A.M. Best Places Ratings RLI Indemnity Company Under Review With Negative Implications

A.M. Best has placed under review with negative implications the financial strength rating of A+ (Superior) and the issuer credit rating of “aa” of RLI Indemnity Company (RLI Indemnity), a reinsured subsidiary of RLI Insurance Company.

The rating action follows the recent announcement that RLI Indemnity’s parent, Mt. Hawley Insurance Company, and ultimate insurance parent, RLI Insurance Company, have entered into a definitive agreement with Clear Blue Financial Holdings, LLC (Clear Blue) under which Clear Blue will acquire RLI Indemnity. RLI Indemnity is being sold as a “shell.” After closing, RLI Insurance Company will reinsure all in-force RLI Indemnity bond and insurance liabilities, adjust claims, and service the remaining in-force policies and bonds until they terminate or are moved into RLI Insurance Company. The publicly traded parent holding company of RLI Indemnity is RLI Corp. (NYSE: RLI). RLI Corp.’s insurance subsidiaries are domiciled in Peoria, IL.

The current rating of RLI Indemnity is based on its position within the RLI Insurance Company organization and the support it receives therefrom. Upon sale, the rating will be based on the position it will have within the new owner. The negative implications indicate the likelihood for negative rating action at that time. The ratings will remain under review pending the completion of the transaction and the conclusion of A.M. Best’s discussions with Clear Blue’s management regarding plans for future operations, business strategy and risk-adjusted capitalization. The transaction is pending regulatory approval.

The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Key insurance criteria reports utilized:

• Rating Members of Insurance Groups
• Risk Management and the Rating Process for Insurance Companies
• Understanding BCAR for Property/Casualty Insurers

This press release relates to rating(s) that have been published on A.M. Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please visit A.M. Best’s Ratings & Criteria Center.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

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