RLI Corp. (NYSE:RLI) – RLI Corp. reported second quarter 2021 net earnings of $81.8 million ($1.79 per share), compared to $92.2 million ($2.04 per share) for the second quarter of 2020. Operating earnings⁽¹⁾ for the second quarter of 2021 were $49.9 million ($1.09 per share), compared to $34.8 million ($0.77 per share) for the same period in 2020.

	Second Quarter				Year to Date
Earnings Per Diluted Share	2021		2020		2021		2020
Net earnings	$	1.79	$	2.04	$	3.39	$	0.68
Operating earnings ⁽¹⁾	$	1.09	$	0.77	$	1.96	$	1.43

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

Highlights for the quarter included:

Underwriting income⁽¹⁾ of $36.6 million on a combined ratio⁽¹⁾ of 84.8.
25% increase in gross premiums written.
Favorable development in prior years' loss reserves, resulting in a $27.5 million net increase in underwriting income.
Book value per share of $27.46, an increase of 11% (inclusive of dividends) from year-end 2020.

"We are pleased to report excellent second quarter financial results," said RLI Corp. Chairman and CEO Jonathan E. Michael. "All three product segments contributed to our strong performance in the quarter. We achieved an 85 combined ratio and 25% growth in gross written premiums. Favorable market conditions and the continued economic recovery enabled our disciplined underwriters to find more niche opportunities that match our risk appetite. Our capital base continues to grow, supported by our insurance operations and investment returns, and book value per share has increased 11% year to date."

"During the quarter, we also announced an increase in ordinary dividends for the 46th consecutive year. We are proud of this track record and I want to thank our talented associates for their hard work and continued dedication to our customers. We recently welcomed many of our team members back to our offices and appreciate their perseverance over the past 18 months."

Underwriting Income

RLI achieved $36.6 million of underwriting income in the second quarter of 2021 on an 84.8 combined ratio, compared to $24.2 million on an 88.4 combined ratio in 2020.

Results for both years include net favorable development in prior years' loss reserves, which totaled $27.5 million and $21.6 million for 2021 and 2020, respectively.

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

Underwriting Income⁽¹⁾					Combined Ratio⁽¹⁾
(in millions)	2021		2020			2021		2020
Casualty	$	26.4	$	9.7	Casualty		83.1		92.8
Property		8.9		6.2	Property		84.1		86.4
Surety		1.3		8.3	Surety		95.6		70.6
Total	$	36.6	$	24.2	Total		84.8		88.4

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

Other Income

Net investment income for the quarter decreased 1.5% to $16.7 million, compared to the same period in 2020. The investment portfolio's total return was 2.8% for the quarter and 3.0% for the six months ended June 30, 2021.

RLI's comprehensive earnings were $97.0 million for the quarter ($2.12 per share), compared to $145.7 million ($3.22 per share) for the same quarter in 2020. In addition to net earnings, comprehensive earnings (loss) included after-tax unrealized gains/(losses) from the fixed income portfolio.

Equity in earnings of Maui Jim, Inc., a producer of premium sunglasses, was $10.6 million for the quarter. Equity in earnings of Prime Holdings Insurance Services, Inc., a specialty insurance company, was $3.6 million. Comparatively, for the second quarter of 2020, equity in earnings of unconsolidated investees from Maui Jim and Prime was $2.6 million and $2.5 million, respectively.

Dividends Paid in the Second Quarter of 2021

On June 18, 2021, the company paid a regular quarterly dividend of $0.25 per share, a $0.01 increase over the prior quarter. RLI's cumulative dividends total nearly $500 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 earnings per share (EPS) from operations consist of our GAAP net earnings adjusted by the 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 EPS from operations. A reconciliation of the operating earnings and EPS from operations to the comparable GAAP financial measures is included in the 2021 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 daylight time (CDT) tomorrow, July 22, 2021, 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 https://edge.media-server.com/mmc/p/ged4yftt.

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, 2020.

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 46 consecutive years and delivered underwriting profits for 25 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 June 30,						Six Months Ended June 30,
(Dollars in thousands, except per share amounts)	2021			2020			2021			2020
Favorable development in casualty prior years' reserves	$	29.2		$	21.1		$	57.5		$	27.5
Favorable development in property prior years' reserves	$	3.8		$	0.7		$	9.9		$	5.5
Favorable (unfavorable) development in surety prior years' reserves	$	(2.7	)	$	3.8		$	0.1		$	7.8

Net incurred losses related to:
2021 storms	$	(8.0	)	$	-		$	(24.0	)	$	-
2020 and prior events⁽⁴⁾	$	2.1		$	(11.5	)	$	2.1		$	(17.1	)

	Operating Earnings Per Share
	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Operating Earnings Per Share⁽¹⁾	$	1.09		$	0.77		$	1.96		$	1.43

Specific items included in operating earnings per share:^{(2) (3)}
Net favorable development in casualty prior years' reserves	$	0.46		$	0.32		$	0.88		$	0.44
Net favorable development in property prior years' reserves	$	0.05		$	-		$	0.13		$	0.05
Net favorable (unfavorable) development in surety prior years' reserves	$	(0.06	)	$	0.06		$	(0.02	)	$	0.12

Net incurred losses related to:
2021 storms	$	(0.12	)	$	-		$	(0.35	)	$	-
2020 and prior events⁽⁴⁾	$	0.03		$	(0.18	)	$	0.03		$	(0.26	)

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

(2) Includes incentive and profit sharing-related impacts which affected policy acquisition, insurance operating and general corporate expenses.

(3) Reserve development reflects changes from previously estimated losses.

(4) Includes COVID-19 reserves established in 2020.

RLI CORP

2021 FINANCIAL HIGHLIGHTS

(Unaudited)

(Dollars in thousands, except per share amounts)

	Three Months Ended June 30,										Six Months Ended June 30,
SUMMARIZED INCOME STATEMENT DATA:		2021			2020		% Change					2021				2020			% Change
Net premiums earned	$	241,000		$	208,734			15.5		%	$	469,595			$	424,316				10.7		%
Net investment income		16,661			16,917			(1.5	)	%		33,085				34,695				(4.6	)	%
Net realized gains (losses)		36,463			(2,109	)	NM					50,613				13,043			NM
Net unrealized gains (losses) on equity securities		3,956			74,705			(94.7	)	%		32,118				(55,690	)		NM
Consolidated revenue	$	298,080		$	298,247			(0.1	)	%	$	585,411			$	416,364				40.6		%
Loss and settlement expenses		107,026			101,202			5.8		%		211,918				212,223				(0.1	)	%
Policy acquisition costs		77,235			69,463			11.2		%		152,225				142,404				6.9		%
Insurance operating expenses		20,148			13,906			44.9		%		38,944				28,287				37.7		%
Interest expense on debt		1,904			1,903			0.1		%		3,805				3,800				0.1		%
General corporate expenses		3,686			1,994			84.9		%		7,028				3,749				87.5		%
Total expenses	$	209,999		$	188,468			11.4		%	$	413,920			$	390,463				6.0		%
Equity in earnings of unconsolidated investees		13,940			5,100			173.3		%		20,364				9,614				111.8		%
Earnings before income taxes	$	102,021		$	114,879			(11.2	)	%	$	191,855			$	35,515			NM
Income tax expense		20,206			22,713			(11.0	)	%		37,028				4,616			NM
Net earnings	$	81,815		$	92,166			(11.2	)	%	$	154,827			$	30,899			NM

Other comprehensive earnings (loss), net of tax		15,177			53,571			(71.7	)	%		(29,570	)			40,540			NM
Comprehensive earnings	$	96,992		$	145,737			(33.4	)	%	$	125,257			$	71,439				75.3		%

Operating earnings⁽¹⁾:
Net earnings	$	81,815		$	92,166			(11.2	)	%	$	154,827			$	30,899			NM
Less:
Realized (gains) losses		(36,463	)		2,109		NM					(50,613	)			(13,043	)		NM
Income tax on realized gains (losses)		7,656			(443	)	NM					10,628				2,739			NM
Unrealized (gains) losses on equity securities		(3,956	)		(74,705	)		(94.7	)	%		(32,118	)			55,690			NM
Income tax on unrealized gains (losses) on equity securities		831			15,688			(94.7	)	%		6,745				(11,695	)		NM
Operating earnings	$	49,883		$	34,815			43.3		%	$	89,469			$	64,590				38.5		%

Return on Equity:
Net earnings (trailing four quarters)											24.7			%		11.8		%
Comprehensive earnings (trailing four quarters)											23.5			%		17.0		%

Per Share Data:
Diluted:
Weighted average shares outstanding (in 000's)		45,715			45,274							45,703				45,311

Net earnings per share	$	1.79		$	2.04			(12.3	)	%	$	3.39			$	0.68			NM
Less:
Realized (gains) losses		(0.80	)		0.05		NM					(1.11	)			(0.29	)		NM
Income tax on realized gains (losses)		0.17			(0.01	)	NM					0.23				0.06			NM
Unrealized (gains) losses on equity securities		(0.09	)		(1.66	)		(94.6	)	%		(0.70	)			1.24			NM
Income tax on unrealized gains (losses) on equity securities		0.02			0.35			(94.3	)	%		0.15				(0.26	)		NM
EPS from operations⁽¹⁾	$	1.09		$	0.77			41.6		%	$	1.96			$	1.43				37.1		%

Comprehensive earnings per share	$	2.12		$	3.22			(34.2	)	%	$	2.74			$	1.58				73.4		%

Cash dividends per share - ordinary	$	0.25		$	0.24			4.2		%	$	0.49			$	0.47				4.3		%

Net Cash Flow provided by Operations	$	104,222		$	89,540			16.4		%	$	164,509			$	83,773				96.4		%

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

NM = Not Meaningful

RLI CORP

2021 FINANCIAL HIGHLIGHTS

(Unaudited)

(Dollars in thousands, except per share amounts)

	June 30,		December 31,
		2021		2020	% Change
SUMMARIZED BALANCE SHEET DATA:
Fixed income, at fair value	$	2,319,244	$	2,196,626		5.6		%
(amortized cost - $2,219,502 at 6/30/21)
(amortized cost - $2,061,467 at 12/31/20)
Equity securities, at fair value		566,870		524,006		8.2		%
(cost - $308,374 at 6/30/21)
(cost - $293,190 at 12/31/20)
Other invested assets		52,849		54,232		(2.6	)	%
Cash and cash equivalents		95,457		62,217		53.4		%
Total investments and cash	$	3,034,420	$	2,837,081		7.0		%

Premiums and reinsurance balances receivable		177,237		174,628		1.5		%
Ceded unearned premiums		120,116		113,488		5.8		%
Reinsurance balances recoverable on unpaid losses		545,085		443,729		22.8		%
Deferred policy acquisition costs		99,898		88,425		13.0		%
Property and equipment		50,925		51,406		(0.9	)	%
Investment in unconsolidated investees		148,561		128,382		15.7		%
Goodwill and intangibles		53,582		53,719		(0.3	)	%
Other assets		50,806		47,627		6.7		%
Total assets	$	4,280,630	$	3,938,485		8.7		%

Unpaid losses and settlement expenses	$	1,917,609	$	1,750,049		9.6		%
Unearned premiums		640,895		586,386		9.3		%
Reinsurance balances payable		34,946		42,265		(17.3	)	%
Funds held		89,474		81,747		9.5		%
Income taxes - deferred		82,110		80,235		2.3		%
Bonds payable, long-term debt		149,582		149,489		0.1		%
Accrued expenses		60,849		75,925		(19.9	)	%
Other liabilities		63,362		36,411		74.0		%
Total liabilities	$	3,038,827	$	2,802,507		8.4		%
Shareholders' equity		1,241,803		1,135,978		9.3		%
Total liabilities & shareholders' equity	$	4,280,630	$	3,938,485		8.7		%

OTHER DATA:
Common shares outstanding (in 000's)		45,223		45,143

Book value per share	$	27.46	$	25.16		9.1		%
Closing stock price per share	$	104.59	$	104.15		0.4		%

Statutory surplus	$	1,227,879	$	1,121,592		9.5		%

RLI CORP

2021 FINANCIAL HIGHLIGHTS

UNDERWRITING SEGMENT DATA

(Unaudited)

(Dollars in thousands, except per share amounts)

Three Months Ended June 30,
			GAAP					GAAP					GAAP					GAAP
	Casualty		Ratios			Property		Ratios			Surety		Ratios			Total		Ratios
2021

Gross premiums written	$	236,329				$	91,911				$	30,744				$	358,984
Net premiums written		183,436					69,943					29,107					282,486
Net premiums earned		156,195					55,865					28,940					241,000
Net loss & settlement expenses		74,421		47.6	%		24,311		43.5	%		8,294		28.7	%		107,026		44.4	%
Net operating expenses		55,336		35.5	%		22,675		40.6	%		19,372		66.9	%		97,383		40.4	%
Underwriting income⁽¹⁾	$	26,438		83.1	%	$	8,879		84.1	%	$	1,274		95.6	%	$	36,591		84.8	%

2020

Gross premiums written	$	190,047				$	69,286				$	27,820				$	287,153
Net premiums written		152,114					51,563					26,413					230,090
Net premiums earned		135,215					45,387					28,132					208,734
Net loss & settlement expenses		77,651		57.4	%		21,550		47.5	%		2,001		7.1	%		101,202		48.5	%
Net operating expenses		47,831		35.4	%		17,670		38.9	%		17,868		63.5	%		83,369		39.9	%
Underwriting income⁽¹⁾	$	9,733		92.8	%	$	6,167		86.4	%	$	8,263		70.6	%	$	24,163		88.4	%

Six Months Ended June 30,
			GAAP					GAAP					GAAP					GAAP
	Casualty		Ratios			Property		Ratios			Surety		Ratios			Total		Ratios
2021

Gross premiums written	$	425,225				$	166,448				$	62,206				$	653,879
Net premiums written		332,327					125,929					59,219					517,475
Net premiums earned		304,965					107,507					57,123					469,595
Net loss & settlement expenses		144,668		47.4	%		55,948		52.0	%		11,302		19.8	%		211,918		45.1	%
Net operating expenses		108,992		35.8	%		43,685		40.7	%		38,492		67.4	%		191,169		40.7	%
Underwriting income⁽¹⁾	$	51,305		83.2	%	$	7,874		92.7	%	$	7,329		87.2	%	$	66,508		85.8	%

2020

Gross premiums written	$	349,283				$	126,007				$	57,695				$	532,985
Net premiums written		279,291					92,990					54,912					427,193
Net premiums earned		278,635					89,735					55,946					424,316
Net loss & settlement expenses		171,916		61.7	%		37,521		41.8	%		2,786		5.0	%		212,223		50.0	%
Net operating expenses		98,309		35.3	%		36,139		40.3	%		36,243		64.8	%		170,691		40.2	%
Underwriting income⁽¹⁾	$	8,410		97.0	%	$	16,075		82.1	%	$	16,917		69.8	%	$	41,402		90.2	%

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

Category: Earnings Release

View source version on businesswire.com: https://www.businesswire.com/news/home/20210721005733/en/

RLI Reports Second Quarter 2021 Results