RLI Reports Modest Growth for 2000; Underwriting Results Mixed

January 11, 2001

RLI Corp. reported fourth quarter net operating earnings of $6.3 million ($.63 per diluted share), a 15 percent per-share decline over the $7.4 million ($.74 per share) result from the same quarter last year. Year-end operating earnings stood at $26.8 million ($2.70 per share), 3 percent less per-share than last year’s $28.5 million ($2.79 per share) level.

Net comprehensive earnings, which include after-tax unrealized gains from the investment portfolio, posted a 51% per-share improvement for the quarter, to $15.7 million ($1.58 per share). For the year, net comprehensive earnings stood at $42.0 million ($4.23 per share), besting last year’s $20.9 million ($2.04 per share) mark by 101%. These results were driven by positive investment results. Year-end shareholders’ equity was a company record $326.7 million, an 11.5% increase from 2000’s mark of $293.1 million.

For the year, the company repurchased 71,272 shares of RLI common stock at a cost of $2.1 million and paid dividends of $5.7 million. Year-end assets of $1.3 billion were also a company record. Gross premiums written rose by 23% for the quarter, the company’s 11th consecutive quarter of top-line growth. For the year, RLI premiums grew by 29%, with all business segments reporting double-digit volume increases.

Surety premiums grew by 41%, property by 29% and casualty by 27%. RLI reported pretax underwriting profits in every quarter of 2000, ending the year with a fourth quarter underwriting gain of $2.8 million on a 95.3 net GAAP combined ratio. This compares to a fourth quarter 1999 underwriting profit of $4.1 million on a 92.0 combined ratio. For the year, RLI’s combined ratio stood at 94.8, with underwriting gains totaling $12.1 million.

These results compare to last year’s 91.2 combined ratio and underwriting profits of $17.1 million “It was a difficult year for our short-term property business,” RLI Corp. President Jonathan E. Michael, said. “Results were affected by increased reinsurance costs and several significant losses in certain areas of our diversified property book. Our underwriters are taking appropriate actions where necessary and improved pricing and terms bode well for this segment.”

Net premiums written for the quarter were $57.2 million, up 18% from the same period last year. Segment totals for 2000: property net written premium was $72.7 million, up 42% over 1999; surety recorded $41.2 million, a 33% improvement; and casualty finished at $147.0 million, up 1%. Net investment income rose for both the quarter and the year due to increased cash flow. The quarter’s $7.6 million result represented a 10% improvement; the company’s $29.0 million posting as of December 31, 2000 reflected a 12% gain.

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