RLI third-quarter net earnings fall to $81.0 million as operating earnings rise

RLI Corp. (RLI) reported third-quarter 2026 net earnings of $81.0 million, or $0.88 per diluted share, down from $124.6 million, or $1.35 per share, a year earlier, the specialty insurer said in a filing dated Oct. 19.

Operating earnings, a non-GAAP measure that excludes realized and unrealized investment gains and losses, rose 4.6% to $79.3 million, or $0.86 per diluted share, from $75.8 million, or $0.82 per share. Beginning in the fourth quarter of 2025, the company removed equity in earnings of unconsolidated investees from operating earnings and recast prior periods to match.

Here's how the company did:

• Net earnings: $81.0 million, or $0.88 per diluted share, vs. $124.6 million, or $1.35 per share, a year earlier
• Operating earnings: $79.3 million, or $0.86 per diluted share, vs. $75.8 million, or $0.82 a year earlier
• Consolidated revenue: $477.0 million vs. $509.3 million a year earlier
• Underwriting income: $58.8 million vs. $60.5 million a year earlier
• Combined ratio: 86.2 vs. 85.1 a year earlier

Consolidated revenue fell 6.3% to $477.0 million. The decline reflects a swing in investment results. Net unrealized gains on equity securities were a loss of $3.3 million, compared with a gain of $42.0 million a year earlier, and net realized gains fell 52.8% to $8.6 million.

Underwriting income was $58.8 million on an 86.2 combined ratio, against $60.5 million on an 85.1 combined ratio a year earlier. Net premiums earned rose 4.2% to $424.9 million.

Gross premiums written increased 2%, to $522.2 million from $510.2 million. Net investment income rose 13.1% to $46.7 million.

Here's how the company's segments did during the quarter:

• Casualty: underwriting income of $1.0 million vs. $4.5 million; combined ratio 99.6 vs. 98.2
• Property: underwriting income of $50.5 million vs. $50.4 million; combined ratio 60.1 vs. 60.2
• Surety: underwriting income of $7.3 million vs. $5.6 million; combined ratio 79.8 vs. 85.0

Casualty underwriting income fell to $1.0 million from $4.5 million, as the segment's combined ratio rose to 99.6 from 98.2. Casualty gross premiums written rose to $330.9 million from $317.1 million.

Property underwriting income was $50.5 million, against $50.4 million a year earlier. Property gross premiums written fell to $152.4 million from $154.6 million, and the segment's combined ratio was 60.1 compared with 60.2.

Surety underwriting income rose to $7.3 million from $5.6 million. The segment's combined ratio improved to 79.8 from 85.0.

Loss and settlement expenses rose 7.1% to $201.3 million. Policy acquisition costs rose 4.0% to $134.1 million, and insurance operating expenses were $30.7 million, up 1.5%.

Favorable development in prior years' loss reserves added $20.1 million to underwriting income, compared with $13.7 million a year earlier. The filing also reported $3.9 million of net incurred losses from current accident year catastrophe events in property.

Interest expense on debt was $4.2 million, against $1.4 million a year earlier. Long-term debt stood at $297.0 million on Sept. 30, compared with no long-term debt and $100.0 million of short-term debt at Dec. 31, 2025.

“Our third-quarter results reflect consistent, disciplined execution across the business,” said RLI Corp. President & CEO Craig Kliethermes. He said the company delivered an 86 combined ratio, with strong underwriting performance in its property and surety segments.

“As market conditions evolve across our portfolio, we remain focused on risk selection and profitable growth,” Kliethermes said. “We will continue to pursue opportunities where our underwriting expertise can deliver attractive long-term returns.”

The release did not include a new full-year outlook or revised guidance.

For the first nine months of 2026, net earnings were $303.9 million, or $3.29 per diluted share, down 2.6% from $312.2 million. Operating earnings were $232.9 million, or $2.52 per share, down 0.6% from $234.4 million. Consolidated revenue for the period rose 4.2%.

Comprehensive loss was $36.8 million, or $0.40 per share, compared with comprehensive earnings of $152.3 million, or $1.65 per share, a year earlier. The company said the comprehensive loss included after-tax unrealized losses from its fixed income portfolio, due to rising interest rates.

The investment portfolio's total return was negative 2.0% for the quarter and 0.9% for the nine months ended Sept. 30, 2026.

The company paid a regular quarterly dividend of $0.18 per share on Sept. 15, the same amount as the prior quarter. Ordinary dividends per share were $0.18 for the quarter, up from $0.16 a year earlier. Cash dividends for the nine months included a $2.00 special dividend per share, and none was paid in the third quarter.

RLI repurchased 103,573 shares in the quarter at an average price of $60.51, for a total cost of $6.3 million. As of Sept. 30, $231.7 million of capacity remained under the share repurchase program. Over the past five years, the company has returned more than $1.3 billion to shareholders through dividends and share repurchases.

RLI management will hold a conference call at 10 a.m. central daylight time on Oct. 20, 2026, to discuss the quarterly results with insurance industry analysts.

RLI Corp. is a specialty insurer serving niche property, casualty and surety markets from Peoria, Illinois. Its products are offered through RLI Insurance Company, Mt. Hawley Insurance Company and Contractors Bonding and Insurance Company, all rated A++ (Superior) by AM Best Company.