• Operating Earnings: $1.31 per share for the third quarter.

• Net Earnings: $2.06 per share, compared to $0.29 per share in Q3 2023.

• Combined Ratio: 89.6% for the quarter, 83.3% year-to-date.

• Gross Premiums: Increased by 13% in the quarter.

• Investment Income: Rose by 15% in the quarter.

• Hurricane Losses: $37 million total, with $35 million in the Property segment and $2 million in the Casualty segment.

• Operating Cash Flow: $219 million for the quarter.

• Book Value Per Share: $38.17, a 26% increase from year-end 2023.

• Casualty Segment Growth: 16% increase in gross premium.

• Surety Segment Growth: 9% increase in gross premium.

• Property Segment Growth: 10% increase in gross premium.

• Personal Umbrella Growth: 36% increase, including a 16% rate increase.

• Marine Growth: 21% increase in the third quarter.

• Warning! GuruFocus has detected 6 Warning Sign with RLI.

Release Date: October 22, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• RLI Corp (NYSE:RLI) reported a strong third quarter with operating earnings of $1.31 per share, driven by positive underwriting performance and a 15% rise in investment income.

• The company achieved a combined ratio of 89.6% for the quarter, improving from 98.7% in the same period last year.

• Gross premiums grew by 13% in the quarter, with balanced growth across product segments, including a 16% increase in the Casualty segment.

• RLI Corp (NYSE:RLI) saw a 26% increase in book value per share from year-end 2023, inclusive of dividends, reflecting strong comprehensive earnings.

• The company maintained strong operating cash flow of $219 million, supporting continued investment portfolio purchases with yields averaging 4.9%.

Negative Points

• RLI Corp (NYSE:RLI) faced $37 million in losses from Hurricanes Helene and Beryl, impacting the Property and Casualty segments.

• The company anticipates pretax losses from Hurricane Milton to be between $45 million and $55 million, which could affect future financials.

• The Executive Products group within the Casualty segment is contracting, with rates down 4% in the quarter due to competitive pressures.

• The property market is softening, with hurricane rates down 8% and overall E&S property rate change flat, potentially impacting future growth.

• RLI Corp (NYSE:RLI) is experiencing extended reporting patterns in the Casualty segment, which may indicate longer claim resolution times and increased risk.

Q & A Highlights

Q: Craig, could you discuss the most attractive opportunities for incremental profitability across your business lines that you see currently? A: Craig Kliethermes, President and CEO, highlighted that RLI's business model, with its narrow and deep expertise in underwriting and claims, allows the company to lean into opportunities during market disruptions. He mentioned personal umbrella, transportation, marine, Hawaii homeowners, and E&S property as areas with potential for growth. The company's diverse portfolio enables it to capitalize on opportunities while pulling back in overly competitive markets.