0001558370-24-005415.txt : 20240422
0001558370-24-005415.hdr.sgml : 20240422
20240422161951
ACCESSION NUMBER: 0001558370-24-005415
CONFORMED SUBMISSION TYPE: 8-K
PUBLIC DOCUMENT COUNT: 17
CONFORMED PERIOD OF REPORT: 20240422
ITEM INFORMATION: Results of Operations and Financial Condition
ITEM INFORMATION: Financial Statements and Exhibits
FILED AS OF DATE: 20240422
DATE AS OF CHANGE: 20240422
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: RLI CORP
CENTRAL INDEX KEY: 0000084246
STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331]
ORGANIZATION NAME: 02 Finance
IRS NUMBER: 370889946
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 8-K
SEC ACT: 1934 Act
SEC FILE NUMBER: 001-09463
FILM NUMBER: 24861424
BUSINESS ADDRESS:
STREET 1: 9025 N. LINDBERGH DRIVE
CITY: PEORIA
STATE: IL
ZIP: 61615
BUSINESS PHONE: 3096921000
MAIL ADDRESS:
STREET 1: 9025 N. LINDBERGH DRIVE
CITY: PEORIA
STATE: IL
ZIP: 61615
8-K
1
rli-20240422x8k.htm
8-K
0000084246false00000842462024-04-222024-04-22
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 22, 2024
RLI Corp.
(Exact name of registrant as specified in its charter)
Delaware
001-09463
37-0889946
(State or other jurisdiction
(Commission
(IRS Employer
of incorporation)
File Number)
Identification No.)
9025 North Lindbergh Drive, Peoria, IL
61615
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code: (309) 692-1000
Not applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
Title of each class
Trading Symbol
Name of each exchange on which registered
Common Stock $0.01 par value
RLI
New York Stock Exchange
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On April 22, 2024, RLI Corp. announced its results of operations for the first quarter of 2024. Furnished as Exhibit 99.1 and incorporated herein by reference is the press release issued by RLI Corp.
This Exhibit is furnished pursuant to Item 2.02 hereof and should not be deemed to be “filed” under the Securities Exchange Act of 1934.
104
Cover Page Interactive Data File (embedded within the Inline XBRL document).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
RLI CORP.
Date: April 22, 2024
By:
/s/ Todd W. Bryant
Todd W. Bryant
Chief Financial Officer
EX-99.1
2
rli-20240422xex99d1.htm
EX-99.1
EXHIBIT 99.1
RLI REPORTS FIRST QUARTER 2024 RESULTS
PEORIA, ILLINOIS, April 22, 2024 – RLI Corp. (NYSE: RLI) – RLI Corp. reported first quarter 2024 net earnings of $127.9 million ($2.77 per share), compared to $98.8 million ($2.15 per share) for the first quarter of 2023. Operating earnings(1) for the first quarter of 2024 were $87.4 million ($1.89 per share), compared to $75.0 million ($1.63 per share) for the same period in 2023.
First Quarter
Earnings Per Diluted Share
2024
2023
Net earnings
$
2.77
$
2.15
Operating earnings (1)
$
1.89
$
1.63
(1)
See discussion below: Non-GAAP and Performance Measures.
Highlights for the quarter included:
●
Underwriting income(1) of $77.7 million on a combined ratio(1) of 78.5.
●
13% increase in gross premiums written.
●
21% increase in net investment income.
●
Favorable development in prior years’ loss reserves resulted in a $37.4 million net increase in underwriting income.
●
Book value per share of $33.27, an increase of 8% (inclusive of dividends) from year-end 2023.
“We are pleased to report continued top line premium growth and excellent bottom line results in the first quarter of 2024,” said RLI Corp. President & CEO Craig Kliethermes. “Gross premiums written increased 13%, with contributions from all three of our product segments. While property premium growth was more moderate this quarter, sustained rate increases and manageable storm activity resulted in an outstanding 55 combined ratio for the segment. Overall, underwriting income delivered significant margin which complemented investment returns to support an 8% increase in book value. We believe our ownership culture and ability to serve customers from a position of financial strength continue to differentiate us. I want to thank RLI’s talented associates for their ongoing work to deliver value to our shareholders.”
Underwriting Income
RLI achieved $77.7 million of underwriting income in the first quarter of 2024 on a 78.5 combined ratio, compared to $67.9 million on a 77.9 combined ratio in 2023.
Results for both years include favorable development in prior years’ loss reserves, which resulted in a $37.4 million and $44.5 million net increase to underwriting income in 2024 and 2023, respectively.
The following table highlights underwriting income and combined ratios by segment.
Underwriting Income(1)
Combined Ratio(1)
(in millions)
2024
2023
2024
2023
Casualty
$
13.7
$
31.8
Casualty
93.1
82.9
Property
57.7
28.4
Property
55.4
68.0
Surety
6.3
7.7
Surety
80.9
76.7
Total
$
77.7
$
67.9
Total
78.5
77.9
(1)
See discussion below: Non-GAAP and Performance Measures.
Other Income
Net investment income for the quarter increased 21.3% to $32.8 million, compared to the same period in 2023. The investment portfolio’s total return was 1.8% for the quarter.
RLI’s comprehensive earnings were $115.2 million for the quarter ($2.50 per share), compared to $136.5 million ($2.97 per share) for the same quarter in 2023. In addition to net earnings, comprehensive earnings for 2024 included after-tax unrealized losses from the fixed income portfolio, due to rising interest rates.
Dividends Paid in First Quarter of 2024
On March 20, 2024, the company paid a regular quarterly dividend of $0.27 per share, the same amount as the prior quarter. RLI’s cumulative dividends total more than $816 million paid over the last five years.
Non-GAAP and Performance Measures
Management has included certain non-generally accepted accounting principles (non-GAAP) financial measures in presenting the company’s results. Management believes that these non-GAAP measures further explain the company’s results of operations and allow for a more complete understanding of the underlying trends in the company’s business. These measures should not be viewed as a substitute for those determined in accordance with generally accepted accounting principles (GAAP). In addition, our definitions of these items may not be comparable to the definitions used by other companies.
Operating earnings and operating earnings per share (EPS) consist of our GAAP net earnings adjusted by net realized gains/(losses), net unrealized gains/(losses) on equity securities and taxes related thereto. Net earnings and net earnings per share are the GAAP financial measures that are most directly comparable to operating earnings and operating EPS. A reconciliation of the operating earnings and operating EPS to the comparable GAAP financial measures is included in the 2024 financial highlights below.
Underwriting income or profit represents the pretax profitability of our insurance operations and is derived by subtracting loss and settlement expenses, policy acquisition costs and insurance operating expenses from net premium earned, which are all GAAP financial measures. The combined ratio, which is derived from components of underwriting income, is a performance measure commonly used by property and casualty insurance companies and is calculated as the sum of loss and settlement expenses, policy acquisition costs and insurance operating expenses, divided by net premiums earned, which are all GAAP measures.
Other News
During the first quarter, the company’s A+ (Superior) financial strength rating was affirmed by AM Best Company for the company’s insurance subsidiaries – RLI Insurance Company, Mt. Hawley Insurance Company and Contractors Bonding and Insurance Company.
At 10 a.m. central daylight time (CDT) on April 23, 2024, RLI management will hold a conference call to discuss quarterly results with insurance industry analysts. Interested parties may listen to the discussion at https://events.q4inc.com/attendee/397005913.
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, 2023.
2
About RLI
RLI Corp. (NYSE: RLI) is a specialty insurer serving niche property, casualty and surety markets. The company provides deep underwriting expertise and superior service to commercial and personal lines customers nationwide. RLI’s products are offered through its insurance subsidiaries – RLI Insurance Company, Mt. Hawley Insurance Company and Contractors Bonding and Insurance Company. All of RLI’s insurance subsidiaries are rated A+ (Superior) by AM Best Company. RLI has paid and increased regular dividends for 48 consecutive years and delivered underwriting profits for 28 consecutive years. To learn more about RLI, visit www.rlicorp.com.
Media Contact
Aaron Diefenthaler
Chief Investment Officer & Treasurer
309-693-5846
Aaron.Diefenthaler@rlicorp.com
3
Supplemental disclosure regarding the earnings impact of specific items:
Reserve Development(1) and Catastrophe Losses,
Net of Reinsurance
Three Months Ended
March 31,
(Dollars in millions, except per share amounts)
2024
2023
Favorable development in casualty prior years' reserves
$
18.1
$
35.9
Favorable development in property prior years' reserves
$
18.9
$
12.6
Favorable development in surety prior years' reserves
$
5.4
$
3.2
Net incurred losses related to:
2024 storms
$
(12.0)
$
—
2023 and prior events
$
—
$
(4.0)
Operating Earnings Per Share
Three Months Ended
March 31,
2024
2023
Operating Earnings Per Share(2)
$
1.89
$
1.63
Specific items included in operating earnings per share:(1) (3)
Net favorable development in casualty prior years' reserves
$
0.24
$
0.53
Net favorable development in property prior years' reserves
$
0.30
$
0.19
Net favorable development in surety prior years' reserves
$
0.08
$
0.04
Net incurred losses related to:
2024 storms
$
(0.18)
$
—
2023 and prior events
$
—
$
(0.06)
(1)
Reserve development reflects changes from previously estimated losses.
(2)
See discussion above: Non-GAAP and Performance Measures.
(3)
Items included in operating earnings per share are after tax and incorporates incentive and profit sharing-related impacts which affected policy acquisition, insurance operating and general corporate expenses.
4
RLI CORP
2024 FINANCIAL HIGHLIGHTS
(Unaudited)
(Dollars in thousands, except per share amounts)
Three Months Ended March 31,
SUMMARIZED INCOME STATEMENT DATA:
2024
2023
% Change
Net premiums earned
$
360,676
$
307,723
17.2
%
Net investment income
32,847
27,084
21.3
%
Net realized gains
5,994
14,620
(59.0)
%
Net unrealized gains on equity securities
45,314
15,496
192.4
%
Consolidated revenue
$
444,831
$
364,923
21.9
%
Loss and settlement expenses
143,824
114,488
25.6
%
Policy acquisition costs
110,454
101,444
8.9
%
Insurance operating expenses
28,703
23,901
20.1
%
Interest expense on debt
1,618
2,008
(19.4)
%
General corporate expenses
5,010
4,214
18.9
%
Total expenses
$
289,609
$
246,055
17.7
%
Equity in earnings of unconsolidated investees
4,769
3,923
21.6
%
Earnings before income taxes
$
159,991
$
122,791
30.3
%
Income tax expense
32,091
23,980
33.8
%
Net earnings
$
127,900
$
98,811
29.4
%
Other comprehensive earnings (loss), net of tax
(12,671)
37,707
NM
Comprehensive earnings
$
115,229
$
136,518
(15.6)
%
Operating earnings(1):
Net earnings
$
127,900
$
98,811
29.4
%
Less:
Net realized gains
(5,994)
(14,620)
(59.0)
%
Income tax on realized gains
1,259
3,071
(59.0)
%
Net unrealized gains on equity securities
(45,314)
(15,496)
192.4
%
Income tax on unrealized gains on equity securities
9,516
3,254
192.4
%
Operating earnings
$
87,367
$
75,020
16.5
%
Return on Equity:
Net earnings (trailing four quarters)
24.2
%
52.2
%
Comprehensive earnings (trailing four quarters)
25.1
%
41.9
%
Per Share Data:
Diluted:
Weighted average shares outstanding (in 000's)
46,163
46,035
Net earnings per share
$
2.77
$
2.15
28.8
%
Less:
Net realized gains
(0.13)
(0.32)
(59.4)
%
Income tax on realized gains
0.03
0.07
(57.1)
%
Net unrealized gains on equity securities
(0.98)
(0.34)
188.2
%
Income tax on unrealized gains on equity securities
0.20
0.07
185.7
%
Operating earnings per share(1)
$
1.89
$
1.63
16.0
%
Comprehensive earnings per share
$
2.50
$
2.97
(15.8)
%
Cash dividends per share - ordinary
$
0.27
$
0.26
3.8
%
Net cash flow provided by operations
$
70,946
$
69,219
2.5
%
(1)
See discussion above: Non-GAAP and Performance Measures.
NM = Not Meaningful
5
RLI CORP
2024 FINANCIAL HIGHLIGHTS
(Unaudited)
(Dollars in thousands, except per share amounts)
March 31,
December 31,
2024
2023
% Change
SUMMARIZED BALANCE SHEET DATA:
Fixed income, at fair value
$
2,863,321
$
2,855,849
0.3
%
(amortized cost - $3,082,273 at 3/31/24)
(amortized cost - $3,054,391 at 12/31/23)
Equity securities, at fair value
643,367
590,041
9.0
%
(cost - $362,527 at 3/31/24)
(cost - $354,022 at 12/31/23)
Short-term investments
147,186
134,923
9.1
%
Other invested assets
59,273
59,081
0.3
%
Cash and cash equivalents
44,557
36,424
22.3
%
Total investments and cash
$
3,757,704
$
3,676,318
2.2
%
Accrued investment income
25,353
24,062
5.4
%
Premiums and reinsurance balances receivable
230,537
221,206
4.2
%
Ceded unearned premiums
107,822
112,257
(4.0)
%
Reinsurance balances recoverable on unpaid losses
814,676
757,349
7.6
%
Deferred policy acquisition costs
152,924
146,566
4.3
%
Property and equipment
46,536
46,715
(0.4)
%
Investment in unconsolidated investees
66,134
56,966
16.1
%
Goodwill and intangibles
53,562
53,562
0.0
%
Income taxes - deferred
10,700
15,872
(32.6)
%
Other assets
72,461
69,348
4.5
%
Total assets
$
5,338,409
$
5,180,221
3.1
%
Unpaid losses and settlement expenses
$
2,532,190
$
2,446,025
3.5
%
Unearned premiums
904,848
892,326
1.4
%
Reinsurance balances payable
35,157
71,507
(50.8)
%
Funds held
106,430
101,446
4.9
%
Income taxes - current
25,455
3,757
NM
Debt
100,000
100,000
—
%
Accrued expenses
68,216
108,880
(37.3)
%
Other liabilities
45,361
42,766
6.1
%
Total liabilities
$
3,817,657
$
3,766,707
1.4
%
Shareholders' equity
1,520,752
1,413,514
7.6
%
Total liabilities & shareholders' equity
$
5,338,409
$
5,180,221
3.1
%
OTHER DATA:
Common shares outstanding (in 000's)
45,710
45,640
Book value per share
$
33.27
$
30.97
7.4
%
Closing stock price per share
$
148.47
$
133.12
11.5
%
Statutory surplus
$
1,670,595
$
1,520,135
9.9
%
6
RLI CORP
2024 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
2024
Gross premiums written
$
245,329
$
180,364
$
42,982
$
468,675
Net premiums written
205,628
133,171
38,834
377,633
Net premiums earned
198,276
129,411
32,989
360,676
Net loss & settlement expenses
109,472
55.2
%
32,577
25.2
%
1,775
5.4
%
143,824
39.9
%
Net operating expenses
75,130
37.9
%
39,118
30.2
%
24,909
75.5
%
139,157
38.6
%
Underwriting income(1)
$
13,674
93.1
%
$
57,716
55.4
%
$
6,305
80.9
%
$
77,695
78.5
%
2023
Gross premiums written
$
217,834
$
158,846
$
38,332
$
415,012
Net premiums written
181,201
124,866
36,518
342,585
Net premiums earned
186,031
88,767
32,925
307,723
Net loss & settlement expenses
84,688
45.5
%
26,437
29.8
%
3,363
10.2
%
114,488
37.2
%
Net operating expenses
69,512
37.4
%
33,947
38.2
%
21,886
66.5
%
125,345
40.7
%
Underwriting income(1)
$
31,831
82.9
%
$
28,383
68.0
%
$
7,676
76.7
%
$
67,890
77.9
%
(1)
See discussion above: Non-GAAP and Performance Measures.
For the EDGAR submission types of Form 8-K: the date of the report, the date of the earliest event reported; for the EDGAR submission types of Form N-1A: the filing date; for all other submission types: the end of the reporting or transition period. The format of the date is YYYY-MM-DD.
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