Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil Hydroworld Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries RLI Reports Fourth Quarter and Year-End 2022 Results By: RLI Corp. via Business Wire January 25, 2023 at 16:05 PM EST RLI Corp. (NYSE: RLI) – RLI Corp. reported fourth quarter 2022 net earnings of $97.8 million ($2.13 per share), compared to $95.3 million ($2.08 per share) for the fourth quarter of 2021. Operating earnings(1) for the fourth quarter of 2022 were $70.5 million ($1.53 per share), compared to $55.3 million ($1.21 per share) for the same period in 2021. Fourth Quarter Year to Date Earnings Per Diluted Share 2022 2021 2022 2021 Net earnings $ 2.13 $ 2.08 $ 12.74 $ 6.11 Operating earnings (1) (2) $ 1.53 $ 1.21 $ 4.69 $ 3.48 (1) See discussion below: Non-GAAP and Performance Measures. (2) Equity in earnings of Maui Jim and the related taxes were excluded from operating earnings per share due to the sale of RLI’s investment in Maui Jim. Prior period amounts have been restated to reflect the adjustment. Highlights for the quarter included: Underwriting income(1) of $54.0 million on a combined ratio(1) of 82.1. 14% increase in gross premiums written. 59% increase in net investment income. Favorable development in prior years’ loss reserves, resulting in a $17.0 million net increase in underwriting income. Special dividend of $7.00 per share, representing $318.1 million returned to shareholders. Highlights for the year included: Underwriting income(1) of $178.2 million on a combined ratio(1) of 84.4. 16% increase in gross premiums written. Favorable development in prior years’ loss reserves, resulting in a $106.5 million net increase in underwriting income. Net earnings include $434.4 million ($9.49 per diluted share) related to the sale of Maui Jim, Inc. Book value per share of $25.89, an increase of 25% (inclusive of dividends) from year-end 2021. “In 2022, we continued to provide outstanding service to our customers while delivering profitable growth,” said RLI Corp. President & CEO Craig Kliethermes. “We faced some headwinds from hurricane activity and capital market volatility, but strong underwriting performance across all product segments resulted in 16% growth in gross premiums written for the year and an 84 combined ratio, marking our 27th consecutive year of underwriting profitability. We also successfully closed on the sale of our minority ownership interest in Maui Jim and were able to share excess capital generated with shareholders through a $7 per share special dividend. “I’m proud of what our team accomplished in 2022 and want to thank our talented associate owners for their dedication to our mission and our customers. In the year ahead, we anticipate the industry will remain dynamic. We will continue to address both the opportunities and challenges with discipline, and a focus on the long-term success of our company.” Underwriting Income RLI achieved $54.0 million of underwriting income in the fourth quarter of 2022 on an 82.1 combined ratio, compared to $49.7 million on an 80.7 combined ratio in 2021. For the year, RLI achieved $178.2 million of underwriting income on an 84.4 combined ratio, compared to $129.9 million on an 86.8 combined ratio in 2021. Favorable development in prior years’ loss reserves resulted in a $106.5 million net increase to underwriting income in 2022, which was partially offset by $44.4 million of hurricane and storm losses. Comparatively, favorable development in prior years’ loss reserves resulted in a $106.5 million net increase to underwriting income in 2021, which was partially offset by $50.2 million of hurricane and storm losses. The following table highlights underwriting income and combined ratios by segment for the year. Underwriting Income(1) Combined Ratio(1) (in millions) 2022 2021 2022 2021 Casualty $ 73.8 $ 95.5 Casualty 89.6 84.9 Property 72.5 11.3 Property 76.4 95.1 Surety 31.9 23.1 Surety 74.4 80.0 Total $ 178.2 $ 129.9 Total 84.4 86.8 (1) See discussion below: Non-GAAP and Performance Measures. Other Income Net investment income for the quarter increased 58.7% to $28.5 million, compared to the same period in 2021. For the year ended December 31, 2022, net investment income was $86.1 million, compared to $68.9 million for the same period in 2021. The investment portfolio’s total return was 2.3% for the quarter and -11.5% for the year. RLI’s comprehensive earnings were $113.3 million for the quarter ($2.47 per share), compared to $78.2 million ($1.71 per share) for the same quarter in 2021. Full-year comprehensive earnings were $304.5 million ($6.65 per share), compared to $220.5 million ($4.82 per share) in 2021. In addition to net earnings, comprehensive earnings included after-tax unrealized losses from the fixed income portfolio, due to rising interest rates. Equity in earnings of Maui Jim, Inc. (Maui Jim), a producer of premium sunglasses, was $3.5 million for the quarter, as post-closing adjustments were made after the sale. Equity in earnings of Prime Holdings Insurance Services, Inc. (Prime), a specialty insurance company, was $3.7 million. Comparatively, for the fourth quarter of 2021, equity in earnings of unconsolidated investees from Maui Jim and Prime was $3.1 million and $5.3 million, respectively. For the year ended December 31, 2022, equity in earnings of Maui Jim was $0.4 million, down from $22.8 million in 2021, primarily due to transaction related expenses from the sale of the company. Equity in earnings of Prime was $13.0 million in 2022, compared to $17.0 million in 2021. Special and Regular Dividends On December 20, 2022, the company paid a special cash dividend of $7.00 per share and a regular quarterly dividend of $0.26 per share for a combined total of $329.9 million. RLI has paid dividends for 186 consecutive quarters and increased regular dividends in each of the last 47 years. Over the last 10 years, the company has returned $1.37 billion to shareholders and the regular quarterly dividend has grown an average of 5.0% per year. 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. Additionally, equity in earnings of Maui Jim and the related taxes were excluded from operating earnings and operating EPS due to the sale of RLI’s investment. Operating earnings and operating EPS for prior periods have been restated to reflect the equity in earnings of Maui Jim adjustment. 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 2022 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 fourth 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 standard time (CST) tomorrow, January 26, 2023, 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/603734663. 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, 2021. 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 47 consecutive years and delivered underwriting profits for 27 consecutive years. To learn more about RLI, visit www.rlicorp.com. Supplemental disclosure regarding the earnings impact of specific items: Reserve Development and Catastrophe Losses, Net of Reinsurance Three Months Ended Twelve Months Ended December 31, December 31, (Dollars in millions, except per share amounts) 2022 2021 2022 2021 Favorable development in casualty prior years' reserves $ 14.0 $ 25.7 $ 87.0 $ 109.5 Favorable development in property prior years' reserves $ 0.4 $ — $ 21.2 $ 8.4 Favorable development in surety prior years' reserves $ 1.1 $ 3.2 $ 10.4 $ 5.8 Net incurred losses related to: 2022 storms $ (8.0 ) $ — $ (13.0 ) $ — Hurricane Ian $ 2.0 $ — $ (38.0 ) $ — 2021 and prior events $ 4.0 $ — $ 4.0 $ (56.8 ) Operating Earnings Per Share Three Months Ended Twelve Months Ended December 31, December 31, 2022 2021 2022 2021 Operating Earnings Per Share(1) (2) $ 1.53 $ 1.21 $ 4.69 $ 3.48 Specific items included in operating earnings per share:(3) (4) Net favorable development in casualty prior years' reserves $ 0.21 $ 0.40 $ 1.31 $ 1.72 Net favorable development in property prior years' reserves $ 0.01 $ — $ 0.32 $ 0.07 Net favorable development in surety prior years' reserves $ 0.01 $ 0.02 $ 0.15 $ 0.03 Net incurred losses related to: 2022 storms $ (0.12 ) $ — $ (0.20 ) $ — Hurricane Ian $ 0.03 $ — $ (0.57 ) $ — 2021 and prior events $ 0.06 $ — $ 0.06 $ (0.84 ) Gain from tax benefit of special dividend to ESOP(5) $ 0.08 $ 0.02 $ 0.08 $ 0.02 (1) See discussion above: Non-GAAP and Performance Measures. (2) Equity in earnings of Maui Jim and the related taxes were excluded from operating earnings per share due to the sale of RLI’s investment in Maui Jim. Prior period amounts have been restated to reflect the adjustment. (3) Includes incentive and profit sharing-related impacts which affected policy acquisition, insurance operating and general corporate expenses. (4) Reserve development reflects changes from previously estimated losses. (5) Dividends paid on employer securities in an ESOP are fully deductible from taxable income and resulted in a 21% tax benefit. RLI CORP 2022 FINANCIAL HIGHLIGHTS (Unaudited) (Dollars in thousands, except per share amounts) Three Months Ended December 31, Twelve Months Ended December 31, SUMMARIZED INCOME STATEMENT DATA: 2022 2021 % Change 2022 2021 % Change Net premiums earned $ 301,006 $ 257,919 16.7 % $ 1,144,436 $ 980,903 16.7 % Net investment income 28,453 17,933 58.7 % 86,078 68,862 25.0 % Net realized gains (losses) (3,047 ) 11,780 NM 588,515 64,222 NM Net unrealized gains (losses) on equity securities 34,181 35,732 (4.3 ) % (121,037 ) 65,258 NM Consolidated revenue $ 360,593 $ 323,364 11.5 % $ 1,697,992 $ 1,179,245 44.0 % Loss and settlement expenses 125,849 101,028 24.6 % 514,376 456,602 12.7 % Policy acquisition costs 97,753 84,794 15.3 % 369,632 317,468 16.4 % Insurance operating expenses 23,418 22,403 4.5 % 82,212 76,907 6.9 % Interest expense on debt 2,013 1,966 2.4 % 8,047 7,677 4.8 % General corporate expenses 4,347 3,797 14.5 % 12,900 13,330 (3.2 ) % Total expenses $ 253,380 $ 213,988 18.4 % $ 987,167 $ 871,984 13.2 % Equity in earnings of unconsolidated investees 6,792 7,653 (11.3 ) % 9,853 37,060 (73.4 ) % Earnings before income taxes $ 114,005 $ 117,029 (2.6 ) % $ 720,678 $ 344,321 109.3 % Income tax expense 16,171 21,745 (25.6 ) % 137,267 64,967 111.3 % Net earnings(3) $ 97,834 $ 95,284 2.7 % $ 583,411 $ 279,354 108.8 % Other comprehensive earnings (loss), net of tax 15,490 (17,078 ) NM (278,902 ) (58,888 ) NM Comprehensive earnings $ 113,324 $ 78,206 44.9 % $ 304,509 $ 220,466 38.1 % Operating earnings(1): Net earnings(3) $ 97,834 $ 95,284 2.7 % $ 583,411 $ 279,354 108.8 % Less: Net realized (gains) losses 3,047 (11,780 ) NM (588,515 ) (64,222 ) NM Income tax on realized gains (losses) (646 ) 2,474 NM 124,415 13,487 NM Net unrealized (gains) losses on equity securities (34,181 ) (35,732 ) (4.3 ) % 121,037 (65,258 ) NM Income tax on unrealized gains (losses) on equity securities 7,178 7,503 (4.3 ) % (25,418 ) 13,703 NM Equity in earnings of Maui Jim (3,493 ) (3,095 ) 12.9 % (372 ) (22,786 ) (98.4 ) % Income tax on equity in earnings of Maui Jim 734 650 12.9 % 78 4,785 (98.4 ) % Operating earnings(2) $ 70,472 $ 55,304 27.4 % $ 214,636 $ 159,063 34.9 % Return on Equity: Net earnings 48.6 % 23.2 % Comprehensive earnings 25.4 % 18.3 % Per Share Data: Diluted: Weighted average shares outstanding (in 000's) 45,954 45,730 45,794 45,712 Net earnings per share(2) $ 2.13 $ 2.08 2.4 % $ 12.74 $ 6.11 108.5 % Less: Net realized (gains) losses 0.06 (0.26 ) NM (12.84 ) (1.40 ) NM Income tax on realized gains (losses) (0.01 ) 0.05 NM 2.72 0.30 NM Net unrealized (gains) losses on equity securities (0.74 ) (0.77 ) (3.9 ) % 2.64 (1.44 ) NM Income tax on unrealized gains (losses) on equity securities 0.16 0.16 — % (0.56 ) 0.30 NM Equity in earnings of Maui Jim (0.08 ) (0.06 ) 33.3 % (0.01 ) (0.49 ) (98.0 ) % Income tax on equity in earnings of Maui Jim 0.01 0.01 — % — 0.10 (100.0 ) % Operating earnings per share(1)(2) $ 1.53 $ 1.21 26.4 % $ 4.69 $ 3.48 34.8 % Comprehensive earnings per share $ 2.47 $ 1.71 44.4 % $ 6.65 $ 4.82 38.0 % Cash dividends per share - ordinary $ 0.26 $ 0.25 4.0 % $ 1.03 $ 0.99 4.0 % Cash dividends per share - special 7.00 2.00 NM 7.00 2.00 NM Net Cash Flow provided by (used in) Operations(4) $ (32,438 ) $ 104,464 (131.1 ) % $ 250,448 $ 384,905 (34.9 ) % (1) See discussion above: Non-GAAP and Performance Measures. (2) Equity in earnings of Maui Jim and the related taxes were excluded from operating earnings and operating earnings per share due to the sale of RLI’s investment in Maui Jim. Prior period amounts have been restated to reflect the adjustment. (3) Net earnings include $434.4 million related to the sale of Maui Jim, which was completed in the third quarter of 2022. (4) Proceeds from the sale of Maui Jim were classified as cash flow from investing activities, not operating activities. However, $116.5 million of tax payments related to the sale were included as operating cash outflows. NM = Not Meaningful RLI CORP 2022 FINANCIAL HIGHLIGHTS (Unaudited) (Dollars in thousands, except per share amounts) December 31, December 31, 2022 2021 % Change SUMMARIZED BALANCE SHEET DATA: Fixed income, at fair value $ 2,666,950 $ 2,409,887 10.7 % (amortized cost - $2,945,273 at 12/31/22) (amortized cost - $2,346,267 at 12/31/21) Equity securities, at fair value 498,382 613,776 (18.8 ) % (cost - $328,019 at 12/31/22) (cost - $324,501 at 12/31/21) Short-term investments 36,229 — NM Other invested assets 47,922 50,501 (5.1 ) % Cash and cash equivalents 22,818 88,804 (74.3 ) % Total investments and cash $ 3,272,301 $ 3,162,968 3.5 % Accrued investment income 21,259 17,505 21.4 % Premiums and reinsurance balances receivable 189,501 167,279 13.3 % Ceded unearned premiums 138,457 130,916 5.8 % Reinsurance balances recoverable on unpaid losses 740,089 608,086 21.7 % Deferred policy acquisition costs 127,859 103,553 23.5 % Property and equipment 49,573 52,161 (5.0 ) % Investment in unconsolidated investees 58,275 171,311 (66.0 ) % Goodwill and intangibles 53,562 53,562 0.0 % Income taxes - deferred 40,269 — NM Other assets 75,923 40,961 85.4 % Total assets $ 4,767,068 $ 4,508,302 5.7 % Unpaid losses and settlement expenses $ 2,315,637 $ 2,043,555 13.3 % Unearned premiums 785,085 680,444 15.4 % Reinsurance balances payable 61,100 42,851 42.6 % Funds held 101,144 89,773 12.7 % Income taxes - deferred — 83,509 (100.0 ) % Current portion of long-term debt 199,863 — NM Long-term debt — 199,676 (100.0 ) % Accrued expenses 94,869 98,274 (3.5 ) % Other liabilities 32,029 40,859 (21.6 ) % Total liabilities $ 3,589,727 $ 3,278,941 9.5 % Shareholders' equity 1,177,341 1,229,361 (4.2 ) % Total liabilities & shareholders' equity $ 4,767,068 $ 4,508,302 5.7 % OTHER DATA: Common shares outstanding (in 000's) 45,470 45,289 Book value per share $ 25.89 $ 27.14 (4.6 ) % Closing stock price per share $ 131.27 $ 112.10 17.1 % Statutory surplus $ 1,437,324 $ 1,240,649 15.9 % RLI CORP 2022 FINANCIAL HIGHLIGHTS UNDERWRITING SEGMENT DATA (Unaudited) (Dollars in thousands, except per share amounts) Three Months Ended December 31, GAAP GAAP GAAP GAAP Casualty Ratios Property Ratios Surety Ratios Total Ratios 2022 Gross premiums written $ 221,729 $ 127,932 $ 34,127 $ 383,788 Net premiums written 175,132 91,332 32,031 298,495 Net premiums earned 183,338 84,912 32,756 301,006 Net loss & settlement expenses 102,623 56.0 % 20,558 24.2 % 2,668 8.1 % 125,849 41.8 % Net operating expenses 67,344 36.7 % 32,105 37.8 % 21,722 66.4 % 121,171 40.3 % Underwriting income(1) $ 13,371 92.7 % $ 32,249 62.0 % $ 8,366 74.5 % $ 53,986 82.1 % 2021 Gross premiums written $ 213,563 $ 91,270 $ 32,396 $ 337,229 Net premiums written 163,796 68,443 29,166 261,405 Net premiums earned 165,822 63,444 28,653 257,919 Net loss & settlement expenses 82,820 49.9 % 18,281 28.8 % (73 ) (0.3 ) % 101,028 39.2 % Net operating expenses 61,737 37.3 % 25,179 39.7 % 20,281 70.8 % 107,197 41.5 % Underwriting income(1) $ 21,265 87.2 % $ 19,984 68.5 % $ 8,445 70.5 % $ 49,694 80.7 % Twelve Months Ended December 31, GAAP GAAP GAAP GAAP Casualty Ratios Property Ratios Surety Ratios Total Ratios 2022 Gross premiums written $ 926,231 $ 499,461 $ 139,794 $ 1,565,486 Net premiums written 744,607 364,644 132,285 1,241,536 Net premiums earned 711,832 307,886 124,718 1,144,436 Net loss & settlement expenses 381,436 53.6 % 120,745 39.2 % 12,195 9.8 % 514,376 44.9 % Net operating expenses 256,607 36.0 % 114,619 37.2 % 80,618 64.6 % 451,844 39.5 % Underwriting income(1) $ 73,789 89.6 % $ 72,522 76.4 % $ 31,905 74.4 % $ 178,216 84.4 % 2021 Gross premiums written $ 871,584 $ 347,866 $ 127,904 $ 1,347,354 Net premiums written 674,709 262,816 120,008 1,057,533 Net premiums earned 633,639 231,837 115,427 980,903 Net loss & settlement expenses 311,627 49.2 % 129,924 56.0 % 15,051 13.0 % 456,602 46.5 % Net operating expenses 226,493 35.7 % 90,613 39.1 % 77,269 67.0 % 394,375 40.3 % Underwriting income(1) $ 95,519 84.9 % $ 11,300 95.1 % $ 23,107 80.0 % $ 129,926 86.8 % (1) See discussion above: Non-GAAP and Performance Measures. Category: Earnings Release View source version on businesswire.com: https://www.businesswire.com/news/home/20230125005742/en/Contacts Aaron Diefenthaler Chief Investment Officer & Treasurer 309-693-5846 Aaron.Diefenthaler@rlicorp.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
RLI Reports Fourth Quarter and Year-End 2022 Results By: RLI Corp. via Business Wire January 25, 2023 at 16:05 PM EST RLI Corp. (NYSE: RLI) – RLI Corp. reported fourth quarter 2022 net earnings of $97.8 million ($2.13 per share), compared to $95.3 million ($2.08 per share) for the fourth quarter of 2021. Operating earnings(1) for the fourth quarter of 2022 were $70.5 million ($1.53 per share), compared to $55.3 million ($1.21 per share) for the same period in 2021. Fourth Quarter Year to Date Earnings Per Diluted Share 2022 2021 2022 2021 Net earnings $ 2.13 $ 2.08 $ 12.74 $ 6.11 Operating earnings (1) (2) $ 1.53 $ 1.21 $ 4.69 $ 3.48 (1) See discussion below: Non-GAAP and Performance Measures. (2) Equity in earnings of Maui Jim and the related taxes were excluded from operating earnings per share due to the sale of RLI’s investment in Maui Jim. Prior period amounts have been restated to reflect the adjustment. Highlights for the quarter included: Underwriting income(1) of $54.0 million on a combined ratio(1) of 82.1. 14% increase in gross premiums written. 59% increase in net investment income. Favorable development in prior years’ loss reserves, resulting in a $17.0 million net increase in underwriting income. Special dividend of $7.00 per share, representing $318.1 million returned to shareholders. Highlights for the year included: Underwriting income(1) of $178.2 million on a combined ratio(1) of 84.4. 16% increase in gross premiums written. Favorable development in prior years’ loss reserves, resulting in a $106.5 million net increase in underwriting income. Net earnings include $434.4 million ($9.49 per diluted share) related to the sale of Maui Jim, Inc. Book value per share of $25.89, an increase of 25% (inclusive of dividends) from year-end 2021. “In 2022, we continued to provide outstanding service to our customers while delivering profitable growth,” said RLI Corp. President & CEO Craig Kliethermes. “We faced some headwinds from hurricane activity and capital market volatility, but strong underwriting performance across all product segments resulted in 16% growth in gross premiums written for the year and an 84 combined ratio, marking our 27th consecutive year of underwriting profitability. We also successfully closed on the sale of our minority ownership interest in Maui Jim and were able to share excess capital generated with shareholders through a $7 per share special dividend. “I’m proud of what our team accomplished in 2022 and want to thank our talented associate owners for their dedication to our mission and our customers. In the year ahead, we anticipate the industry will remain dynamic. We will continue to address both the opportunities and challenges with discipline, and a focus on the long-term success of our company.” Underwriting Income RLI achieved $54.0 million of underwriting income in the fourth quarter of 2022 on an 82.1 combined ratio, compared to $49.7 million on an 80.7 combined ratio in 2021. For the year, RLI achieved $178.2 million of underwriting income on an 84.4 combined ratio, compared to $129.9 million on an 86.8 combined ratio in 2021. Favorable development in prior years’ loss reserves resulted in a $106.5 million net increase to underwriting income in 2022, which was partially offset by $44.4 million of hurricane and storm losses. Comparatively, favorable development in prior years’ loss reserves resulted in a $106.5 million net increase to underwriting income in 2021, which was partially offset by $50.2 million of hurricane and storm losses. The following table highlights underwriting income and combined ratios by segment for the year. Underwriting Income(1) Combined Ratio(1) (in millions) 2022 2021 2022 2021 Casualty $ 73.8 $ 95.5 Casualty 89.6 84.9 Property 72.5 11.3 Property 76.4 95.1 Surety 31.9 23.1 Surety 74.4 80.0 Total $ 178.2 $ 129.9 Total 84.4 86.8 (1) See discussion below: Non-GAAP and Performance Measures. Other Income Net investment income for the quarter increased 58.7% to $28.5 million, compared to the same period in 2021. For the year ended December 31, 2022, net investment income was $86.1 million, compared to $68.9 million for the same period in 2021. The investment portfolio’s total return was 2.3% for the quarter and -11.5% for the year. RLI’s comprehensive earnings were $113.3 million for the quarter ($2.47 per share), compared to $78.2 million ($1.71 per share) for the same quarter in 2021. Full-year comprehensive earnings were $304.5 million ($6.65 per share), compared to $220.5 million ($4.82 per share) in 2021. In addition to net earnings, comprehensive earnings included after-tax unrealized losses from the fixed income portfolio, due to rising interest rates. Equity in earnings of Maui Jim, Inc. (Maui Jim), a producer of premium sunglasses, was $3.5 million for the quarter, as post-closing adjustments were made after the sale. Equity in earnings of Prime Holdings Insurance Services, Inc. (Prime), a specialty insurance company, was $3.7 million. Comparatively, for the fourth quarter of 2021, equity in earnings of unconsolidated investees from Maui Jim and Prime was $3.1 million and $5.3 million, respectively. For the year ended December 31, 2022, equity in earnings of Maui Jim was $0.4 million, down from $22.8 million in 2021, primarily due to transaction related expenses from the sale of the company. Equity in earnings of Prime was $13.0 million in 2022, compared to $17.0 million in 2021. Special and Regular Dividends On December 20, 2022, the company paid a special cash dividend of $7.00 per share and a regular quarterly dividend of $0.26 per share for a combined total of $329.9 million. RLI has paid dividends for 186 consecutive quarters and increased regular dividends in each of the last 47 years. Over the last 10 years, the company has returned $1.37 billion to shareholders and the regular quarterly dividend has grown an average of 5.0% per year. 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. Additionally, equity in earnings of Maui Jim and the related taxes were excluded from operating earnings and operating EPS due to the sale of RLI’s investment. Operating earnings and operating EPS for prior periods have been restated to reflect the equity in earnings of Maui Jim adjustment. 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 2022 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 fourth 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 standard time (CST) tomorrow, January 26, 2023, 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/603734663. 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, 2021. 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 47 consecutive years and delivered underwriting profits for 27 consecutive years. To learn more about RLI, visit www.rlicorp.com. Supplemental disclosure regarding the earnings impact of specific items: Reserve Development and Catastrophe Losses, Net of Reinsurance Three Months Ended Twelve Months Ended December 31, December 31, (Dollars in millions, except per share amounts) 2022 2021 2022 2021 Favorable development in casualty prior years' reserves $ 14.0 $ 25.7 $ 87.0 $ 109.5 Favorable development in property prior years' reserves $ 0.4 $ — $ 21.2 $ 8.4 Favorable development in surety prior years' reserves $ 1.1 $ 3.2 $ 10.4 $ 5.8 Net incurred losses related to: 2022 storms $ (8.0 ) $ — $ (13.0 ) $ — Hurricane Ian $ 2.0 $ — $ (38.0 ) $ — 2021 and prior events $ 4.0 $ — $ 4.0 $ (56.8 ) Operating Earnings Per Share Three Months Ended Twelve Months Ended December 31, December 31, 2022 2021 2022 2021 Operating Earnings Per Share(1) (2) $ 1.53 $ 1.21 $ 4.69 $ 3.48 Specific items included in operating earnings per share:(3) (4) Net favorable development in casualty prior years' reserves $ 0.21 $ 0.40 $ 1.31 $ 1.72 Net favorable development in property prior years' reserves $ 0.01 $ — $ 0.32 $ 0.07 Net favorable development in surety prior years' reserves $ 0.01 $ 0.02 $ 0.15 $ 0.03 Net incurred losses related to: 2022 storms $ (0.12 ) $ — $ (0.20 ) $ — Hurricane Ian $ 0.03 $ — $ (0.57 ) $ — 2021 and prior events $ 0.06 $ — $ 0.06 $ (0.84 ) Gain from tax benefit of special dividend to ESOP(5) $ 0.08 $ 0.02 $ 0.08 $ 0.02 (1) See discussion above: Non-GAAP and Performance Measures. (2) Equity in earnings of Maui Jim and the related taxes were excluded from operating earnings per share due to the sale of RLI’s investment in Maui Jim. Prior period amounts have been restated to reflect the adjustment. (3) Includes incentive and profit sharing-related impacts which affected policy acquisition, insurance operating and general corporate expenses. (4) Reserve development reflects changes from previously estimated losses. (5) Dividends paid on employer securities in an ESOP are fully deductible from taxable income and resulted in a 21% tax benefit. RLI CORP 2022 FINANCIAL HIGHLIGHTS (Unaudited) (Dollars in thousands, except per share amounts) Three Months Ended December 31, Twelve Months Ended December 31, SUMMARIZED INCOME STATEMENT DATA: 2022 2021 % Change 2022 2021 % Change Net premiums earned $ 301,006 $ 257,919 16.7 % $ 1,144,436 $ 980,903 16.7 % Net investment income 28,453 17,933 58.7 % 86,078 68,862 25.0 % Net realized gains (losses) (3,047 ) 11,780 NM 588,515 64,222 NM Net unrealized gains (losses) on equity securities 34,181 35,732 (4.3 ) % (121,037 ) 65,258 NM Consolidated revenue $ 360,593 $ 323,364 11.5 % $ 1,697,992 $ 1,179,245 44.0 % Loss and settlement expenses 125,849 101,028 24.6 % 514,376 456,602 12.7 % Policy acquisition costs 97,753 84,794 15.3 % 369,632 317,468 16.4 % Insurance operating expenses 23,418 22,403 4.5 % 82,212 76,907 6.9 % Interest expense on debt 2,013 1,966 2.4 % 8,047 7,677 4.8 % General corporate expenses 4,347 3,797 14.5 % 12,900 13,330 (3.2 ) % Total expenses $ 253,380 $ 213,988 18.4 % $ 987,167 $ 871,984 13.2 % Equity in earnings of unconsolidated investees 6,792 7,653 (11.3 ) % 9,853 37,060 (73.4 ) % Earnings before income taxes $ 114,005 $ 117,029 (2.6 ) % $ 720,678 $ 344,321 109.3 % Income tax expense 16,171 21,745 (25.6 ) % 137,267 64,967 111.3 % Net earnings(3) $ 97,834 $ 95,284 2.7 % $ 583,411 $ 279,354 108.8 % Other comprehensive earnings (loss), net of tax 15,490 (17,078 ) NM (278,902 ) (58,888 ) NM Comprehensive earnings $ 113,324 $ 78,206 44.9 % $ 304,509 $ 220,466 38.1 % Operating earnings(1): Net earnings(3) $ 97,834 $ 95,284 2.7 % $ 583,411 $ 279,354 108.8 % Less: Net realized (gains) losses 3,047 (11,780 ) NM (588,515 ) (64,222 ) NM Income tax on realized gains (losses) (646 ) 2,474 NM 124,415 13,487 NM Net unrealized (gains) losses on equity securities (34,181 ) (35,732 ) (4.3 ) % 121,037 (65,258 ) NM Income tax on unrealized gains (losses) on equity securities 7,178 7,503 (4.3 ) % (25,418 ) 13,703 NM Equity in earnings of Maui Jim (3,493 ) (3,095 ) 12.9 % (372 ) (22,786 ) (98.4 ) % Income tax on equity in earnings of Maui Jim 734 650 12.9 % 78 4,785 (98.4 ) % Operating earnings(2) $ 70,472 $ 55,304 27.4 % $ 214,636 $ 159,063 34.9 % Return on Equity: Net earnings 48.6 % 23.2 % Comprehensive earnings 25.4 % 18.3 % Per Share Data: Diluted: Weighted average shares outstanding (in 000's) 45,954 45,730 45,794 45,712 Net earnings per share(2) $ 2.13 $ 2.08 2.4 % $ 12.74 $ 6.11 108.5 % Less: Net realized (gains) losses 0.06 (0.26 ) NM (12.84 ) (1.40 ) NM Income tax on realized gains (losses) (0.01 ) 0.05 NM 2.72 0.30 NM Net unrealized (gains) losses on equity securities (0.74 ) (0.77 ) (3.9 ) % 2.64 (1.44 ) NM Income tax on unrealized gains (losses) on equity securities 0.16 0.16 — % (0.56 ) 0.30 NM Equity in earnings of Maui Jim (0.08 ) (0.06 ) 33.3 % (0.01 ) (0.49 ) (98.0 ) % Income tax on equity in earnings of Maui Jim 0.01 0.01 — % — 0.10 (100.0 ) % Operating earnings per share(1)(2) $ 1.53 $ 1.21 26.4 % $ 4.69 $ 3.48 34.8 % Comprehensive earnings per share $ 2.47 $ 1.71 44.4 % $ 6.65 $ 4.82 38.0 % Cash dividends per share - ordinary $ 0.26 $ 0.25 4.0 % $ 1.03 $ 0.99 4.0 % Cash dividends per share - special 7.00 2.00 NM 7.00 2.00 NM Net Cash Flow provided by (used in) Operations(4) $ (32,438 ) $ 104,464 (131.1 ) % $ 250,448 $ 384,905 (34.9 ) % (1) See discussion above: Non-GAAP and Performance Measures. (2) Equity in earnings of Maui Jim and the related taxes were excluded from operating earnings and operating earnings per share due to the sale of RLI’s investment in Maui Jim. Prior period amounts have been restated to reflect the adjustment. (3) Net earnings include $434.4 million related to the sale of Maui Jim, which was completed in the third quarter of 2022. (4) Proceeds from the sale of Maui Jim were classified as cash flow from investing activities, not operating activities. However, $116.5 million of tax payments related to the sale were included as operating cash outflows. NM = Not Meaningful RLI CORP 2022 FINANCIAL HIGHLIGHTS (Unaudited) (Dollars in thousands, except per share amounts) December 31, December 31, 2022 2021 % Change SUMMARIZED BALANCE SHEET DATA: Fixed income, at fair value $ 2,666,950 $ 2,409,887 10.7 % (amortized cost - $2,945,273 at 12/31/22) (amortized cost - $2,346,267 at 12/31/21) Equity securities, at fair value 498,382 613,776 (18.8 ) % (cost - $328,019 at 12/31/22) (cost - $324,501 at 12/31/21) Short-term investments 36,229 — NM Other invested assets 47,922 50,501 (5.1 ) % Cash and cash equivalents 22,818 88,804 (74.3 ) % Total investments and cash $ 3,272,301 $ 3,162,968 3.5 % Accrued investment income 21,259 17,505 21.4 % Premiums and reinsurance balances receivable 189,501 167,279 13.3 % Ceded unearned premiums 138,457 130,916 5.8 % Reinsurance balances recoverable on unpaid losses 740,089 608,086 21.7 % Deferred policy acquisition costs 127,859 103,553 23.5 % Property and equipment 49,573 52,161 (5.0 ) % Investment in unconsolidated investees 58,275 171,311 (66.0 ) % Goodwill and intangibles 53,562 53,562 0.0 % Income taxes - deferred 40,269 — NM Other assets 75,923 40,961 85.4 % Total assets $ 4,767,068 $ 4,508,302 5.7 % Unpaid losses and settlement expenses $ 2,315,637 $ 2,043,555 13.3 % Unearned premiums 785,085 680,444 15.4 % Reinsurance balances payable 61,100 42,851 42.6 % Funds held 101,144 89,773 12.7 % Income taxes - deferred — 83,509 (100.0 ) % Current portion of long-term debt 199,863 — NM Long-term debt — 199,676 (100.0 ) % Accrued expenses 94,869 98,274 (3.5 ) % Other liabilities 32,029 40,859 (21.6 ) % Total liabilities $ 3,589,727 $ 3,278,941 9.5 % Shareholders' equity 1,177,341 1,229,361 (4.2 ) % Total liabilities & shareholders' equity $ 4,767,068 $ 4,508,302 5.7 % OTHER DATA: Common shares outstanding (in 000's) 45,470 45,289 Book value per share $ 25.89 $ 27.14 (4.6 ) % Closing stock price per share $ 131.27 $ 112.10 17.1 % Statutory surplus $ 1,437,324 $ 1,240,649 15.9 % RLI CORP 2022 FINANCIAL HIGHLIGHTS UNDERWRITING SEGMENT DATA (Unaudited) (Dollars in thousands, except per share amounts) Three Months Ended December 31, GAAP GAAP GAAP GAAP Casualty Ratios Property Ratios Surety Ratios Total Ratios 2022 Gross premiums written $ 221,729 $ 127,932 $ 34,127 $ 383,788 Net premiums written 175,132 91,332 32,031 298,495 Net premiums earned 183,338 84,912 32,756 301,006 Net loss & settlement expenses 102,623 56.0 % 20,558 24.2 % 2,668 8.1 % 125,849 41.8 % Net operating expenses 67,344 36.7 % 32,105 37.8 % 21,722 66.4 % 121,171 40.3 % Underwriting income(1) $ 13,371 92.7 % $ 32,249 62.0 % $ 8,366 74.5 % $ 53,986 82.1 % 2021 Gross premiums written $ 213,563 $ 91,270 $ 32,396 $ 337,229 Net premiums written 163,796 68,443 29,166 261,405 Net premiums earned 165,822 63,444 28,653 257,919 Net loss & settlement expenses 82,820 49.9 % 18,281 28.8 % (73 ) (0.3 ) % 101,028 39.2 % Net operating expenses 61,737 37.3 % 25,179 39.7 % 20,281 70.8 % 107,197 41.5 % Underwriting income(1) $ 21,265 87.2 % $ 19,984 68.5 % $ 8,445 70.5 % $ 49,694 80.7 % Twelve Months Ended December 31, GAAP GAAP GAAP GAAP Casualty Ratios Property Ratios Surety Ratios Total Ratios 2022 Gross premiums written $ 926,231 $ 499,461 $ 139,794 $ 1,565,486 Net premiums written 744,607 364,644 132,285 1,241,536 Net premiums earned 711,832 307,886 124,718 1,144,436 Net loss & settlement expenses 381,436 53.6 % 120,745 39.2 % 12,195 9.8 % 514,376 44.9 % Net operating expenses 256,607 36.0 % 114,619 37.2 % 80,618 64.6 % 451,844 39.5 % Underwriting income(1) $ 73,789 89.6 % $ 72,522 76.4 % $ 31,905 74.4 % $ 178,216 84.4 % 2021 Gross premiums written $ 871,584 $ 347,866 $ 127,904 $ 1,347,354 Net premiums written 674,709 262,816 120,008 1,057,533 Net premiums earned 633,639 231,837 115,427 980,903 Net loss & settlement expenses 311,627 49.2 % 129,924 56.0 % 15,051 13.0 % 456,602 46.5 % Net operating expenses 226,493 35.7 % 90,613 39.1 % 77,269 67.0 % 394,375 40.3 % Underwriting income(1) $ 95,519 84.9 % $ 11,300 95.1 % $ 23,107 80.0 % $ 129,926 86.8 % (1) See discussion above: Non-GAAP and Performance Measures. Category: Earnings Release View source version on businesswire.com: https://www.businesswire.com/news/home/20230125005742/en/Contacts Aaron Diefenthaler Chief Investment Officer & Treasurer 309-693-5846 Aaron.Diefenthaler@rlicorp.com
RLI Corp. (NYSE: RLI) – RLI Corp. reported fourth quarter 2022 net earnings of $97.8 million ($2.13 per share), compared to $95.3 million ($2.08 per share) for the fourth quarter of 2021. Operating earnings(1) for the fourth quarter of 2022 were $70.5 million ($1.53 per share), compared to $55.3 million ($1.21 per share) for the same period in 2021. Fourth Quarter Year to Date Earnings Per Diluted Share 2022 2021 2022 2021 Net earnings $ 2.13 $ 2.08 $ 12.74 $ 6.11 Operating earnings (1) (2) $ 1.53 $ 1.21 $ 4.69 $ 3.48 (1) See discussion below: Non-GAAP and Performance Measures. (2) Equity in earnings of Maui Jim and the related taxes were excluded from operating earnings per share due to the sale of RLI’s investment in Maui Jim. Prior period amounts have been restated to reflect the adjustment. Highlights for the quarter included: Underwriting income(1) of $54.0 million on a combined ratio(1) of 82.1. 14% increase in gross premiums written. 59% increase in net investment income. Favorable development in prior years’ loss reserves, resulting in a $17.0 million net increase in underwriting income. Special dividend of $7.00 per share, representing $318.1 million returned to shareholders. Highlights for the year included: Underwriting income(1) of $178.2 million on a combined ratio(1) of 84.4. 16% increase in gross premiums written. Favorable development in prior years’ loss reserves, resulting in a $106.5 million net increase in underwriting income. Net earnings include $434.4 million ($9.49 per diluted share) related to the sale of Maui Jim, Inc. Book value per share of $25.89, an increase of 25% (inclusive of dividends) from year-end 2021. “In 2022, we continued to provide outstanding service to our customers while delivering profitable growth,” said RLI Corp. President & CEO Craig Kliethermes. “We faced some headwinds from hurricane activity and capital market volatility, but strong underwriting performance across all product segments resulted in 16% growth in gross premiums written for the year and an 84 combined ratio, marking our 27th consecutive year of underwriting profitability. We also successfully closed on the sale of our minority ownership interest in Maui Jim and were able to share excess capital generated with shareholders through a $7 per share special dividend. “I’m proud of what our team accomplished in 2022 and want to thank our talented associate owners for their dedication to our mission and our customers. In the year ahead, we anticipate the industry will remain dynamic. We will continue to address both the opportunities and challenges with discipline, and a focus on the long-term success of our company.” Underwriting Income RLI achieved $54.0 million of underwriting income in the fourth quarter of 2022 on an 82.1 combined ratio, compared to $49.7 million on an 80.7 combined ratio in 2021. For the year, RLI achieved $178.2 million of underwriting income on an 84.4 combined ratio, compared to $129.9 million on an 86.8 combined ratio in 2021. Favorable development in prior years’ loss reserves resulted in a $106.5 million net increase to underwriting income in 2022, which was partially offset by $44.4 million of hurricane and storm losses. Comparatively, favorable development in prior years’ loss reserves resulted in a $106.5 million net increase to underwriting income in 2021, which was partially offset by $50.2 million of hurricane and storm losses. The following table highlights underwriting income and combined ratios by segment for the year. Underwriting Income(1) Combined Ratio(1) (in millions) 2022 2021 2022 2021 Casualty $ 73.8 $ 95.5 Casualty 89.6 84.9 Property 72.5 11.3 Property 76.4 95.1 Surety 31.9 23.1 Surety 74.4 80.0 Total $ 178.2 $ 129.9 Total 84.4 86.8 (1) See discussion below: Non-GAAP and Performance Measures. Other Income Net investment income for the quarter increased 58.7% to $28.5 million, compared to the same period in 2021. For the year ended December 31, 2022, net investment income was $86.1 million, compared to $68.9 million for the same period in 2021. The investment portfolio’s total return was 2.3% for the quarter and -11.5% for the year. RLI’s comprehensive earnings were $113.3 million for the quarter ($2.47 per share), compared to $78.2 million ($1.71 per share) for the same quarter in 2021. Full-year comprehensive earnings were $304.5 million ($6.65 per share), compared to $220.5 million ($4.82 per share) in 2021. In addition to net earnings, comprehensive earnings included after-tax unrealized losses from the fixed income portfolio, due to rising interest rates. Equity in earnings of Maui Jim, Inc. (Maui Jim), a producer of premium sunglasses, was $3.5 million for the quarter, as post-closing adjustments were made after the sale. Equity in earnings of Prime Holdings Insurance Services, Inc. (Prime), a specialty insurance company, was $3.7 million. Comparatively, for the fourth quarter of 2021, equity in earnings of unconsolidated investees from Maui Jim and Prime was $3.1 million and $5.3 million, respectively. For the year ended December 31, 2022, equity in earnings of Maui Jim was $0.4 million, down from $22.8 million in 2021, primarily due to transaction related expenses from the sale of the company. Equity in earnings of Prime was $13.0 million in 2022, compared to $17.0 million in 2021. Special and Regular Dividends On December 20, 2022, the company paid a special cash dividend of $7.00 per share and a regular quarterly dividend of $0.26 per share for a combined total of $329.9 million. RLI has paid dividends for 186 consecutive quarters and increased regular dividends in each of the last 47 years. Over the last 10 years, the company has returned $1.37 billion to shareholders and the regular quarterly dividend has grown an average of 5.0% per year. 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. Additionally, equity in earnings of Maui Jim and the related taxes were excluded from operating earnings and operating EPS due to the sale of RLI’s investment. Operating earnings and operating EPS for prior periods have been restated to reflect the equity in earnings of Maui Jim adjustment. 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 2022 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 fourth 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 standard time (CST) tomorrow, January 26, 2023, 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/603734663. 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, 2021. 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 47 consecutive years and delivered underwriting profits for 27 consecutive years. To learn more about RLI, visit www.rlicorp.com. Supplemental disclosure regarding the earnings impact of specific items: Reserve Development and Catastrophe Losses, Net of Reinsurance Three Months Ended Twelve Months Ended December 31, December 31, (Dollars in millions, except per share amounts) 2022 2021 2022 2021 Favorable development in casualty prior years' reserves $ 14.0 $ 25.7 $ 87.0 $ 109.5 Favorable development in property prior years' reserves $ 0.4 $ — $ 21.2 $ 8.4 Favorable development in surety prior years' reserves $ 1.1 $ 3.2 $ 10.4 $ 5.8 Net incurred losses related to: 2022 storms $ (8.0 ) $ — $ (13.0 ) $ — Hurricane Ian $ 2.0 $ — $ (38.0 ) $ — 2021 and prior events $ 4.0 $ — $ 4.0 $ (56.8 ) Operating Earnings Per Share Three Months Ended Twelve Months Ended December 31, December 31, 2022 2021 2022 2021 Operating Earnings Per Share(1) (2) $ 1.53 $ 1.21 $ 4.69 $ 3.48 Specific items included in operating earnings per share:(3) (4) Net favorable development in casualty prior years' reserves $ 0.21 $ 0.40 $ 1.31 $ 1.72 Net favorable development in property prior years' reserves $ 0.01 $ — $ 0.32 $ 0.07 Net favorable development in surety prior years' reserves $ 0.01 $ 0.02 $ 0.15 $ 0.03 Net incurred losses related to: 2022 storms $ (0.12 ) $ — $ (0.20 ) $ — Hurricane Ian $ 0.03 $ — $ (0.57 ) $ — 2021 and prior events $ 0.06 $ — $ 0.06 $ (0.84 ) Gain from tax benefit of special dividend to ESOP(5) $ 0.08 $ 0.02 $ 0.08 $ 0.02 (1) See discussion above: Non-GAAP and Performance Measures. (2) Equity in earnings of Maui Jim and the related taxes were excluded from operating earnings per share due to the sale of RLI’s investment in Maui Jim. Prior period amounts have been restated to reflect the adjustment. (3) Includes incentive and profit sharing-related impacts which affected policy acquisition, insurance operating and general corporate expenses. (4) Reserve development reflects changes from previously estimated losses. (5) Dividends paid on employer securities in an ESOP are fully deductible from taxable income and resulted in a 21% tax benefit. RLI CORP 2022 FINANCIAL HIGHLIGHTS (Unaudited) (Dollars in thousands, except per share amounts) Three Months Ended December 31, Twelve Months Ended December 31, SUMMARIZED INCOME STATEMENT DATA: 2022 2021 % Change 2022 2021 % Change Net premiums earned $ 301,006 $ 257,919 16.7 % $ 1,144,436 $ 980,903 16.7 % Net investment income 28,453 17,933 58.7 % 86,078 68,862 25.0 % Net realized gains (losses) (3,047 ) 11,780 NM 588,515 64,222 NM Net unrealized gains (losses) on equity securities 34,181 35,732 (4.3 ) % (121,037 ) 65,258 NM Consolidated revenue $ 360,593 $ 323,364 11.5 % $ 1,697,992 $ 1,179,245 44.0 % Loss and settlement expenses 125,849 101,028 24.6 % 514,376 456,602 12.7 % Policy acquisition costs 97,753 84,794 15.3 % 369,632 317,468 16.4 % Insurance operating expenses 23,418 22,403 4.5 % 82,212 76,907 6.9 % Interest expense on debt 2,013 1,966 2.4 % 8,047 7,677 4.8 % General corporate expenses 4,347 3,797 14.5 % 12,900 13,330 (3.2 ) % Total expenses $ 253,380 $ 213,988 18.4 % $ 987,167 $ 871,984 13.2 % Equity in earnings of unconsolidated investees 6,792 7,653 (11.3 ) % 9,853 37,060 (73.4 ) % Earnings before income taxes $ 114,005 $ 117,029 (2.6 ) % $ 720,678 $ 344,321 109.3 % Income tax expense 16,171 21,745 (25.6 ) % 137,267 64,967 111.3 % Net earnings(3) $ 97,834 $ 95,284 2.7 % $ 583,411 $ 279,354 108.8 % Other comprehensive earnings (loss), net of tax 15,490 (17,078 ) NM (278,902 ) (58,888 ) NM Comprehensive earnings $ 113,324 $ 78,206 44.9 % $ 304,509 $ 220,466 38.1 % Operating earnings(1): Net earnings(3) $ 97,834 $ 95,284 2.7 % $ 583,411 $ 279,354 108.8 % Less: Net realized (gains) losses 3,047 (11,780 ) NM (588,515 ) (64,222 ) NM Income tax on realized gains (losses) (646 ) 2,474 NM 124,415 13,487 NM Net unrealized (gains) losses on equity securities (34,181 ) (35,732 ) (4.3 ) % 121,037 (65,258 ) NM Income tax on unrealized gains (losses) on equity securities 7,178 7,503 (4.3 ) % (25,418 ) 13,703 NM Equity in earnings of Maui Jim (3,493 ) (3,095 ) 12.9 % (372 ) (22,786 ) (98.4 ) % Income tax on equity in earnings of Maui Jim 734 650 12.9 % 78 4,785 (98.4 ) % Operating earnings(2) $ 70,472 $ 55,304 27.4 % $ 214,636 $ 159,063 34.9 % Return on Equity: Net earnings 48.6 % 23.2 % Comprehensive earnings 25.4 % 18.3 % Per Share Data: Diluted: Weighted average shares outstanding (in 000's) 45,954 45,730 45,794 45,712 Net earnings per share(2) $ 2.13 $ 2.08 2.4 % $ 12.74 $ 6.11 108.5 % Less: Net realized (gains) losses 0.06 (0.26 ) NM (12.84 ) (1.40 ) NM Income tax on realized gains (losses) (0.01 ) 0.05 NM 2.72 0.30 NM Net unrealized (gains) losses on equity securities (0.74 ) (0.77 ) (3.9 ) % 2.64 (1.44 ) NM Income tax on unrealized gains (losses) on equity securities 0.16 0.16 — % (0.56 ) 0.30 NM Equity in earnings of Maui Jim (0.08 ) (0.06 ) 33.3 % (0.01 ) (0.49 ) (98.0 ) % Income tax on equity in earnings of Maui Jim 0.01 0.01 — % — 0.10 (100.0 ) % Operating earnings per share(1)(2) $ 1.53 $ 1.21 26.4 % $ 4.69 $ 3.48 34.8 % Comprehensive earnings per share $ 2.47 $ 1.71 44.4 % $ 6.65 $ 4.82 38.0 % Cash dividends per share - ordinary $ 0.26 $ 0.25 4.0 % $ 1.03 $ 0.99 4.0 % Cash dividends per share - special 7.00 2.00 NM 7.00 2.00 NM Net Cash Flow provided by (used in) Operations(4) $ (32,438 ) $ 104,464 (131.1 ) % $ 250,448 $ 384,905 (34.9 ) % (1) See discussion above: Non-GAAP and Performance Measures. (2) Equity in earnings of Maui Jim and the related taxes were excluded from operating earnings and operating earnings per share due to the sale of RLI’s investment in Maui Jim. Prior period amounts have been restated to reflect the adjustment. (3) Net earnings include $434.4 million related to the sale of Maui Jim, which was completed in the third quarter of 2022. (4) Proceeds from the sale of Maui Jim were classified as cash flow from investing activities, not operating activities. However, $116.5 million of tax payments related to the sale were included as operating cash outflows. NM = Not Meaningful RLI CORP 2022 FINANCIAL HIGHLIGHTS (Unaudited) (Dollars in thousands, except per share amounts) December 31, December 31, 2022 2021 % Change SUMMARIZED BALANCE SHEET DATA: Fixed income, at fair value $ 2,666,950 $ 2,409,887 10.7 % (amortized cost - $2,945,273 at 12/31/22) (amortized cost - $2,346,267 at 12/31/21) Equity securities, at fair value 498,382 613,776 (18.8 ) % (cost - $328,019 at 12/31/22) (cost - $324,501 at 12/31/21) Short-term investments 36,229 — NM Other invested assets 47,922 50,501 (5.1 ) % Cash and cash equivalents 22,818 88,804 (74.3 ) % Total investments and cash $ 3,272,301 $ 3,162,968 3.5 % Accrued investment income 21,259 17,505 21.4 % Premiums and reinsurance balances receivable 189,501 167,279 13.3 % Ceded unearned premiums 138,457 130,916 5.8 % Reinsurance balances recoverable on unpaid losses 740,089 608,086 21.7 % Deferred policy acquisition costs 127,859 103,553 23.5 % Property and equipment 49,573 52,161 (5.0 ) % Investment in unconsolidated investees 58,275 171,311 (66.0 ) % Goodwill and intangibles 53,562 53,562 0.0 % Income taxes - deferred 40,269 — NM Other assets 75,923 40,961 85.4 % Total assets $ 4,767,068 $ 4,508,302 5.7 % Unpaid losses and settlement expenses $ 2,315,637 $ 2,043,555 13.3 % Unearned premiums 785,085 680,444 15.4 % Reinsurance balances payable 61,100 42,851 42.6 % Funds held 101,144 89,773 12.7 % Income taxes - deferred — 83,509 (100.0 ) % Current portion of long-term debt 199,863 — NM Long-term debt — 199,676 (100.0 ) % Accrued expenses 94,869 98,274 (3.5 ) % Other liabilities 32,029 40,859 (21.6 ) % Total liabilities $ 3,589,727 $ 3,278,941 9.5 % Shareholders' equity 1,177,341 1,229,361 (4.2 ) % Total liabilities & shareholders' equity $ 4,767,068 $ 4,508,302 5.7 % OTHER DATA: Common shares outstanding (in 000's) 45,470 45,289 Book value per share $ 25.89 $ 27.14 (4.6 ) % Closing stock price per share $ 131.27 $ 112.10 17.1 % Statutory surplus $ 1,437,324 $ 1,240,649 15.9 % RLI CORP 2022 FINANCIAL HIGHLIGHTS UNDERWRITING SEGMENT DATA (Unaudited) (Dollars in thousands, except per share amounts) Three Months Ended December 31, GAAP GAAP GAAP GAAP Casualty Ratios Property Ratios Surety Ratios Total Ratios 2022 Gross premiums written $ 221,729 $ 127,932 $ 34,127 $ 383,788 Net premiums written 175,132 91,332 32,031 298,495 Net premiums earned 183,338 84,912 32,756 301,006 Net loss & settlement expenses 102,623 56.0 % 20,558 24.2 % 2,668 8.1 % 125,849 41.8 % Net operating expenses 67,344 36.7 % 32,105 37.8 % 21,722 66.4 % 121,171 40.3 % Underwriting income(1) $ 13,371 92.7 % $ 32,249 62.0 % $ 8,366 74.5 % $ 53,986 82.1 % 2021 Gross premiums written $ 213,563 $ 91,270 $ 32,396 $ 337,229 Net premiums written 163,796 68,443 29,166 261,405 Net premiums earned 165,822 63,444 28,653 257,919 Net loss & settlement expenses 82,820 49.9 % 18,281 28.8 % (73 ) (0.3 ) % 101,028 39.2 % Net operating expenses 61,737 37.3 % 25,179 39.7 % 20,281 70.8 % 107,197 41.5 % Underwriting income(1) $ 21,265 87.2 % $ 19,984 68.5 % $ 8,445 70.5 % $ 49,694 80.7 % Twelve Months Ended December 31, GAAP GAAP GAAP GAAP Casualty Ratios Property Ratios Surety Ratios Total Ratios 2022 Gross premiums written $ 926,231 $ 499,461 $ 139,794 $ 1,565,486 Net premiums written 744,607 364,644 132,285 1,241,536 Net premiums earned 711,832 307,886 124,718 1,144,436 Net loss & settlement expenses 381,436 53.6 % 120,745 39.2 % 12,195 9.8 % 514,376 44.9 % Net operating expenses 256,607 36.0 % 114,619 37.2 % 80,618 64.6 % 451,844 39.5 % Underwriting income(1) $ 73,789 89.6 % $ 72,522 76.4 % $ 31,905 74.4 % $ 178,216 84.4 % 2021 Gross premiums written $ 871,584 $ 347,866 $ 127,904 $ 1,347,354 Net premiums written 674,709 262,816 120,008 1,057,533 Net premiums earned 633,639 231,837 115,427 980,903 Net loss & settlement expenses 311,627 49.2 % 129,924 56.0 % 15,051 13.0 % 456,602 46.5 % Net operating expenses 226,493 35.7 % 90,613 39.1 % 77,269 67.0 % 394,375 40.3 % Underwriting income(1) $ 95,519 84.9 % $ 11,300 95.1 % $ 23,107 80.0 % $ 129,926 86.8 % (1) See discussion above: Non-GAAP and Performance Measures. Category: Earnings Release View source version on businesswire.com: https://www.businesswire.com/news/home/20230125005742/en/