RLI Corp. Q4 FY2025 earnings call

• RLI Corp achieved 30th consecutive year of underwriting profitability in 2025, with underwriting income of $264 million and an 84 combined ratio.
• Book value per share grew by 33% inclusive of dividends.
• Changed definition of operating earnings to exclude equity and earnings of unconsolidated investees and related taxes.
• On reinsurance renewals, property reinsurance saw 15%-20% rate decreases, while casualty rates were down ~5%.
• Invested in technology to improve customer experience, efficiencies, and feedback loops between underwriting, claims, and analytics.

Property: Q4 premiums declined 11%, but property team delivered an excellent 49 combined ratio. Hawaii homeowners premium grew 5% in Q4, 26% for the year. Marine premium was up 2% in Q4. Casualty: Q4 premiums grew 2% with a 99.6 combined ratio; personal umbrella led with 24% premium growth. Transportation premium declined 10% in Q4. Surety: Premium was flat in Q4 but produced an 80 combined ratio. Revenue contributions: Underwriting income for the full year was $264 million, with property, casualty, and surety segments contributing to the overall results.

• Optimistic about opportunities ahead.
• Continue to seek rate increases in various lines, e.g., 20% rate increase in California personal umbrella effective December 1.
• Expect to continue pushing for double-digit rate increases in auto business until loss severity trends subside.

• Competitive market dynamics posing challenges to premium growth and combined ratios.
• Potential impact of large catastrophic events on property underwriting results.
• Ongoing challenges with auto-related exposures and reserve development.

Q: The accident year loss ratio in Casualty improved a bit from last year; can you talk about mix shift from pulling away from transportation book?

A: Jennifer Klobnak said they pulled back in transportation and other auto areas, and Aaron Diefenthaler noted better stability around auto-related exposures compared to prior years.

Q: On property competition, what needs to happen for inflection in rate decreases?

A: Jennifer Klobnak said less capacity, like a large outsized cat event or change in investment opportunities, would be beneficial for rate normalization.

Q: Any granularity on property competitive pressure?

A: Jennifer Klobnak stated the market is still competitive, with Q4 being a slow renewal quarter, and more significant renewals in spring and April.