Peoria, Ill.-based specialty lines carrier RLI Corp. announced record second-quarter profits, driven growing underwriting profits and investment income.
The company reported quarterly net earnings of $18.4 million (71 per diluted share), a 19 percent improvement over the $15.4 million (60 cents per diluted share) posted in the second quarter last year. The total dollar and per-share amounts were second-quarter records, the company said. Quarterly operating earnings of $17.1 million (66 cents per share) rose 21 percent from last year’s $14.1 million (55 cents per share) result, and set all-time total dollar and per-share records.
Through six months, RLI posted net earnings of $35.3 million ($1.35 per share), an 18 percent gain over last year’s $29.8 million ($1.16 per share). Operating earnings of $32.5 million ($1.25 per share) were 15 percent better than the $28.3 million ($1.10 per share) reported last year. These set all-time midyear total dollar and per-share records.
Underwriting profits grow
RLI’s quarterly underwriting profits were $11.8 million on a 90.7 net GAAP combined ratio versus the $7.4 million gain on a 93.4 combined ratio for the same period last year. The company’s property segment was the catalyst behind these results; it posted a 66.1 combined ratio. The casualty segment recorded its sixth straight profitable quarter with a 95.9 combined ratio. Surety results improved more than 11 points, achieving a combined ratio of 100.8.
Net premiums earned grew 11.7 percent for the quarter, to $126.9 million, and resulted in consolidated revenue of $142.1 million, an increase of 12.4 percent. Gross premiums written rose 5 percent from the same period one year ago, to $199.6 million. Segment performance included an increase in surety gross premiums of 16 percent, a rise in casualty writings of 6 percent, and flat results for property business.
RLI CEO Jonathan E. Michael said specialty writers like his firm are still finding “an attractive market” in 2004.
Investment income rises
Investment income reached $13.4 million, a 23 percent increase over the second quarter of last year due to the strength of cash flows and the proceeds from the December 2003 debt offering. Invested assets grew 6 percent, which helped push the company’s investment portfolio to more than $1.4 billion.
The company’s consolidated investment portfolio generated a 0.3 percent total return year to date. The equity portfolio registered a 1.7 percent return for the quarter, 3.6 percent year to date. This increase was more than offset by RLI’s bond portfolio performance, which dropped 2.7 percent in the second quarter, as it was adversely affected by rising interest rates. The bond portfolio has dropped 0.5 percent through June 30, 2004.
Topics Profit Loss
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