Skip to content
    RLI
    Earnings call· Jun 2026(Q2 FY26)

    RLI CORP RLI

    Jul 23, 2026 Source

    Executive summary

    RLI Corp. Q2 FY26 — Profitable Growth with Strong Underwriting and Investment Income

    RLI Corp. delivered another quarter of profitable growth, driven by disciplined underwriting and increased investment income, while navigating competitive market conditions in several segments. The company emphasized its relationship-based approach and empowered underwriters as key differentiators, allowing it to selectively pursue profitable opportunities and maintain strong capital management. Management expressed confidence in its strategy for the second half of the year.

    Highlights

    5

    • Generated an 86% combined ratio, reflecting strong underwriting performance.

    • Gross premiums written grew by 3%, led by the Casualty segment.

    • Net investment income increased by 17% to $46 million, contributing significantly to results.

    • Produced a 25% return on equity, demonstrating strong profitability.

    • Returned over $200 million to shareholders through a special dividend and share repurchases.

    Concerns

    5

    • Expense ratio increased 1.5 points to 40.1% due to personnel-related costs, acquisition expense, and technology investments.

    • Property segment gross premium was down 6% due to heightened competitive dynamics.

    • Surety premium was down 6%, primarily due to moderating renewable energy construction activity and specific customs bonds.

    • Personal Umbrella renewal retention is down 2 points from last year due to underwriting adjustments and cumulative rate increases.

    • Property segment renewal retention ratio is just under 70% as the company maintains underwriting discipline amidst competition.

    Guidance & targets

    2
    CategoryTargetConfidence
    Personal Umbrella rate increases
    tempered
    medium materiality
    Medium
    Property ceded premiums
    down 4-5 points year-over-year
    medium materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Casualty
    Growth led by Personal Umbrella and Transportation. Underwriting profit bolstered by favorable prior year development. Mix of business shifting towards non-coastal states in Personal Umbrella. Increased competition in Cash and brokerage.
    Favorable development on prior year's reserves: $13 million2026 catastrophe losses: $1 millionPersonal umbrella premium growth: 26%Personal umbrella rate increases: 17%Personal umbrella renewal retention: down 2 points from last yearTransportation premium growth: 19%Transportation rate increase: 8%Transportation new claim counts: decreasing for second year in a rowTransportation submissions: up 9%Cash and brokerage premium: down 6%Cash and brokerage submissions: up 14%Excess liability rate increases: 7%
    		—11%—99.3% combined ratio
    Property
    Very strong combined ratio on lighter catastrophe activity. Competitive dynamics persist, leading to premium decrease. Growth in Hawaii homeowners and Marine. Rates approaching benchmark price.
    Catastrophe activity: $9 millionFavorable prior year development: $23 millionHawaii homeowners premium growth: 9%Hawaii homeowners rate increase: 12%Marine premium growth: 7%Marine rate increase: 1%Renewal retention ratio: just under 70%
    		—decreased 6%—56.8% combined ratio
    Surety
    Growth muted due to moderating renewable energy construction activity and customs bonds. Loss ratio improvement partly offset by higher expense ratio due to investments and acquisition costs. Industry loss ratios beginning to move higher.
    Favorable development on prior year's reserves: $3.4 millionExpense ratio increase: 3 points
    		—down 6%—87.2% combined ratio

    Operational metrics

    17
    Operating Earnings Per Share
    $0.83vs $0.82 last year
    Q2 FY26

    Non-GAAP measure, adjusted to exclude equity in earnings of unconsolidated investees and related taxes.

    GAAP Net Earnings Per Share
    $1.82compared with $1.34 in the year ago period
    Q2 FY26

    Difference from operating earnings primarily due to strong equity portfolio performance.

    Unrealized Gains on Equity Securities
    $103 millioncompared with $44 million last year
    Q2 FY26

    Contributed to the difference between net and operating earnings.

    Realized Gains
    $9 million
    Q2 FY26

    Reflective of modest portfolio rebalancing.

    Underwriting Income
    $59.9 million
    Q2 FY26

    Solid underwriting performance.

    Loss Ratio
    45.5%improved 0.4%
    Q2 FY26

    Part of the overall combined ratio.

    Expense Ratio
    40.1%increased 1.5%
    Q2 FY26

    Part of the overall combined ratio.

    Fixed Income Purchase Yields
    4.9%
    Q2 FY26

    Average yield on new fixed income purchases.

    Investment Portfolio Total Return
    3.4%
    Q2 FY26

    Total return for the quarter.

    Investment Portfolio Total Return
    3%
    YTD FY26

    Total return for the first 6 months of the year.

    Total Investments and Cash
    $4.9 billion
    Q2 FY26

    Balance at quarter end.

    Regular Quarterly Dividend
    $0.18
    Q2 FY26

    Paid in addition to a special dividend.

    Special Dividend
    $2
    Q2 FY26

    Part of capital returned to shareholders.

    Share Repurchase Program Authorization
    $250 millionnewly authorized
    FY26

    Added flexibility for capital return.

    Shares Repurchased
    235,000
    Q2 FY26

    Executed during the quarter.

    Remaining Share Repurchase Authorization
    $238 million
    Q2 FY26

    Amount available at June 30.

    Comprehensive Earnings
    $166 millioncompared with $143 million last year
    Q2 FY26

    Also reported as $1.80 per share vs $1.55 per share last year.

    Industry KPIs

    10
    MetricValueDetails
    Combined ratio85.6% (overall), 99.3% (Casualty), 56.8% (Property), 87.2% (Surety), 86% (H1 FY26)%
    Capital returns$200 million (total), $0.18 (regular dividend), $2 (special dividend), $250 million (buyback authorization), 235,000 (shares repurchased)USD, per share, shares
    ROE operating ROE25%%
    Catastrophe losses$10 million (net incurred), $9 million (Property)USD
    Book value per shareincreased 11%%
    Net investment income$46 millionUSD
    Retention persistencydown 2 points from last year (Personal Umbrella), just under 70% (Property)%
    Net premiums written earned3% (gross premiums written)%
    Renewal rate change pricing17% (Personal Umbrella), 8% (Transportation), 7% (Excess Liability), 12% (Hawaii Homeowners), 1% (Marine)%
    Prior year reserve development$39.8 million (favorable), $13 million (Casualty), $23 million (Property), $3.4 million (Surety)USD

    Product announcements

    1
    ProductTypeDetails
    Non-admitted Entertainment & Amusement Offeringlaunch

    Deals & partnerships

    1
    nullRenewal of reinsurance agreements for marine executive products, professional liability, and earthquake surplus share treaty.

    Renewed reinsurance agreements for several product lines, benefiting from favorable market conditions with stable coverage and flat to down rates.

    Risks & headwinds

    5
    Increased Competition in E&S PropertyCurrent

    individual submission can be sent out to over 45 markets; rates we are achieving are approaching our benchmark price; renewal retention, ratio, which is down to just under 70%

    Mitigation: Maintaining underwriting discipline, holding the line on terms and conditions, proactively protecting renewals, pursuing new business by offering more quotes and multiple coverage actions, increasing limits, stable responsive market presence.

    Moderating Renewable Energy Construction ActivityCurrent

    Contributed to Surety premium being down 6%

    Mitigation: Decision to exit a few larger accounts where risk-adjusted returns were not justified, maintaining discipline, entrepreneurial mindset to take advantage of future market disruption.

    Litigation Environment in Personal UmbrellaCurrent

    Renewal retention down 2 points from last year

    Mitigation: Underwriting adjustments, targeting growth in non-coastal states, monitoring risk characteristics, regular communication with producers to direct business.

    Increased Competition in Cash and Brokerage PremiumCurrent

    Cash and brokerage premium down 6%

    Mitigation: Picking spots, emphasizing risk selection, focusing on in-house loss control services, individual underwriting of accounts to provide tailored coverage.

    Rising Surety Loss Ratios Across IndustryBeginning to occur

    Surety loss ratios are beginning to move higher (industry-wide)

    Mitigation: Maintaining a clean book to take advantage of opportunities when market disruption occurs.

    What to watch in Q3 FY26

    5

    Personal Umbrella Rate Increases

    H2 FY26
    Current17% rate in the quarter
    TargetTempered

    Why it matters

    Indicates pricing power and ability to maintain profitability in a competitive segment.

    Rate increases in the second half of the year will be tempered as some of those filings have earned through the book and our next approved rate increase is taking effect on January 1.

    Q&A highlights

    7

    How much of the casualty growth is rate-driven vs. new business, and why is the casualty loss ratio higher this half?

    Casualty growth is driven by both rate and new business opportunities, capitalizing on market disruption. The higher casualty loss ratio is attributed to a mix of business shift towards areas with longer-term trends and historical severity, requiring cautious reserving.

    “So it really comes down to mix as the driver of that underlying.”

    asked by Michael Phillips · answered by Aaron Diefenthaler

    2 min read6 chapters

    Detailed Narrative

    01

    Underwriting Discipline and Relationship-Based Approach

    RLI emphasizes its long-standing principles of disciplined underwriting, sensible capital management, and continuous improvement. The company highlights its relationship-based business model, where accessible and empowered people solve problems and consistently support business partners through all insurance cycles. This approach, combined with customized underwriting, allows RLI to tailor solutions to individual risks and maintain a competitive advantage, contributing to its consistent recognition as a top P&C performer.

    02

    Strong Investment Income Contribution

    Net investment income increased 17% to $46 million, becoming an important contributor to results. The company's operating cash flow of $145 million supported fixed income purchase activity, with yields averaging 4.9% in the quarter. Management noted that the foundations are in place for continued growth in investment income, assuming the current rate environment holds, as new investments are yielding significantly above the current book yield.

    03

    Proactive Capital Management

    RLI returned over $200 million to shareholders during the quarter, including a regular quarterly dividend of $0.18 per share and a $2 special dividend. A new $250 million share repurchase program was authorized, under which approximately 235,000 shares were repurchased at an average price of $51.25. The company views share repurchases as a complementary form of capital return, maintaining flexibility without a specific timeline to exhaust the authorization.

    04

    Evolving Market Conditions and Competitive Landscape

    The insurance market continues to evolve with increased competition, prompting carriers to differentiate through underwriting expertise, financial strength, and service. RLI remains flexible on pricing while maintaining discipline in coverage, leveraging technology to enhance underwriting processes and improve efficiency. The company's reputation as a stable, dependable carrier resonates with producers and insurers, enabling it to win profitable business despite competitive pressures.

    05

    Casualty Segment Growth and Strategy

    The Casualty segment saw an 11% premium increase, with rates up 10%, primarily driven by Personal Umbrella (up 26% with 17% rate increases) and Transportation (up 19% with 8% rate increases). RLI is capitalizing on market disruption🌐 in transportation, where competitors are pulling back, by offering more new business opportunities and leveraging in-house loss control services. In Personal Umbrella, the company is making underwriting adjustments and targeting growth in non-coastal states to improve the book mix.

    06

    Property and Surety Segment Headwinds

    The Property segment's premium decreased 6% amid heightened competition, with individual submissions reportedly sent to over 45 markets. Rates are approaching RLI's benchmark price, and renewal retention is down to just under 70% as the company holds firm on terms and conditions. Surety premium was also down 6% due to moderating renewable energy construction activity and the decision to exit some larger accounts that no longer met risk-adjusted return targets, though bid activity is starting to increase.

    AI-generated summary of the company’s earnings call. Not investment advice.