013

 

-1.3

%

Other insurance expenses

 

8,827

 

8,262

 

6.8

%

Interest expense on debt

 

1,512

 

1,512

 

0.0

%

General corporate expenses

 

1,717

 

1,628

 

5.5

%

Total expenses

 

106,778

 

113,636

 

-6.0

%

 

 

 

 

 

 

 

 

Equity in earnings of unconsolidated investee

 

2,253

 

1,398

 

61.2

%

 

 

 

 

 

 

 

 

Earnings (loss) before income taxes

 

34,802

 

(2,381

)

 

 

Income tax expense (benefit)

 

10,581

 

(565

)

 

 

Net earnings (loss)

 

$

24,221

 

$

(1,816

)

 

 

 

 

 

 

 

 

 

 

Other comprehensive earnings , net of tax

 

9,275

 

3,578

 

159.2

%

Comprehensive earnings

 

$

33,496

 

$

1,762

 

1801.0

%

 

 

 

 

 

 

 

 

Operating earnings:(1)

 

 

 

 

 

 

 

Net earnings (loss)

 

$

24,221

 

$

(1,816

)

 

 

Less: Realized investment gains (losses), net of tax

 

4,201

 

(24,269

)

 

 

Operating earnings

 

$

20,020

 

$

22,453

 

-10.8

%

 

 

 

 

 

 

 

 

Return on Equity:

 

 

 

 

 

 

 

Net earnings (trailing four quarters)

 

15.0

%

7.1

%

 

 

Comprehensive earnings (trailing four quarters)

 

23.6

%

-0.9

%

 

 

 

 

 

 

 

 

 

 

Per Share Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted:

 

 

 

 

 

 

 

Weighted average shares outstanding (in 000’s)

 

21,372

 

21,756

 

 

 

 

 

 

 

 

 

 

 

EPS from operations (1)

 

$

0.94

 

$

1.03

 

-8.7

%

Realized gains (losses), net of tax

 

0.19

 

(1.11

)

 

 

Net earnings (loss) per share

 

$

1.13

 

$

(0.08

)

 

 

Comprehensive earnings per share

 

$

1.57

 

$

0.08

 

1862.5

%

 

 

 

 

 

 

 

 

Cash dividends per share

 

$

0.28

 

$

0.26

 

7.7

%

 

 

 

 

 

 

 

 

Net Cash Flow (used in) provided by Operations

 

$

(2,448

)

$

3,961

 

 

 

 

(1)  See discussion of non-GAAP financial measures on page 2.

 

4


 

RLI CORP.

2010 FINANCIAL HIGHLIGHTS

(Unaudited)

(Dollars in thousands, except per share amounts)

 

 

 

March 31,

 

December 31,

 

 

 

 

 

2010

 

2009

 

% Change

 

SUMMARIZED BALANCE SHEET DATA:

 

 

 

 

 

 

 

Fixed income

 

 

 

 

 

 

 

(amortized cost - $1,381,914 at 3/31/10)

 

 

 

 

 

 

 

(amortized cost - $1,452,084 at 12/31/09)

 

$

1,419,991

 

$

1,485,347

 

-4.4

%

Equity securities

 

 

 

 

 

 

 

(cost - $184,633 at 3/31/10)

 

 

 

 

 

 

 

(cost - $177,681 at 12/31/09)

 

279,447

 

262,693

 

6.4

%

Short-term investments

 

182,320

 

104,462

 

74.5

%

Total investments

 

1,881,758

 

1,852,502

 

1.6

%

 

 

 

 

 

 

 

 

Premiums and reinsurance balances receivable

 

85,748

 

83,961

 

2.1

%

Ceded unearned premiums

 

57,911

 

65,379

 

-11.4

%

Reinsurance recoverable on unpaid losses

 

351,249

 

336,392

 

4.4

%

Deferred acquisition costs

 

73,748

 

75,880

 

-2.8

%

Property and equipment

 

18,741

 

19,110

 

-1.9

%

Investment in unconsolidated investee

 

46,237

 

44,286

 

4.4

%

Goodwill

 

26,214

 

26,214

 

—

 

Other assets

 

29,268

 

34,929

 

-16.2

%

Total assets

 

$

2,570,874

 

$

2,538,653

 

1.3

%

 

 

 

 

 

 

 

 

Unpaid losses and settlement expenses

 

$

1,171,685

 

$

1,146,460

 

2.2

%

Unearned premiums

 

296,997

 

312,527

 

-5.0

%

Reinsurance balances payable

 

18,679

 

22,431

 

-16.7

%

Long-term debt - bonds payable

 

100,000

 

100,000

 

—

 

Income taxes - deferred

 

29,612

 

24,299

 

21.9

%

Accrued expenses

 

22,504

 

41,835

 

-46.2

%

Other liabilities

 

81,541

 

58,851

 

38.6

%

Total liabilities

 

1,721,018

 

1,706,403

 

0.9

%

Shareholders’ equity

 

849,856

 

832,250

 

2.1

%

Total liabilities & shareholders’ equity

 

$

2,570,874

 

$

2,538,653

 

1.3

%

 

 

 

 

 

 

 

 

OTHER DATA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares outstanding (in 000’s)

 

21,097

 

21,265

 

 

 

 

 

 

 

 

 

 

 

Book Value per share

 

$

40.28

 

$

39.14

 

2.9

%

Closing stock price per share

 

$

57.02

 

$

53.25

 

7.1

%

Cash dividends per share (annualized)

 

$

1.12

 

$

1.08

 

3.7

%

 

 

 

 

 

 

 

 

Statutory Surplus

 

$

798,462

 

$

784,161

 

1.8

%

 

5


 

RLI CORP.

2010 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

 

2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross premiums written

 

$

69,285

 

 

 

$

50,335

 

 

 

$

21,686

 

 

 

$

141,306

 

 

 

Net premiums written

 

51,622

 

 

 

37,085

 

 

 

19,496

 

 

 

108,203

 

 

 

Net premiums earned

 

59,046

 

 

 

38,322

 

 

 

18,896

 

 

 

116,264

 

 

 

Net loss & settlement expenses

 

37,725

 

63.9

%

14,015

 

36.6

%

2,517

 

13.3

%

54,257

 

46.7

%

Net operating expenses

 

20,299

 

34.4

%

16,260

 

42.4

%

12,733

 

67.4

%

49,292

 

42.4

%

Underwriting income

 

$

1,022

 

98.3

%

$

8,047

 

79.0

%

$

3,646

 

80.7

%

$

12,715

 

89.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross premiums written

 

$

79,872

 

 

 

$

48,005

 

 

 

$

20,560

 

 

 

$

148,437

 

 

 

Net premiums written

 

61,306

 

 

 

34,548

 

 

 

17,043

 

 

 

112,897

 

 

 

Net premiums earned

 

70,690

 

 

 

37,192

 

 

 

17,800

 

 

 

125,682

 

 

 

Net loss & settlement expenses

 

42,407

 

60.0

%

15,349

 

41.3

%

3,465

 

19.5

%

61,221

 

48.7

%

Net operating expenses

 

22,280

 

31.5

%

15,643

 

42.1

%

11,352

 

63.8

%

49,275

 

39.2

%

Underwriting income

 

$

6,003

 

91.5

%

$

6,200

 

83.4

%

$

2,983

 

83.3

%

$

15,186

 

87.9

%

 

6