Exhibit 99.1
RLI REPORTS FOURTH QUARTER AND YEAR-END 2017 RESULTS
PEORIA, ILLINOIS, January 24, 2018 -- RLI Corp. (NYSE: RLI) – RLI Corp. reported fourth quarter 2017 net earnings of $57.3 million ($1.29 per share), compared to $32.2 million ($0.72 per share) for the fourth quarter of 2016. For the year ended December 31, 2017, net earnings were $105.0 million ($2.36 per share), compared to $114.9 million ($2.59 per share) for the 2016 fiscal year. Operating earnings(1) for the fourth quarter of 2017 were $53.9 million ($1.21 per share) compared to $24.9 million ($0.56 per share) for the same period in 2016. For the year ended December 31, 2017, operating earnings were $102.2 million ($2.30 per share) compared to $92.4 million ($2.08 per share) for the 2016 fiscal year.
| | | | | | | | | | | |
| Fourth Quarter | | Year to Date |
Earnings Per Diluted Share | 2017 | | 2016 | | 2017 | | 2016 |
Net earnings | $ | 1.29 | | $ | 0.72 | | $ | 2.36 | | $ | 2.59 |
Operating earnings (1) | $ | 1.21 | | $ | 0.56 | | $ | 2.30 | | $ | 2.08 |
| | | | | | | | | | | |
(1) See discussion below of non-GAAP and performance measures. |
Highlights for the quarter included:
| · | | Underwriting income(1) of $9.0 million, resulting in a combined ratio(1) of 95.2. |
| · | | 11% increase in gross premiums written and 10% increase in investment income. |
| · | | Favorable development in prior years’ loss reserves resulting in a $5.2 million net increase in underwriting income. |
| · | | $0.63 per share increase to net earnings from recent tax reform. |
| · | | Special dividend of $1.75 per share, representing $77.3 million returned to shareholders. |
Highlights for the year included:
| · | | Underwriting income of $26.8 million, resulting in a combined ratio of 96.4. |
| · | | 1% growth in gross premiums written. |
| · | | Losses from hurricanes resulting in a $31.7 million net decrease to underwriting income. |
| · | | Favorable development in prior years’ loss reserves resulting in a $37.5 million net increase in underwriting income. |
| · | | 22nd consecutive year of a combined ratio below 100. |
| · | | Book value per share of $19.33, an increase of 17% from year-end 2016, inclusive of dividends. |
“RLI’s strong customer focus, financial performance and rewards to shareholders continued to distinguish us in 2017,” said RLI Corp. Chairman & CEO Jonathan E. Michael. “The 96 combined ratio included 4 points from hurricane losses, which was within our expectations for events of this magnitude. Despite exiting a few underperforming product lines and re-underwriting our transportation business, we ended the year with a 1% increase in gross premiums written, which was supported by an 11% increase in premium in the fourth quarter. Our investment portfolio and minority investment in Maui Jim contributed significantly to earnings and book value growth in 2017. At year end, we paid another special dividend, reinforcing our commitment to shareholders.”
“We enter 2018 well positioned to capitalize on market conditions with a talented team, diverse product portfolio, disciplined underwriting and service-oriented culture,” said Michael.
Underwriting Income
RLI had $9.0 million of underwriting income in the fourth quarter of 2017 on a 95.2 combined ratio, compared to $18.2 million of underwriting income on a 90.3 combined ratio in the same quarter for 2016.
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For the year, RLI had $26.8 million of underwriting income on a 96.4 combined ratio, compared to $76.1 million on an 89.5 combined ratio in 2016. The third quarter of 2017 was impacted by hurricane losses with a $31.7 million net decrease in underwriting income due to Hurricanes Harvey, Irma and Maria. Results for both years include favorable development in prior years’ loss reserves which totaled $37.5 million and $36.4 million for 2017 and 2016, respectively.
The following table highlights underwriting income and combined ratios by segment.
| | | | | | | | | | | | |
Underwriting Income(1) | | | | Combined Ratio(1) | | |
(in millions) | | | 2017 | | | 2016 | | | | 2017 | | 2016 |
Casualty | | $ | 3.9 | | $ | 36.3 | | Casualty | | 99.2 | | 92.0 |
Property | | | (11.9) | | | 12.8 | | Property | | 108.6 | | 91.6 |
Surety | | | 34.8 | | | 27.0 | | Surety | | 71.2 | | 77.8 |
Total | | $ | 26.8 | | $ | 76.1 | | Total | | 96.4 | | 89.5 |
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(1) See discussion below of non-GAAP and performance measures. |
Tax Reform Impact
The Tax Cuts and Jobs Act of 2017 (TCJA) was signed into law on December 22, 2017. Among other provisions, the TCJA lowered the federal corporate tax rate from 35% to 21% starting January 1, 2018. As a result, RLI revalued deferred tax items as of year-end 2017 to reflect the lower rate. Most significantly, lower future taxes applicable to unrealized gains on investments and other deferred tax items resulted in a reduction in our net deferred tax liability of $32.8 million. This change lowered tax expense in the quarter, increasing net earnings and operating earnings by $0.63 per share, inclusive of the effect of performance-related incentive and profit sharing expenses. Performance-related amounts impact policy acquisition, insurance operating and general corporate expenses, increasing the expense ratio by 3.7 points in the fourth quarter and 1.0 point for the full year, respectively.
Other Income
RLI’s net investment income for the quarter increased 9.8% to $14.4 million, compared to the same period in 2016. For the year ended December 31, 2017, investment income was $54.9 million versus $53.1 million for the same period in 2016. The investment portfolio’s total return was 1.4% for the quarter. The bond portfolio’s return was 0.4% in the quarter, while the equity portfolio’s return was 5.7%. For the year ended December 31, 2017, the investment portfolio’s total return was 6.6% with the bond portfolio returning 4.4% and equities returning 15.8%.
Comprehensive earnings, which include after-tax unrealized gains/losses from the investment portfolio, were $61.8 million for the quarter ($1.39 per share) compared to -$2.9 million (-$0.06 per share) for the same quarter in 2016. Full-year comprehensive earnings were $140.3 million ($3.15 per share), compared to $113.8 million ($2.56 per share) in 2016.
Equity in earnings of Maui Jim, Inc., a producer of premium sunglasses, was $0.8 million (reflecting seasonal sales results) for the quarter. Equity in earnings of Prime Holdings Insurance Services, Inc., a specialty E&S insurance company, was $1.0 million. Comparatively, in the fourth quarter of 2016, equity in earnings of Maui Jim was -$0.1 million and offset $0.1 million of earnings from Prime. For the year ended December 31, 2017, equity in earnings of unconsolidated investees from Maui Jim and Prime was $14.4 million and $2.8 million, respectively, compared to $9.7 million and $1.1 million from Maui Jim and Prime, respectively, for the prior year. Maui Jim announced a $9.9 million dividend, which resulted in a tax benefit on dividends from affiliates of $1.4 million ($0.03 per share) in the fourth quarter of 2017.
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Special and Regular Dividends
On December 27, 2017, RLI paid a special cash dividend of $1.75 per share, resulting in a tax benefit of $1.9 million ($0.04 per share) as dividends to the ESOP are fully deductible, and a regular quarterly dividend of $0.21 per share for a combined total of $86.5 million. RLI has paid dividends for 166 consecutive quarters and increased regular dividends in each of the last 42 years. Over the last 10 years, the company’s regular quarterly dividend has grown an average of 6.2% per year.
Non-GAAP and Performance Measures
Management has included certain non-generally accepted accounting principles (“non-GAAP”) financial measures in presenting the Company’s results. Management believes that these non-GAAP measures better explain the Company’s results of operations and allow for a more complete understanding of the underlying trends in the Company’s business. These measures should not be viewed as a substitute for those determined in accordance with generally accepted accounting principles (“GAAP”). In addition, our definitions of these items may not be comparable to the definitions used by other companies.
Operating earnings and earnings per share (EPS) from operations consist of our GAAP net earnings adjusted by the net realized gains/(losses) and taxes related thereto. Net earnings and net earnings per share are the GAAP financial measures that are most directly comparable to operating earnings and EPS from operations. A reconciliation of the operating earnings and EPS from operations to the comparable GAAP financial measures is included in the 2017 financial highlights below.
Underwriting income or profit represents the pretax profitability of our insurance operations and is derived by subtracting loss and settlement expenses, policy acquisition costs and insurance operating expenses from net premium earned, which are all GAAP financial measures. The combined ratio, which is derived from components of underwriting income, is a performance measure commonly used by property and casualty insurance companies and is calculated as the sum of loss and settlement expenses, policy acquisition costs and insurance operating expenses, divided by net premiums earned.
Other News
At 10 a.m. central standard time (CST) tomorrow, January 25, 2018, 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 https://edge.media-server.com/m6/p/3koihhpq.
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) including, without limitation, statements reflecting our current expectations about the future performance of our company or our business segments or about future market conditions. These statements 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 Annual Report for the year ended December 31, 2016.
About RLI
RLI Corp. (NYSE: RLI) is a specialty insurer serving diverse, niche property, casualty and surety markets. The company provides deep underwriting expertise and superior service to commercial and personal lines customers nationwide. RLI’s products are offered through its insurance subsidiaries RLI Insurance Company, Mt. Hawley Insurance Company and Contractors Bonding and Insurance Company. All of RLI’s insurance subsidiaries are rated A+ (Superior) by A.M. Best Company. RLI has paid and increased regular dividends for 42 consecutive years and delivered underwriting profits for 22 consecutive years. To learn more about RLI, visit www.rlicorp.com.
Media Contact
Aaron Jacoby
Vice President, Corporate Development
309-693-5880
Aaron.Jacoby@rlicorp.com
Supplemental disclosure regarding the earnings impact of specific items:
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| | | Operating Earnings Per Share |
| | | | 2017 | | 2016 | | 2017 | | 2016 |
| | | | 4th Qtr | | 4th Qtr | | 12 Mos. | | 12 Mos. |
Operating Earnings Per Share(1) | $ | 1.21 | | $ | 0.56 | | $ | 2.30 | | $ | 2.08 |
| | | | | | | | | | | | | | |
Specific items included in operating earnings per share:(2) (3) | | | | | | | | | | | |
| Favorable development in casualty prior years' reserves | $ | 0.05 | | $ | 0.23 | | $ | 0.28 | | $ | 0.48 |
| Favorable (unfavorable) development in property prior years' reserves | $ | 0.02 | | $ | (0.02) | | $ | 0.08 | | $ | (0.02) |
| Favorable (unfavorable) development in surety prior years' reserves | $ | - | | $ | (0.01) | | $ | 0.16 | | $ | 0.08 |
| Catastrophe impact | | | | | | | | | | | |
| ▪ | Hurricanes Harvey, Irma and Maria | $ | - | | | - | | | (0.46) | | | - |
| ▪ | Other 2017 events | $ | (0.01) | | $ | - | | $ | (0.05) | | $ | - |
| ▪ | 2016 and prior events | $ | 0.01 | | $ | (0.11) | | $ | 0.03 | | $ | (0.20) |
| Gain from tax benefit of special dividend to ESOP(4) | $ | 0.04 | | $ | 0.05 | | $ | 0.04 | | $ | 0.05 |
| Gain from tax benefit applicable to Maui Jim dividend(5) | $ | 0.03 | | $ | 0.06 | | $ | 0.03 | | $ | 0.06 |
| Gain from tax benefit of change in corporate tax rate(6) | $ | 0.63 | | $ | - | | $ | 0.63 | | $ | - |
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| (1) | See discussion above of non-GAAP and performance measures. |
| (2) | Includes incentive and profit sharing-related impacts which affected policy acquisition, insurance operating and general corporate expenses. |
| (3) | Reserve development reflects changes from previously estimated losses. |
| (4) | Dividends paid in an ESOP on employer securities are fully deductible from taxable income and result in a 35% tax benefit. |
| (5) | As required under the accounting standard for income taxes, the gain reflects the tax benefit of applying the lower tax rate applicable to dividends received from an affiliate (7.35%) as compared to the corporate capital gains tax rate (21%) on which tax estimates were based. |
| (6) | The gain reflects the tax benefit of applying the lower future tax rate (21%) enacted under the TCJA of 2017 to deferred tax items previously recorded at 35%. |
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RLI CORP. |
2017 FINANCIAL HIGHLIGHTS |
(Unaudited) |
(Dollars in thousands, except per share amounts) |
| | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended December 31, | | | Twelve Months Ended December 31, |
| | 2017 | | 2016 | | % Change | | 2017 | | | 2016 | | | % Change |
SUMMARIZED INCOME STATEMENT DATA: | | | | | | | | | | | | | | | | | | | |
Net premiums earned | $ | 188,296 | | $ | 187,869 | | 0.2 | % | | $ | 737,937 | | | $ | 728,608 | | | 1.3 | % |
Net investment income | | 14,446 | | | 13,153 | | 9.8 | % | | | 54,876 | | | | 53,075 | | | 3.4 | % |
Net realized gains | | 5,111 | | | 11,283 | | (54.7) | % | | | 4,411 | | | | 34,645 | | | (87.3) | % |
Consolidated revenue | | $ | 207,853 | | $ | 212,305 | | (2.1) | % | | $ | 797,224 | | | $ | 816,328 | | | (2.3) | % |
| | | | | | | | | | | | | | | | | | | | |
Loss and settlement expenses | | $ | 94,657 | | $ | 90,438 | | 4.7 | % | | $ | 401,584 | | | $ | 349,778 | | | 14.8 | % |
Policy acquisition costs | | | 66,251 | | | 65,087 | | 1.8 | % | | | 252,515 | | | | 249,612 | | | 1.2 | % |
Insurance operating expenses | | | 18,412 | | | 14,143 | | 30.2 | % | | | 56,994 | | | | 53,093 | | | 7.3 | % |
Interest expense on debt | | | 1,857 | | | 1,856 | | 0.1 | % | | | 7,426 | | | | 7,426 | | | 0.0 | % |
General corporate expenses | | | 3,524 | | | 2,785 | | 26.5 | % | | | 11,340 | | | | 10,170 | | | 11.5 | % |
Total expenses | | $ | 184,701 | | $ | 174,309 | | 6.0 | % | | $ | 729,859 | | | $ | 670,079 | | | 8.9 | % |
| | | | | | | | | | | | | | | | | | | | |
Equity in earnings of | | | | | | | | | | | | | | | | | | | | |
unconsolidated investees | | | 1,820 | | | 10 | | 18,100.0 | % | | | 17,224 | | | | 10,833 | | | 59.0 | % |
| | | | | | | | | | | | | | | | | | | | |
Earnings before income taxes | | $ | 24,972 | | $ | 38,006 | | (34.3) | % | | $ | 84,589 | | | $ | 157,082 | | | (46.1) | % |
Income tax expense (benefit) | | | (32,286) | | | 5,819 | | - | | | | (20,439) | | | | 42,162 | | | - | |
Net earnings | | $ | 57,258 | | $ | 32,187 | | 77.9 | % | | $ | 105,028 | | | $ | 114,920 | | | (8.6) | % |
| | | | | | | | | | | | | | | | | | | | |
Other comprehensive earnings (loss), net of tax | | | 4,497 | | | (35,062) | | - | | | | 35,309 | | | | (1,164) | | | - | |
| | | | | | | | | | | | | | | | | | | | |
Comprehensive earnings (loss) | | $ | 61,755 | | $ | (2,875) | | - | | | $ | 140,337 | | | $ | 113,756 | | | 23.4 | % |
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Operating earnings(1): | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Net earnings | | $ | 57,258 | | $ | 32,187 | | 77.9 | % | | $ | 105,028 | | | $ | 114,920 | | | (8.6) | % |
Less: Realized gains | | | (5,111) | | | (11,283) | | (54.7) | % | | | (4,411) | | | | (34,645) | | | (87.3) | % |
Income tax on realized gains | | | 1,789 | | | 3,950 | | (54.7) | % | | | 1,544 | | | | 12,126 | | | (87.3) | % |
Operating earnings | | $ | 53,936 | | $ | 24,854 | | 117.0 | % | | $ | 102,161 | | | $ | 92,401 | | | 10.6 | % |
| | | | | | | | | | | | | | | | | | | | |
Return on Equity: | | | | | | | | | | | | | | | | | | | | |
Net earnings | | | | | | | | | | | | 12.3 | % | | | 13.2 | % | | | |
Comprehensive earnings | | | | | | | | | | | | 16.4 | % | | | 13.1 | % | | | |
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Per Share Data: | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Diluted: | | | | | | | | | | | | | | | | | | | | |
Weighted average shares outstanding (in 000's) | | | 44,549 | | | 44,398 | | | | | | 44,500 | | | | 44,432 | | | | |
| | | | | | | | | | | | | | | | | | | | |
Net earnings per share | | $ | 1.29 | | $ | 0.72 | | 79.2 | % | | $ | 2.36 | | | $ | 2.59 | | | (8.9) | % |
Less: Realized gains | | | (0.12) | | | (0.25) | | (52.0) | % | | | (0.09) | | | | (0.78) | | | (88.5) | % |
Income tax on realized gains | | | 0.04 | | | 0.09 | | (55.6) | % | | | 0.03 | | | | 0.27 | | | (88.9) | % |
EPS from operations(1) | | $ | 1.21 | | $ | 0.56 | | 116.1 | % | | $ | 2.30 | | | $ | 2.08 | | | 10.6 | % |
| | | | | | | | | | | | | | | | | | | | |
Comprehensive earnings per share | | $ | 1.39 | | $ | (0.06) | | - | | | $ | 3.15 | | | $ | 2.56 | | | 23.0 | % |
| | | | | | | | | | | | | | | | | | | | |
Cash dividends per share -ordinary | | $ | 0.21 | | $ | 0.20 | | 5.0 | % | | $ | 0.83 | | | $ | 0.79 | | | 5.1 | % |
Cash dividends per share - special | | $ | 1.75 | | $ | 2.00 | | (12.5) | % | | $ | 1.75 | | | $ | 2.00 | | | (12.5) | % |
| | | | | | | | | | | | | | | | | | | | |
Net Cash Flow provided by Operations | | $ | 51,592 | | $ | 51,463 | | 0.3 | % | | $ | 197,525 | | | $ | 174,463 | | | 13.2 | % |
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(1) See discussion above of non-GAAP and performance measures. | | | | | | | | |
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RLI CORP. |
2017 FINANCIAL HIGHLIGHTS |
(Unaudited) |
(Dollars in thousands, except per share amounts) |
| | | | | | | | | |
| | | | | | | | | |
| | December 31, | | December 31, | | | |
| | 2017 | | 2016 | | % Change |
SUMMARIZED BALANCE SHEET DATA: | | | | | | | | | |
Fixed income | | $ | 1,672,239 | | $ | 1,605,209 | | 4.2 | % |
(amortized cost - $1,646,411 at 12/31/17) | | | | | | | | | |
(amortized cost - $1,596,227 at 12/31/16) | | | | | | | | | |
Equity securities | | | 400,492 | | | 369,219 | | 8.5 | % |
(cost - $182,002 at 12/31/17) | | | | | | | | | |
(cost - $187,573 at 12/31/16) | | | | | | | | | |
Other invested assets | | | 33,808 | | | 24,115 | | 40.2 | % |
Cash and cash equivalents | | | 34,251 | | | 23,284 | | 47.1 | % |
Total investments and cash | | $ | 2,140,790 | | $ | 2,021,827 | | 5.9 | % |
| | | | | | | | | |
Premiums and reinsurance balances receivable | | | 134,351 | | | 126,387 | | 6.3 | % |
Ceded unearned premiums | | | 57,928 | | | 52,173 | | 11.0 | % |
Reinsurance balances recoverable on unpaid losses | | | 301,991 | | | 288,224 | | 4.8 | % |
Deferred policy acquisition costs | | | 77,716 | | | 73,147 | | 6.2 | % |
Property and equipment | | | 55,849 | | | 54,606 | | 2.3 | % |
Investment in unconsolidated investees | | | 90,067 | | | 72,240 | | 24.7 | % |
Goodwill and intangibles | | | 59,302 | | | 64,371 | | (7.9) | % |
Other assets | | | 29,250 | | | 24,658 | | 18.6 | % |
Total assets | | $ | 2,947,244 | | $ | 2,777,633 | | 6.1 | % |
| | | | | | | | | |
Unpaid losses and settlement expenses | | $ | 1,271,503 | | $ | 1,139,337 | | 11.6 | % |
Unearned premiums | | | 451,449 | | | 433,777 | | 4.1 | % |
Reinsurance balances payable | | | 21,624 | | | 17,928 | | 20.6 | % |
Funds held | | | 74,560 | | | 72,742 | | 2.5 | % |
Income taxes - deferred | | | 53,768 | | | 64,494 | | (16.6) | % |
Bonds payable, long-term debt | | | 148,928 | | | 148,741 | | 0.1 | % |
Accrued expenses | | | 52,848 | | | 51,992 | | 1.6 | % |
Other liabilities | | | 18,966 | | | 25,050 | | (24.3) | % |
Total liabilities | | $ | 2,093,646 | | $ | 1,954,061 | | 7.1 | % |
Shareholders' equity | | | 853,598 | | | 823,572 | | 3.6 | % |
Total liabilities & shareholders' equity | | $ | 2,947,244 | | $ | 2,777,633 | | 6.1 | % |
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OTHER DATA: | | | | | | | | | |
| | | | | | | | | |
Common shares outstanding (in 000's) | | | 44,148 | | | 43,945 | | | |
| | | | | | | | | |
Book value per share | | $ | 19.33 | | $ | 18.74 | | 3.1 | % |
Closing stock price per share | | $ | 60.66 | | $ | 63.13 | | (3.9) | % |
Cash dividends per share - ordinary | | $ | 0.83 | | $ | 0.79 | | 5.1 | % |
Cash dividends per share - special | | $ | 1.75 | | $ | 2.00 | | (12.5) | % |
| | | | | | | | | |
Statutory surplus | | $ | 864,554 | | $ | 859,976 | | 0.5 | % |
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RLI CORP. |
2017 FINANCIAL HIGHLIGHTS |
UNDERWRITING SEGMENT DATA |
(Unaudited) |
(Dollars in thousands, except per share amounts) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Three Months Ended December 31, | | | | | | | | | | | | | | | | | | | |
| | | | | GAAP | | | | | | GAAP | | | | | | GAAP | | | | | | GAAP | |
| | | Casualty | | Ratios | | | | Property | | Ratios | | | | Surety | | Ratios | | | | Total | | Ratios | |
2017 | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Gross premiums written | | $ | 153,575 | | | | | $ | 43,747 | | | | | $ | 31,743 | | | | | $ | 229,065 | | | |
Net premiums written | | | 128,996 | | | | | | 34,015 | | | | | | 29,881 | | | | | | 192,892 | | | |
Net premiums earned | | | 123,967 | | | | | | 34,497 | | | | | | 29,832 | | | | | | 188,296 | | | |
Net loss & settlement expenses | | | 78,576 | | 63.4 | % | | | 12,977 | | 37.6 | % | | | 3,104 | | 10.4 | % | | | 94,657 | | 50.3 | % |
Net operating expenses | | | 46,808 | | 37.8 | % | | | 17,527 | | 50.8 | % | | | 20,328 | | 68.1 | % | | | 84,663 | | 44.9 | % |
Underwriting income (loss)(1) | | $ | (1,417) | | 101.2 | % | | $ | 3,993 | | 88.4 | % | | $ | 6,400 | | 78.5 | % | | $ | 8,976 | | 95.2 | % |
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2016 | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Gross premiums written | | $ | 134,092 | | | | | $ | 40,322 | | | | | $ | 31,945 | | | | | $ | 206,359 | | | |
Net premiums written | | | 111,841 | | | | | | 32,153 | | | | | | 30,442 | | | | | | 174,436 | | | |
Net premiums earned | | | 118,271 | | | | | | 38,156 | | | | | | 31,442 | | | | | | 187,869 | | | |
Net loss & settlement expenses | | | 60,637 | | 51.3 | % | | | 21,664 | | 56.8 | % | | | 8,137 | | 25.9 | % | | | 90,438 | | 48.1 | % |
Net operating expenses | | | 41,795 | | 35.3 | % | | | 17,571 | | 46.1 | % | | | 19,864 | | 63.2 | % | | | 79,230 | | 42.2 | % |
Underwriting income (loss)(1) | | $ | 15,839 | | 86.6 | % | | $ | (1,079) | | 102.9 | % | | $ | 3,441 | | 89.1 | % | | $ | 18,201 | | 90.3 | % |
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Twelve Months Ended December 31, | | | | | | | | | | | | | | | | | | | |
| | | | | GAAP | | | | | | GAAP | | | | | | GAAP | | | | | | GAAP | |
| | | Casualty | | Ratios | | | | Property | | Ratios | | | | Surety | | Ratios | | | | Total | | Ratios | |
2017 | | | | | | | | | | | | | | | | | | | | | | | | |
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Gross premiums written | | $ | 585,449 | | | | | $ | 175,538 | | | | | $ | 124,325 | | | | | $ | 885,312 | | | |
Net premiums written | | | 494,649 | | | | | | 137,031 | | | | | | 118,174 | | | | | | 749,854 | | | |
Net premiums earned | | | 478,603 | | | | | | 138,346 | | | | | | 120,988 | | | | | | 737,937 | | | |
Net loss & settlement expenses | | | 305,679 | | 63.9 | % | | | 85,027 | | 61.5 | % | | | 10,878 | | 9.0 | % | | | 401,584 | | 54.4 | % |
Net operating expenses | | | 169,020 | | 35.3 | % | | | 65,178 | | 47.1 | % | | | 75,311 | | 62.2 | % | | | 309,509 | | 42.0 | % |
Underwriting income (loss)(1) | | $ | 3,904 | | 99.2 | % | | $ | (11,859) | | 108.6 | % | | $ | 34,799 | | 71.2 | % | | $ | 26,844 | | 96.4 | % |
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2016 | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Gross premiums written | | $ | 560,349 | | | | | $ | 186,136 | | | | | $ | 128,379 | | | | | $ | 874,864 | | | |
Net premiums written | | | 470,082 | | | | | | 149,170 | | | | | | 121,700 | | | | | | 740,952 | | | |
Net premiums earned | | | 454,843 | | | | | | 152,167 | | | | | | 121,598 | | | | | | 728,608 | | | |
Net loss & settlement expenses | | | 259,907 | | 57.1 | % | | | 71,350 | | 46.9 | % | | | 18,521 | | 15.2 | % | | | 349,778 | | 48.0 | % |
Net operating expenses | | | 158,607 | | 34.9 | % | | | 67,985 | | 44.7 | % | | | 76,113 | | 62.6 | % | | | 302,705 | | 41.5 | % |
Underwriting income (loss)(1) | | $ | 36,329 | | 92.0 | % | | $ | 12,832 | | 91.6 | % | | $ | 26,964 | | 77.8 | % | | $ | 76,125 | | 89.5 | % |
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(1) See discussion above of non-GAAP and performance measures. | | | | | | | | | |
