RLI Announces First Quarter Earnings

Apr 17, 2001, 01:00 ET from RLI Corp.

    PEORIA, Ill., April 17 /PRNewswire/ -- RLI Corp. (NYSE:   RLI) -- RLI Corp.
 posted first quarter net earnings of $7.1 million ($.71 per diluted share)
 today, compared with $6.5 million ($.66 per share) from the same quarter in
 2000.  Included in this result are net operating earnings of $6.2 million
 ($.62 per share), versus the $6.6 million ($.67 per share) result from the
 same period last year.  The small decline in first quarter operating earnings
 was the result of the company's Seattle earthquake loss experience, which
 totaled just under $1.0 million ($.06 per share).
 
     Profitable underwriting results continue
     For the quarter, RLI reported pretax underwriting profits of $2.1 million
 on a 96.7 net GAAP combined ratio, compared to  $3.7 million on a
 93.0 combined ratio last year.  Although the quarter's combined ratio was up
 slightly from one year ago, the company continues to generate profitable
 business.  The surety segment reported a 5% improvement in profitability, due
 to volume-related expense savings, while the casualty segment's performance
 remained essentially unchanged from last year.  In spite of the earthquake
 losses, property segment results were profitable.  Management expects that
 actions taken in the second half of 2000 to improve results in this segment,
 coupled with an improved competitive environment, bode well for the future.
     "Our customers have reported minimal losses as a result of the Seattle
 earthquake," said RLI Corp. President Jonathan E. Michael.  "At the end of the
 first quarter, our estimated liability for the event was just under
 $1.0 million, which is extraordinary for an earthquake of 6.8 magnitude.  We
 are very pleased that our underwriting discipline served us well and that the
 effects of the temblor were mitigated by the deep location of its epicenter.
 We would expect this event to heighten consumer awareness of exposure to
 earthquakes in this region.
     "Our surety and casualty segments continue to perform well, consistent
 with expectations.  Throughout the quarter, our underwriters reported more
 opportunities for new business, and they will continue to select those that
 seem to have the greatest potential for profitability."
     Gross written premiums for the quarter increased by 17% over the same
 period in 2000, reaching the $120.1 million level.  The casualty segment
 posted a 34% increase in gross writings, indicative of the improved pricing
 environment in this segment.  The surety and property segments showed a 9%
 increase and a 4% decrease, respectively, for the period.  Overall, net
 written premiums increased by 15%.
 
     Investment income rises
     Investment income continued to grow, due to an increase in invested assets
 relating to the company's continuing premium growth and profitability.  Strong
 operating cash flows over the past year helped quarterly pretax investment
 income rise 7%, to $7.5 million.  Invested assets were down 4% from year-end,
 due to swings in the investment markets and a reduction in short-term debt of
 almost $13 million during the quarter.
     Comprehensive earnings -- which include after-tax unrealized gains from
 the investment portfolio -- were subject to the quarter's volatility in the
 equity markets.  Although the company's equity portfolio return was -6.8% for
 the quarter, it significantly outperformed the S&P 500 index, which was down
 almost 12% for the same period.  The portfolio's net unrealized loss of
 $14.3 million, combined with net earnings, produced a comprehensive loss for
 the quarter of $7.1 million, or $.71 per share.
     Over time the portfolio's results continue to be positive, with an average
 annual total return of 16% since its inception in 1982 and 12% over the past
 five-plus years.  As a result, cumulative comprehensive earnings have outpaced
 net earnings by 39% over the same five-year period, resulting in added growth
 in RLI shareholder value.  We remain comfortable with our basic investment
 allocation, and intend to continue this long-term strategy.
 
                                   Diluted         Diluted
                                     EPS      Comprehensive EPS
      1996                          2.28             3.62
      1997                          2.66             5.76
      1998                          2.65             4.87
      1999                          3.08             2.04
      2000                          2.89             4.23
      2001 (1Q only)                0.71            (0.71)
                                  $14.27           $19.81
 
     Other quarterly news
     In March, the RLI Corp. board declared a cash dividend of $.15 per share
 that was paid April 13, 2001, to the company's shareholders of record as of
 March 30, 2001.  This was the 99th consecutive dividend paid by RLI since cash
 dividends began in 1976, and has brought the cumulative return to shareholders
 via dividends to more than $61 million.
     At 3:15 p.m. CDT today, April 17, RLI management will hold a conference
 call to discuss quarterly results with insurance industry analysts.
 Interested parties may listen to the discussion through the Internet at RLI's
 website, http://www.rlicorp.com , or through
 http://www.videonewswire.com/RLI/041701/ .
 
     Forward-looking statements
     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)
 which 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 for the year ended December 31, 2000.
     RLI Corp., through its subsidiaries RLI Insurance Company, Mt. Hawley
 Insurance Company, Underwriters Indemnity Company and Planet Indemnity
 Company, underwrites selected property and casualty insurance products.  For
 additional information, contact Treasurer Michael A. Price at (309) 693-5880
 or at Mike_Price@rlicorp.com .
 
                                     RLI CORP.
                             2001 FINANCIAL HIGHLIGHTS
                  (Dollars in thousands, except per share amounts)
 
                                                 Three Months Ended March 31,
                                               2001        2000        % Change
     SUMMARIZED INCOME STATEMENT DATA:
     Net premiums earned                       $63,287     $53,186       19.0%
     Net investment income                       7,452       6,937        7.4%
     Net realized investment gains (loss)        1,432        (121)    1283.5%
        Consolidated revenue                    72,171      60,002       20.3%
 
     Loss and settlement expenses               35,864      27,883       28.6%
     Policy acquisition costs                   20,612      17,250       19.5%
     Other insurance expenses                    4,687       4,339        8.0%
     Interest expense on debt                    1,202       1,238       -2.9%
     General corporate expenses                    802         858       -6.5%
        Total expenses                          63,167      51,568       22.5%
 
     Equity in earnings of
       unconsolidated investee                     533         562       -5.2%
 
     Earnings before income taxes                9,537       8,996        6.0%
     Income tax expense                          2,404       2,456       -2.1%
        Net Earnings                            $7,133      $6,540        9.1%
 
     Other comprehensive earnings (loss),
      net of tax                               (14,276)     (4,940)    -189.0%
 
     Comprehensive earnings (loss)             $(7,143)     $1,600     -546.4%
 
     Net operating earnings (excluding
       realized gains(loss) )                   $6,202      $6,619       -6.3%
 
     Return on Equity:
       Net earnings (12 months trailing)         10.5%       10.8%
       Comprehensive earnings (12 months
        trailing)                                 4.0%        7.1%
 
     Per Share Data
 
     Diluted:
     Weighted average shares outstanding
      (in 000's)                                10,007       9,938
 
     EPS from operations                         $0.62       $0.67       -7.5%
     Realized gains (loss), net of tax            0.09       (0.01)    1000.0%
     Net earnings per share                      $0.71       $0.66        8.3%
 
     Comprehensive earnings (loss) per
      share                                     $(0.71)      $0.16     -543.8%
 
     Cash dividends per share                    $0.15       $0.14        7.1%
 
 
                                     RLI CORP.
                             2001 FINANCIAL HIGHLIGHTS
                  (Dollars in thousands, except per share amounts)
 
                                Three Months Ended March 31,
                                2001       2000     % Change
     Total Gross Sales
     Gross premium written     $120,139   102,428       17.3%
     Net investment income        7,452     6,937        7.4%
     Net realized investment
      gains (loss)                1,432      (121)    1283.5%
        Total                  $129,023  $109,244       18.1%
 
 
                             March 31,     Per    December 31,  Per
                               2001       Share       2000     Share   % Change
     SUMMARIZED BALANCE
      SHEET DATA:
     Fixed income and short-
      term investments         $442,194    $45.07    $449,917   $45.89   -1.7%
        (amortized cost -
         $438,173)
     Equity securities          283,789     28.92     306,194    31.23   -7.3%
        Total investments       725,983     73.99     756,111    77.12   -4.0%
 
     Premiums and
      reinsurance balances
      receivable                 99,558                94,761             5.1%
     Ceded unearned premium      66,505                64,184             3.6%
     Reinsurance recoverable
      on unpaid losses          235,356               239,696            -1.8%
     Deferred acquisition
      costs                      45,117                43,287             4.2%
     Property and equipment      13,496                13,808            -2.3%
     Investment in
      unconsolidated
      investee                   18,581                18,048             3.0%
     Goodwill                    32,446                32,716            -0.8%
     Other assets                20,467                18,713             9.4%
        Total assets         $1,257,509            $1,281,324            -1.9%
 
     Unpaid losses and
      settlement expenses       541,630               539,750             0.3%
     Unearned premiums          221,630               211,802             4.6%
     Reinsurance balances
      payable                    55,888                51,167             9.2%
     Short-term debt             65,964                78,763           -16.3%
     Income taxes - deferred     42,977                50,702           -15.2%
     Other liabilities           11,476                22,486           -49.0%
        Total liabilities       939,565               954,670            -1.6%
        Shareholders' equity    317,944    $32.40     326,654   $33.32   -2.7%
        Total liabilities &
         shareholders'
         equity              $1,257,509            $1,281,324            -1.9%
 
     Common shares
      outstanding (in 000's)      9,812                 9,804
     Closing stock price per
      share                      $40.84                $44.69            -8.6%
 
 
                                    RLI CORP.
                            2001 FINANCIAL HIGHLIGHTS
                 (Dollars in thousands, except per share amounts)
 
 
     UNDERWRITING SEGMENT DATA
     (in thousands)
 
                                                       GAAP             GAAP
                                           Property   Ratios  Surety   Ratios
 
     Three Months Ended March 31,
                2001
 
     Gross premium written                  $37,032           $11,266
     Net premium written                     17,065            10,647
     Net premium earned                      17,270             9,998
     Net loss & settlement expenses           9,563   55.4%     2,581   25.8%
     Net operating expenses                   6,124   35.5%     6,262   62.6%
       Underwriting income(loss)             $1,583   90.9%    $1,155   88.4%
 
 
                2000
     Gross premium written                  $38,664           $10,323
     Net premium written                     15,040             9,980
     Net premium earned                      13,215             7,215
     Net loss & settlement expenses           5,336   40.4%     1,398   19.4%
     Net operating expenses                   4,639   35.1%     4,722   65.4%
       Underwriting income(loss)             $3,240   75.5%    $1,095   84.8%
 
 
 
                                                     GAAP              GAAP
                                          Casualty  Ratios   Total    Ratios
 
     Three Months Ended March 31,
                2001
 
     Gross premium written                 $71,841          $120,139
     Net premium written                    43,082            70,794
     Net premium earned                     36,019            63,287
     Net loss & settlement expenses         23,720   65.9%    35,864  56.7%
     Net operating expenses                 12,913   35.9%    25,299  40.0%
       Underwriting income(loss)           $  (614) 101.8%    $2,124  96.7%
 
 
                2000
     Gross premium written                 $53,441          $102,428
     Net premium written                    36,448            61,468
     Net premium earned                     32,756            53,186
     Net loss & settlement expenses         21,149   64.6%    27,883  52.4%
     Net operating expenses                 12,228   37.3%    21,589  40.6%
       Underwriting income(loss)           $  (621) 101.9%    $3,714  93.0%
 
 

SOURCE RLI Corp.
    PEORIA, Ill., April 17 /PRNewswire/ -- RLI Corp. (NYSE:   RLI) -- RLI Corp.
 posted first quarter net earnings of $7.1 million ($.71 per diluted share)
 today, compared with $6.5 million ($.66 per share) from the same quarter in
 2000.  Included in this result are net operating earnings of $6.2 million
 ($.62 per share), versus the $6.6 million ($.67 per share) result from the
 same period last year.  The small decline in first quarter operating earnings
 was the result of the company's Seattle earthquake loss experience, which
 totaled just under $1.0 million ($.06 per share).
 
     Profitable underwriting results continue
     For the quarter, RLI reported pretax underwriting profits of $2.1 million
 on a 96.7 net GAAP combined ratio, compared to  $3.7 million on a
 93.0 combined ratio last year.  Although the quarter's combined ratio was up
 slightly from one year ago, the company continues to generate profitable
 business.  The surety segment reported a 5% improvement in profitability, due
 to volume-related expense savings, while the casualty segment's performance
 remained essentially unchanged from last year.  In spite of the earthquake
 losses, property segment results were profitable.  Management expects that
 actions taken in the second half of 2000 to improve results in this segment,
 coupled with an improved competitive environment, bode well for the future.
     "Our customers have reported minimal losses as a result of the Seattle
 earthquake," said RLI Corp. President Jonathan E. Michael.  "At the end of the
 first quarter, our estimated liability for the event was just under
 $1.0 million, which is extraordinary for an earthquake of 6.8 magnitude.  We
 are very pleased that our underwriting discipline served us well and that the
 effects of the temblor were mitigated by the deep location of its epicenter.
 We would expect this event to heighten consumer awareness of exposure to
 earthquakes in this region.
     "Our surety and casualty segments continue to perform well, consistent
 with expectations.  Throughout the quarter, our underwriters reported more
 opportunities for new business, and they will continue to select those that
 seem to have the greatest potential for profitability."
     Gross written premiums for the quarter increased by 17% over the same
 period in 2000, reaching the $120.1 million level.  The casualty segment
 posted a 34% increase in gross writings, indicative of the improved pricing
 environment in this segment.  The surety and property segments showed a 9%
 increase and a 4% decrease, respectively, for the period.  Overall, net
 written premiums increased by 15%.
 
     Investment income rises
     Investment income continued to grow, due to an increase in invested assets
 relating to the company's continuing premium growth and profitability.  Strong
 operating cash flows over the past year helped quarterly pretax investment
 income rise 7%, to $7.5 million.  Invested assets were down 4% from year-end,
 due to swings in the investment markets and a reduction in short-term debt of
 almost $13 million during the quarter.
     Comprehensive earnings -- which include after-tax unrealized gains from
 the investment portfolio -- were subject to the quarter's volatility in the
 equity markets.  Although the company's equity portfolio return was -6.8% for
 the quarter, it significantly outperformed the S&P 500 index, which was down
 almost 12% for the same period.  The portfolio's net unrealized loss of
 $14.3 million, combined with net earnings, produced a comprehensive loss for
 the quarter of $7.1 million, or $.71 per share.
     Over time the portfolio's results continue to be positive, with an average
 annual total return of 16% since its inception in 1982 and 12% over the past
 five-plus years.  As a result, cumulative comprehensive earnings have outpaced
 net earnings by 39% over the same five-year period, resulting in added growth
 in RLI shareholder value.  We remain comfortable with our basic investment
 allocation, and intend to continue this long-term strategy.
 
                                   Diluted         Diluted
                                     EPS      Comprehensive EPS
      1996                          2.28             3.62
      1997                          2.66             5.76
      1998                          2.65             4.87
      1999                          3.08             2.04
      2000                          2.89             4.23
      2001 (1Q only)                0.71            (0.71)
                                  $14.27           $19.81
 
     Other quarterly news
     In March, the RLI Corp. board declared a cash dividend of $.15 per share
 that was paid April 13, 2001, to the company's shareholders of record as of
 March 30, 2001.  This was the 99th consecutive dividend paid by RLI since cash
 dividends began in 1976, and has brought the cumulative return to shareholders
 via dividends to more than $61 million.
     At 3:15 p.m. CDT today, April 17, RLI management will hold a conference
 call to discuss quarterly results with insurance industry analysts.
 Interested parties may listen to the discussion through the Internet at RLI's
 website, http://www.rlicorp.com , or through
 http://www.videonewswire.com/RLI/041701/ .
 
     Forward-looking statements
     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)
 which 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 for the year ended December 31, 2000.
     RLI Corp., through its subsidiaries RLI Insurance Company, Mt. Hawley
 Insurance Company, Underwriters Indemnity Company and Planet Indemnity
 Company, underwrites selected property and casualty insurance products.  For
 additional information, contact Treasurer Michael A. Price at (309) 693-5880
 or at Mike_Price@rlicorp.com .
 
                                     RLI CORP.
                             2001 FINANCIAL HIGHLIGHTS
                  (Dollars in thousands, except per share amounts)
 
                                                 Three Months Ended March 31,
                                               2001        2000        % Change
     SUMMARIZED INCOME STATEMENT DATA:
     Net premiums earned                       $63,287     $53,186       19.0%
     Net investment income                       7,452       6,937        7.4%
     Net realized investment gains (loss)        1,432        (121)    1283.5%
        Consolidated revenue                    72,171      60,002       20.3%
 
     Loss and settlement expenses               35,864      27,883       28.6%
     Policy acquisition costs                   20,612      17,250       19.5%
     Other insurance expenses                    4,687       4,339        8.0%
     Interest expense on debt                    1,202       1,238       -2.9%
     General corporate expenses                    802         858       -6.5%
        Total expenses                          63,167      51,568       22.5%
 
     Equity in earnings of
       unconsolidated investee                     533         562       -5.2%
 
     Earnings before income taxes                9,537       8,996        6.0%
     Income tax expense                          2,404       2,456       -2.1%
        Net Earnings                            $7,133      $6,540        9.1%
 
     Other comprehensive earnings (loss),
      net of tax                               (14,276)     (4,940)    -189.0%
 
     Comprehensive earnings (loss)             $(7,143)     $1,600     -546.4%
 
     Net operating earnings (excluding
       realized gains(loss) )                   $6,202      $6,619       -6.3%
 
     Return on Equity:
       Net earnings (12 months trailing)         10.5%       10.8%
       Comprehensive earnings (12 months
        trailing)                                 4.0%        7.1%
 
     Per Share Data
 
     Diluted:
     Weighted average shares outstanding
      (in 000's)                                10,007       9,938
 
     EPS from operations                         $0.62       $0.67       -7.5%
     Realized gains (loss), net of tax            0.09       (0.01)    1000.0%
     Net earnings per share                      $0.71       $0.66        8.3%
 
     Comprehensive earnings (loss) per
      share                                     $(0.71)      $0.16     -543.8%
 
     Cash dividends per share                    $0.15       $0.14        7.1%
 
 
                                     RLI CORP.
                             2001 FINANCIAL HIGHLIGHTS
                  (Dollars in thousands, except per share amounts)
 
                                Three Months Ended March 31,
                                2001       2000     % Change
     Total Gross Sales
     Gross premium written     $120,139   102,428       17.3%
     Net investment income        7,452     6,937        7.4%
     Net realized investment
      gains (loss)                1,432      (121)    1283.5%
        Total                  $129,023  $109,244       18.1%
 
 
                             March 31,     Per    December 31,  Per
                               2001       Share       2000     Share   % Change
     SUMMARIZED BALANCE
      SHEET DATA:
     Fixed income and short-
      term investments         $442,194    $45.07    $449,917   $45.89   -1.7%
        (amortized cost -
         $438,173)
     Equity securities          283,789     28.92     306,194    31.23   -7.3%
        Total investments       725,983     73.99     756,111    77.12   -4.0%
 
     Premiums and
      reinsurance balances
      receivable                 99,558                94,761             5.1%
     Ceded unearned premium      66,505                64,184             3.6%
     Reinsurance recoverable
      on unpaid losses          235,356               239,696            -1.8%
     Deferred acquisition
      costs                      45,117                43,287             4.2%
     Property and equipment      13,496                13,808            -2.3%
     Investment in
      unconsolidated
      investee                   18,581                18,048             3.0%
     Goodwill                    32,446                32,716            -0.8%
     Other assets                20,467                18,713             9.4%
        Total assets         $1,257,509            $1,281,324            -1.9%
 
     Unpaid losses and
      settlement expenses       541,630               539,750             0.3%
     Unearned premiums          221,630               211,802             4.6%
     Reinsurance balances
      payable                    55,888                51,167             9.2%
     Short-term debt             65,964                78,763           -16.3%
     Income taxes - deferred     42,977                50,702           -15.2%
     Other liabilities           11,476                22,486           -49.0%
        Total liabilities       939,565               954,670            -1.6%
        Shareholders' equity    317,944    $32.40     326,654   $33.32   -2.7%
        Total liabilities &
         shareholders'
         equity              $1,257,509            $1,281,324            -1.9%
 
     Common shares
      outstanding (in 000's)      9,812                 9,804
     Closing stock price per
      share                      $40.84                $44.69            -8.6%
 
 
                                    RLI CORP.
                            2001 FINANCIAL HIGHLIGHTS
                 (Dollars in thousands, except per share amounts)
 
 
     UNDERWRITING SEGMENT DATA
     (in thousands)
 
                                                       GAAP             GAAP
                                           Property   Ratios  Surety   Ratios
 
     Three Months Ended March 31,
                2001
 
     Gross premium written                  $37,032           $11,266
     Net premium written                     17,065            10,647
     Net premium earned                      17,270             9,998
     Net loss & settlement expenses           9,563   55.4%     2,581   25.8%
     Net operating expenses                   6,124   35.5%     6,262   62.6%
       Underwriting income(loss)             $1,583   90.9%    $1,155   88.4%
 
 
                2000
     Gross premium written                  $38,664           $10,323
     Net premium written                     15,040             9,980
     Net premium earned                      13,215             7,215
     Net loss & settlement expenses           5,336   40.4%     1,398   19.4%
     Net operating expenses                   4,639   35.1%     4,722   65.4%
       Underwriting income(loss)             $3,240   75.5%    $1,095   84.8%
 
 
 
                                                     GAAP              GAAP
                                          Casualty  Ratios   Total    Ratios
 
     Three Months Ended March 31,
                2001
 
     Gross premium written                 $71,841          $120,139
     Net premium written                    43,082            70,794
     Net premium earned                     36,019            63,287
     Net loss & settlement expenses         23,720   65.9%    35,864  56.7%
     Net operating expenses                 12,913   35.9%    25,299  40.0%
       Underwriting income(loss)           $  (614) 101.8%    $2,124  96.7%
 
 
                2000
     Gross premium written                 $53,441          $102,428
     Net premium written                    36,448            61,468
     Net premium earned                     32,756            53,186
     Net loss & settlement expenses         21,149   64.6%    27,883  52.4%
     Net operating expenses                 12,228   37.3%    21,589  40.6%
       Underwriting income(loss)           $  (621) 101.9%    $3,714  93.0%
 
 SOURCE  RLI Corp.