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RLI Reports First Quarter 2024 Results
First Quarter
-------------------------- -------------------- ----------------------------------------------------------------------------------------------------
Earnings Per Diluted Share 2024 2023
-------------------------- -------------------- ---------------------------------------- -------------------- ----------------------------------------
Net earnings $ 2.77 $ 2.15
Operating earnings (1) $ 1.89 $ 1.63
-------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
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
---------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
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.
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(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:
$ (12.0 ) $ --
2024 storms
$ -- $ (4.0 )
2023 and prior events
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)
$ 0.24 $ 0.53
Net favorable development in casualty prior years' reserves
$ 0.30 $ 0.19
Net favorable development in property prior years' reserves
$ 0.08 $ 0.04
Net favorable development in surety prior years' reserves
Net incurred losses related to:
$ (0.18 ) $ --
2024 storms
(1) Reserve development reflects changes from previously estimated losses. Reserve development reflects changes from previously estimated losses. (2) See discussion above: Non-GAAP and Performance Measures. See discussion above: Non-GAAP and Performance Measures.
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 %
-------------------- -------------------- -------------------- -------------------- --------------------
$ 444,831 $ 364,923 21.9 %
Consolidated revenue
-------------------- -------------------- -------------------- -------------------- --------------------
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 %
-------------------- -------------------- -------------------- -------------------- --------------------
$ 127,900 $ 98,811 29.4 %
Net earnings
==================== ==================== ==================== ==================== ====================
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:
(5,994) (14,620) (59.0) %
Net realized gains
1,259 3,071 (59.0) %
Income tax on realized gains
(45,314) (15,496) 192.4 %
Net unrealized gains on equity securities
9,516 3,254 192.4 %
Income tax on unrealized gains on equity securities
-------------------- -------------------- -------------------- -------------------- --------------------
Operating earnings $ 87,367 $ 75,020 16.5 %
==================== ==================== ==================== ==================== ====================
Return on Equity:
24.2 % 52.2 %
Net earnings (trailing four quarters)
==================== ==================== ==================== ====================
25.1 % 41.9 %
Comprehensive earnings (trailing four quarters)
==================== ==================== ==================== ====================
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:
(0.13) (0.32) (59.4) %
Net realized gains
0.03 0.07 (57.1) %
Income tax on realized gains
(0.98) (0.34) 188.2 %
Net unrealized gains on equity securities
0.20 0.07 185.7 %
Income tax on unrealized gains on equity securities
-------------------- -------------------- -------------------- -------------------- --------------------
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.
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 %
-------------------- -------------------- -------------------- -------------------- --------------------
$ 3,757,704 $ 3,676,318 2.2 %
Total investments and cash
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 %
-------------------- -------------------- -------------------- -------------------- --------------------
$ 5,338,409 $ 5,180,221 3.1 %
Total assets
==================== ==================== ==================== ==================== ====================
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 %
-------------------- -------------------- -------------------- -------------------- --------------------
$ 3,817,657 $ 3,766,707 1.4 %
Total liabilities
1,520,752 1,413,514 7.6 %
Shareholders' equity
-------------------- -------------------- -------------------- -------------------- --------------------
$ 5,338,409 $ 5,180,221 3.1 %
Total liabilities & shareholders' equity
==================== ==================== ==================== ==================== ====================
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 %
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 %
-------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
$ 13,674 93.1 % $ 57,716 55.4 % $ 6,305 80.9 % $ 77,695 78.5 %
Underwriting income(1)
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 %
-------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
$ 31,831 82.9 % $ 28,383 68.0 % $ 7,676 76.7 % $ 67,890 77.9 %
Underwriting income(1)
Category: Earnings Release
View source version on businesswire.com: https://www.businesswire.com/news/home/20240422266603/en/
SOURCE: RLI Corp.
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Aaron Diefenthaler Chief Investment Officer & Treasurer 309-693-5846 Aaron.Diefenthaler@rlicorp.com
COMTEX_451242110/1006/2024-04-22T16:10:00