RLI Corp. (NYSE:RLI) – RLI Corp. reported fourth quarter 2023 net earnings of $114.6 million ($2.49 per share), compared to $97.8 million ($2.13 per share) for the fourth quarter of 2022. Operating earnings⁽²⁾⁽³⁾ for the fourth quarter of 2023 were $71.1 million ($1.54 per share), compared to $70.5 million ($1.53 per share) for the same period in 2022.


	Fourth Quarter				Year to Date
Earnings Per Diluted Share	2023		2022		2023		2022
Net earnings ⁽¹⁾	$	2.49	$	2.13	$	6.61	$	12.74
Operating earnings ^{(2) (3)}	$	1.54	$	1.53	$	4.94	$	4.69

(1)	The year to date net earnings for 2022 include $434.4 million ($9.49 per diluted share) related to the sale of Maui Jim, Inc. in the third quarter of 2022.
(2)	See discussion below: Non-GAAP and Performance Measures.
(3)	Equity in earnings of Maui Jim and the related taxes were excluded from operating earnings per share in 2022 due to the sale of RLI's investment in Maui Jim in the third quarter of 2022.

Highlights for the quarter included:

Underwriting income⁽²⁾ of $59.8 million on a combined ratio⁽²⁾ of 82.7.
13% increase in gross premiums written.
Favorable development in prior years' loss reserves resulted in a $12.5 million net increase in underwriting income.
Special dividend of $2.00 per share, representing $91.3 million returned to shareholders.

Highlights for the year included:

Underwriting income⁽²⁾ of $173.2 million on a combined ratio⁽²⁾ of 86.6.
15% increase in gross premiums written.
40% increase in net investment income.
Favorable development in prior years' loss reserves resulted in a $95.3 million net increase in underwriting income.
Book value per share of $30.97, an increase of 31% (inclusive of dividends) from year-end 2022.

"Continued premium growth across all product segments drove RLI's strong fourth quarter performance and supported our 28th consecutive year of underwriting profit," said RLI Corp. President & CEO Craig Kliethermes. "Gross premiums written grew 13% in the quarter and we achieved an 83 combined ratio. Underwriting and investment income were solid contributors to quarterly operating earnings of $1.54 per share and book value growth of 31% from year-end 2022. Our success during the year is a reminder that underwriting discipline and financial strength put us in the best position to fulfill our promise to policyholders and provide superior customer service."

"As we turn our focus to 2024, I want to thank our associate-owners who drive RLI forward every day. Their dedication is a testament to our ability to meet the challenges and opportunities that lie ahead."

Underwriting Income

RLI achieved $59.8 million of underwriting income in the fourth quarter of 2023 on an 82.7 combined ratio, compared to $54.0 million on an 82.1 combined ratio in 2022.

For the year, RLI achieved $173.2 million of underwriting income on an 86.6 combined ratio, compared to $178.2 million on an 84.4 combined ratio in 2022. Favorable development in prior years' loss reserves resulted in a $95.3 million net increase to underwriting income in 2023, which was partially offset by $81.2 million of Hawaiian wildfire and other storm losses. Comparatively, favorable development in prior years' loss reserves resulted in a $106.5 million net increase to underwriting income in 2022, which was partially offset by $44.4 million of hurricane and storm losses.

The following table highlights underwriting income and combined ratios by segment for the year.


Underwriting Income⁽¹⁾					Combined Ratio⁽¹⁾
(in millions)	2023		2022			2023	2022
Casualty	$	59.5	$	73.8	Casualty	92.2	89.6
Property		86.3		72.5	Property	78.5	76.4
Surety		27.4		31.9	Surety	79.6	74.4
Total	$	173.2	$	178.2	Total	86.6	84.4

(1) See discussion below: Non-GAAP and Performance Measures.

Other Income

Net investment income for the quarter increased 14.4% to $32.5 million, compared to the same period in 2022. For the year ended December 31, 2023, net investment income was $120.4 million, compared to $86.1 million for the same period in 2022. The investment portfolio's total return was 6.4% for the quarter and 8.8% for the year.

RLI's comprehensive earnings were $216.2 million for the quarter ($4.69 per share), compared to $113.3 million ($2.47 per share) for the same quarter in 2022. Full-year comprehensive earnings were $367.4 million ($7.97 per share), compared to $304.5 million ($6.65 per share) in 2022. In addition to net earnings, comprehensive earnings for 2023 included after-tax unrealized gains from the fixed income portfolio, due to declining interest rates.

Special and Regular Dividends

On December 20, 2023, the company paid a special cash dividend of $2.00 per share and a regular quarterly dividend of $0.27 per share for a combined total of $103.6 million. RLI has paid dividends for 190 consecutive quarters and increased regular dividends in each of the last 48 years. Over the last 10 years, the company has returned $1.41 billion to shareholders and the regular dividend has grown an average of 4.7% per year.

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. Additionally, equity in earnings of Maui Jim and the related taxes were excluded from operating earnings and operating EPS for 2022 due to the sale of RLI's investment in the third quarter of 2022. 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 2023 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

At 10 a.m. central standard time (CST) tomorrow, January 25, 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/112063672.

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, 2022.

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.

Supplemental disclosure regarding the earnings impact of specific items:


	Reserve Development and Catastrophe Losses,
	Net of Reinsurance
	Three Months Ended				Twelve Months Ended
	December 31,				December 31,
(Dollars in millions, except per share amounts)	2023		2022		2023		2022
Favorable development in casualty prior years' reserves	$	9.0	$	14.0	$	76.0	$	87.0
Favorable development in property prior years' reserves	$	2.0	$	0.4	$	16.2	$	21.2
Favorable development in surety prior years' reserves	$	0.6	$	1.1	$	8.9	$	10.4

Net incurred losses related to:
2023 storms	$	(4.0)	$	—	$	(31.0)	$	—
Hawaiian wildfires	$	2.4	$	—	$	(49.3)	$	—
2022 and prior events	$	2.9	$	(2.0)	$	7.5	$	(47.0)
Reinstatement premium from Hawaiian wildfires	$	2.6	$	—	$	(11.7)	$	—

	Operating Earnings Per Share
	Three Months Ended				Twelve Months Ended
	December 31,				December 31,
	2023		2022		2023		2022
Operating Earnings Per Share^{(1) (2)}	$	1.54	$	1.53	$	4.94	$	4.69

Specific items included in operating earnings per share:^{(3) (4)}
Net favorable development in casualty prior years' reserves	$	0.13	$	0.21	$	1.14	$	1.31
Net favorable development in property prior years' reserves	$	0.03	$	0.01	$	0.23	$	0.32
Net favorable development in surety prior years' reserves	$	0.01	$	0.01	$	0.12	$	0.15

Net incurred losses related to:
2023 storms	$	(0.06)	$	—	$	(0.46)	$	—
Hawaiian wildfires (incurred loss and reinstatement premium)	$	0.07	$	—	$	(0.90)	$	—
2022 and prior events	$	0.04	$	(0.03)	$	0.10	$	(0.71)

Gain from tax benefit of special dividend to ESOP⁽⁵⁾	$	0.02	$	0.08	$	0.02	$	0.08

(1)	See discussion above: Non-GAAP and Performance Measures.
(2)	Equity in earnings of Maui Jim and the related taxes were excluded from operating earnings per share in 2022 due to the sale of RLI's investment in Maui Jim in the third quarter of 2022.
(3)	Includes incentive and profit sharing-related impacts which affected policy acquisition, insurance operating and general corporate expenses.
(4)	Reserve development reflects changes from previously estimated losses.
(5)	Dividends paid on employer securities in an ESOP are fully deductible from taxable income and resulted in a 21% tax benefit.

RLI CORP
2023 FINANCIAL HIGHLIGHTS
(Unaudited)
(Dollars in thousands, except per share amounts)


	Three Months Ended December 31,						Twelve Months Ended December 31,
SUMMARIZED INCOME STATEMENT DATA:	2023		2022		% Change		2023			2022			% Change
Net premiums earned	$	345,894	$	301,006	14.9	%	$	1,294,306		$	1,144,436		13.1	%
Net investment income		32,548		28,453	14.4	%		120,383			86,078		39.9	%
Net realized gains (losses)		5,760		(3,047)	NM			32,518			588,515		(94.5)	%
Net unrealized gains (losses) on equity securities		49,313		34,181	44.3	%		64,787			(121,037)		NM
Consolidated revenue	$	433,515	$	360,593	20.2	%	$	1,511,994		$	1,697,992		(11.0)	%
Loss and settlement expenses		146,424		125,849	16.3	%		604,413			514,376		17.5	%
Policy acquisition costs		111,242		97,753	13.8	%		418,325			369,632		13.2	%
Insurance operating expenses		28,381		23,418	21.2	%		98,383			82,212		19.7	%
Interest expense on debt		1,373		2,013	(31.8)	%		7,301			8,047		(9.3)	%
General corporate expenses		5,112		4,347	17.6	%		15,917			12,900		23.4	%
Total expenses	$	292,532	$	253,380	15.5	%	$	1,144,339		$	987,167		15.9	%
Equity in earnings of unconsolidated investees		2,441		6,792	(64.1)	%		9,610			9,853		(2.5)	%
Earnings before income taxes	$	143,424	$	114,005	25.8	%	$	377,265		$	720,678		(47.7)	%
Income tax expense		28,812		16,171	78.2	%		72,654			137,267		(47.1)	%
Net earnings	$	114,612	$	97,834	17.1	%	$	304,611		$	583,411		(47.8)	%

Other comprehensive earnings (loss), net of tax		101,621		15,490	556.0	%		62,773			(278,902)		NM
Comprehensive earnings	$	216,233	$	113,324	90.8	%	$	367,384		$	304,509		20.6	%

Operating earnings⁽¹⁾:
Net earnings	$	114,612	$	97,834	17.1	%	$	304,611		$	583,411		(47.8)	%
Less:
Net realized (gains) losses		(5,760)		3,047	NM			(32,518)			(588,515)		(94.5)	%
Income tax on realized gains (losses)		1,210		(646)	NM			6,829			124,415		(94.5)	%
Net unrealized (gains) losses on equity securities		(49,313)		(34,181)	44.3	%		(64,787)			121,037		NM
Income tax on unrealized gains (losses) on equity securities		10,355		7,178	44.3	%		13,605			(25,418)		NM
Equity in earnings of Maui Jim		—		(3,493)	(100.0)	%		—			(372)		(100.0)	%
Income tax on equity in earnings of Maui Jim		—		733	(100.0)	%		—			78		(100.0)	%
Operating earnings⁽²⁾	$	71,104	$	70,472	0.9	%	$	227,740		$	214,636		6.1	%

Return on Equity:
Net earnings								23.3	%		48.6	%
Comprehensive earnings								28.1	%		25.4	%

Per Share Data:
Diluted:
Weighted average shares outstanding (in 000's)		46,072		45,954				46,077			45,794

Net earnings per share⁽²⁾	$	2.49	$	2.13	16.9	%	$	6.61		$	12.74		(48.1)	%
Less:
Net realized (gains) losses		(0.13)		0.06	NM			(0.71)			(12.84)		(94.5)	%
Income tax on realized gains (losses)		0.03		(0.01)	NM			0.15			2.72		(94.5)	%
Net unrealized (gains) losses on equity securities		(1.07)		(0.74)	44.6	%		(1.41)			2.64		NM
Income tax on unrealized gains (losses) on equity securities		0.22		0.16	37.5	%		0.30			(0.56)		NM
Equity in earnings of Maui Jim		—		(0.08)	(100.0)	%		—			(0.01)		(100.0)	%
Income tax on equity in earnings of Maui Jim		—		0.01	(100.0)	%		—			—		—	%
Operating earnings per share⁽¹⁾⁽²⁾	$	1.54	$	1.53	0.7	%	$	4.94		$	4.69		5.3	%

Comprehensive earnings per share	$	4.69	$	2.47	89.9	%	$	7.97		$	6.65		19.8	%

Cash dividends per share - ordinary	$	0.27	$	0.26	3.8	%	$	1.07		$	1.03		3.9	%
Cash dividends per share - special		2.00		7.00	(71.4)	%		2.00			7.00		(71.4)	%

Net cash flow provided by (used in) operations	$	122,065	$	(32,438)	NM		$	464,257		$	250,448		85.4	%

(1)	See discussion above: Non-GAAP and Performance Measures.
(2)	Equity in earnings of Maui Jim and the related taxes were excluded from operating earnings and operating earnings per share in 2022 due to the sale of RLI's investment in Maui Jim in the third quarter of 2022.

NM = Not Meaningful

RLI CORP
2023 FINANCIAL HIGHLIGHTS
(Unaudited)
(Dollars in thousands, except per share amounts)

	December 31,		December 31,
	2023		2022		% Change
SUMMARIZED BALANCE SHEET DATA:
Fixed income, at fair value	$	2,855,849	$	2,666,950	7.1	%
(amortized cost - $3,054,391 at 12/31/23)
(amortized cost - $2,945,273 at 12/31/22)
Equity securities, at fair value		590,041		498,382	18.4	%
(cost - $354,022 at 12/31/23)
(cost - $328,019 at 12/31/22)
Short-term investments		134,923		36,229	272.4	%
Other invested assets		59,081		47,922	23.3	%
Cash and cash equivalents		36,424		22,818	59.6	%
Total investments and cash	$	3,676,318	$	3,272,301	12.3	%

Accrued investment income		24,062		21,259	13.2	%
Premiums and reinsurance balances receivable		221,206		189,501	16.7	%
Ceded unearned premiums		112,257		138,457	(18.9)	%
Reinsurance balances recoverable on unpaid losses		757,349		740,089	2.3	%
Deferred policy acquisition costs		146,566		127,859	14.6	%
Property and equipment		46,715		49,573	(5.8)	%
Investment in unconsolidated investees		56,966		58,275	(2.2)	%
Goodwill and intangibles		53,562		53,562	0.0	%
Income taxes - deferred		15,872		40,269	(60.6)	%
Other assets		69,348		75,923	(8.7)	%
Total assets	$	5,180,221	$	4,767,068	8.7	%

Unpaid losses and settlement expenses	$	2,446,025	$	2,315,637	5.6	%
Unearned premiums		892,326		785,085	13.7	%
Reinsurance balances payable		71,507		61,100	17.0	%
Funds held		101,446		101,144	0.3	%
Income taxes - current		3,757		—	NM
Debt		100,000		199,863	(50.0)	%
Accrued expenses		108,880		94,869	14.8	%
Other liabilities		42,766		32,029	33.5	%
Total liabilities	$	3,766,707	$	3,589,727	4.9	%
Shareholders' equity		1,413,514		1,177,341	20.1	%
Total liabilities & shareholders' equity	$	5,180,221	$	4,767,068	8.7	%

OTHER DATA:
Common shares outstanding (in 000's)		45,640		45,470

Book value per share	$	30.97	$	25.89	19.6	%
Closing stock price per share	$	133.12	$	131.27	1.4	%

Statutory surplus	$	1,520,135	$	1,437,324	5.8	%

RLI CORP
2023 FINANCIAL HIGHLIGHTS
UNDERWRITING SEGMENT DATA
(Unaudited)
(Dollars in thousands, except per share amounts)

Three Months Ended December 31,
			GAAP				GAAP				GAAP				GAAP
	Casualty		Ratios		Property		Ratios		Surety		Ratios		Total		Ratios
2023

Gross premiums written	$	238,467			$	158,047			$	37,846			$	434,360
Net premiums written		191,626				104,154				35,117				330,897
Net premiums earned		195,962				115,934				33,998				345,894
Net loss & settlement expenses		121,399	62.0	%		22,554	19.5	%		2,471	7.3	%		146,424	42.3	%
Net operating expenses		72,562	37.0	%		40,653	35.0	%		26,408	77.6	%		139,623	40.4	%
Underwriting income⁽¹⁾	$	2,001	99.0	%	$	52,727	54.5	%	$	5,119	84.9	%	$	59,847	82.7	%

2022

Gross premiums written	$	221,729			$	127,932			$	34,127			$	383,788
Net premiums written		175,132				91,332				32,031				298,495
Net premiums earned		183,338				84,912				32,756				301,006
Net loss & settlement expenses		102,623	56.0	%		20,558	24.2	%		2,668	8.1	%		125,849	41.8	%
Net operating expenses		67,344	36.7	%		32,105	37.8	%		21,722	66.4	%		121,171	40.3	%
Underwriting income⁽¹⁾	$	13,371	92.7	%	$	32,249	62.0	%	$	8,366	74.5	%	$	53,986	82.1	%


Twelve Months Ended December 31,
			GAAP				GAAP				GAAP				GAAP
	Casualty		Ratios		Property		Ratios		Surety		Ratios		Total		Ratios
2023

Gross premiums written	$	961,665			$	697,372			$	147,623			$	1,806,660
Net premiums written		788,982				500,057				138,708				1,427,747
Net premiums earned		758,346				401,530				134,430				1,294,306
Net loss & settlement expenses		418,032	55.1	%		172,062	42.9	%		14,319	10.7	%		604,413	46.7	%
Net operating expenses		280,835	37.1	%		143,152	35.6	%		92,721	68.9	%		516,708	39.9	%
Underwriting income⁽¹⁾	$	59,479	92.2	%	$	86,316	78.5	%	$	27,390	79.6	%	$	173,185	86.6	%

2022

Gross premiums written	$	926,231			$	499,461			$	139,794			$	1,565,486
Net premiums written		744,607				364,644				132,285				1,241,536
Net premiums earned		711,832				307,886				124,718				1,144,436
Net loss & settlement expenses		381,436	53.6	%		120,745	39.2	%		12,195	9.8	%		514,376	44.9	%
Net operating expenses		256,607	36.0	%		114,619	37.2	%		80,618	64.6	%		451,844	39.5	%
Underwriting income⁽¹⁾	$	73,789	89.6	%	$	72,522	76.4	%	$	31,905	74.4	%	$	178,216	84.4	%

(1) See discussion above: Non-GAAP and Performance Measures.

Category: Earnings Release

View source version on businesswire.com: https://www.businesswire.com/news/home/20240124867301/en/

RLI Reports Fourth Quarter and Year-End 2023 Results