RLI Corp. third-quarter operating earnings rise to $0.86 a share from $0.82

RLI Corp. (RLI) posted third-quarter 2026 operating earnings of $0.86 per share, up from $0.82 a year earlier, the insurer said in a regulatory filing on Wednesday.

The figures were discussed on an earnings call held Tuesday, Oct. 20. The company furnished a transcript of that call as an exhibit to its 8-K.

Here's how the company did:

• Operating earnings: $0.86 per share vs. $0.82 a year earlier
• Net earnings on a GAAP basis: $0.88 per share vs. $1.35 a year earlier
• Underwriting income: $58.8 million
• Combined ratio: 86.2 vs. 85.1 a year earlier
• Net investment income: $46.7 million, up 13%
• Gross premiums written: up 2%

Chief Financial Officer Aaron Diefenthaler said the year-over-year gap on a GAAP basis was primarily driven by changes in the value of equity securities between the two periods.

Operating earnings exclude after-tax realized and unrealized gains and losses on equity securities, as well as equity in the earnings of unconsolidated investees and the related taxes. The company changed that definition in the fourth quarter of 2025 and has recast prior-period comparisons.

The loss ratio rose 1.3 points to 47.4, while the expense ratio improved modestly to 38.8. Favorable development on prior years’ loss reserves totaled $22.9 million, up from $15.5 million in the third quarter of 2025.

Current-year catastrophe losses were approximately $4 million, primarily in the Property segment.

“Consistency may be boring to some,” CEO Craig Kliethermes said on the call. “At RLI, we think boring is beautiful.”

Segment results

Casualty premium rose 4%, and the segment posted a 99.6 combined ratio, compared with 98.2 a year earlier. Its underwriting results benefited from $8.2 million of favorable development on prior-year reserves, roughly in line with the third quarter of 2025.

Property gross premiums fell about 1%. The segment produced just over $50 million of underwriting income on a 60.1 combined ratio, equivalent to last year. Property’s current-year catastrophe losses totaled $3.9 million, about half of it from Hawaii.

Surety gross premiums rose about 1%, on a 79.8 combined ratio compared with 85 last year. Underwriting income increased to $7.3 million from $5.6 million in the prior-year quarter.

Chief Operating Officer Jennifer Klobnak said Marine premium grew 11% in the quarter. E&S Property premium fell 17% as additional capacity entered the market and standard carriers and retailers reclaimed business.

Hawaii Homeowners premium rose 9%, with rates up 13%. Personal Umbrella premium rose 22%, with rates up 8%. Transportation premium fell 9% while rates rose 12%, and renewal retention declined almost 10 points.

Klobnak said the company’s partnership with Steadily, which specializes in landlord insurance, generated $9 million of premium this quarter.

Capital and investments

Operating cash flow was $195 million, up 9% from last year. New fixed-income purchases had average yields of 5.5%, nearly 100 basis points above the company’s book yield.

During the quarter the company paid its regular quarterly dividend of $0.18 per share. It repurchased just under 104,000 shares at an average price of $60.51. About $232 million remained under its share repurchase authorization at Sept. 30.

Adjusted for dividends and share repurchases, book value rose 10% from year-end 2025.

Comprehensive loss was $36.8 million, or 40 cents per share, compared with comprehensive earnings of $152 million, or $1.65 per share, a year earlier. Diefenthaler said the mark-to-market total return for the quarter was negative 2.0%.

Through the first nine months of 2026, the company generated $176 million of underwriting income on an 85.9 combined ratio, and net investment income rose 15%. Operating earnings were $2.52 per share, which Diefenthaler described as very consistent with the prior year.

Management’s view of the market

Klobnak said the company expects personal umbrella rate increases to return to double-digit levels during 2027, after its next approved rate filing takes effect Jan. 1.

Klobnak also said the reinsurance market is a buyer’s market and that the company expects positive terms at its Jan. 1 renewals, though negotiations are still under way.

“In an overall softening market, the team was able to grow premium +2% in the quarter and produce an 86 combined ratio,” Klobnak said. “That is an outstanding result!”

The call transcript did not include a numerical outlook for full-year 2026 or 2027.