RLI (RLI) 10-K 23 Feb 18 2017 FY Annual report Financial data

Document and Entity Information

Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2017	Feb. 07, 2018	Jun. 30, 2017
Document and Entity Information
Entity Registrant Name	RLI CORP
Entity Central Index Key	84,246
Document Type	10-K
Document Period End Date	Dec. 31, 2017
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$ 2,125,028,624
Entity Common Stock, Shares Outstanding		44,237,951
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	FY

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Fixed income:
Available-for-sale, at fair value (amortized cost - $1,646,411 in 2017 and $1,596,227 in 2016)	$ 1,672,239	$ 1,605,209
Equity securities available-for-sale, at fair value (cost - $182,002 in 2017 and $187,573 in 2016)	400,492	369,219
Short-term investments, at cost which approximates fair value	9,980	5,015
Other invested assets	33,808	24,115
Cash	24,271	18,269
Total investments and cash	2,140,790	2,021,827
Accrued investment income	15,166	14,593
Premiums and reinsurance balances receivable, net of allowances for uncollectible amounts of $16,935 in 2017 and $15,981 in 2016	134,351	126,387
Ceded unearned premium	57,928	52,173
Reinsurance balances recoverable on unpaid losses and settlement expenses, net of allowances for uncollectible amounts of $10,014 in 2017 and $10,699 in 2016	301,991	288,224
Deferred policy acquisition costs	77,716	73,147
Property and equipment, at cost, net of accumulated depreciation of $47,676 in 2017 and $41,999 in 2016	55,849	54,606
Investment in unconsolidated investees	90,067	72,240
Goodwill and intangibles	59,302	64,371
Other assets	14,084	10,065
TOTAL ASSETS	2,947,244	2,777,633
Liabilities:
Unpaid losses and settlement expenses	1,271,503	1,139,337
Unearned premiums	451,449	433,777
Reinsurance balances payable	21,624	17,928
Funds held	74,560	72,742
Income taxes - deferred	53,768	64,494
Bonds payable, long-term debt	148,928	148,741
Accrued expenses	52,848	51,992
Other liabilities	18,966	25,050
TOTAL LIABILITIES	2,093,646	1,954,061
Shareholders' Equity
Common stock ($1 par value, authorized 100,000,000 shares, issued 67,078,569 shares in 2017 and 66,874,911 shares in 2016, and outstanding 44,148,355 shares in 2017 and 43,944,697 shares in 2016)	67,079	66,875
Paid-in capital	233,077	229,779
Accumulated other comprehensive earnings	157,919	122,610
Retained earnings	788,522	797,307
Deferred compensation	8,640	11,496
Less: Treasury shares at cost (22,930,214 shares in 2017 and 2016	(401,639)	(404,495)
TOTAL SHAREHOLDERS’ EQUITY	853,598	823,572
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$ 2,947,244	$ 2,777,633

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Condensed Consolidated Balance Sheets
Available-for-sale, amortized cost	$ 1,646,411	$ 1,596,227
Equity securities available-for-sale, cost	182,002	187,573
Premiums and reinsurance balances receivable, allowances for uncollectible amounts	16,935	15,981
Reinsurance balances recoverable on unpaid losses and settlement expenses, allowances for uncollectible amounts	10,014	10,699
Property and equipment, accumulated depreciation	$ 47,676	$ 41,999
Common stock, par value (in dollars per share)	$ 1	$ 1
Common stock, shares authorized (in shares)	100,000,000	100,000,000
Common stock, shares issued (in shares)	67,078,569	66,874,911
Common stock, shares outstanding (in shares)	44,148,355	43,944,697
Treasury stock, shares (in shares)	22,930,214	22,930,214

Consolidated Statements of Earn

Consolidated Statements of Earnings and Comprehensive Earnings - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Condensed Consolidated Statements of Earnings and Comprehensive Earnings
Net premiums earned	$ 737,937	$ 728,608	$ 700,161
Net investment income	54,876	53,075	54,644
Net realized gains	6,970	34,740	39,829
Other-than-temporary-impairment (OTTI) losses on investments	(2,559)	(95)	0
Consolidated revenue	797,224	816,328	794,634
Losses and settlement expenses	401,584	349,778	299,045
Policy acquisition costs	252,515	249,612	241,078
Insurance operating expenses	56,994	53,093	51,480
Interest expense on debt	7,426	7,426	7,426
General corporate expenses	11,340	10,170	9,837
Total expenses	729,859	670,079	608,866
Equity in earnings of unconsolidated investees	17,224	10,833	10,914
Earnings (loss) before income taxes	84,589	157,082	196,682
Income tax expense:
Current	9,302	41,034	52,104
Deferred	(29,741)	1,128	7,034
Total tax expense (benefit)	(20,439)	42,162	59,138
Net earnings	105,028	114,920	137,544
Other comprehensive earnings (loss), net of tax	35,309	(1,164)	(47,609)
Comprehensive earnings	$ 140,337	$ 113,756	$ 89,935
Basic:
Net earnings per share (in dollars per share)	$ 2.39	$ 2.63	$ 3.18
Comprehensive earnings per share (in dollars per share)	3.19	2.60	2.08
Diluted:
Net earnings per share (in dollars per share)	2.36	2.59	3.12
Comprehensive earnings per share (in dollars per share)	$ 3.15	$ 2.56	$ 2.04
Weighted average number of common shares outstanding
Basic (in shares)	44,033	43,772	43,299
Diluted (in shares)	44,500	44,432	44,131

Consolidated Statements of Shar

Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands	Common stock security	Paid-in Capital	Accumulated Other Comprehensive Earnings (Loss)	Retained Earnings	Deferred Compensation	Treasury Stock at Cost	Total
Stockholders' Equity Attributable to Parent, Beginning Balance at Dec. 31, 2014	$ 66,033	$ 213,737	$ 171,383	$ 786,908	$ 13,769	$ (406,768)	$ 845,062
Balance (in shares) at Dec. 31, 2014	43,102,715
Increase (Decrease) in Shareholders' Equity
Net earnings				137,544			137,544
Other comprehensive earnings (loss), net of tax			(47,609)				(47,609)
Deferred compensation under Rabbi trust plans					(3,122)	3,122
Stock option excess tax benefit		11,413					11,413
Exercise of stock options	$ 441	(3,805)					(3,364)
Exercise of stock options (in shares)	441,413
Dividends paid ($2.58, $2.79 and $2.75 per share during 2017, 2016 and 2015, respectively)				(119,577)			(119,577)
Stockholders' Equity Attributable to Parent, Ending Balance at Dec. 31, 2015	$ 66,474	221,345	123,774	804,875	10,647	(403,646)	823,469
Balance (in shares) at Dec. 31, 2015	43,544,128
Increase (Decrease) in Shareholders' Equity
Net earnings				114,920			114,920
Other comprehensive earnings (loss), net of tax			(1,164)				(1,164)
Deferred compensation under Rabbi trust plans					849	(849)
Stock option excess tax benefit		9,576					9,576
Exercise of stock options	$ 401	(1,142)					(741)
Exercise of stock options (in shares)	400,569
Dividends paid ($2.58, $2.79 and $2.75 per share during 2017, 2016 and 2015, respectively)				(122,488)			(122,488)
Stockholders' Equity Attributable to Parent, Ending Balance at Dec. 31, 2016	$ 66,875	229,779	122,610	797,307	11,496	(404,495)	823,572
Balance (in shares) at Dec. 31, 2016	43,944,697
Increase (Decrease) in Shareholders' Equity
Net earnings				105,028			105,028
Other comprehensive earnings (loss), net of tax			35,309				35,309
Deferred compensation under Rabbi trust plans					(2,856)	2,856
Exercise of stock options	$ 204	3,298					3,502
Exercise of stock options (in shares)	203,658
Dividends paid ($2.58, $2.79 and $2.75 per share during 2017, 2016 and 2015, respectively)				(113,813)			(113,813)
Stockholders' Equity Attributable to Parent, Ending Balance at Dec. 31, 2017	$ 67,079	$ 233,077	$ 157,919	$ 788,522	$ 8,640	$ (401,639)	$ 853,598
Balance (in shares) at Dec. 31, 2017	44,148,355

Consolidated Statements of Sha6

Consolidated Statements of Shareholders' Equity (Parenthetical) - $ / shares	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Consolidated Statements of Shareholders' Equity
Cash dividends paid per common share	$ 2.58	$ 2.79	$ 2.75

Consolidated Statements of Cash

Consolidated Statements of Cash Flows - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Cash flows from operating activities:
Net earnings	$ 105,028,000	$ 114,920,000	$ 137,544,000
Adjustments to reconcile net earnings to net cash provided by operating activities
Net realized gains	(4,411,000)	(34,645,000)	(39,829,000)
Depreciation	6,944,000	6,430,000	5,406,000
Other items, net	16,368,000	17,699,000	15,006,000
Change in:
Accrued investment income	(573,000)	285,000	(249,000)
Premiums and reinsurance balances receivable (net of direct write-offs and commutations)	(7,964,000)	17,275,000	10,911,000
Reinsurance balances payable	3,696,000	(19,628,000)	(457,000)
Funds held	1,818,000	18,488,000	2,773,000
Ceded unearned premium	(5,755,000)	660,000	1,128,000
Reinsurance balances recoverable on unpaid losses	(13,767,000)	9,620,000	37,262,000
Deferred policy acquisition costs	(4,569,000)	(3,318,000)	(4,706,000)
Accrued expenses	856,000	(3,750,000)	(7,406,000)
Unpaid losses and settlement expenses	132,166,000	35,552,000	(17,255,000)
Unearned premiums	17,672,000	11,683,000	20,682,000
Income taxes
Current	(3,019,000)	12,573,000	7,069,000
Deferred	(29,741,000)	1,128,000	7,034,000
Stock option excess tax benefit		(9,576,000)	(11,413,000)
Changes in investment in unconsolidated investees:
Undistributed earnings	(17,224,000)	(10,833,000)	(10,914,000)
Dividends received	0	9,900,000	0
Net Cash Provided by (Used in) Operating Activities, Total	197,525,000	174,463,000	152,586,000
Purchase of:
Fixed income, available-for-sale	(430,727,000)	(557,067,000)	(665,422,000)
Equity securities, available-for-sale	(20,719,000)	(36,335,000)	(39,905,000)
Short-term investments, net	(4,965,000)
Property and equipment	(9,238,000)	(16,155,000)	(10,035,000)
Investment in equity method investee			(1,711,000)
Acquisition of agency		(850,000)
Other	(19,112,000)	(7,722,000)	(4,642,000)
Proceeds from sale of:
Fixed income, available-for-sale	168,760,000	329,091,000	436,680,000
Equity securities, available-for-sale	36,573,000	89,909,000	53,110,000
Short-term investments, net		2,564,000	6,637,000
Property and equipment	128,000	1,688,000	76,000
Subsidiary or agency	408,000		7,500,000
Other	2,063,000		135,000
Proceeds from call or maturity of:
Fixed income, available-for-sale	195,617,000	141,255,000	156,980,000
Net Cash Provided by (Used in) Investing Activities, Total	(81,212,000)	(53,622,000)	(60,597,000)
Cash Flows from Financing Activities
Stock option excess tax benefit		9,576,000	11,413,000
Proceeds from stock option exercises	3,502,000	(741,000)	(3,364,000)
Cash dividends paid	(113,813,000)	(122,488,000)	(119,577,000)
Net Cash Used in Financing Activities, Total	(110,311,000)	(113,653,000)	(111,528,000)
Net increase (decrease) in cash	6,002,000	7,188,000	(19,539,000)
Cash at the beginning of the period	18,269,000	11,081,000	30,620,000
Cash at the end of the period	$ 24,271,000	$ 18,269,000	$ 11,081,000

INVESTMENTS

INVESTMENTS	12 Months Ended
	Dec. 31, 2017
INVESTMENTS
INVESTMENTS	2. INVESTMENTS A summary of net investment income is as follows: NET INVESTMENT INCOME (in thousands) 2017 2016 2015 Interest on fixed income securities $ 48,343 $ 46,834 $ 48,064 Dividends on equity securities 10,506 10,929 11,407 Interest on cash, short-term investments and other invested assets 945 120 11 Gross investment income $ 59,794 $ 57,883 $ 59,482 Less investment expenses (4,918) (4,808) (4,838) Net investment income $ 54,876 $ 53,075 $ 54,644 Pretax net realized investment gains (losses) and net changes in unrealized gains (losses) on investments for the years ended December 31 are summarized as follows: REALIZED/UNREALIZED GAINS (in thousands) 2017 2016 2015 Net realized gains (losses): Fixed income: Available-for-sale $ 859 $ 4,314 $ 10,832 Available-for-sale OTTI (2,559) (95) — Equity securities 10,282 38,709 22,107 Sale of subsidiary (RLI Indemnity Company)* — — 6,698 Other (4,171) (8,283) 192 Total $ 4,411 $ 34,645 $ 39,829 Net changes in unrealized gains (losses) on investments: Fixed income: Available-for-sale $ 16,846 $ (10,972) $ (26,929) Equity securities 36,844 8,659 (44,120) Other invested assets 29 — — Investment in unconsolidated investees 604 522 (1,886) Total $ 54,323 $ (1,791) $ (72,935) Net realized gains (losses) and changes in unrealized gains (losses) on investments $ 58,734 $ 32,854 $ (33,106) *See note 13 for further discussion on the sale of RLI Indemnity Company. During 2017, we recorded $4.4 million in net realized gains, which included $3.4 million of other non-cash realized losses from goodwill and definite-lived intangible impairments. In addition, we recorded a change in net unrealized gains of $54.3 million. The majority of our net realized gains were due to sales of equity securities. The change in unrealized gains was due to strong equity market returns as well as spread compression in fixed income credit sectors. For 2017, the net realized gains (losses) and changes in unrealized gains (losses) on investments totaled $58.7 million. The following is a summary of the disposition of fixed income securities and equities for the years ended December 31, with separate presentations for sales and calls/maturities. Net SALES Proceeds Gross Realized Realized (in thousands) From Sales Gains Losses Gain (Loss) 2017 Available-for-sale $ 169,002 $ 2,406 $ (1,670) $ 736 Equities 36,573 13,178 (2,896) 10,282 2016 Available-for-sale $ 329,091 $ 7,158 $ (3,287) $ 3,871 Equities 89,909 39,668 (959) 38,709 2015 Available-for-sale $ 436,680 $ 14,691 $ (4,067) $ 10,624 Equities 53,110 25,985 (3,878) 22,107 Net CALLS/MATURITIES Gross Realized Realized (in thousands) Proceeds Gains Losses Gain (Loss) 2017 Available-for-sale $ 195,617 $ 262 $ (139) $ 123 2016 Available-for-sale $ 141,255 $ 445 $ (2) $ 443 2015 Available-for-sale $ 156,980 $ 217 $ (9) $ 208 FAIR VALUE MEASUREMENTS Assets measured at fair value on a recurring basis as of December 31, 2017, are summarized below: Significant Quoted in Active Other Significant Markets for Observable Unobservable Identical Assets Inputs Inputs (in thousands) (Level 1) (Level 2) (Level 3) Total Available-for-sale securities: U.S. government $ — $ 91,689 $ — $ 91,689 U.S. agency — 18,778 — 18,778 Non-U.S. govt. & agency — 7,588 — 7,588 Agency MBS — 328,471 — 328,471 ABS/CMBS* — 70,526 — 70,526 Corporate — 519,022 — 519,022 Municipal — 636,165 — 636,165 Equity 400,492 — — 400,492 Total available-for-sale securities $ 400,492 $ 1,672,239 $ — $ 2,072,731 *Non-agency asset-backed & commercial mortgage-backed Assets measured at fair value on a recurring basis as of December 31, 2016, are summarized below: Significant Quoted in Active Other Significant Markets for Observable Unobservable Identical Assets Inputs Inputs (in thousands) (Level 1) (Level 2) (Level 3) Total Available-for-sale securities: U.S. government $ — $ 76,563 $ — $ 76,563 U.S. agency — 5,813 — 5,813 Non-U.S. govt. & agency — 9,151 — 9,151 Agency MBS — 284,069 — 284,069 ABS/CMBS* — 93,910 — 93,910 Corporate — 508,367 — 508,367 Municipal — 627,336 — 627,336 Equity 369,219 — — 369,219 Total available-for-sale securities $ 369,219 $ 1,605,209 $ — $ 1,974,428 *Non-agency asset-backed & commercial mortgage-backed As noted in the previous tables, we did not have any assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) as of December 31, 2017 and 2016. Additionally, there were no securities transferred in or out of levels 1 or 2 during 2017 or 2016. The amortized cost and estimated fair value of fixed income securities at December 31, 2017, by contractual maturity, are shown as follows: (in thousands) Amortized Cost Fair Value Available-for-sale: Due in one year or less $ 16,023 $ 15,984 Due after one year through five years 318,411 322,988 Due after five years through 10 years 586,340 598,041 Due after 10 years 326,103 336,229 Mtge/ABS/CMBS* 399,534 398,997 Total available-for-sale $ 1,646,411 $ 1,672,239 * Mortgage-backed, asset-backed & commercial mortgage-backed Expected maturities may differ from contractual maturities due to call provisions on some existing securities. At December 31, 2017, the net unrealized appreciation of available-for-sale fixed income and equity securities totaled $244.3 million pretax. At December 31, 2016, the net unrealized appreciation of available-for-sale fixed maturities and equity securities totaled $190.6 million pretax. In addition, the following table is a schedule of amortized costs and estimated fair values of investments in fixed income and equity securities as of December 31, 2017 and 2016: 2017 Amortized Gross Unrealized (in thousands) Cost Fair Value Gains Losses Available-for-sale: U.S. government $ 92,561 $ 91,689 $ 23 $ (895) U.S. agency 18,541 18,778 347 (110) Non-U.S. govt. & agency 7,501 7,588 143 (56) Agency MBS 329,129 328,471 3,420 (4,078) ABS/CMBS* 70,405 70,526 436 (315) Corporate 508,128 519,022 12,575 (1,681) Municipal 620,146 636,165 17,272 (1,253) Total fixed income $ 1,646,411 $ 1,672,239 $ 34,216 $ (8,388) Equity securities 182,002 400,492 219,346 (856) Total available-for-sale $ 1,828,413 $ 2,072,731 $ 253,562 $ (9,244) 2016 Amortized Gross Unrealized (in thousands) Cost Fair Value Gains Losses Available-for-sale: U.S. government $ 77,054 $ 76,563 $ 88 $ (579) U.S. agency 5,473 5,813 340 — Non-U.S. govt. & agency 9,517 9,151 2 (368) Agency MBS 283,002 284,069 4,635 (3,568) ABS/CMBS* 93,791 93,910 676 (557) Corporate 503,041 508,367 10,996 (5,670) Municipal 624,349 627,336 9,575 (6,588) Total fixed income $ 1,596,227 $ 1,605,209 $ 26,312 $ (17,330) Equity securities 187,573 369,219 182,912 (1,266) Total available-for-sale $ 1,783,800 $ 1,974,428 $ 209,224 $ (18,596) * Non-agency asset-backed & commercial mortgage-backed Mortgage-Backed, Commercial Mortgage-Backed and Asset-Backed Securities Gross unrealized losses in the collateralized securities bond portfolio increased to $4.4 million in 2017 as interest rates increased during the last four months of the year. All of our collateralized securities carry the highest credit rating by one or more major rating agencies and continue to pay according to contractual terms. For all fixed income securities at an unrealized loss at December 31, 2017, we believe it is probable that we will receive all contractual payments in the form of principal and interest. In addition, we are not required to, nor do we intend to sell these investments prior to recovering the entire amortized cost basis of each security, which may be at maturity. We do not consider these investments to be other-than-temporarily impaired at December 31, 2017. Corporate Bonds Gross unrealized losses in the corporate bond portfolio decreased to $1.7 million in 2017 from $5.7 million at the end of 2016 as credit spreads remained at historically tight levels during the year. The corporate bond portfolio has an overall rating of BBB+. Municipal Bonds As of December 31, 2017, municipal bonds totaled $636.2 million with gross unrealized losses of $1.3 million. Unrealized losses decreased during the year due to strong investor demand for the sector. As of December 31, 2017, approximately 43 percent of the municipal fixed income securities in the investment portfolio were general obligations of state and local governments and the remaining 57 percent were revenue based. Eighty-eight percent of our municipal fixed income securities were rated AA or better while 99 percent were rated A or better. Equity Securities Our equity portfolio consists of common stocks and exchange traded funds (ETF). Gross unrealized losses in the equity portfolio decreased $0.4 million to $0.9 million in 2017. Given our intent to hold and expectation of recovery to cost within a reasonable period of time, we do not consider any of our equities to be other-than-temporarily impaired. Impairment Analysis Under current accounting standards, an OTTI write-down of debt securities, where fair value is below amortized cost, is triggered by circumstances where (1) an entity has the intent to sell a security, (2) it is more likely than not that the entity will be required to sell the security before recovery of its amortized cost basis or (3) the entity does not expect to recover the entire amortized cost basis of the security. If an entity intends to sell a security or if it is more likely than not the entity will be required to sell the security before recovery, an OTTI write-down is recognized in earnings equal to the difference between the security’s amortized cost and its fair value. If an entity does not intend to sell the security or it is not more likely than not that it will be required to sell the security before recovery, the OTTI write-down is separated into an amount representing the credit loss, which is recognized in earnings, and the amount related to all other factors, which is recognized in other comprehensive income. Part of our evaluation of whether particular securities are other-than-temporarily impaired involves assessing whether we have both the intent and ability to continue to hold equity securities in an unrealized loss position. For fixed income securities, we consider our intent to sell a security (which is determined on a security-by-security basis) and whether it is more likely than not we will be required to sell the security before the recovery of our amortized cost basis. Significant changes in these factors could result in a charge to net earnings for impairment losses. Impairment losses result in a reduction of the underlying investment’s cost basis. The following table is also used as part of our impairment analysis and displays the total value of securities that were in an unrealized loss position as of December 31, 2017, and December 31, 2016. The table segregates the securities based on type, noting the fair value, cost (or amortized cost) and unrealized loss on each category of investment as well as in total. The table further classifies the securities based on the length of time they have been in an unrealized loss position. December 31, 2017 December 31, 2016 12 Mos. 12 Mos. (in thousands) < 12 Mos. & Greater Total < 12 Mos. & Greater Total U.S. Government Fair value $ 58,009 $ 30,888 $ 88,897 $ 48,500 $ — $ 48,500 Cost or amortized cost 58,443 31,349 89,792 49,079 — 49,079 Unrealized Loss $ (434) $ (461) $ (895) $ (579) $ — $ (579) U.S. Agency Fair value $ 10,917 $ — $ 10,917 $ — $ — $ — Cost or amortized cost 11,027 — 11,027 — — — Unrealized Loss $ (110) $ — $ (110) $ — $ — $ — Non-U.S. Government Fair value $ — $ 1,840 $ 1,840 $ 7,647 $ — $ 7,647 Cost or amortized cost — 1,896 1,896 8,015 — 8,015 Unrealized Loss $ — $ (56) $ (56) $ (368) $ — $ (368) Agency MBS Fair value $ 122,130 $ 111,306 $ 233,436 $ 175,858 $ 5,737 $ 181,595 Cost or amortized cost 123,559 113,955 237,514 179,238 5,925 185,163 Unrealized Loss $ (1,429) $ (2,649) $ (4,078) $ (3,380) $ (188) $ (3,568) ABS/CMBS* Fair value $ 23,406 $ 21,587 $ 44,993 $ 48,907 $ 5,272 $ 54,179 Cost or amortized cost 23,491 21,817 45,308 49,372 5,364 54,736 Unrealized Loss $ (85) $ (230) $ (315) $ (465) $ (92) $ (557) Corporate Fair value $ 86,946 $ 28,600 $ 115,546 $ 144,353 $ 15,535 $ 159,888 Cost or amortized cost 87,736 29,491 117,227 146,979 18,579 165,558 Unrealized Loss $ (790) $ (891) $ (1,681) $ (2,626) $ (3,044) $ (5,670) Municipal Fair value $ 71,059 $ 60,049 $ 131,108 $ 250,930 $ — $ 250,930 Cost or amortized cost 71,534 60,827 132,361 257,518 — 257,518 Unrealized Loss $ (475) $ (778) $ (1,253) $ (6,588) $ — $ (6,588) Subtotal, fixed income Fair value $ 372,467 $ 254,270 $ 626,737 $ 676,195 $ 26,544 $ 702,739 Cost or amortized cost 375,790 259,335 635,125 690,201 29,868 720,069 Unrealized Loss $ (3,323) $ (5,065) $ (8,388) $ (14,006) $ (3,324) $ (17,330) Equity securities Fair value $ 4,373 $ 2,156 $ 6,529 $ 7,438 $ 1,973 $ 9,411 Cost or amortized cost 4,581 2,804 7,385 8,029 2,648 10,677 Unrealized Loss $ (208) $ (648) $ (856) $ (591) $ (675) $ (1,266) Total Fair value $ 376,840 $ 256,426 $ 633,266 $ 683,633 $ 28,517 $ 712,150 Cost or amortized cost 380,371 262,139 642,510 698,230 32,516 730,746 Unrealized Loss $ (3,531) $ (5,713) $ (9,244) $ (14,597) $ (3,999) $ (18,596) *Non-agency asset-backed & commercial mortgage-backed As of December 31, 2017, we held three equity securities that were in unrealized loss positions. The total unrealized loss on these securities was $0.9 million. In considering both the significance and duration of the unrealized loss position, we have no equity securities in an unrealized loss position of greater than 20 percent for more than six consecutive months. The fixed income portfolio contained 346 securities in an unrealized loss position as of December 31, 2017. Of these 346 securities, 133 have been in an unrealized loss position for 12 consecutive months or longer and represent $5.1 million in unrealized losses. All fixed income securities in the investment portfolio continue to pay the expected coupon payments under the contractual terms of the securities. Credit-related impairments on fixed income securities that we do not plan to sell, and for which we are not more likely than not to be required to sell, are recognized in net earnings. Any non-credit related impairment is recognized in comprehensive earnings. Based on our analysis, our fixed income portfolio is of a high credit quality and we believe we will recover the amortized cost basis of our fixed income securities. We continually monitor the credit quality of our fixed income investments to assess if it is probable that we will receive our contractual or estimated cash flows in the form of principal and interest. There were no OTTI losses recognized in other comprehensive earnings in the periods presented. Key factors that we consider in the evaluation of credit quality include: · Changes in technology that may impair the earnings potential of the investment, · The discontinuance of a segment of business that may affect future earnings potential, · Reduction or elimination of dividends, · Specific concerns related to the issuer’s industry or geographic area of operation, · Significant or recurring operating losses, poor cash flows and/or deteriorating liquidity ratios and · Downgrades in credit quality by a major rating agency. Based on our analysis, we concluded that the securities in an unrealized loss position were not other-than-temporarily impaired at December 31, 2017 and 2016. There were $2.6 million and $0.1 million in losses associated with OTTI of securities in 2017 and 2016, respectively. We did not recognize any impairment losses during 2015. As required by law, certain fixed maturity investments amounting to $42.2 million at December 31, 2017, were on deposit with either regulatory authorities or banks. Other Invested Assets Other invested assets shown on the balance sheet as of December 31, 2017 include investments in three low income housing tax credit (LIHTC) partnerships, carried at cost, membership stock in the Federal Home Loan Bank of Chicago (FHLBC), carried at cost, an investment in a real estate fund, carried at cost, an investment in a business development company (BDC), carried at fair value, and an investment in a global credit fund, carried at fair value. Our LIHTC interests had a balance of $15.5 million at December 31, 2017 compared to $17.5 million at December 31, 2016 and recognized a total tax benefit of $2.4 million during 2017 compared to $1.9 million during 2016 and $1.1 million during 2015. Our unfunded commitment for our LIHTC investments totaled $3.1 million at December 31, 2017 and will be paid out in installments through 2025. Our investment in FHLBC stock totaled $1.0 million at the end of 2017, compared to $1.6 million at the end of 2016. As of December 31, 2017, $18.9 million of investments were pledged as collateral with the FHLBC to ensure timely access to the secured lending facility that ownership of the FHLBC stock provides. During the fourth quarter of 2017, we borrowed and repaid $5.5 million from the FHLBC. The borrowing occurred due to a timing difference between dividends paid and received at one of our subsidiaries. As of December 31, 2017, there were no outstanding borrowings with the FHLBC. Our investment in the real estate fund was carried at $2.5 million, which approximated fair value at December 31, 2017, compared to a carrying value of $5.0 million, which approximated fair value at December 31, 2016. During 2017, we made an investment in a BDC which had a fair value of $7.3 million at December 31, 2017. The investment in the BDC is restricted from being transferred until after a qualified IPO unless prior consent is provided by the BDC. Our unfunded commitments related to this investment totaled $17.7 million at December 31, 2017. Additionally in 2017, we made an investment in a global credit fund that specializes in consumer loans. This investment had a fair value of $7.5 million and unfunded commitments of $7.2 million as of December 31, 2017.

POLICY ACQUISITION COSTS

POLICY ACQUISITION COSTS	12 Months Ended
	Dec. 31, 2017
POLICY ACQUISITION COSTS
POLICY ACQUISITION COSTS	3. POLICY ACQUISITION COSTS Policy acquisition costs deferred and amortized to income for the years ended December 31 are summarized as follows: (in thousands) 2017 2016 2015 Deferred policy acquisition costs (DAC), beginning of year $ 73,147 $ 69,829 $ 65,123 Deferred: Direct commissions $ 157,723 $ 150,390 $ 146,507 Premium taxes 11,651 11,759 11,087 Ceding commissions (18,096) (17,488) (17,403) Net deferred $ 151,278 $ 144,661 $ 140,191 Amortized 146,709 141,343 135,485 DAC, end of year $ 77,716 $ 73,147 $ 69,829 Policy acquisition costs: Amortized to expense - DAC $ 146,709 $ 141,343 $ 135,485 Period costs: Ceding commission - contingent (3,575) (1,524) (1,834) Other underwriting expenses 109,381 109,793 107,427 Total policy acquisition costs $ 252,515 $ 249,612 $ 241,078

DEBT

DEBT	12 Months Ended
	Dec. 31, 2017
DEBT
DEBT	4. DEBT As of December 31, 2017, outstanding debt balances totaled $148.9 million, net of unamortized discount and debt issuance costs, all of which were our long-term senior notes. On October 2, 2013, we completed a public debt offering, issuing $150.0 million in senior notes maturing September 15, 2023, and paying interest semi-annually at the rate of 4.875 percent. The notes were issued at a discount resulting in proceeds, net of discount and commission, of $148.6 million. The amount of the discount is being charged to income over the life of the debt on an effective-yield basis. On December 12, 2013, a portion of the proceeds were used to redeem the $100.0 million in senior notes that were to mature on January 15, 2014, and the remaining proceeds were made available for general corporate purposes. The estimated fair value for the senior note was $160.3 million as of December 31, 2017. The fair value of our long-term debt is based on the limited observable prices that reflect thinly traded securities and is therefore classified as a level 2 liability within the fair value hierarchy. We incurred $7.4 million of interest expense on our senior notes in each of the last three years. The average rate on debt was 4.91 percent in 2017, 2016 and 2015. We maintain a revolving line of credit with JP Morgan Chase Bank N.A., which permits us to borrow up to an aggregate principal amount of $40.0 million. This facility was entered into during the second quarter of 2014 and replaced the previous $25.0 million facility which expired on May 31, 2014. Under certain conditions, the line may be increased up to an aggregate principal amount of $65.0 million. This facility has a four-year term that expires on May 28, 2018. As of and during the years ended December 31, 2017, 2016 and 2015, no amounts were outstanding on these facilities.

REINSURANCE

REINSURANCE	12 Months Ended
	Dec. 31, 2017
REINSURANCE
REINSURANCE	5. REINSURANCE In the ordinary course of business, our insurance subsidiaries assume and cede premiums and selected insured risks with other insurance companies, known as reinsurance. A large portion of the reinsurance is put into effect under contracts known as treaties and, in some instances, by negotiation on each individual risk (known as facultative reinsurance). In addition, there are several types of treaties including quota share, excess of loss and catastrophe reinsurance contracts that protect against losses over stipulated amounts arising from any one occurrence or event. The arrangements allow us to pursue greater diversification of business and serve to limit the maximum net loss to a single event, such as a catastrophe. Through the quantification of exposed policy limits in each region and the extensive use of computer-assisted modeling techniques, we monitor the concentration of risks exposed to catastrophic events. Through the purchase of reinsurance, we also generally limit our net loss on any individual risk to a maximum of $3.0 million, although retentions can vary. Premiums written and earned along with losses and settlement expenses incurred for the years ended December 31 are summarized as follows: (in thousands) 2017 2016 2015 WRITTEN Direct $ 848,153 $ 844,430 $ 819,130 Reinsurance assumed 37,159 30,434 34,456 Reinsurance ceded (135,458) (133,912) (131,615) Net $ 749,854 $ 740,952 $ 721,971 EARNED Direct $ 835,118 $ 835,294 $ 797,180 Reinsurance assumed 32,521 27,886 35,724 Reinsurance ceded (129,702) (134,572) (132,743) Net $ 737,937 $ 728,608 $ 700,161 LOSSES AND SETTLEMENT EXPENSES INCURRED Direct $ 486,986 $ 405,873 $ 307,445 Reinsurance assumed 16,072 13,196 23,184 Reinsurance ceded (101,474) (69,291) (31,584) Net $ 401,584 $ 349,778 $ 299,045 At December 31, 2017, we had prepaid reinsurance premiums and recoverables on paid and unpaid losses and settlement expenses totaling $349.7 million. More than 94 percent of our reinsurance recoverables are due from companies with financial strength ratings of “A” or better by A.M. Best and S&P rating services. The following table displays net reinsurance balances recoverable, after consideration of collateral, from our top 10 reinsurers as of December 31, 2017. These reinsurers all have financial strength ratings of “A” or better by A.M. Best and Standard and Poor’s ratings services. Also shown are the amounts of written premium ceded to these reinsurers during the calendar year 2017. Net Reinsurer Ceded A.M. Best S & P Exposure as of Percent of Premiums Percent of (dollars in thousands) Rating Rating 12/31/2017 Total Written Total Munich Re / HSB A+, Superior AA-, Very Strong $ 59,277 17.0 % $ 24,747 18.3 % Swiss Re / Westport Ins. Corp. A+, Superior AA-, Very Strong 47,680 13.6 % 10,671 7.9 % Endurance Re A+, Superior A, Strong 29,771 8.5 % 5,695 4.2 % Aspen UK Ltd. A, Excellent A, Strong 26,204 7.5 % 6,895 5.1 % Berkley Insurance Co. A+, Superior A+, Strong 17,404 5.0 % 5,589 4.1 % Transatlantic Re A, Excellent A+, Strong 15,726 4.5 % 6,212 4.6 % General Re A++, Superior AA+, Very Strong 14,997 4.3 % 3,694 2.7 % Scor Reinsurance Co. A+, Superior AA-, Very Strong 14,226 4.1 % 5,433 4.0 % Tokio Millennium Re A++, Superior A+, Strong 14,133 4.0 % 7,775 5.7 % Hannover Ruckversicherung A+, Superior AA-, Very Strong 13,649 3.9 % 7,302 5.4 % All other reinsurers* 96,643 27.6 % 51,445 38.0 % Total ceded exposure $ 349,710 100.0 % $ 135,458 100.0 % * All other reinsurance balances recoverable, when considered by individual reinsurer, are less than 2 percent of shareholders’ equity. Ceded unearned premiums and reinsurance balances recoverable on paid losses and settlement expenses are reported separately as an asset, rather than being netted with the related liability, since reinsurance does not relieve us of our liability to policyholders. Such balances are subject to the credit risk associated with the individual reinsurer. We continually monitor the financial condition of our reinsurers and actively follow up on any past due or disputed amounts. As part of our monitoring efforts, we review their annual financial statements and SEC filings for those reinsurers that are publicly traded. We also review insurance industry developments that may impact the financial condition of our reinsurers. We analyze the credit risk associated with our reinsurance balances recoverable by monitoring the A.M. Best and S&P ratings of our reinsurers. In addition, we subject our reinsurance recoverables to detailed recoverability tests, including a segment based analysis using the average default rating percentage by S&P rating, which assists us in assessing the sufficiency of the existing allowance. Additionally, we perform an in-depth reinsurer financial condition analysis prior to the renewal of our reinsurance placements. Our policy is to charge to earnings, in the form of an allowance, an estimate of unrecoverable amounts from reinsurers. This allowance is reviewed on an ongoing basis to ensure that the amount makes a reasonable provision for reinsurance balances that we may be unable to recover. Once regulatory action (such as receivership, finding of insolvency, order of conservation or order of liquidation) is taken against a reinsurer, the paid and unpaid recoverable for the reinsurer are specifically identified and written off through the use of our allowance for estimated unrecoverable amounts from reinsurers. When we write-off such a balance, it is done in full. We then re-evaluate the remaining allowance and determine whether the balance is sufficient as detailed above and if needed, an additional allowance is recognized and income charged. The amounts of allowances for uncollectible amounts on paid and unpaid recoverables were $15.9 million and $10.0 million, respectively, at December 31, 2017. At December 31, 2016, the amounts were $15.2 million and $10.7 million, respectively. We have no receivables with a due date that extends beyond one year that are not included in our allowance for uncollectible amounts.

HISTORICAL LOSS AND LAE DEVELOP

HISTORICAL LOSS AND LAE DEVELOPMENT	12 Months Ended
	Dec. 31, 2017
HISTORICAL LOSS AND LAE DEVELOPMENT
HISTORICAL LOSS AND LAE DEVELOPMENT	6. HISTORICAL LOSS AND LAE DEVELOPMENT The following table is a reconciliation of our unpaid losses and settlement expenses (LAE) for the years 2017, 2016 and 2015: (in thousands) 2017 2016 2015 Unpaid losses and LAE at beginning of year: Gross $ 1,139,337 $ 1,103,785 $ 1,121,040 Ceded (288,224) (297,844) (335,106) Net $ 851,113 $ 805,941 $ 785,934 Increase (decrease) in incurred losses and LAE: Current accident year $ 440,452 $ 391,772 $ 364,472 Prior accident years (38,868) (41,994) (65,427) Total incurred $ 401,584 $ 349,778 $ 299,045 Loss and LAE payments for claims incurred: Current accident year $ (73,392) $ (70,540) $ (71,853) Prior accident year (209,793) (234,066) (207,185) Total paid $ (283,185) $ (304,606) $ (279,038) Net unpaid losses and LAE at end of year $ 969,512 $ 851,113 $ 805,941 Unpaid losses and LAE at end of year: Gross $ 1,271,503 $ 1,139,337 $ 1,103,785 Ceded (301,991) (288,224) (297,844) Net $ 969,512 $ 851,113 $ 805,941 The differences from our initial reserve estimates emerged as changes in our ultimate loss expectations as we performed our reserve analysis process. The recognition of the changes in initial reserve estimates occurred over time as claims were reported, initial case reserves were established, initial reserves were reviewed in light of additional information and ultimate payments were made on the collective set of claims incurred as of that evaluation date. The new information on the ultimate settlement value of claims is continually updated until all claims in a defined set are settled. As a small specialty insurer with a diversified product portfolio, our experience will ordinarily exhibit fluctuations from period to period. While we attempt to identify and react to systematic changes in the loss environment, we also must consider the volume of experience directly available to us and interpret any particular period’s indications with a realistic technical understanding of the reliability of those observations. The following is information about incurred and paid loss development as of December 31, 2017, net of reinsurance, as well as cumulative claim frequency, the total of IBNR liabilities included within the net incurred loss amounts and average historical claims duration as of December 31, 2017. The loss information has been disaggregated so that only losses that are expected to develop in a similar manner are grouped together. This has resulted in the presentation of loss information for our property and surety segments at the segment level, while information for our casualty segment has been separated in four groupings: primary occurrence, excess occurrence, claims made and transportation. Primary occurrence includes select lines within the professional services product along with general liability, small commercial and other casualty products. Excess occurrence encompasses commercial and personal umbrella, while claims made includes select lines within the professional services product and medical professional liability and executive products. Reported claim counts represent claim events on a specified policy rather than individual claimants and includes claims that did not or are not expected to result in an incurred loss. The information about incurred and paid claims development for the years ended December 31, 2008 to 2016 is presented as unaudited required supplementary information. Casualty - Primary Occurrence (in thousands, except number of claims) Incurred Losses and Loss Adjustment Expenses, Net of Reinsurance As of December 31, 2017 For the Years Ended December 31, Cumulative Number of Reported AY 2008* 2009* 2010* 2011* 2012* 2013* 2014* 2015* 2016* 2017 Total IBNR Claims 2008 $ 96,829 $ 100,454 $ 91,734 $ 83,367 $ 78,218 $ 74,174 $ 73,859 $ 73,696 $ 74,837 $ 74,672 $ 1,505 5,423 2009 85,476 119,957 99,765 91,441 86,888 82,651 81,138 80,518 80,350 2,068 5,705 2010 87,875 96,582 93,589 88,820 85,034 80,289 78,685 78,991 2,216 6,107 2011 91,139 98,428 94,145 89,622 86,342 83,181 82,193 3,413 5,839 2012 91,807 78,406 65,893 61,072 59,028 59,488 4,100 5,148 2013 80,823 67,297 62,882 60,329 60,162 9,631 4,267 2014 88,092 79,497 71,592 67,237 17,335 4,190 2015 94,835 84,975 83,579 33,109 4,201 2016 101,950 96,753 54,413 3,920 2017 119,741 93,852 3,496 Total $ Cumulative Paid Loss and Loss Adjustment Expenses, Net of Reinsurance For the Years Ended December 31, AY 2008* 2009* 2010* 2011* 2012* 2013* 2014* 2015* 2016* 2017 2008 $ 3,022 $ 9,399 $ 20,539 $ 33,605 $ 48,108 $ 56,288 $ 62,511 $ 64,814 $ 67,572 $ 69,605 2009 1,972 9,233 24,115 43,702 58,460 65,913 70,220 74,920 75,948 2010 2,587 13,025 29,312 44,051 55,992 61,929 66,399 69,514 2011 5,924 17,124 32,978 48,822 60,769 67,358 71,413 2012 5,897 14,539 23,889 33,822 43,276 47,970 2013 6,334 13,021 22,366 34,786 40,609 2014 11,436 18,771 29,545 40,270 2015 10,157 19,902 33,020 2016 10,142 24,186 2017 13,154 * Presented as unaudited required supplementary information. Total $ All outstanding liabilities before 2008, net of reinsurance 7,705 Liabilities for losses and loss adjustment expenses, net of reinsurance $ Average Annual Percentage Payout of Incurred Losses by Age, Net of Reinsurance Years 1 2 3 4 5 6 7 8 9 10 % % % % % % % % % % Casualty - Excess Occurrence (in thousands, except number of claims) Incurred Losses and Loss Adjustment Expenses, Net of Reinsurance As of December 31, 2017 For the Years Ended December 31, Cumulative Number of Reported AY 2008* 2009* 2010* 2011* 2012* 2013* 2014* 2015* 2016* 2017 Total IBNR Claims 2008 $ 35,209 $ 22,666 $ 17,347 $ 14,472 $ 13,869 $ 13,862 $ 13,816 $ 13,695 $ 13,487 $ 13,671 $ 308 638 2009 30,267 19,719 14,981 12,893 12,966 12,459 12,601 11,982 12,055 268 566 2010 29,314 24,244 22,111 18,932 20,044 22,044 21,018 20,530 381 499 2011 26,272 17,148 17,443 18,641 19,160 20,959 21,295 964 578 2012 29,042 21,558 21,021 21,885 21,231 22,433 1,417 837 2013 39,984 34,824 26,857 25,425 25,599 4,654 925 2014 50,889 39,095 35,119 32,274 9,801 844 2015 53,672 50,857 47,392 22,168 608 2016 56,341 49,385 39,381 486 2017 62,863 58,246 287 Total $ Cumulative Paid Loss and Loss Adjustment Expenses, Net of Reinsurance For the Years Ended December 31, AY 2008* 2009* 2010* 2011* 2012* 2013* 2014* 2015* 2016* 2017 2008 $ 115 $ 3,224 $ 8,212 $ 11,231 $ 11,755 $ 11,938 $ 12,163 $ 13,166 $ 13,183 $ 13,281 2009 956 3,947 6,585 9,460 11,001 10,808 11,776 11,780 11,786 2010 7 6,002 10,705 13,282 15,512 17,302 19,175 19,256 2011 2,169 5,145 6,981 8,793 10,772 16,494 17,769 2012 1,315 3,573 8,843 15,380 16,879 17,747 2013 1,060 5,701 10,967 14,545 16,967 2014 1,899 4,006 11,002 18,852 2015 2,048 10,127 19,571 2016 1,068 3,396 2017 17 * Presented as unaudited required supplementary information. Total $ All outstanding liabilities before 2008, net of reinsurance 20,108 Liabilities for losses and loss adjustment expenses, net of reinsurance $ Average Annual Percentage Payout of Incurred Losses by Age, Net of Reinsurance Years 1 2 3 4 5 6 7 8 9 10 % % % % % % % % % % Casualty - Claims Made (in thousands, except number of claims) Incurred Losses and Loss Adjustment Expenses, Net of Reinsurance As of December 31, 2017 For the Years Ended December 31, Cumulative Number of Reported AY 2008* 2009* 2010* 2011* 2012* 2013* 2014* 2015* 2016* 2017 Total IBNR Claims 2008 $ 11,083 $ 12,754 $ 3,915 $ 3,043 $ 7,811 $ 6,878 $ 5,568 $ 4,848 $ 4,584 $ 4,528 $ 103 300 2009 12,918 13,703 9,687 13,562 11,710 13,117 12,810 12,053 11,827 302 383 2010 13,690 15,556 9,776 10,429 11,689 10,581 9,175 9,024 490 502 2011 17,416 17,454 12,260 10,619 8,510 7,720 7,852 693 682 2012 27,576 26,144 20,727 19,590 18,022 17,612 2,156 803 2013 40,095 41,488 44,054 40,288 38,473 5,773 1,042 2014 53,929 55,386 58,152 55,350 13,240 1,302 2015 55,006 47,831 42,206 19,844 1,332 2016 59,992 67,760 30,727 1,481 2017 60,572 46,522 1,534 Total $ Cumulative Paid Loss and Loss Adjustment Expenses, Net of Reinsurance For the Years Ended December 31, AY 2008* 2009* 2010* 2011* 2012* 2013* 2014* 2015* 2016* 2017 2008 $ 9 $ 227 $ 703 $ 705 $ 707 $ 712 $ 4,380 $ 4,385 $ 4,424 $ 4,424 2009 113 442 773 3,413 5,176 10,678 11,217 11,398 11,475 2010 259 1,548 2,308 3,626 5,733 5,749 6,956 8,485 2011 330 1,949 4,508 5,947 5,637 6,209 6,835 2012 433 4,086 6,898 9,218 10,968 14,378 2013 792 7,073 18,425 26,121 29,678 2014 1,705 9,775 27,923 35,755 2015 2,215 10,738 16,774 2016 2,060 14,558 2017 2,455 * Presented as unaudited required supplementary information. Total $ All outstanding liabilities before 2008, net of reinsurance 854 Liabilities for losses and loss adjustment expenses, net of reinsurance $ Average Annual Percentage Payout of Incurred Losses by Age, Net of Reinsurance Years 1 2 3 4 5 6 7 8 9 10 % % % % % % % % % % Casualty - Transportation (in thousands, except number of claims) Incurred Losses and Loss Adjustment Expenses, Net of Reinsurance As of December 31, 2017 For the Years Ended December 31, Cumulative Number of Reported AY 2008* 2009* 2010* 2011* 2012* 2013* 2014* 2015* 2016* 2017 Total IBNR Claims 2008 $ 32,071 $ 27,752 $ 25,520 $ 23,497 $ 24,255 $ 24,110 $ 23,764 $ 23,673 $ 23,690 $ 23,672 $ 23 2,834 2009 26,349 23,366 23,174 22,929 22,613 22,340 21,958 21,969 21,926 36 2,644 2010 27,239 23,390 24,912 25,593 23,981 23,625 23,701 23,786 52 2,842 2011 22,957 23,479 25,747 25,272 25,431 25,376 25,167 71 2,469 2012 21,452 22,203 22,924 23,511 23,689 23,620 129 2,282 2013 32,742 32,853 32,989 37,673 38,811 702 2,849 2014 38,361 33,015 36,452 38,590 1,698 3,093 2015 38,561 46,258 47,021 6,051 3,167 2016 50,430 53,519 11,987 3,879 2017 55,640 17,396 3,361 Total $ 351,752 Cumulative Paid Loss and Loss Adjustment Expenses, Net of Reinsurance For the Years Ended December 31, AY 2008* 2009* 2010* 2011* 2012* 2013* 2014* 2015* 2016* 2017 2008 $ 6,153 $ 10,821 $ 14,489 $ 18,359 $ 21,110 $ 23,293 $ 23,387 $ 23,614 $ 23,616 $ 23,628 2009 5,035 8,698 14,613 19,933 21,100 21,325 21,640 21,650 21,650 2010 6,296 10,116 15,475 20,045 21,792 23,063 23,488 23,533 2011 5,295 9,485 14,477 19,443 22,375 23,537 23,941 2012 4,466 8,533 12,394 17,318 20,931 22,566 2013 5,306 11,978 19,761 28,220 33,480 2014 7,125 13,933 19,676 27,457 2015 6,984 20,709 29,554 2016 8,923 18,354 2017 7,979 * Presented as unaudited required supplementary information. Total $ 232,142 All outstanding liabilities before 2008, net of reinsurance 94 Liabilities for losses and loss adjustment expenses, net of reinsurance $ 119,704 Average Annual Percentage Payout of Incurred Losses by Age, Net of Reinsurance Years 1 2 3 4 5 6 7 8 9 10 % % % % % % % % % % Property (in thousands, except number of claims) Incurred Losses and Loss Adjustment Expenses, Net of Reinsurance As of December 31, 2017 For the Years Ended December 31, Cumulative Number of Reported AY 2008* 2009* 2010* 2011* 2012* 2013* 2014* 2015* 2016* 2017 Total IBNR Claims 2008 $ 75,951 $ 79,774 $ 78,378 $ 78,946 $ 75,974 $ 76,089 $ 75,281 $ 75,313 $ 75,288 $ 75,217 $ 20 2,718 2009 59,975 55,821 52,286 49,534 48,969 48,857 48,707 49,267 49,323 58 2,631 2010 63,194 59,145 55,427 53,937 54,153 52,927 52,964 52,952 85 2,850 2011 70,246 66,924 64,976 63,724 62,770 62,570 62,456 300 3,027 2012 85,485 80,155 79,181 77,569 79,175 78,125 335 2,639 2013 63,864 62,090 62,173 62,114 61,914 698 2,995 2014 56,587 49,441 48,801 48,761 534 4,558 2015 59,863 56,103 53,958 1,727 4,070 2016 62,900 55,594 3,759 3,352 2017 90,803 24,892 2,609 Total $ 629,103 Cumulative Paid Loss and Loss Adjustment Expenses, Net of Reinsurance For the Years Ended December 31, AY 2008* 2009* 2010* 2011* 2012* 2013* 2014* 2015* 2016* 2017 2008 $ 31,573 $ 59,695 $ 66,028 $ 69,811 $ 71,938 $ 73,619 $ 74,692 $ 74,766 $ 74,827 $ 74,896 2009 25,464 40,775 43,758 46,004 48,031 48,297 48,329 49,051 49,173 2010 25,274 43,091 47,743 50,055 52,729 52,426 52,719 52,851 2011 27,676 48,756 55,778 59,099 60,272 61,428 61,834 2012 39,074 66,509 72,057 73,705 75,640 76,152 2013 32,208 50,840 57,407 59,259 60,520 2014 30,550 43,380 46,148 46,528 2015 32,184 49,348 50,197 2016 33,134 46,921 2017 41,314 * Presented as unaudited required supplementary information. Total $ 560,386 All outstanding liabilities before 2008, net of reinsurance 150 Liabilities for losses and loss adjustment expenses, net of reinsurance $ 68,867 Average Annual Percentage Payout of Incurred Losses by Age, Net of Reinsurance Years 1 2 3 4 5 6 7 8 9 10 % % % % % % % % % % Surety (in thousands, except number of claims) Incurred Losses and Loss Adjustment Expenses, Net of Reinsurance As of December 31, 2017 For the Years Ended December 31, Cumulative Number of Reported AY 2008* 2009* 2010* 2011* 2012* 2013* 2014* 2015* 2016* 2017 Total IBNR Claims 2008 $ 8,055 $ 4,045 $ 3,469 $ 3,267 $ 2,832 $ 2,850 $ 2,877 $ 2,856 $ 2,939 $ 2,818 $ 3 2,084 2009 15,474 4,896 4,708 4,246 4,146 4,551 4,288 4,923 5,990 7 1,660 2010 13,961 8,205 6,630 7,076 6,810 7,136 7,645 6,850 32 1,533 2011 13,842 17,832 17,792 17,321 16,766 16,695 16,480 31 1,669 2012 17,114 11,452 8,667 8,180 7,867 7,471 104 1,459 2013 16,080 7,516 6,170 5,399 5,271 108 1,398 2014 16,450 8,106 5,225 4,427 349 1,318 2015 16,958 12,957 11,113 1,724 1,149 2016 18,928 11,062 3,018 1,167 2017 16,127 14,938 793 Total $ Cumulative Paid Loss and Loss Adjustment Expenses, Net of Reinsurance For the Years Ended December 31, AY 2008* 2009* 2010* 2011* 2012* 2013* 2014* 2015* 2016* 2017 2008 $ 643 $ 2,110 $ 2,722 $ 2,665 $ 2,731 $ 2,745 $ 2,816 $ 2,803 $ 2,919 $ 2,931 2009 892 1,914 2,382 2,493 3,490 4,336 3,919 3,908 5,978 2010 1,724 3,205 5,702 7,092 7,151 7,285 7,822 7,269 2011 8,160 16,932 17,151 17,403 17,212 17,086 17,086 2012 1,883 6,680 6,726 7,416 7,536 7,406 2013 1,116 2,856 4,701 4,911 5,098 2014 722 4,283 4,166 4,059 2015 3,192 6,719 7,695 2016 3,087 5,817 2017 979 * Presented as unaudited required supplementary information. Total $ All outstanding liabilities before 2008, net of reinsurance 84 Liabilities for losses and loss adjustment expenses, net of reinsurance $ Average Annual Percentage Payout of Incurred Losses by Age, Net of Reinsurance Years 1 2 3 4 5 6 7 8 9 10 % % % % % % % -2.9 % % % The following is a reconciliation of the net incurred and paid loss development tables to the liability for unpaid losses and settlement expenses in the consolidated balance sheet: Reconciliation of the Disclosure of Incurred and Paid Loss Development to the Liability for Unpaid Losses and Settlement Expenses (in thousands) December 31, 2017 December 31, 2016 Net outstanding liabilities: Casualty - Primary Occurrence $ 325,182 $ 293,256 Casualty - Excess Occurrence 188,963 163,801 Casualty - Claims Made 171,241 152,031 Casualty - Transportation 119,704 98,604 Property 68,867 47,769 Surety 23,375 24,388 Unallocated loss adjustment expenses 48,844 46,286 Allowance for uncollectible reinsurance balances recoverable on unpaid losses and settlement expenses 10,014 10,699 Other 13,322 14,279 Liabilities for unpaid loss and settlement expenses, net of reinsurance $ 969,512 $ 851,113 Reinsurance recoverable on unpaid claims: Casualty - Primary Occurrence $ 36,158 $ 43,662 Casualty - Excess Occurrence 74,400 69,858 Casualty - Claims Made 117,436 113,891 Casualty - Transportation 46,590 41,173 Property 28,613 17,548 Surety 7,079 10,606 Allowance for uncollectible reinsurance balances recoverable on unpaid losses and settlement expenses Other 1,729 2,185 Total reinsurance balances recoverable on unpaid losses and settlement expenses $ 301,991 $ 288,224 Total gross liability for unpaid loss and settlement expenses $ 1,271,503 $ 1,139,337 DETERMINATION OF IBNR Initial carried IBNR reserves are determined through a reserve estimation process. For most casualty and surety products, this process involves the use of an initial loss and allocated loss adjustment expense (ALAE) ratio that is applied to the earned premium for a given period. Payments and case reserves are subtracted from this initial estimate of ultimate loss and ALAE to determine a carried IBNR reserve. For most property products, the IBNR reserves are determined by IBNR percentages applied to premium earned. The percentages are determined based on historical reporting patterns and are updated periodically. No deductions for paid or case reserves are made. Shortly after natural or man-made catastrophes, we review insured locations exposed to the event and model losses based on our own exposures and industry loss estimates of the event. We also consider our knowledge of frequency and severity from early claim reports to determine an appropriate reserve for the catastrophe. Adjustments to the initial loss ratio by product and segment are made where necessary and reflect updated assumptions regarding loss experience, loss trends, price changes and prevailing risk factors. Actuaries perform a ground-up reserve study of the expected value of the unpaid loss and LAE derived using multiple standard actuarial methodologies on a quarterly basis. Each method produces an estimate of ultimate loss by accident year. We review all of these various estimates and assign weights to each based on the characteristics of the product being reviewed. These estimates are then compared to the carried loss reserves to determine the appropriateness of the current reserve balance. In addition, an emergence analysis is completed quarterly to determine if further adjustments are necessary. Upon completion of our loss and LAE estimation analysis, a review of the resulting variance between the indicated reserves and the carried reserves takes place. Our actuaries make a recommendation to management in regards to booked reserves that reflect their analytical assessment and view of estimation risk. After discussion of these analyses and all relevant risk factors, the Loss Reserve Committee, a panel of management including the lead reserving actuary, chief executive officer, chief operating officer, chief financial officer and other executives, confirms the appropriateness of the reserve balances. DEVELOPMENT OF IBNR RESERVES The following table summarizes our prior accident years’ loss reserve development by segment for 2017, 2016 and 2015: (FAVORABLE)/UNFAVORABLE RESERVE DEVELOPMENT BY SEGMENT (in thousands) 2017 2016 2015 Casualty $ (17,462) $ (32,401) $ (45,654) Property (12,134) (4,793) (11,848) Surety (9,272) (4,800) (7,925) Total $ (38,868) $ (41,994) $ (65,427) A discussion of significant components of reserve development for the three most recent calendar years follows: 2017. We experienced favorable emergence relative to prior years’ reserve estimates in all of our segments during 2017. The casualty segment contributed $17.5 million in favorable development, inclusive of unallocated loss and adjustment expenses (ULAE). Accident years 2014, 2015 and 2016 contributed significantly to the favorable development. This was predominantly caused by favorable frequency and severity trends that continued to be better than our long-term expectations. In addition, we believe this to be the result of our underwriters’ risk selection, which has mostly offset price declines and loss cost inflation. Nearly all of our casualty products contributed to the favorable development. Within the primary occurrence grouping, the general liability product contributed $4.6 million to our favorable development with all coverages contributing to the favorable development in 2017. Small commercial products were the second largest contributor with $3.2 million in favorable development. Within the excess occurrence grouping, personal and commercial umbrella were favorable by $1.1 million and $9.9 million, respectively. Within the claims made grouping, our executive products had favorable contributions of $4.4 million, while medical professional liability was adverse $3.7 million. Transportation was adverse $7.4 million for the year, but posted favorable experience during the last three quarters of the year. The marine product was the primary driver of the favorable development in the property segment. Marine contributed $6.8 million of the $12.1 million total favorable property development, inclusive of ULAE. Accident years 2015 and 2016 contributed to the marine products’ favorable development. Commercial property was favorable $3.2 million. The surety segment experienced favorable development of $9.3 million, inclusive of ULAE. The majority of the favorable development was from accident year 2016. Contract and commercial surety products were the main contributors with favorable development of $4.4 million and $3.5 million, respectively. Energy surety had favorable development of $1.5 million and miscellaneous surety had unfavorable development of $0.1 million. 2016. We experienced favorable emergence relative to prior years’ reserve estimates in all of our segments during 2016. The casualty segment contributed $32.4 million in favorable development, inclusive of ULAE, which is excluded from the incurred loss and loss adjustment expense tables above. Accident year 2015 contributed significantly to the favorable development, with accident years 2010 to 2014 also continuing to develop favorably. The favorable development in 2016 was smaller than 2015 but continued to reflect favorable frequency and severity trends. In addition, the risk selection by our underwriters continued to provide better results than estimated in our reserving process. Within the primary occurrence grouping, the general liability product contributed $17.6 million to our favorable development. Small commercial products were favorable by $6.2 million. Within the excess occurrence grouping, commercial umbrella was favorable by $13.8 million which was offset by adverse development in our personal umbrella product of $4.9 million. Within the claims made grouping, executive products contributed $14.7 million in favorable development and miscellaneous professional liability had $0.8 million of favorable development. Transportation experienced unfavorable development of $15.4 million as adverse commercial loss trends resulted in an increase in case reserves for accident years 2013 through 2015. Marine contributed $2.1 million of the $4.8 million total favorable property development, inclusive of ULAE. Accident years 2013 through 2015 contributed to the marine products’ favorable development. Assumed property contributed $2.5 million of favorable development offsetting the unfavorable development of $0.2 million in other direct property products. The surety segment experienced favorable development of $4.8 million, inclusive of ULAE. The majority of the favorable development was from accident year 2015, which offset the unfavorable development from accident years 2008 through 2011 and 2014. Commercial and energy surety products were the main contributors with favorable development of $1.7 million and $1.9 million, respectively. Miscellaneous surety had favorable development of $1.1 million and contract surety had favorable development of $0.1 million. 2015. We experienced favorable emergence relative to prior years’ reserve estimates in all of our segments during 2015. Development from the casualty segment totaled $45.7 million, inclusive of ULAE. The largest amounts of favorable development came from accident years 2010 through 2014. We continued to experience emergence that was generally better than previously estimated, but to a lesser degree in 2015 than in the previous year. Frequency and severity trends have been favorable relative to initial estimates and we believe this is largely due to risk selection by our underwriters, which has been effective in offsetting loss cost trends and a competitive pricing environment. Within the primary occurrence grouping, our general liability and small commercial products experienced favorable development of $15.4 million and $6.6 million, respectively. Although the habitational classes within general liability produced adverse development, it was more than offset by favorable development from the construction classes. However, the professional services product, experienced adverse development totaling $3.2 million in 2015. Within the excess occurrence grouping, our commercial umbrella product experienced $10.7 million of favorable development while the casualty runoff business experienced $5.4 million of adverse development, primarily on the 1983 accident year. The claims made and transportation groupings had favorable contributions of $3.9 million and $5.4 million, respectively. Our marine product was the predominant driver of the favorable development in the property segment, accounting for $9.2 million of the $11.8 million total favorable development for the segment, inclusive of ULAE. The accident years making the largest contributions were 2010 through 2014. The inland marine and cargo coverages were responsible for the majority of the favorable loss experience. Our assumed property products contributed $4.9 million of favorable development with the majority of that coming from loss reductions on previous hurricanes and storms. Development on direct property products business was also favorable overall. Our recreational vehicle product experienced $1.3 million of adverse development, mostly due to auto physical damage coverages. The surety segment experienced $7.9 million of favorable development, inclusive of ULAE. The majority of the favorable development came from the 2014 accident year, which served to offset the unfavorable development from accident years 2010 and 2013. Commercial, contract and energy surety contributed favorable development of $4.0 million, $2.2 million and $2.0 million, respectively. Miscellaneous surety experienced adverse development totaling $0.3 million. ENVIRONMENTAL, ASBESTOS AND MASS TORT EXPOSURES We are subject to environmental site cleanup, asbestos removal and mass tort claims and exposures through our commercial umbrella, general liability and discontinued assumed casualty reinsurance lines of business. The majority of the exposure is in the excess layers of our commercial umbrella and assumed reinsurance books of business. The following table represents paid and unpaid environmental, asbestos and mass tort claims data (including incurred but not reported losses) as of December 31, 2017, 2016 and 2015: (in thousands) 2017 2016 2015 Loss and LAE Payments (Cumulative): Gross $ 132,883 $ 130,358 $ 119,632 Ceded (67,507) (66,644) (62,463) Net $ 65,376 $ 63,714 $ 57,169 Unpaid Losses and LAE at End of Year: Gross $ 28,042 $ 28,815 $ 41,062 Ceded (5,715) (4,987) (12,559) Net $ 22,327 $ 23,828 $ 28,503 Our environmental, asbestos and mass tort exposure is limited, relative to other insurers, as a result of entering the affected liability lines after the insurance industry had already recognized environmental and asbestos exposure as a problem and adopted appropriate coverage exclusions. The majority of our reserves are associated with products that went into runoff at least two decades ago. Some are for assumed reinsurance, some are for excess liability business and some followed from the acquisition of Underwriters Indemnity Company in 1999. Calendar year 2017 included an increase in inception-to-date paid losses, offsetting a decrease in unpaid losses. The activity was related to payments on previously reserved claims. In aggregate, inception-to-date incurred losses increased on a gross and net. While our environmental exposure is limited, the ultimate liability for this exposure is difficult to assess because of the extensive and complicated litigation involved in the settlement of claims and evolving legislation on issues such as joint and several liability, retroactive liability and standards of cleanup. Additionally, we participate primarily in the excess layers of coverage, where accurate estimates of ultimate loss are more difficult to derive than for primary coverage.

INCOME TAXES

INCOME TAXES	12 Months Ended
	Dec. 31, 2017
INCOME TAXES
INCOME TAXES	7. INCOME TAXES The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are summarized as follows: (in thousands) 2017 2016 Deferred tax assets: Tax discounting of unpaid losses and settlement expenses $ 20,020 $ 17,330 Unearned premium offset 16,528 26,712 Deferred compensation 1,435 4,727 Stock option expense 2,283 4,114 Other 578 685 Deferred tax assets before allowance $ 40,844 $ 53,568 Less valuation allowance — — Total deferred tax assets $ 40,844 $ 53,568 Deferred tax liabilities: Net unrealized appreciation of securities $ 51,448 $ 66,973 Deferred policy acquisition costs 16,320 25,602 Discounting of unpaid losses and settlement expenses - TCJA implementation offset 9,466 — Book/tax depreciation 3,159 4,819 Intangible assets 584 1,980 Undistributed earnings of unconsolidated investees 13,431 18,397 Other 204 291 Total deferred tax liabilities $ 94,612 $ 118,062 Net deferred tax liability $ (53,768) $ (64,494) Income tax expense (benefit) attributable to income from operations for the years ended December 31, 2017, 2016 and 2015, differed from the amounts computed by applying the U.S. federal tax rate of 35 percent to pretax income from continuing operations as demonstrated in the following table: (in thousands) 2017 2016 2015 Provision for income taxes at the statutory federal tax rates $ 29,606 35.0 % $ 54,979 35.0 % $ 68,839 35.0 % Increase (reduction) in taxes resulting from: Enactment of Tax Cuts and Jobs Act (TCJA) (32,821) (38.8) % — — % — — % Excess tax benefit on share-based compensation (5,798) (6.9) % — — % — — % Dividends received deduction (2,025) (2.4) % (2,216) (1.4) % (2,278) (1.2) % ESOP dividends paid deduction (2,905) (3.4) % (3,302) (2.1) % (3,377) (1.7) % Tax-exempt interest income (4,671) (5.5) % (4,263) (2.7) % (4,214) (2.1) % Unconsolidated investee dividends (1,351) (1.6) % (2,772) (1.8) % — — % Other items, net (474) (0.6) % (264) (0.2) % 168 0.1 % Total $ (20,439)    (24.2) % $ 42,162    26.8 % $ 59,138    30.1 % Our effective tax rates were -24.2 percent, 26.8 percent and 30.1 percent for 2017, 2016 and 2015, respectively. Effective rates are dependent upon components of pretax earnings and the related tax effects. The effective rate was significantly lower in 2017, primarily as the result of recent tax reform. Additionally, catastrophic losses incurred in the third quarter resulted in significantly lower pretax earnings and the change in accounting for excess tax benefits on share-based compensation further decreased the effective tax rate. 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 percent to 21 percent effective January 1, 2018. As a result, we revalued deferred tax items as of year-end 2017 to reflect the lower rate. The revaluation reduced our net deferred tax liability and income tax expense by $32.8 million and decreased the effective tax rate by 38.8 percent. Except for the following two aspects, we have completed the accounting for the tax effects of the enactment of the TCJA as of December 31, 2017. First, we provisionally recorded $2.3 million in deferred tax expense for an expected disallowance of deductions related to certain performance based compensation, including bonuses and stock options. As there is a lack of clarity on whether some amounts could be grandfathered in as deductible, we were unable to complete our analysis. Once the IRS provides more guidance on the deductibility of certain compensation classes, we will finalize the tax expense adjustments for this aspect of the TCJA changes. Second, the IRS has not yet published the factors for us to calculate the discount on loss reserves under the basis required by the TCJA. Although there is currently no net impact from the tax law changes, the gross deferred tax assets will likely increase as the discounting factors are expected to delay the deductibility of loss reserves. Once the revised discount factors are obtained, we can implement the new discounting methodology related to this aspect of the TCJA changes and will recognize the adjustment ratably over the allowed eight-year period beginning in 2018. In 2017, the company adopted FASB ASU 2016-09, which requires the excess tax benefit on share-based compensation to flow through income tax expense. Prior to the adoption, excess tax benefits on share-based compensation were recorded directly to shareholders’ equity and had no impact on the effective tax rate. Due to the new accounting method, we recognized a $5.8 million tax benefit in 2017, decreasing the effective tax rate by 6.9 percent. Our net earnings include equity in earnings of unconsolidated investees, Maui Jim and Prime. The investees do not have a policy or pattern of paying dividends. As a result, we record a deferred tax liability on the earnings at the recently revised corporate capital gains rate of 21 percent in anticipation of recovering our investments through means other than through the receipt of dividends, such as a sale. In the fourth quarter of 2017, Maui Jim gave notification that a $9.9 million dividend would be paid in January 2018. Even though no dividend was received in 2017, we were aware that the lower tax rate applicable to affiliated dividends (7.35 percent in 2018) would be applied when the dividend was paid in 2018 and we therefore recorded a $1.4 million tax benefit in 2017. We received a $9.9 million dividend from Maui Jim in the fourth quarter of 2016 and recognized a $2.8 million tax benefit from applying the lower tax rate applicable to affiliated dividends (7 percent in 2016), as compared to the corporate capital gains rate on which the deferred tax liabilities were based. No dividends were received from unconsolidated investees in 2015. Standing alone, the dividends resulted in a 1.6 percent and 1.8 percent reduction to the 2017 and 2016 effective tax rates, respectively. Dividends paid to our ESOP also result in a tax deduction. Dividends paid to the ESOP in 2017, 2016 and 2015 resulted in tax benefits of $2.9 million, $3.3 million and $3.4 million, respectively. These tax benefits reduced the effective tax rate for 2017, 2016 and 2015 by 3.4 percent, 2.1 percent and 1.7 percent, respectively. We have recorded our deferred tax assets and liabilities using the statutory federal tax rate of 21 percent. We believe it is more likely than not that all deferred tax assets will be recovered, given the carry back availability as well as the results of future operations, which will generate sufficient taxable income to realize the deferred tax asset. In addition, we believe when these deferred items reverse in future years, our taxable income will be taxed at an effective rate of 21 percent. Federal and state income taxes paid in 2017, 2016 and 2015, amounted to $10.4 million, $26.9 million and $44.2 million, respectively. Although we are not currently under audit by the Internal Revenue Service (IRS), tax years 2014 through 2017 remain open and are subject to examination.

EMPLOYEE BENEFITS

EMPLOYEE BENEFITS	12 Months Ended
	Dec. 31, 2017
EMPLOYEE BENEFITS
EMPLOYEE BENEFITS	8. EMPLOYEE BENEFITS EMPLOYEE STOCK OWNERSHIP, 401(K) AND INCENTIVE PLANS We maintain ESOP, 401(k) and incentive plans covering executives, managers and associates. Funding of these plans is primarily dependent upon reaching predetermined levels of operating return on equity, combined ratio and Market Value Potential (MVP). MVP is a compensation model that measures components of comprehensive earnings against a minimum required return on our capital. Bonuses are earned as we generate earnings in excess of this required return. While some management incentive plans may be affected somewhat by other performance factors, the larger influence of corporate performance ensures that the interests of our executives, managers and associates correspond with those of our shareholders. Our 401(k) plan allows voluntary contributions by employees and permits ESOP diversification transfers for employees meeting certain age and service requirements. We provide a basic 401(k) contribution of 3 percent of eligible compensation. Participants are 100 percent vested in both voluntary and basic contributions. Additionally, an annual discretionary profit-sharing contribution may be made to the ESOP and 401(k), subject to the achievement of certain overall financial goals and board approval. Profit-sharing contributions vest after three years of plan service. Our ESOP and 401(k) cover all employees meeting eligibility requirements. ESOP and 401(k) profit-sharing contributions are determined annually by our board of directors and are expensed in the year earned. ESOP and 401(k)-related expenses (basic and profit-sharing) were $12.5 million, $11.7 million and $11.6 million, for 2017, 2016 and 2015, respectively. During 2017, the ESOP purchased 124,186 shares of RLI stock on the open market at an average price of $58.02 ($7.2 million) relating to the contribution for plan year 2016. Shares held by the ESOP as of December 31, 2017, totaled 3,206,518 and are treated as outstanding in computing our earnings per share. During 2016, the ESOP purchased 112,608 shares of RLI stock on the open market at an average price of $64.20 ($7.2 million) relating to the contribution for plan year 2015. During 2015, the ESOP purchased 178,492 shares of RLI stock on the open market at an average price of $49.98 ($8.9 million) relating to the contribution for plan year 2014. The above mentioned ESOP purchases relate only to our annual contributions to the plan and do not include amounts or shares resulting from the reinvestment of dividends. Annual awards are provided to executives, managers and associates through our incentive plans, provided certain financial and operational goals are met. Annual expenses for these incentive plans totaled $19.7 million, $19.2 million and $20.4 million for 2017, 2016 and 2015, respectively. DEFERRED COMPENSATION We maintain rabbi trusts for deferred compensation plans for directors, key employees and executive officers through which our shares are purchased. The employer stock in the plan is classified and accounted for as equity, in a manner consistent with the accounting for treasury stock. In 2017, the trusts purchased 7,464 shares of our common stock on the open market at an average price of $58.66 ($0.4 million). In 2016, the trusts purchased 6,702 shares of our common stock on the open market at an average price of $61.61 ($0.4 million). In 2015, the trusts purchased 9,348 shares of our common stock on the open market at an average price of $53.15 ($0.5 million). At December 31, 2017, the trusts’ assets were valued at $33.2 million. STOCK PLANS Our RLI Corp. Omnibus Stock Plan (omnibus plan) was in place from 2005 to 2010. The omnibus plan provided for equity-based compensation, including stock options, up to a maximum of 3,000,000 shares (subject to adjustment for changes in our capitalization and other events). Between 2005 and 2010, we granted 2,458,059 stock options under this plan, including incentive stock options (ISOs). The omnibus plan was replaced in 2010. In 2010, our shareholders approved the RLI Corp. Long-Term Incentive Plan (2010 LTIP), which provides for equity-based compensation and replaced the omnibus plan. In conjunction with the adoption of the 2010 LTIP, effective May 6, 2010, options were no longer granted under the omnibus plan. The 2010 LTIP provided for equity-based compensation, including stock options, up to a maximum of 4,000,000 shares of common stock (subject to adjustment for changes in our capitalization and other events). Between 2010 and 2015, we granted 2,878,000 stock options under the 2010 LTIP. The 2010 LTIP was replaced in 2015. In 2015, our shareholders approved the 2015 RLI Corp. Long-Term Incentive Plan (2015 LTIP), which provides for equity-based compensation and replaced the 2010 LTIP. In conjunction with the adoption of the 2015 LTIP, effective May 7, 2015, options were no longer granted under the 2010 LTIP. Awards under the 2015 LTIP may be in the form of restricted stock, stock options (non-qualified only), stock appreciation rights, performance units as well as other stock-based awards. Eligibility under the 2015 LTIP is limited to employees and directors of the company or any affiliate. The granting of awards under the 2015 LTIP is solely at the discretion of the board of directors. The maximum number of shares of common stock available for distribution under the 2015 LTIP is 4,000,000 shares (subject to adjustment for changes in our capitalization and other events). Since the plan’s approval in 2015, we have granted 1,448,575 awards under the 2015 LTIP, including 497,825 in 2017. Stock Options Under the 2015 LTIP, as under the 2010 LTIP and omnibus plan, we grant stock options for shares with an exercise price equal to the fair market value of the shares at the date of grant (subject to adjustments for changes in our capitalization, including special dividends and other events as set forth in such plans). Options generally vest and become exercisable ratably over a five-year period and expire eight years after grant. For most participants, the requisite service period and vesting period will be the same. For participants who are retirement eligible, defined by the plan as those individuals whose age and years of service equals 75, the requisite service period is deemed to be met and options are immediately expensed on the date of grant. For participants who will become retirement eligible during the vesting period, the requisite service period over which expense is recognized is the period between the grant date and the attainment of retirement eligibility. Shares issued upon option exercise are newly issued shares. Shares issued may be less than the number of shares actually exercised, as our plan allows net settlement to cover the option exercise price and taxes due upon option exercise. Shares netted are valued at the closing stock price at the time of option exercise. In these instances, the actual number of shares issued will be less than the options exercised and can result in a decrease to shareholders’ equity. Specifically, when options are exercised with significant intrinsic value (i.e. market value in excess of exercise price) and the exercise is facilitated via net settlement, amounts withheld for taxes result in a decrease in shareholders’ equity. During 2016 and 2015, the aggregate intrinsic value of options exercised was $31.3 million and $32.1 million, respectively. A majority of these options were exercised via net settlement with taxes withheld at the statutory minimum rate. As shown in the consolidated statements of shareholders’ equity, the exercise of options in 2016 and 2015 resulted in a decrease to paid-in-capital, as the taxes withheld pursuant to net settlement exceeded amounts paid in for options that were exercised using cash. This was not the case in 2017 as the intrinsic value of the options exercised was not as significant ($12.8 million). Therefore, the exercise of options in 2017 resulted in an increase to paid-in-capital. Prior to the adoption of FASB ASU 2016-09 in 2017, shareholders’ equity was also impacted by corporate tax deductions allowed as a result of option exercises. This tax benefit offset our current tax liability and was recorded as an increase to paid-in-capital. Beginning in 2017, all tax effects related to share-based payments are required to be recorded in net earnings and will directly impact our effective tax rate. See note 7 for the impact in 2017. For 2016 and 2015, refer to our consolidated statements of shareholders’ equity for the impact to paid-in capital from this tax benefit in those years. On November 9, 2017, the board of directors declared a $1.75 per share special cash dividend to be paid on December 27, 2017, to shareholders of record at the close of business on November 30, 2017. Similarly, on November 10, 2016, the board of directors declared a $2.00 per share special cash dividend to be paid on December 23, 2016, to shareholders of record at the close of business on November 30, 2016. On November 12, 2015, the board of directors declared a $2.00 per share special cash dividend to be paid on December 22, 2015, to shareholders of record at the close of business on November 30, 2015. To preserve the intrinsic value of the options, the board also approved, pursuant to the terms of our various stock option plans, a proportional adjustment to the exercise price (equivalent to the special dividend) for all outstanding non-qualified options in relation to the 2015 special dividend. This adjustment did not result in any incremental compensation expense as the aggregate fair value, aggregate intrinsic value and the ratio of the exercise price to the market price were approximately equal immediately before and after the adjustments. No adjustments were made in 2017 or 2016. The following tables summarize option activity in 2017, 2016 and 2015: Weighted Weighted Average Aggregate Number of Average Remaining Intrinsic Options Exercise Contractual Value Outstanding Price Life (in 000’s) Outstanding options at January 1, 2017 2,207,110 $ 40.90 Options granted 482,375 $ 57.12 Options exercised (390,870) $ 26.07 $ 12,779 Options canceled/forfeited (41,600) $ 48.30 Outstanding options at December 31, 2017 2,257,015 $ 46.80 4.88 $ 32,620 Exercisable options at December 31, 2017 975,055 $ 38.66 3.25 $ 21,780 Weighted Weighted Average Aggregate Number of Average Remaining Intrinsic Options Exercise Contractual Value Outstanding Price Life (in 000’s) Outstanding options at January 1, 2016 2,582,220 $ 32.42 Options granted 440,750 $ 63.54 Options exercised (756,380) $ 24.87 $ 31,328 Options canceled/forfeited (59,480) $ 44.39 Outstanding options at December 31, 2016 2,207,110 $ 40.90 4.93 $ 49,531 Exercisable options at December 31, 2016 862,605 $ 31.23 3.27 $ 27,523 Weighted Weighted Average Aggregate Number of Average Remaining Intrinsic Options Exercise Contractual Value Outstanding Price Life (in 000’s) Outstanding options at January 1, 2015 2,892,717 $ 26.65 Options granted 563,500 $ 49.01 Options exercised (865,957) $ 19.23 $ 32,135 Options canceled/forfeited (8,040) $ 32.12 Outstanding options at December 31, 2015 2,582,220 $ 32.42 5.32 $ 75,725 Exercisable options at December 31, 2015 899,680 $ 23.60 3.98 $ 34,327 The majority of our stock options are granted annually at our regular board meeting in May. In addition, options are approved at the May meeting for quarterly grants to certain retirement eligible employees. Since stock option grants to retirement eligible employees are fully expensed when granted, the approach allows for a more even expense distribution throughout the year. In 2017, 482,375 options were granted with an average exercise price of $57.12 and an average fair value of $8.00. Of these grants, 384,750 were granted at the board meeting in May with a calculated fair value of $7.91. We recognized $4.4 million of expense during 2017 related to options vesting. Since options granted under our plan are non-qualified, we recorded a deferred tax benefit of $1.5 million related to this compensation expense. Total unrecognized compensation expense relating to outstanding and unvested options was $5.7 million, which will be recognized over the remainder of the vesting period. In 2016, 440,750 options were granted with an average exercise price of $63.54 and an average fair value of $11.38. Of these grants, 345,750 were granted at the board meeting in May with a calculated fair value of $11.42. We recognized $4.1 million of expense during 2016 related to options vesting. Since options granted under our plan are non-qualified, we recorded a deferred tax benefit of $1.4 million related to this compensation expense. Total unrecognized compensation expense relating to outstanding and unvested options was $6.2 million, which will be recognized over the remainder of the vesting period. In 2015, 563,500 options were granted with an average exercise price of $49.01 and an average fair value of $9.25. Of these grants, 412,000 were granted at the board meeting in May with a calculated fair value of $8.94. We recognized $4.1 million of expense during 2015 related to options vesting. Since options granted under our plan are non-qualified, we recorded a deferred tax benefit of $1.4 million related to this compensation expense. Total unrecognized compensation expense relating to outstanding and unvested options was $5.7 million, which will be recognized over the remainder of the vesting period. The fair value of options were estimated using a Black-Scholes based option pricing model with the following weighted-average grant-date assumptions and weighted-average fair values as of December 31: 2017 2016 2015 Weighted-average fair value of grants $ 8.00 $ 11.38 $ 9.25 Risk-free interest rates 1.90 % 1.21 % 1.54 % Dividend yield 3.60 % 1.61 % 1.81 % Expected volatility 22.95 % 23.06 % 22.91 % Expected option life 5.05 years 5.04 years 5.21 years The risk-free rate was determined based on U.S. treasury yields that most closely approximated the option’s expected life. The dividend yield for 2017 was determined based on the average annualized quarterly dividends paid during the most recent five-year period and incorporated a consideration for special dividends paid in recent history. The dividend yield in 2016 and 2015 was calculated based on the average annualized dividends paid during the most recent five-year period, exclusive of consideration for special dividends. The expected volatility was calculated based on the median of the rolling volatilities for the expected life of the options. The expected option life was determined based on historical exercise behavior and the assumption that all outstanding options will be exercised at the midpoint of the current date and remaining contractual term, adjusted for the demographics of the current year’s grant. Restricted Stock Units In addition to stock options, restricted stock units (RSUs) were granted for the first time in May 2017. RSUs have a grant date value equal to the closing stock price of the Company’s stock on the dates the shares are granted. Generally, these units have a three-year cliff vesting. For participants who become retirement eligible, defined by the plan as those individuals whose age and years of service equals 75, the units become fully vested. In addition, the RSUs have dividend participation which accrues and is settled in additional shares with all granted stock units at the end of the three-year period. As of December 31, 2017, 15,450 RSUs have been granted and 15,300 remain outstanding. The weighted average grant date fair value was $56.71. We recognized $0.4 million of expense on these units during 2017. Total unrecognized compensation expense relating to outstanding and unvested RSUs was $0.5 million, which will be recognized over the remainder of the three-year vesting period.

STATUTORY INFORMATION AND DIVID

STATUTORY INFORMATION AND DIVIDEND RESTRICTIONS	12 Months Ended
	Dec. 31, 2017
STATUTORY INFORMATION AND DIVIDEND RESTRICTIONS
STATUTORY INFORMATION AND DIVIDEND RESTRICTIONS	9. STATUTORY INFORMATION AND DIVIDEND RESTRICTIONS The statutory financial statements of our three insurance companies are presented on the basis of accounting practices prescribed or permitted by the Illinois Department of Insurance (IDOI), which has adopted the NAIC statutory accounting principles as the basis of its statutory accounting principles. We do not use any permitted statutory accounting principles that differ from NAIC prescribed statutory accounting principles. In converting from statutory to GAAP, typical adjustments include deferral of policy acquisition costs, the inclusion of statutory non-admitted assets and the inclusion of net unrealized holding gains or losses in shareholders’ equity relating to fixed maturities. The NAIC has risk based capital (RBC) requirements for insurance companies to calculate and report information under a risk-based formula, which measures statutory capital and surplus needs based upon a regulatory definition of risk relative to the company’s balance sheet and mix of products. As of December 31, 2017, each of our insurance subsidiaries had an RBC amount in excess of the authorized control level RBC, as defined by the NAIC. RLI Insurance Company (RLI Ins.), our principal insurance company subsidiary, had an authorized control level RBC of $157.7 million, $127.0 million and $123.6 million as of December 31, 2017, 2016 and 2015, respectively, compared to actual statutory capital and surplus of $864.6 million, $860.0 million and $865.3 million, respectively, for these same periods. Year-end statutory surplus for 2017 presented in the table below includes $106.9 million of RLI stock (cost basis of $64.6 million) held by Mt. Hawley Insurance Company, compared to $104.4 million and $117.5 million in 2016 and 2015, respectively. The Securities Valuation Office provides specific guidance for valuing this investment, which is eliminated in our GAAP consolidated financial statements. The following table includes selected information for our insurance subsidiaries for the year ending and as of December 31: (in thousands) 2017 2016 2015 Consolidated net income, statutory basis $ 72,889 $ 128,165 $ 178,502 Consolidated surplus, statutory basis $ 864,554 $ 859,976 $ 865,268 As discussed in note 1.A., our three insurance companies are subsidiaries of RLI Corp, with RLI Ins. as the first-level, or principal, insurance subsidiary. At the holding company (RLI Corp.) level, we rely largely on dividends from our insurance company subsidiaries to meet our obligations for paying principal and interest on outstanding debt, corporate expenses and dividends to RLI Corp. shareholders. As discussed further below, dividend payments to RLI Corp. from our principal insurance subsidiary are restricted by state insurance laws as to the amount that may be paid without prior approval of the insurance regulatory authorities of Illinois. As a result, we may not be able to receive dividends from such subsidiary at times and in amounts necessary to pay desired dividends to RLI Corp. shareholders. On a GAAP basis, as of December 31, 2017, our holding company had $853.6 million in equity. This includes amounts related to the equity of our insurance subsidiaries, which is subject to regulatory restrictions under state insurance laws. The unrestricted portion of holding company net assets is comprised primarily of investments and cash, including $23.5 million in liquid assets, which approximates half of our annual holding company expenditures. Unrestricted funds at the holding company are available to fund debt interest, general corporate obligations and ordinary dividend payments to our shareholders. If necessary, the holding company also has other potential sources of liquidity that could provide for additional funding to meet corporate obligations or pay shareholder dividends, which include a revolving line of credit, as well as access to capital markets. Ordinary dividends, which may be paid by our principal insurance subsidiary without prior regulatory approval, are subject to certain limitations based upon statutory income, surplus and earned surplus. The maximum ordinary dividend distribution from our principal insurance subsidiary in a rolling 12-month period is limited by Illinois law to the greater of 10 percent of RLI Ins. policyholder surplus, as of December 31 of the preceding year, or the net income of RLI Ins. for the 12-month period ending December 31 of the preceding year. Ordinary dividends are further restricted by the requirement that they be paid from earned surplus. In 2017, 2016 and 2015, our principal insurance subsidiary paid ordinary dividends totaling $107.0 million, $123.6 million and $125.0 million, respectively, to RLI Corp. Any dividend distribution in excess of the ordinary dividend limits is deemed extraordinary and requires prior approval from the IDOI. No extraordinary dividends were paid in 2017, 2016 or 2015. Given the amount of dividends paid during the prior rolling 12-month period, the net assets of our principal insurance subsidiary are restricted until the end of the third quarter of 2018 and cannot be distributed to RLI Corp. without prior approval of the IDOI. However, in addition to the unrestricted liquid net assets that RLI Corp. had on hand as of December 31, 2017, RLI Corp. has other anticipated cash inflows and access to lines of credit that would cover normal annual holding company expenditures as they are incurred and become payable.

COMMITMENTS AND CONTINGENT LIAB

COMMITMENTS AND CONTINGENT LIABILITIES	12 Months Ended
	Dec. 31, 2017
COMMITMENTS AND CONTINGENT LIABILITIES
COMMITMENTS AND CONTINGENT LIABILITIES	10. COMMITMENTS AND CONTINGENT LIABILITIES We are party to numerous claims, losses and litigation matters that arise in the normal course of our business. Many of such claims, losses or litigation matters involve claims under policies that we underwrite as an insurer. We believe that the resolution of these claims and losses will not have a material adverse effect on our financial condition, results of operations or cash flows. We are also involved in various other legal proceedings and litigation unrelated to our insurance business that arise in the ordinary course of business operations. Management believes that any liabilities that may arise as a result of these legal matters will not have a material adverse effect on our financial condition or results of operations. We have operating lease obligations for regional office facilities. These leases expire in various years through 2034. Expenses associated with these leases totaled $6.8 million in 2017, $6.4 million in 2016 and $6.1 million in 2015. Minimum future rental payments under non-cancellable leases are as follows: (in thousands) 2018 $ 5,589 2019 5,238 2020 5,138 2021 5,026 2022 4,991 2023-2034 6,644 Total minimum future rental payments $ 32,626 As of December 31, 2017, we also had $17.7 million of unfunded commitments related to our investment in a business development company, $7.2 million of unfunded commitments related to an investment in a global credit fund that specializes in consumer loans and $3.1 million of unfunded commitments related to our low income housing tax credit investments. See note 2 for more information on these investments.

OPERATING SEGMENT INFORMATION

OPERATING SEGMENT INFORMATION	12 Months Ended
	Dec. 31, 2017
OPERATING SEGMENT INFORMATION
OPERATING SEGMENT INFORMATION	11. OPERATING SEGMENT INFORMATION The segments of our insurance operations include casualty, property and surety. The casualty portion of our business consists largely of commercial umbrella, personal umbrella, general liability, transportation and executive products coverages, as well as package business and other specialty coverages, such as professional liability and workers’ compensation for office-based professionals. We offer fidelity and crime coverage for commercial insureds and select financial institutions and medical and healthcare professional liability coverage in the excess and surplus market. We also assume a limited amount of hard-to-place risks through a quota share reinsurance agreement. The casualty business is subject to the risk of estimating losses and related loss reserves because the ultimate settlement of a casualty claim may take several years to fully develop. The casualty segment is also subject to inflation risk and may be affected by evolving legislation and court decisions that define the extent of coverage and the amount of compensation due for injuries or losses. Our property segment is comprised primarily of commercial fire, earthquake, difference in conditions and marine coverages. We also offer select personal lines policies, including homeowners’ coverages. Our crop, property reinsurance and recreational vehicle products are in runoff after we discontinued our crop relationship at the end of 2015 and began curtailing reinsurance and recreational vehicle offerings at the end of 2015 and 2016, respectively. Property insurance results are subject to the variability introduced by perils such as earthquakes, fires and hurricanes. Our major catastrophe exposure is to losses caused by earthquakes, primarily on the West Coast. Our second largest catastrophe exposure is to losses caused by wind storms to commercial properties throughout the Gulf and East Coast, as well as to homes we insure in Hawaii. We limit our net aggregate exposure to a catastrophic event by minimizing the total policy limits written in a particular region, purchasing reinsurance and maintaining policy terms and conditions throughout market cycles. We also use computer-assisted modeling techniques to provide estimates that help us carefully manage the concentration of risks exposed to catastrophic events. The surety segment specializes in writing small to large-sized commercial and contract surety coverages, as well as those for the energy, petrochemical and refining industries. We also offer miscellaneous bonds including license and permit, notary and court bonds. Often, our surety coverages involve a statutory requirement for bonds. While these bonds typically maintain a relatively low loss ratio, losses may fluctuate due to adverse economic conditions affecting the financial viability of our insureds. The contract surety product guarantees the construction work of a commercial contractor for a specific project. Generally, losses occur due to the deterioration of a contractor’s financial condition. This line has historically produced marginally higher loss ratios than other surety lines during economic downturns. Net investment income consists of the interest and dividend income streams from our investments in fixed income and equity securities. Interest and general corporate expenses include the cost of debt, other director and shareholder relations costs and other compensation-related expenses incurred for the benefit of the corporation, but not attributable to the operations of our insurance segments. Investee earnings represent our share in Maui Jim and Prime earnings. We own 40 percent of Maui Jim, a privately-held company which operates in the sunglass and optical goods industries, and 23 percent of Prime Holdings Insurance Services, Inc., a privately-held insurance company which specializes in hard-to-place risks in the excess and surplus market and has recently expanded into certain coverages in the admitted market. Our investment in Maui Jim, which is carried at the holding company, is unrelated to our core insurance operations. The following table summarizes our segment data based on the internal structure and reporting of information as it is used by management. The net earnings of each segment are before taxes and include revenues (if applicable), direct product or segment costs (such as commissions and claims costs), as well as allocated support costs from various support departments. While depreciation and amortization charges have been included in these measures via our expense allocation system, the related assets are not allocated for management use and, therefore, are not included in this schedule. REVENUES (in thousands) 2017 2016 2015 Casualty $ 478,603 $ 454,843 $ 412,248 Property 138,346 152,167 170,924 Surety 120,988 121,598 116,989 Net premiums earned $ 737,937 $ 728,608 $ 700,161 Net investment income 54,876 53,075 54,644 Net realized gains 4,411 34,645 39,829 Total $ 797,224 $ 816,328 $ 794,634 INSURANCE EXPENSES (in thousands) 2017 2016 2015 Loss and settlement expenses: Casualty $ 305,679 $ 259,907 $ 218,414 Property 85,027 71,350 69,851 Surety 10,878 18,521 10,780 Total net loss and settlement expenses $ 401,584 $ 349,778 $ 299,045 Policy acquisition costs: Casualty $ 136,135 $ 128,566 $ 119,529 Property 51,070 54,167 57,214 Surety 65,310 66,879 64,335 Total policy acquisition costs $ 252,515 $ 249,612 $ 241,078 Other insurance expenses: Casualty $ 32,885 $ 30,040 $ 28,042 Property 14,108 13,819 14,834 Surety 10,001 9,234 8,604 Total other insurance expenses $ 56,994 $ 53,093 $ 51,480 Total $ 711,093 $ 652,483 $ 591,603 NET EARNINGS (LOSSES) (in thousands) 2017 2016 2015 Casualty $ 3,904 $ 36,329 $ 46,263 Property (11,859) 12,832 29,025 Surety 34,799 26,964 33,270 Net underwriting income $ 26,844 $ 76,125 $ 108,558 Net investment income 54,876 53,075 54,644 Net realized gains 4,411 34,645 39,829 General corporate expense and interest on debt (18,766) (17,596) (17,263) Equity in earnings of unconsolidated investees 17,224 10,833 10,914 Total earnings before incomes taxes $ 84,589 $ 157,082 $ 196,682 Income tax expense (benefit) $ (20,439) $ 42,162 $ 59,138 Total $ 105,028 $ 114,920 $ 137,544 The following table further summarizes revenues by major product type within each segment: NET PREMIUMS EARNED Year ended December 31, (in thousands) 2017 2016 2015 CASUALTY Commercial and personal umbrella $ 115,543 $ 111,079 $ 104,598 General liability 90,283 86,853 84,165 Professional services 78,508 75,872 71,034 Commercial transportation 78,061 81,402 65,564 Small commercial 49,601 45,660 40,410 Executive products 18,086 18,755 17,892 Medical professional liability 17,072 17,449 12,292 Other casualty 31,449 17,773 16,293 Total $ 478,603 $ 454,843 $ 412,248 PROPERTY Commercial property $ 63,117 $ 68,165 $ 75,749 Marine 50,931 48,301 47,016 Specialty personal 20,793 24,981 26,395 Other property 3,505 10,720 21,764 Total $ 138,346 $ 152,167 $ 170,924 SURETY Miscellaneous $ 47,237 $ 46,235 $ 42,372 Contract 28,573 28,240 28,269 Commercial 27,625 29,105 29,529 Energy 17,553 18,018 16,819 Total $ 120,988 $ 121,598 $ 116,989 Grand total $ 737,937 $ 728,608 $ 700,161

UNAUDITED INTERIM FINANCIAL INF

UNAUDITED INTERIM FINANCIAL INFORMATION	12 Months Ended
	Dec. 31, 2017
UNAUDITED INTERIM FINANCIAL INFORMATION
UNAUDITED INTERIM FINANCIAL INFORMATION	12. UNAUDITED INTERIM FINANCIAL INFORMATION Select unaudited quarterly information is as follows: (in thousands, except per share data) First Second Third Fourth Year 2017 Net premiums earned $ 183,285 $ 184,331 $ 182,025 $ 188,296 $ 737,937 Net investment income 13,005 13,238 14,187 14,446 54,876 Net realized gains (losses) 624 (1,359) 35 5,111 4,411 Earnings (losses) before income taxes 26,443 34,036 (862) 24,972 84,589 Net earnings 19,828 26,208 1,734 57,258 105,028 Basic earnings per share(1) $ 0.45 $ 0.60 $ 0.04 $ 1.30 $ 2.39 Diluted earnings per share(1) $ 0.45 $ 0.59 $ 0.04 $ 1.29 $ 2.36 2016 Net premiums earned $ 176,918 $ 180,226 $ 183,595 $ 187,869 $ 728,608 Net investment income 13,370 13,048 13,504 13,153 53,075 Net realized gains (losses) 11,400 2,710 9,252 11,283 34,645 Earnings (losses) before income taxes 45,593 42,341 31,142 38,006 157,082 Net earnings 31,393 29,077 22,263 32,187 114,920 Basic earnings per share(1) $ 0.72 $ 0.67 $ 0.51 $ 0.73 $ 2.63 Diluted earnings per share(1) $ 0.71 $ 0.65 $ 0.50 $ 0.72 $ 2.59 (1) Since the weighted-average shares for the quarters are calculated independently of the weighted-average shares for the year, quarterly earnings per share may not total to annual earnings per share.

ACQUISITIONS AND DISPOSITIONS

ACQUISITIONS AND DISPOSITIONS	12 Months Ended
	Dec. 31, 2017
ACQUISITIONS AND DISPOSITIONS
ACQUISITIONS AND DISPOSITIONS	13. On November 3, 2015, RLI Corp completed the sale of its subsidiary RLI Indemnity Company (RIC) to Clear Blue Financial Holdings, LLC for net sale proceeds of $7.5 million that were primarily generated from the transfer of insurance licenses. RIC was sold as a “shell,” with all business and cash flows from the company being retained by RLI Insurance Group. At the time of the sale, RIC had minimal assets and written premium and was transferring all premium and loss cash flows to RLI Ins. through a 100 percent quota share reinsurance agreement. RLI Ins. will continue to reinsure all RIC bond and insurance liabilities that existed at the date of sale, adjust claims and service the remaining in-force polices and bonds until they terminate or are moved into RLI Ins.

SCHEDULE I-SUMMARY OF INVESTMEN

SCHEDULE I-SUMMARY OF INVESTMENTS-OTHER THAN INVESTMENTS IN RELATED PARTIES	12 Months Ended
	Dec. 31, 2017
SCHEDULE I-SUMMARY OF INVESTMENTS-OTHER THAN INVESTMENTS IN RELATED PARTIES
SCHEDULE I-SUMMARY OF INVESTMENTS-OTHER THAN INVESTMENTS IN RELATED PARTIES	RLI CORP. AND SUBSIDIARIES SCHEDULE I—SUMMARY OF INVESTMENTS—OTHER THAN INVESTMENTS IN RELATED PARTIES December 31, 2017 Column A Column B Column C Column D Amount at (in thousands) which shown in Type of Investment Cost (1) Fair Value the balance sheet Fixed maturities: Bonds: Available-for-sale: U.S. Government $ 92,561 $ 91,689 $ 91,689 U.S. Agency 18,541 18,778 18,778 Non-U.S. Government & Agency 7,501 7,588 7,588 Agency MBS 329,129 328,471 328,471 ABS/CMBS* 70,405 70,526 70,526 Corporate 508,128 519,022 519,022 Municipal 620,146 636,165 636,165 Total available-for-sale $ 1,646,411 $ 1,672,239 $ 1,672,239 Total fixed maturities $ 1,646,411 $ 1,672,239 $ 1,672,239 Equity securities: Common stock: Available-for-sale: Ind Misc & all other $ 108,815 $ 256,360 $ 256,360 ETFs (Ind/misc) 73,187 144,132 144,132 Total equity securities $ 182,002 $ 400,492 $ 400,492 Cash & short-term investments 34,251 34,251 34,251 Other invested assets 33,779 33,808 33,808 Total investments and cash $ 1,896,443 $ 2,140,790 $ 2,140,790 * Non-agency asset-backed & commercial mortgage-backed Note: See notes 1E and 2 of Notes to Consolidated Financial Statements. See also the accompanying report of independent registered public accounting firm on page 109 of this report. (1) Original cost of equity securities and, as to fixed maturities, original cost reduced by repayments and adjusted for amortization of premiums or accrual of discounts.

SCHEDULE II-CONDENSED FINANCIAL

SCHEDULE II-CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY)	12 Months Ended
	Dec. 31, 2017
SCHEDULE II-CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY)
SCHEDULE II-CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY)	RLI CORP. AND SUBSIDIARIES SCHEDULE II—CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY) CONDENSED BALANCE SHEETS December 31, (in thousands, except share data) 2017 2016 ASSETS Cash $ 204 $ 21 Short-term investments, at cost which approximates fair value 70 23 Accounts receivable, affiliates 1,057 127 Investments in subsidiaries 912,515 882,095 Investments in unconsolidated investee 77,720 62,604 Fixed income: Available-for-sale, at fair value (amortized cost - $23,184 in 2017 and $45,901 in 2016) 23,210 45,885 Property and equipment, at cost, net of accumulated depreciation of $1,426 in 2017 and $1,523 in 2016 1,982 2,213 Income taxes receivable - current 1,542 858 Other assets 156 329 Total assets $ 1,018,456 $ 994,155 LIABILITIES AND SHAREHOLDERS’ EQUITY Liabilities: Income taxes - deferred $ 13,207 $ 19,145 Bonds payable, long-term debt 148,928 148,741 Interest payable, long-term debt 2,153 2,153 Other liabilities 570 544 Total liabilities $ 164,858 $ 170,583 Shareholders’ equity: Common stock ($1 par value, authorized 100,000,000 shares, issued 67,078,569 shares in 2017 and 66,874,911 shares in 2016, and outstanding 44,148,355 shares in 2017 and 43,944,697 shares in 2016) $ 67,079 $ 66,875 Paid in capital 233,077 229,779 Accumulated other comprehensive earnings, net of tax 157,919 122,610 Retained earnings 788,522 797,307 Deferred compensation 8,640 11,496 Treasury shares at cost (22,930,214 shares in 2017 and 2016) (401,639) (404,495) Total shareholders’ equity $ 853,598 $ 823,572 Total liabilities and shareholders’ equity $ 1,018,456 $ 994,155 See Notes to Consolidated Financial Statements. See also the accompanying report of independent registered public accounting firm on page 109 of this report. RLI CORP. AND SUBSIDIARIES SCHEDULE II—CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY)—(continued) CONDENSED STATEMENTS OF EARNINGS AND COMPREHENSIVE EARNINGS Years ended December 31, (in thousands) 2017 2016 2015 Net investment income $ 647 $ 942 $ 810 Net realized gains (losses) (36) (360) 139 Equity in earnings of unconsolidated investee 14,436 9,764 9,893 Selling, general and administrative expenses (11,340) (10,170) (9,837) Interest expense on debt (7,426) (7,426) (7,426) Loss before income taxes $ (3,719) $ (7,250) $ (6,421) Income tax benefit (16,601) (8,467) (5,499) Net earnings (loss) before equity in net earnings of subsidiaries $ 12,882 $ 1,217 $ (922) Equity in net earnings of subsidiaries 92,146 113,703 138,466 Net earnings $ 105,028 $ 114,920 $ 137,544 Other comprehensive income (loss), net of tax Unrealized gains (losses) on securities: Unrealized holding gains (losses) arising during the period $ 21 $ 308 $ (40) Less: reclassification adjustment for gains (losses) included in net earnings 6 (131) (90) Other comprehensive income (loss) - parent only $ 27 $ 177 $ (130) Equity in other comprehensive earnings (loss) of subsidiaries/investees 35,282 (1,341) (47,479) Other comprehensive earnings (loss) $ 35,309 $ (1,164) $ (47,609) Comprehensive earnings $ 140,337 $ 113,756 $ 89,935 See Notes to Consolidated Financial Statements. See also the accompanying report of independent registered public accounting firm on page 109 of this report. RLI CORP. AND SUBSIDIARIES SCHEDULE II—CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY)—(continued) CONDENSED STATEMENTS OF CASH FLOWS Years ended December 31, (in thousands) 2017 2016 2015 Cash flows from operating activities Earnings before equity in net earnings of subsidiaries $ 12,882 $ 1,217 $ (922) Adjustments to reconcile net losses to net cash provided by (used in) operating activities: Net realized (gains) losses 36 360 (139) Depreciation 77 196 237 Other items, net 595 560 530 Change in: Affiliate balances receivable/payable (930) (535) 4,211 Federal income taxes (6,874) 9,762 14,227 Stock option excess tax benefit — (9,576) (11,413) Changes in investment in unconsolidated investee: Undistributed earnings (14,436) (9,764) (9,893) Dividends received — 9,900 — Net cash provided by (used in) operating activities $ (8,650) $ 2,120 $ (3,162) Cash flows from investing activities Purchase of: Fixed income, available-for-sale $ (5,773) $ (12,844) $ (16,031) Short-term investments, net (47) — — Sale of: Fixed income, available-for-sale 24,771 4,981 7,048 Short-term investments, net — 63 91 Property and equipment 128 — — Call or maturity of: Fixed income, available-for-sale 3,499 6,859 9,507 Cash dividends received-subsidiaries 107,000 123,600 125,000 Net cash provided by investing activities $ 129,578 $ 122,659 $ 125,615 Cash flows from financing activities Stock option excess tax benefit $ — $ 9,576 $ 11,413 Proceeds from stock option exercises 3,502 (741) (3,364) Cash dividends paid (124,247) (133,771) (130,698) Net cash used in financing activities $ (120,745) $ (124,936) $ (122,649) Net (decrease) increase in cash $ 183 $ (157) $ (196) Cash at beginning of year 21 178 374 Cash at end of year $ 204 $ 21 $ 178 Interest paid on outstanding debt amounted to $7.3 million for 2017, 2016 and 2015, respectively. See Notes to Consolidated Financial Statements. See also the accompanying report of independent registered public accounting firm on page 109 of this report.

SCHEDULE III-SUPPLEMENTARY INSU

SCHEDULE III-SUPPLEMENTARY INSURANCE INFORMATION	12 Months Ended
	Dec. 31, 2017
SCHEDULE III-SUPPLEMENTARY INSURANCE INFORMATION
SCHEDULE III-SUPPLEMENTARY INSURANCE INFORMATION	RLI CORP. AND SUBSIDIARIES SCHEDULE III—SUPPLEMENTARY INSURANCE INFORMATION As of and for the years ended December 31, 2017, 2016 and 2015 Incurred losses Deferred policy Unpaid losses Unearned Net and settlement acquisition and settlement premiums, premiums expenses (in thousands) costs expenses, gross gross earned current year Year ended December 31, 2017 Casualty segment $ 44,358 $ 1,127,787 $ 296,751 $ 478,603 $ 323,141 Property segment 13,029 107,304 84,010 138,346 97,161 Surety segment 20,329 36,412 70,688 120,988 20,150 RLI Insurance Group $ 77,716 $ 1,271,503 $ 451,449 $ 737,937 $ 440,452 Year ended December 31, 2016 Casualty segment $ 39,131 $ 1,021,506 $ 276,096 $ 454,843 $ 292,308 Property segment 13,115 76,989 84,425 152,167 76,143 Surety segment 20,901 40,842 73,256 121,598 23,321 RLI Insurance Group $ 73,147 $ 1,139,337 $ 433,777 $ 728,608 $ 391,772 Year ended December 31, 2015 Casualty segment $ 35,464 $ 993,717 $ 260,227 $ 412,248 $ 264,068 Property segment 13,332 77,584 88,808 170,924 81,699 Surety segment 21,033 32,484 73,059 116,989 18,705 RLI Insurance Group $ 69,829 $ 1,103,785 $ 422,094 $ 700,161 $ 364,472 NOTE 1: See the accompanying report of independent registered public accounting firm on page 109 of this report. RLI CORP. AND SUBSIDIARIES SCHEDULE III—SUPPLEMENTARY INSURANCE INFORMATION (continued) As of and for the years ended December 31, 2017, 2016 and 2015 Incurred losses and settlement Policy Other Net expenses acquisition operating premiums (in thousands) prior year costs expenses written Year ended December 31, 2017 Casualty segment $ (17,462) $ 136,135 $ 32,885 $ 494,649 Property segment (12,134) 51,070 14,108 137,031 Surety segment (9,272) 65,310 10,001 118,174 RLI Insurance Group $ (38,868) $ 252,515 $ 56,994 $ 749,854 Year ended December 31, 2016 Casualty segment $ (32,401) $ 128,566 $ 30,040 $ 470,082 Property segment (4,793) 54,167 13,819 149,170 Surety segment (4,800) 66,879 9,234 121,700 RLI Insurance Group $ (41,994) $ 249,612 $ 53,093 $ 740,952 Year ended December 31, 2015 Casualty segment $ (45,654) $ 119,529 $ 28,042 $ 435,409 Property segment (11,848) 57,214 14,834 166,659 Surety segment (7,925) 64,335 8,604 119,903 RLI Insurance Group $ (65,427) $ 241,078 $ 51,480 $ 721,971 See the accompanying report of independent registered public accounting firm on page 109 of this report.

SCHEDULE IV-REINSURANCE

SCHEDULE IV-REINSURANCE	12 Months Ended
	Dec. 31, 2017
SCHEDULE IV-REINSURANCE
SCHEDULE IV-REINSURANCE	RLI CORP. AND SUBSIDIARIES SCHEDULE IV—REINSURANCE Years ended December 31, 2017, 2016 and 2015 Percentage Ceded to Assumed of amount Direct other from other Net assumed (in thousands) amount companies companies amount to net 2017 Casualty segment $ 536,085 $ 86,190 $ 28,708 $ 478,603 6.0 % Property segment 172,668 37,607 3,285 138,346 2.4 % Surety segment 126,365 5,905 528 120,988 0.4 % RLI Insurance Group premiums earned $ 835,118 $ 129,702 $ 32,521 $ 737,937 4.4 % 2016 Casualty segment $ 528,691 $ 89,635 $ 15,787 $ 454,843 3.5 % Property segment 179,460 38,353 11,060 152,167 7.3 % Surety segment 127,143 6,584 1,039 121,598 0.9 % RLI Insurance Group premiums earned $ 835,294 $ 134,572 $ 27,886 $ 728,608 3.8 % 2015 Casualty segment $ 484,435 $ 84,311 $ 12,124 $ 412,248 2.9 % Property segment 190,678 42,731 22,977 170,924 13.4 % Surety segment 122,067 5,701 623 116,989 0.5 % RLI Insurance Group premiums earned $ 797,180 $ 132,743 $ 35,724 $ 700,161 5.1 % See the accompanying report of independent registered public accounting firm on page 109 of this report.

SCHEDULE V-VALUATION AND QUALIF

SCHEDULE V-VALUATION AND QUALIFYING ACCOUNTS	12 Months Ended
	Dec. 31, 2017
SCHEDULE V-VALUATION AND QUALIFYING ACCOUNTS
SCHEDULE V-VALUATION AND QUALIFYING ACCOUNTS	RLI CORP. AND SUBSIDIARIES SCHEDULE V—VALUATION AND QUALIFYING ACCOUNTS Years ended December 31, 2017, 2016 and 2015 Balance Amounts Amounts Balance at beginning charged recovered at end of (in thousands) of period to expense (written off) period 2017 Allowance for uncollectible reinsurance $ 25,911 $ — $ — $ 25,911 2016 Allowance for uncollectible reinsurance $ 25,911 $ — $ — $ 25,911 2015 Allowance for uncollectible reinsurance $ 26,404 $ — $ (493) $ 25,911 See the accompanying report of independent registered public accounting firm on page 109 of this report.

SCHEDULE VI-SUPPLEMENTARY INFOR

SCHEDULE VI-SUPPLEMENTARY INFORMATION CONCERNING PROPERTY-CASUALTY INSURANCE OPERATIONS	12 Months Ended
	Dec. 31, 2017
SCHEDULE VI-SUPPLEMENTARY INFORMATION CONCERNING PROPERTY-CASUALTY INSURANCE OPERATIONS
SCHEDULE VI-SUPPLEMENTARY INFORMATION CONCERNING PROPERTY-CASUALTY INSURANCE OPERATIONS	RLI CORP. AND SUBSIDIARIES SCHEDULE VI—SUPPLEMENTARY INFORMATION CONCERNING PROPERTY-CASUALTY INSURANCE OPERATIONS Years ended December 31, 2017, 2016 and 2015 (in thousands) Deferred policy Claims and Unearned Net Net Affiliation with acquisition claim adjustment premiums, premiums investment Registrant (1) costs expense reserves gross earned income 2017 $ 77,716 $ 1,271,503 $ 451,449 $ 737,937 $ 54,876 2016 $ 73,147 $ 1,139,337 $ 433,777 $ 728,608 $ 53,075 2015 $ 69,829 $ 1,103,785 $ 422,094 $ 700,161 $ 54,644 Claims and claim adjustment expenses incurred related to: Amortization Paid claims and Net Current Prior of deferred claim adjustment premiums year year acquisition costs expenses written 2017 $ 440,452 $ (38,868) $ 252,515 $ 283,185 $ 749,854 2016 $ 391,772 $ (41,994) $ 249,612 $ 304,606 $ 740,952 2015 $ 364,472 $ (65,427) $ 241,078 $ 279,038 $ 721,971 (1) Consolidated property-casualty insurance operations. See the accompanying report of independent registered public accounting firm on page 109 of this report.

SUMMARY OF SIGNIFICANT ACCOUNTI

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	12 Months Ended
	Dec. 31, 2017
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS	A. RLI Corp., an insurance holding company, is an Illinois corporation that was organized in 1965. We underwrite select property and casualty insurance coverages through major subsidiaries collectively known as RLI Insurance Group (the Group). We conduct operations principally through three insurance companies. RLI Insurance Company (RLI Ins.), a subsidiary of RLI Corp. and our principal insurance subsidiary, writes multiple lines of insurance on an admitted basis in all 50 states, the District of Columbia, Puerto Rico, the Virgin Islands and Guam. Mt. Hawley Insurance Company (Mt. Hawley), a subsidiary of RLI Ins., writes surplus lines insurance on a non-admitted basis in all 50 states, the District of Columbia, Puerto Rico, the Virgin Islands and Guam. Contractors Bonding and Insurance Company (CBIC), a subsidiary of RLI Ins., writes multiple lines of insurance on an admitted basis in all 50 states and the District of Columbia.
PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION	B. The accompanying consolidated financial statements were prepared in conformity with generally accepted accounting principles in the United States of America (GAAP), which differ in some respects from those followed in reports to insurance regulatory authorities. The consolidated financial statements include the accounts of our holding company and our subsidiaries. All significant intercompany balances and transactions have been eliminated. Certain reclassifications were made to 2016 and 2015 to conform to the classifications used in the current year. The Company has evaluated subsequent events through the date these consolidated financial statements were issued. There were no subsequent events requiring adjustment to the financial statements or disclosure.
ADOPTED ACCOUNTING STANDARDS	C. ASU 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting ASU 2016-09 was issued to simplify the accounting for share-based payment awards. The guidance requires that, prospectively, all tax effects related to share-based payments be made through the income statement at the time of settlement as opposed to excess tax benefits being recognized in additional paid-in capital under the previous guidance. The ASU also removes the requirement to delay recognition of a tax benefit until it reduces current taxes payable. This change is required to be applied on a modified retrospective basis, with a cumulative-effect adjustment to opening retained earnings. Additionally, all tax related cash flows resulting from share-based payments are to be reported as operating activities on the statement of cash flows, a change from the previous requirement to present tax benefits as an inflow from financing activities and an outflow from operating activities. Finally, entities will be allowed to withhold an amount up to the employees’ maximum individual tax rate (as opposed to the minimum statutory tax rate) in the relevant jurisdiction without resulting in liability classification of the award. The change in withholding requirements will be applied on a modified retrospective approach. We adopted ASU 2016-09 on January 1, 2017. The guidance’s primary impact on our financial statements relates to the provision concerning the recognition of tax effects through the income statement in 2017 and forward. Excess tax benefits of $5.8 million were recognized during 2017 as a reduction to income tax expense rather than as an increase to additional paid-in-capital. The future impact to our income statement will vary depending upon the level of intrinsic value associated with option exercises in a particular period, as well as distributions from our deferred compensation plans. Additionally, the changes in cash flow presentation resulted in $5.8 million more operating cash flows and $5.8 million less financing cash flows for 2017 than would have been recognized under the previous guidance. We have historically estimated the number of forfeitures as part of our option valuation process and will continue to do so under the new guidance. As no aspect of the guidance that requires retrospective adoption impacted the Company, no prior period adjustments were made. ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment ASU 2017-04 was issued to simplify the subsequent measurement of goodwill. This update changes the impairment test by requiring an entity to compare the fair value of a reporting unit with its carrying amount as opposed to comparing the carrying amount of goodwill with its implied fair value. We adopted ASU 2017-04 during the second quarter of 2017 to coincide with the annual testing of our energy surety, small commercial and miscellaneous and contract surety reporting units. As most of our assets and liabilities associated with a reporting unit are measured at fair value, the impact of measuring the impairment at the reporting unit level rather than at the goodwill asset level was believed to be minimal.
PROSPECTIVE ACCOUNTING STANDARDS	D. ASU 2014-09, Revenue from Contracts with Customers (Topic 606) ASU 2014-09 was issued to clarify and remove inconsistencies within revenue recognition requirements. The core principle of the update is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, the transaction price for a contract is allocated among separately identifiable performance obligations and a portion of the transaction price is recognized as revenue when the associated performance obligation has been completed or transferred to the customer. All contracts and fulfillment activities within the scope of Topic 944, Financial Services – Insurance, investment income, investment related gains and losses and equity in earnings of unconsolidated investees are outside the scope of this ASU. This ASU was originally effective for interim and annual reporting periods beginning after December 15, 2016. However, in August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which deferred the effective date to interim and annual periods beginning after December 15, 2017. Upon adoption on January 1, 2018, the guidance will be retrospectively applied to each prior reporting period. However, nearly all (over 99 percent) of our consolidated revenue is scoped out and therefore exempt from the guidance contained within this ASU. For the remaining portion, we believe our current revenue recognition policy aligns with the new guidance and that there will not be any changes to the way we recognize revenue once this ASU is adopted. Although the recognition of earnings from equity method investees is out of scope from the update, the recognition of revenue by our two equity method investees would be subject to the new guidance if the revenue streams are within this update’s scope. Any top line impact would affect the net income of each of the equity method investees, upon which we calculate our portion of earnings to recognize. We do not expect a material impact to our earnings, as the revenue generated by both of our equity method investees will either be outside the scope of this update or largely unaffected by the changes. Furthermore, this guidance becomes effective for private companies in periods beginning after December 15, 2018 and will therefore not impact our 2018 results. ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities This ASU was issued to improve the recognition and measurement of financial instruments. The new guidance makes targeted improvements to GAAP as follows: a. Requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income; b. Simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; c. Eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; d. Requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; e. Requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments; f. Requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements; and g. Clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. This ASU is effective for interim and annual reporting periods beginning after December 15, 2017. The primary impact this guidance will have on our financial statements relates to the provision requiring the recognition of changes in the fair value of equity securities through the income statement rather than through other comprehensive income. Upon adoption in 2018, a $142.2 million cumulative-effect adjustment will be made to move net unrealized gains and losses from accumulated other comprehensive income to retained earnings. The impact to our income statement will vary depending upon the level of volatility in the performance of the securities held in our equity portfolio and the overall market. ASU 2016-02, Leases (Topic 842) ASU 2016-02 was issued to improve the financial reporting of leasing transactions. Under current guidance for lessees, leases are only included on the balance sheet if certain criteria, classifying the agreement as a capital lease, are met. This update will require the recognition of a right-of-use asset and a corresponding lease liability, discounted to the present value, for all leases that extend beyond 12 months. For operating leases, the asset and liability will be expensed over the lease term on a straight-line basis, with all cash flows included in the operating section of the statement of cash flows. For finance leases, interest on the lease liability will be recognized separately from the amortization of the right-of-use asset in the statement of comprehensive income and the repayment of the principal portion of the lease liability will be classified as a financing activity while the interest component will be included in the operating section of the statement of cash flows. This ASU is effective for annual and interim reporting periods beginning after December 15, 2018. Early adoption is permitted. Upon adoption, leases will be recognized and measured at the beginning of the earliest period presented using a modified retrospective approach. We do not have any financing leases, but recognized $6.8 million of operating lease expenses in 2017 and had $32.6 million of undiscounted future operating lease liabilities that would have to be discounted to present value and added to the balance sheet with a corresponding right-of-use asset if the guidance were applicable at December 31, 2017. We do not expect that there will be a materially different annual rental expense upon adoption. ASU 2016-13, Financial Instruments – Credit Losses (Topic 326) ASU 2016-13 was issued to provide more decision-useful information about the expected credit losses on financial instruments. Current GAAP delays the recognition of credit losses until it is probable a loss has been incurred. The update will require a financial asset measured at amortized cost, including reinsurance balances recoverable, to be presented at the net amount expected to be collected by means of an allowance for credit losses that runs through net income. Credit losses relating to available-for-sale debt securities will also be recorded through an allowance for credit losses. However, the amendments would limit the amount of the allowance to the amount by which fair value is below amortized cost. The measurement of credit losses on available-for-sale securities is similar under current GAAP, but the update requires the use of the allowance account through which amounts can be reversed, rather than through an irreversible write-down. This ASU is effective for annual and interim reporting periods beginning after December 15, 2019. Early adoption is permitted beginning after December 15, 2018. Upon adoption, the update will be applied using the modified-retrospective approach, by which a cumulative-effect adjustment will be made to retained earnings as of the beginning of the first reporting period presented. We do not have any assets measured at amortized cost that would be impacted by this update. Additionally, as our fixed income portfolio is weighted towards higher rated bonds (83 percent rated A or better and 66 percent rated AA or better at December 31, 2017) and we purchase reinsurance from financially strong reinsurers, we do not expect that our credit losses will be material. ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments ASU 2016-15 was issued to reduce the diversity in practice of how certain cash receipts and payments, for which current guidance is silent, are classified in the statement of cash flows. The update addresses eight specific issues, including contingent consideration payments made after a business combination, distributions received from equity method investees and the classification of cash receipts and payments that have aspects of more than one class of cash flows. This ASU is effective for annual and interim reporting periods beginning after December 15, 2017. Upon adoption, the update will be applied using the retrospective transition method. We do not expect a material impact on our statement of cash flows. ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income ASU 2018-02 was issued as a result of the enactment of the Tax Cuts and Jobs Act of 2017 (TCJA) on December 22, 2017. Accounting guidance required deferred tax items to be revalued based on the new tax laws (the most significant of which reduced the corporate tax rate to 21 percent from 35 percent) and to include the change in income from continuing operations. Since other comprehensive income was not affected by the revaluation of the deferred tax items, the net accumulated other comprehensive income (AOCI) balance was reflective of the historic 35 percent tax rate instead of the newly enacted rate, a difference that is referred to as a stranded tax effect. This ASU allows for the option to reclassify the stranded tax effects resulting from the implementation of the TCJA out of AOCI and into retained earnings. ASU 2018-02 does not replace the guidance requiring changes from the enactment of other tax laws or rates to be included within income from continuing operations and is applicable only to changes from the TCJA. This ASU is effective for annual and interim reporting periods beginning after December 15, 2018. Early adoption is permitted. As the adoption of ASU 2016-01 in 2018 will result in the reclassification of the entire unrealized balance on equity securities from AOCI into retained earnings, only the stranded tax effects on the unrealized balances of our fixed income securities and equity method investees will be impacted. Upon adoption of ASU 2018-02, a $4.1 million reclassification of the remaining stranded tax effects will be applied in the period of adoption or retrospectively to each period in which the effects of the TCJA changes are recognized. As there is no income statement impact and the balance sheet effect is limited to a reclassification within the equity section, there will not be a material impact to our financial statements.
INVESTMENTS	E. INVESTMENTS: We classify our investments in all debt and equity securities into one of three categories: available-for-sale, held-to-maturity or trading. AVAILABLE-FOR-SALE SECURITIES Debt and equity securities not included as held-to-maturity or trading are classified as available-for-sale and reported at fair value. Unrealized gains and losses on these securities are excluded from net earnings but are recorded as a separate component of comprehensive earnings and shareholders’ equity, net of deferred income taxes. All of our debt and equity securities are classified as available-for-sale. HELD-TO-MATURITY SECURITIES Debt securities that we have the positive intent and ability to hold to maturity are classified as held-to-maturity and carried at amortized cost. Except for declines that are other-than-temporary, changes in the fair value of these securities are not reflected in the financial statements. We do not hold any debt security classified as held-to-maturity. TRADING SECURITIES Debt and equity securities purchased for short-term resale are classified as trading securities. These securities are reported at fair value with unrealized gains and losses included in earnings. We do not hold any debt securities classified as trading. OTHER THAN TEMPORARY IMPAIRMENT We regularly evaluate our fixed income and equity securities using both quantitative and qualitative criteria to determine impairment losses for other-than-temporary declines in the fair value of the investments. The following are the key factors for determining if a security is other-than-temporarily impaired: · The length of time and the extent to which the fair value has been less than cost, · The probability of significant adverse changes to the cash flows on a fixed income investment, · The occurrence of a discrete credit event resulting in the issuer defaulting on a material obligation, the issuer seeking protection from creditors under the bankruptcy laws, the issuer proposing a voluntary reorganization under which creditors are asked to exchange their claims for cash or securities having a fair value substantially lower than par value, · The probability that we will recover the entire amortized cost basis of our fixed income securities prior to maturity or · For our equity securities, our expectation of recovery to cost within a reasonable period of time. Quantitative criteria considered during this process include, but are not limited to: the degree and duration of current fair value as compared to the cost (amortized, in certain cases) of the security, degree and duration of the security’s fair value being below cost and, for fixed maturities, whether the issuer is in compliance with terms and covenants of the security. Qualitative criteria include the credit quality, current economic conditions, the anticipated speed of cost recovery, the financial health of and specific prospects for the issuer, as well as our absence of intent to sell or requirement to sell fixed income securities prior to maturity. In addition, we consider price declines of securities in our other-than-temporary impairment (OTTI) analysis, where such price declines provide evidence of declining credit quality, and we distinguish between price changes caused by credit deterioration, as opposed to rising interest rates. See note 2 for further discussion of OTTI. Interest on fixed maturities and short-term investments is credited to earnings on an accrual basis. Premiums and discounts are amortized or accreted over the lives of the related fixed maturities. Dividends on equity securities are credited to earnings on the ex-dividend date. Realized gains and losses on disposition of investments are based on specific identification of the investments sold on the settlement date.
CASH AND SHORT-TERM INVESTMENTS	F. Cash consists of uninvested balances in bank accounts. Short-term investments consist of investments with original maturities of 90 days or less, primarily AAA-rated prime and government money market funds. Short-term investments are carried at cost. We have not experienced losses on these instruments. Other invested assets includes an investment in three low income housing tax credit partnerships (LIHTC), carried at amortized cost, membership in the Federal Home Loan Bank of Chicago (FHLBC), carried at cost, an investment in a real estate fund, carried at cost, an investment in a business development company (BDC), carried at fair value, and an investment in a global credit fund, carried at fair value. Due to the nature of cash, short-term investments, the LIHTC and our membership in the FHLBC, their carrying amounts approximate fair value.
REINSURANCE	G. Ceded unearned premiums and reinsurance balances recoverable on paid and unpaid losses and settlement expenses are reported separately as assets, instead of being netted with the related liabilities, since reinsurance does not relieve us of our legal liability to our policyholders. We continuously monitor the financial condition of our reinsurers. As part of our monitoring efforts, we review their annual financial statements, quarterly disclosures and Securities and Exchange Commission (SEC) filings for those reinsurers that are publicly traded. We also review insurance industry developments that may impact the financial condition of our reinsurers. We analyze the credit risk associated with our reinsurance balances recoverable by monitoring the A.M. Best and Standard & Poor’s (S&P) ratings of our reinsurers. In addition, we subject our reinsurance recoverables to detailed recoverable tests, including one based on average default by S&P rating. Based upon our review and testing, our policy is to charge to earnings, in the form of an allowance, an estimate of unrecoverable amounts from reinsurers. This allowance is reviewed on an ongoing basis to ensure that the amount makes a reasonable provision for reinsurance balances that we may be unable to recover.
POLICY ACQUISITION COSTS	H. We defer commissions, premium taxes and certain other costs that are incrementally or directly related to the successful acquisition of new or renewal insurance contracts. Acquisition-related costs may be deemed ineligible for deferral when they are based on contingent or performance criteria beyond the basic acquisition of the insurance contract or when efforts to obtain or renew the insurance contract are unsuccessful. All eligible costs are capitalized and charged to expense in proportion to premium revenue recognized. The method followed in computing deferred policy acquisition costs limits the amount of such deferred costs to their estimated realizable value. This would also give effect to the premiums to be earned and anticipated losses and settlement expenses, as well as certain other costs expected to be incurred as the premiums are earned. Judgments as to the ultimate recoverability of such deferred costs are reviewed on a segment basis and are highly dependent upon estimated future loss costs associated with the premiums written. This deferral methodology applies to both gross and ceded premiums and acquisition costs.
PROPERTY AND EQUIPMENT	I. Property and equipment are presented at cost less accumulated depreciation and are depreciated on a straight-line basis for financial statement purposes over periods ranging from 3 to 10 years for equipment and up to 30 years for buildings and improvements.
INVESTMENT IN UNCONSOLIDATED INVESTEES	J. We maintain a 40 percent interest in the equity and earnings of Maui Jim, Inc. (Maui Jim), a manufacturer of high-quality sunglasses, which is accounted for by the equity method. We also maintain a similar minority representation on their board of directors. Maui Jim’s chief executive officer owns a controlling majority of the outstanding shares of Maui Jim. We carry this investment at the holding company level as it is not core to our insurance operations. Our investment in Maui Jim was $77.7 million in 2017 and $62.6 million in 2016. In 2017, we recorded $14.4 million in investee earnings for Maui Jim, compared to $9.7 million in 2016 and $9.9 million in 2015. Maui Jim recorded net income of $34.4 million in 2017, $26.9 million in 2016 and $23.7 million in 2015. Additional summarized financial information for Maui Jim for 2017 and 2016 is outlined in the following table: (in millions) 2017 2016 Total assets $ 259.4 $ 246.9 Total liabilities 88.0 112.4 Total equity 171.4 134.5 Approximately $66.3 million of undistributed earnings from Maui Jim are included in our retained earnings as of December 31, 2017. In 2016, we received dividends of $9.9 million from Maui Jim. No dividends were received in 2017 or 2015. As of December 31, 2017, we had a 23 percent interest in the equity and earnings of Prime Holdings Insurance Services, Inc. (Prime), which is accounted for by the equity method. Prime writes business through two Illinois domiciled insurance carriers, Prime Insurance Company, an excess and surplus lines company, and Prime Property and Casualty Insurance Inc., an admitted insurance company. Our investment in Prime was $12.4 million at December 31, 2017 and $9.6 million at December 31, 2016. In 2017, we recorded $2.8 million in investee earnings for Prime, compared to $1.1 million in 2016 and $1.0 million in 2015. Additionally, we maintain a 25 percent quota share reinsurance treaty with Prime, which contributed $29.6 million of gross premiums written and $21.0 million of net premiums earned during 2017, compared to $13.4 million of gross premiums written and $11.4 million of net premiums earned during 2016 and $11.3 million of gross premiums written and $10.9 million of net premiums earned during 2015. We perform annual impairment reviews of our investments in unconsolidated investees, which take into consideration current valuation and operating results. Based upon the most recent reviews, the assets were not impaired.
INTANGIBLE ASSETS	K. Goodwill and intangibles totaled $59.3 million and $64.4 million at December 31, 2017 and 2016, respectively, as detailed in the following table. Goodwill and Intangible Assets (in thousands) 2017 2016 Goodwill Energy surety $ 25,706 $ 25,706 Miscellaneous and contract surety 15,110 15,110 Small Commercial 5,246 5,246 Medical professional liability * 3,595 5,208 Total goodwill $ 49,657 $ 51,270 Intangibles State insurance licenses $ 7,500 $ 7,500 Definite-lived intangibles, net of accumulated amortization of $5,678 2,145 5,601 Total intangibles $ 9,645 $ 13,101 Total goodwill and intangibles $ 59,302 $ 64,371 * The medical professional liability goodwill balance reflects a cumulative non-cash impairment charge of $8.8 million and $7.2 million as of December 31, 2017 and 2016, respectively. As the amortization of goodwill and indefinite-lived intangible assets is not permitted, the assets are tested for impairment on an annual basis, or earlier if there is reason to suspect that their values may have been diminished or impaired. Annual impairment testing was performed on each of our goodwill and indefinite-lived intangible assets during 2017. Based upon these reviews, our energy surety goodwill, miscellaneous and contract surety goodwill, small commercial goodwill and state insurance license indefinite-lived intangible asset were not impaired. In addition, as of December 31, 2017, there were no triggering events on the above mentioned goodwill and intangible assets that would suggest an updated review was necessary. As previously disclosed for our medical professional liability reporting unit, rate and volume declines coupled with adverse loss experience resulted in a triggering event during the second quarter of 2016. A fair value was determined by using a weighted average of a market approach valuation and income approach (or discounted cash flow method) valuation. It was determined that the carrying cost of our medical professional liability goodwill exceeded the fair value, resulting in a $7.2 million non-cash impairment charge. Further adverse loss experience triggered the need to test the medical professional liability reporting unit during the second quarter of 2017, resulting in an additional $3.4 million non-cash impairment charge. A fair value for the medical professional liability reporting unit’s agency relationships, carried as a definite-lived intangible, was determined by using a discounted cash flow valuation. The carrying value exceeded the fair value, resulting in a $1.8 million non-cash impairment charge. Similar to in 2016, a fair value for the medical professional liability reporting unit’s goodwill was determined by using a weighted average of a market approach and discounted cash flow valuation. The carrying value exceeded the fair value, resulting in a $1.6 million non-cash impairment charge. All impairment charges were recorded as net realized losses in the respective period’s consolidated statement of earnings. The annual impairment testing indicated no further impairment and no additional triggering events occurred subsequent to the second quarter of 2017. The definite-lived intangible assets are amortized against future operating results based on their estimated useful lives. Amortization of intangible assets was $0.7 million, $0.9 million and $0.9 million for 2017, 2016 and 2015, respectively. We anticipate we will recognize amortization expense of $0.5 million in 2018, 2019 and 2020, $0.2 million in 2021 and $0.1 million in 2022. In addition to the aforementioned $1.8 million reduction due to the medical professional liability impairment, the asset sale of an agency in 2017 also reduced the definite-lived intangibles by $1.0 million.
UNPAID LOSSES AND SETTLEMENT EXPENSES	L. The liability for unpaid losses and settlement expenses represents estimates of amounts needed to pay reported and unreported claims and related expenses. The estimates are based on certain actuarial and other assumptions related to the ultimate cost to settle such claims. Such assumptions are subject to occasional changes due to evolving economic, social and political conditions. All estimates are periodically reviewed and, as experience develops and new information becomes known, the reserves are adjusted as necessary. Such adjustments are reflected in the results of operations in the period in which they are determined. Due to the inherent uncertainty in estimating reserves for losses and settlement expenses, there can be no assurance that the ultimate liability will not exceed recorded amounts. If actual liabilities do exceed recorded amounts, there will be an adverse effect. Furthermore, we may determine that recorded reserves are more than adequate to cover expected losses, which would lead to a reduction in our reserves.
INSURANCE REVENUE RECOGNITION	M. Insurance premiums are recognized ratably over the term of the contracts, net of ceded reinsurance. Unearned premiums are calculated on a monthly pro rata basis.
INCOME TAXES	N. We file a consolidated federal income tax return. Federal income taxes are accounted for using the asset and liability method under which deferred income taxes are recognized for the tax consequences of temporary differences by applying enacted statutory tax rates applicable to future years to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities, operating losses and tax credit carry forwards. The effect on deferred taxes for a change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that all or some of the deferred tax assets will not be realized. We consider uncertainties in income taxes and recognize those in our financial statements as required. As it relates to uncertainties in income taxes, our unrecognized tax benefits, including interest and penalty accruals, are not considered material to the consolidated financial statements. Also, no tax uncertainties are expected to result in significant increases or decreases to unrecognized tax benefits within the next 12-month period. Penalties and interest related to income tax uncertainties, should they occur, would be included in income tax expense in the period in which they are incurred. As an insurance company, we are subject to minimal state income tax liabilities. On a state basis, since the majority of our income is from insurance operations, we pay premium taxes which are calculated as a percentage of gross premiums written in lieu of state income taxes. Premium taxes are a component of policy acquisition costs.
EARNINGS PER SHARE	O. Basic earnings per share (EPS) is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the dilution that could occur if securities or other contracts to issue common stock or common stock equivalents were exercised or converted into common stock. When inclusion of these items increases the earnings per share or reduces the loss per share, the effect on earnings is anti-dilutive. Under these circumstances, the diluted net earnings or net loss per share is computed excluding these items. The following represents a reconciliation of the numerator and denominator of the basic and diluted EPS computations contained in the consolidated financial statements: Weighted Average Income Shares Per Share (in thousands, except per share data) (Numerator) (Denominator) Amount For the year ended December 31, 2017 Basic EPS Income available to common shareholders $ 105,028 44,033 $ 2.39 Stock options — 467 Diluted EPS Income available to common shareholders and assumed conversions $ 105,028 44,500 $ 2.36 For the year ended December 31, 2016 Basic EPS Income available to common shareholders $ 114,920 43,772 $ 2.63 Stock options — 660 Diluted EPS Income available to common shareholders and assumed conversions $ 114,920 44,432 $ 2.59 For the year ended December 31, 2015 Basic EPS Income available to common shareholders $ 137,544 43,299 $ 3.18 Stock options — 832 Diluted EPS Income available to common shareholders and assumed conversions $ 137,544 44,131 $ 3.12
COMPREHENSIVE EARNINGS	P. Our comprehensive earnings include net earnings plus unrealized gains/losses on our available-for-sale investment securities, net of tax. In reporting the components of comprehensive earnings, we used a 35 percent tax rate. Other comprehensive income (loss), as shown in the consolidated statements of earnings and comprehensive earnings, is net of tax expense (benefit) of $19.0 million, $(0.6) million and $(25.3) million for 2017, 2016 and 2015, respectively. The following table illustrates the changes in the balance of each component of accumulated other comprehensive earnings for each period presented in the consolidated financial statements: Unrealized Gains/Losses on Available-for-Sale Securities For the Year Ended December 31, (in thousands) 2017 2016 2015 Beginning balance $ 122,610 $ 123,774 $ 171,383 Other comprehensive earnings before reclassifications 40,887 26,740 (26,199) Amounts reclassified from accumulated other comprehensive earnings (5,578) (27,904) (21,410) Net current-period other comprehensive earnings (loss) $ 35,309 $ (1,164) $ (47,609) Ending balance $ 157,919 $ 122,610 $ 123,774 The sale or other-than-temporary impairment of an available-for-sale security results in amounts being reclassified from accumulated other comprehensive earnings to current period net earnings. The effects of reclassifications out of accumulated other comprehensive earnings by the respective line items of net earnings are presented in the following table: Amount Reclassified from Accumulated Other Comprehensive Earnings (in thousands) Component of Accumulated For the Year Ended December 31, Affected line item in the Other Comprehensive Earnings 2017 2016 2015 Statement of Earnings Unrealized gains and losses on available-for-sale securities $ 11,141 $ 43,024 $ 32,939 Net realized investment gains (2,559) (95) — Other-than-temporary impairment (OTTI) losses on investments $ 8,582 $ 42,929 $ 32,939 Earnings before income taxes (3,004) (15,025) (11,529) Income tax expense $ 5,578 $ 27,904 $ 21,410 Net earnings
FAIR VALUE DISCLOSURES	Q. Fair value is defined as the price in the principal market that would be received for an asset to facilitate an orderly transaction between market participants on the measurement date. We determined the fair value of certain financial instruments based on their underlying characteristics and relevant transactions in the marketplace. We maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The following are the levels of the fair value hierarchy and a brief description of the type of valuation inputs that are used to establish each level: · Pricing Level 1 is applied to valuations based on readily available, unadjusted quoted prices in active markets for identical assets. · Pricing Level 2 is applied to valuations based upon quoted prices for similar assets in active markets, quoted prices for identical or similar assets in inactive markets; or valuations based on models where the significant inputs are observable (e.g. interest rates, yield curves, prepayment speeds, default rates, loss severities) or can be corroborated by observable market data. · Pricing Level 3 is applied to valuations that are derived from techniques in which one or more of the significant inputs are unobservable. Financial assets are classified based upon the lowest level of significant input that is used to determine fair value. As a part of management’s process to determine fair value, we utilize widely recognized, third-party pricing sources to determine our fair values. We have obtained an understanding of the third-party pricing sources’ valuation methodologies and inputs. The following is a description of the valuation techniques used for financial assets that are measured at fair value, including the general classification of such assets pursuant to the fair value hierarchy. Corporate, Agencies, Government and Municipal Bonds: The pricing vendor employs a multi-dimensional model which uses standard inputs including (listed in approximate order of priority for use) benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, market bids/offers and other reference data. The pricing vendor also monitors market indicators, as well as industry and economic events. All bonds valued using these techniques are classified as Level 2. All Corporate, Agencies, Government and Municipal securities are deemed Level 2. Mortgage-backed Securities (MBS)/Collateralized Mortgage Obligations (CMO) and Asset-backed Securities (ABS): The pricing vendor evaluation methodology includes principally interest rate movements and new issue data. Evaluation of the tranches (non-volatile, volatile or credit sensitivity) is based on the pricing vendors’ interpretation of accepted modeling and pricing conventions. This information is then used to determine the cash flows for each tranche, benchmark yields, pre-payment assumptions and to incorporate collateral performance. To evaluate CMO volatility, an option adjusted spread model is used in combination with models that simulate interest rate paths to determine market price information. This process allows the pricing vendor to obtain evaluations of a broad universe of securities in a way that reflects changes in yield curve, index rates, implied volatility, mortgage rates and recent trade activity. MBS/CMO and ABS with corroborated, observable inputs are classified as Level 2. All of our MBS/CMO and ABS are deemed Level 2. For all of our fixed income securities classified as Level 2, as described above, we periodically conduct a review to assess the reasonableness of the fair values provided by our pricing services. Our review consists of a two-pronged approach. First, we compare prices provided by our pricing services to those provided by an additional source. In some cases, we obtain prices from securities brokers and compare them to the prices provided by our pricing services. In our comparisons, if discrepancies are found, we compare our prices to actual reported trade data for like securities. No changes to the fair values supplied by our pricing services have occurred as a result of our reviews. Based on these assessments, we have determined that the fair values of our Level 2 securities provided by our pricing services are reasonable. Common Stock: For common stock securities, we receive prices from a nationally recognized pricing service. All of our common stock holdings are deemed Level 1 as exchange traded equities have readily observable price levels (fair value based on quoted market prices). As such, we have determined that the fair values of our Level 1 securities provided by our pricing service are reasonable. Due to the relatively short-term nature of cash, short-term investments, accounts receivable and accounts payable, their carrying amounts are reasonable estimates of fair value. Our investments in a business development company and a global credit fund, classified as other invested assets, are measured using the investments’ net asset value per share and are not categorized within the fair value hierarchy. The fair value of our long-term debt is discussed further in note 4.
STOCK-BASED COMPENSATION	R. We expense the estimated fair value of employee stock options and similar awards. We measure compensation cost for awards of equity instruments to employees based on the grant-date fair value of those awards and recognize compensation expense over the service period that the awards are expected to vest. The tax effects related to share-based payments were made through net earnings in 2017. In 2016 and 2015, the tax effects of share-based compensation were recognized in additional paid-in capital under the alternative transition method. The alternative transition method used simplified methods to determine the impact on the additional paid-in capital pool and consolidated statements of cash flows. See note 8 for further discussion and related disclosures regarding stock options.
RISKS AND UNCERTAINTIES	S. Certain risks and uncertainties are inherent to our day-to-day operations and to the process of preparing our consolidated financial statements. The more significant risks and uncertainties, as well as our attempt to mitigate, quantify and minimize such risks, are presented below and throughout the notes to the consolidated financial statements. Insurance Risks We compete with a large number of other companies in our selected lines of business. During periods of intense competition for premium, we are vulnerable to the actions of other companies who may seek to write business without the appropriate regard for risk and profitability. The insurance industry is currently operating under highly competitive conditions and, as a result, margins in the industry are under pressure. During these times, it is very difficult to grow or maintain premium volume without sacrificing underwriting discipline and income. Our profitability can be affected significantly by the ability of our underwriters to accurately select and price risk and our claim personnel to appropriately deliver fair outcomes. We attempt to mitigate this risk by incentivizing our underwriters to maximize underwriting profit and remain disciplined in pricing and selecting risks. If we are unable to compete effectively in the markets in which we operate or expand our operations into new markets, our underwriting revenues may decline, as well as overall business results. Our loss reserves are based on estimates and may be inadequate to cover our actual insured losses, which would negatively impact our profitability. As of December 31, 2017 we had $1.3 billion of gross loss and LAE reserves. Significant periods of time often elapse between the occurrence of an insured loss, the reporting of the loss to us and our payment of that loss. As part of the reserving process, we review historical data and consider the impact of various factors such as trends in claim frequency and severity, emerging economic and social trends, inflation and changes in the regulatory and litigation environments. If the actual amount of insured losses is greater than the amount we have reserved for these losses, our profitability could suffer. Catastrophe Exposures Our insurance coverages include exposure to catastrophic events. We monitor all catastrophe exposures by quantifying our exposed policy limits in each region and by using computer-assisted modeling techniques. Additionally, we limit our risk to such catastrophes through restraining the total policy limits written in each region and by purchasing reinsurance. Our major catastrophe exposure is to losses caused by earthquakes, primarily on the West Coast. In 2017, for this coverage, we had reinsurance protection of $300 million in excess of $25 million first-dollar retention for earthquakes in California and $325 million in excess of a $25 million first-dollar retention for earthquakes outside of California. These amounts are subject to certain co-participations by us on losses in excess of the $25 million retentions. Our second largest catastrophe exposure is to losses caused by wind storms to commercial properties throughout the Gulf and East Coasts, as well as to homes we insure in Hawaii. In 2017, these coverages were supported by $225 million in excess of a $25 million first-dollar retention in traditional catastrophe reinsurance protection, subject to certain co-participations by us in the excess layers. In addition, we have incidental exposure to international catastrophic events. Our catastrophe reinsurance treaty renewed on January 1, 2018. We purchased the same limits over the same first-dollar retention amounts outlined above, subject to certain retentions by us in the excess layers. We actively manage our catastrophe program to keep our net retention in line with risk tolerances and to optimize the risk/return trade off. Environmental Exposures We are subject to environmental claims and exposures primarily through our commercial umbrella, general liability and discontinued assumed casualty reinsurance lines of business. Although exposure to environmental claims exists in these lines of business, we seek to mitigate or control the extent of this exposure on the vast majority of this business through the following methods: (1) our policies include pollution exclusions that have been continually updated to further strengthen them, (2) our policies primarily cover moderate hazard risks and (3) we began writing this business after the insurance industry became aware of the potential pollution liability exposure and implemented changes to limit exposure to this hazard. We offer coverage for low to moderate environmental liability exposures for small contractors and asbestos and mold remediation specialists. We also provide limited coverage for individually underwritten underground storage tanks. The overall exposure is mitigated by focusing on smaller risks with low to moderate exposures. Risks that have large-scale exposures are avoided including petrochemical, chemical, mining, manufacturers and other risks that might be exposed to superfund sites. This business is covered under our casualty ceded reinsurance treaties. We made loss and settlement expense payments on environmental liability claims and have loss and settlement expense reserves for others. We include this historical environmental loss experience with the remaining loss experience in the applicable line of business to project ultimate incurred losses and settlement expenses as well as related incurred but not reported (IBNR) loss and settlement expense reserves. Although historical experience on environmental claims may not accurately reflect future environmental exposures, we used this experience to record loss and settlement expense reserves in the exposed lines of business. See further discussion of environmental exposures in note 6. Reinsurance Reinsurance does not discharge us from our primary liability to policyholders, and to the extent that a reinsurer is unable to meet its obligations, we would be liable. We continuously monitor the financial condition of prospective and existing reinsurers. As a result, we purchase reinsurance from a number of financially strong reinsurers. We provide an allowance for reinsurance balances deemed uncollectible. See further discussion of reinsurance exposures in note 5. Investment Risk Our investment portfolio is subject to market, credit and interest rate risks. The equity portfolio will fluctuate with movements in the overall stock market. While the equity portfolio has been constructed to have lower downside risk than the market, the portfolio is positively correlated with movements in domestic stocks. The bond portfolio is affected by interest rate changes and movement in credit spreads. We attempt to mitigate our interest rate and credit risks by constructing a well-diversified portfolio with high-quality securities with varied maturities. Downturns in the financial markets could have a negative effect on our portfolio. However, we attempt to manage this risk through asset allocation, duration and security selection. Liquidity Risk Liquidity is essential to our business and a key component of our concept of asset-liability matching. Our liquidity may be impaired by an inability to collect premium receivable or reinsurance recoverable balances in a timely manner, an inability to sell assets or redeem our investments, an inability to access funds from our insurance subsidiaries, unforeseen outflows of cash or large claim payments or an inability to access debt or equity capital markets. This situation may arise due to circumstances that we may be unable to control, such as a general market disruption, an operational problem that affects third parties or us, or even by the perception among market participants that we, or other market participants, are experiencing greater liquidity risk. Our credit ratings are important to our liquidity. A reduction in our credit ratings could adversely affect our liquidity and competitive position by increasing our borrowing costs or limiting our access to the capital markets. Financial Statements The preparation of the accompanying consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities and reported amounts of revenues and expenses. The most significant of these amounts is the liability for unpaid losses and settlement expenses. Other estimates include investment valuation and OTTIs, the collectability of reinsurance balances, recoverability of deferred tax assets and deferred policy acquisition costs. These estimates and assumptions are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. We adjust such estimates and assumptions when facts and circumstances dictate. Although recorded estimates are supported by actuarial computations and other supportive data, the estimates are ultimately based on our expectations of future events. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in those estimates resulting from continuing changes in the economic environment will be reflected in the consolidated financial statements in future periods. External Factors Our insurance subsidiaries are highly regulated by the state in which they are incorporated and by the states in which they do business. Such regulations, among other things, limit the amount of dividends, impose restrictions on the amount and types of investments and regulate rates insurers may charge for various coverages. We are also subject to insolvency and guaranty fund assessments for various programs designed to ensure policyholder indemnification. We generally accrue an assessment during the period in which it becomes probable that a liability has been incurred from an insolvency and the amount of the related assessment can be reasonably estimated. The National Association of Insurance Commissioners (NAIC) has developed Property/Casualty Risk-Based Capital (RBC) standards that relate an insurer’s reported statutory surplus to the risks inherent in its overall operations. The RBC formula uses the statutory annual statement to calculate the minimum indicated capital level to support investment and underwriting risk. The NAIC model law calls for various levels of regulatory action based on the magnitude of an indicated RBC capital deficiency, if any. We regularly monitor our subsidiaries’ internal capital requirements and the NAIC’s RBC developments. As of December 31, 2017, we determined that our capital levels are well in excess of the minimum capital requirements for all RBC action levels and that our capital levels are sufficient to support the level of risk inherent in our operations. See note 9 for further discussion of statutory information and related insurance regulatory restrictions. In addition, ratings are a critical factor in establishing the competitive position of insurance companies. Our insurance companies are rated by A.M. Best, S&P and Moody’s. Their ratings reflect their opinions of an insurance company’s and an insurance holding company’s financial strength, operating performance, strategic position and ability to meet its obligations to policyholders.

SUMMARY OF SIGNIFICANT ACCOUN27

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)	12 Months Ended
	Dec. 31, 2017
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Schedule of summarized financial information of Maui Jim	(in millions) 2017 2016 Total assets $ 259.4 $ 246.9 Total liabilities 88.0 112.4 Total equity 171.4 134.5
Schedule of goodwill and intangible assets	Goodwill and Intangible Assets (in thousands) 2017 2016 Goodwill Energy surety $ 25,706 $ 25,706 Miscellaneous and contract surety 15,110 15,110 Small Commercial 5,246 5,246 Medical professional liability * 3,595 5,208 Total goodwill $ 49,657 $ 51,270 Intangibles State insurance licenses $ 7,500 $ 7,500 Definite-lived intangibles, net of accumulated amortization of $5,678 2,145 5,601 Total intangibles $ 9,645 $ 13,101 Total goodwill and intangibles $ 59,302 $ 64,371 * The medical professional liability goodwill balance reflects a cumulative non-cash impairment charge of $8.8 million and $7.2 million as of December 31, 2017 and 2016, respectively.
Schedule of reconciliation of numerator and denominator of the basic and diluted earnings per share computations	Weighted Average Income Shares Per Share (in thousands, except per share data) (Numerator) (Denominator) Amount For the year ended December 31, 2017 Basic EPS Income available to common shareholders $ 105,028 44,033 $ 2.39 Stock options — 467 Diluted EPS Income available to common shareholders and assumed conversions $ 105,028 44,500 $ 2.36 For the year ended December 31, 2016 Basic EPS Income available to common shareholders $ 114,920 43,772 $ 2.63 Stock options — 660 Diluted EPS Income available to common shareholders and assumed conversions $ 114,920 44,432 $ 2.59 For the year ended December 31, 2015 Basic EPS Income available to common shareholders $ 137,544 43,299 $ 3.18 Stock options — 832 Diluted EPS Income available to common shareholders and assumed conversions $ 137,544 44,131 $ 3.12
Schedule of changes in the balance of each component of accumulated other comprehensive earnings	Unrealized Gains/Losses on Available-for-Sale Securities For the Year Ended December 31, (in thousands) 2017 2016 2015 Beginning balance $ 122,610 $ 123,774 $ 171,383 Other comprehensive earnings before reclassifications 40,887 26,740 (26,199) Amounts reclassified from accumulated other comprehensive earnings (5,578) (27,904) (21,410) Net current-period other comprehensive earnings (loss) $ 35,309 $ (1,164) $ (47,609) Ending balance $ 157,919 $ 122,610 $ 123,774
Schedule of effects of reclassifications out of accumulated other comprehensive earnings	Amount Reclassified from Accumulated Other Comprehensive Earnings (in thousands) Component of Accumulated For the Year Ended December 31, Affected line item in the Other Comprehensive Earnings 2017 2016 2015 Statement of Earnings Unrealized gains and losses on available-for-sale securities $ 11,141 $ 43,024 $ 32,939 Net realized investment gains (2,559) (95) — Other-than-temporary impairment (OTTI) losses on investments $ 8,582 $ 42,929 $ 32,939 Earnings before income taxes (3,004) (15,025) (11,529) Income tax expense $ 5,578 $ 27,904 $ 21,410 Net earnings

INVESTMENTS (Tables)

INVESTMENTS (Tables)	12 Months Ended
	Dec. 31, 2017
INVESTMENTS
Schedule of net investment income	NET INVESTMENT INCOME (in thousands) 2017 2016 2015 Interest on fixed income securities $ 48,343 $ 46,834 $ 48,064 Dividends on equity securities 10,506 10,929 11,407 Interest on cash, short-term investments and other invested assets 945 120 11 Gross investment income $ 59,794 $ 57,883 $ 59,482 Less investment expenses (4,918) (4,808) (4,838) Net investment income $ 54,876 $ 53,075 $ 54,644
Schedule of pretax net realized investment gains (losses) and net changes in unrealized gains (losses) on investments	REALIZED/UNREALIZED GAINS (in thousands) 2017 2016 2015 Net realized gains (losses): Fixed income: Available-for-sale $ 859 $ 4,314 $ 10,832 Available-for-sale OTTI (2,559) (95) — Equity securities 10,282 38,709 22,107 Sale of subsidiary (RLI Indemnity Company)* — — 6,698 Other (4,171) (8,283) 192 Total $ 4,411 $ 34,645 $ 39,829 Net changes in unrealized gains (losses) on investments: Fixed income: Available-for-sale $ 16,846 $ (10,972) $ (26,929) Equity securities 36,844 8,659 (44,120) Other invested assets 29 — — Investment in unconsolidated investees 604 522 (1,886) Total $ 54,323 $ (1,791) $ (72,935) Net realized gains (losses) and changes in unrealized gains (losses) on investments $ 58,734 $ 32,854 $ (33,106)
Schedule of disposition of fixed maturities and equities	Net SALES Proceeds Gross Realized Realized (in thousands) From Sales Gains Losses Gain (Loss) 2017 Available-for-sale $ 169,002 $ 2,406 $ (1,670) $ 736 Equities 36,573 13,178 (2,896) 10,282 2016 Available-for-sale $ 329,091 $ 7,158 $ (3,287) $ 3,871 Equities 89,909 39,668 (959) 38,709 2015 Available-for-sale $ 436,680 $ 14,691 $ (4,067) $ 10,624 Equities 53,110 25,985 (3,878) 22,107 Net CALLS/MATURITIES Gross Realized Realized (in thousands) Proceeds Gains Losses Gain (Loss) 2017 Available-for-sale $ 195,617 $ 262 $ (139) $ 123 2016 Available-for-sale $ 141,255 $ 445 $ (2) $ 443 2015 Available-for-sale $ 156,980 $ 217 $ (9) $ 208
Schedule of assets measured at fair value on recurring basis	Assets measured at fair value on a recurring basis as of December 31, 2017, are summarized below: Significant Quoted in Active Other Significant Markets for Observable Unobservable Identical Assets Inputs Inputs (in thousands) (Level 1) (Level 2) (Level 3) Total Available-for-sale securities: U.S. government $ — $ 91,689 $ — $ 91,689 U.S. agency — 18,778 — 18,778 Non-U.S. govt. & agency — 7,588 — 7,588 Agency MBS — 328,471 — 328,471 ABS/CMBS* — 70,526 — 70,526 Corporate — 519,022 — 519,022 Municipal — 636,165 — 636,165 Equity 400,492 — — 400,492 Total available-for-sale securities $ 400,492 $ 1,672,239 $ — $ 2,072,731 *Non-agency asset-backed & commercial mortgage-backed Assets measured at fair value on a recurring basis as of December 31, 2016, are summarized below: Significant Quoted in Active Other Significant Markets for Observable Unobservable Identical Assets Inputs Inputs (in thousands) (Level 1) (Level 2) (Level 3) Total Available-for-sale securities: U.S. government $ — $ 76,563 $ — $ 76,563 U.S. agency — 5,813 — 5,813 Non-U.S. govt. & agency — 9,151 — 9,151 Agency MBS — 284,069 — 284,069 ABS/CMBS* — 93,910 — 93,910 Corporate — 508,367 — 508,367 Municipal — 627,336 — 627,336 Equity 369,219 — — 369,219 Total available-for-sale securities $ 369,219 $ 1,605,209 $ — $ 1,974,428 *Non-agency asset-backed & commercial mortgage-backed
Schedule of contractual maturity of securities	The amortized cost and estimated fair value of fixed income securities at December 31, 2017, by contractual maturity, are shown as follows: (in thousands) Amortized Cost Fair Value Available-for-sale: Due in one year or less $ 16,023 $ 15,984 Due after one year through five years 318,411 322,988 Due after five years through 10 years 586,340 598,041 Due after 10 years 326,103 336,229 Mtge/ABS/CMBS* 399,534 398,997 Total available-for-sale $ 1,646,411 $ 1,672,239 *
Schedule of amortized cost and fair value of available-for-sale securities	In addition, the following table is a schedule of amortized costs and estimated fair values of investments in fixed income and equity securities as of December 31, 2017 and 2016: 2017 Amortized Gross Unrealized (in thousands) Cost Fair Value Gains Losses Available-for-sale: U.S. government $ 92,561 $ 91,689 $ 23 $ (895) U.S. agency 18,541 18,778 347 (110) Non-U.S. govt. & agency 7,501 7,588 143 (56) Agency MBS 329,129 328,471 3,420 (4,078) ABS/CMBS* 70,405 70,526 436 (315) Corporate 508,128 519,022 12,575 (1,681) Municipal 620,146 636,165 17,272 (1,253) Total fixed income $ 1,646,411 $ 1,672,239 $ 34,216 $ (8,388) Equity securities 182,002 400,492 219,346 (856) Total available-for-sale $ 1,828,413 $ 2,072,731 $ 253,562 $ (9,244) 2016 Amortized Gross Unrealized (in thousands) Cost Fair Value Gains Losses Available-for-sale: U.S. government $ 77,054 $ 76,563 $ 88 $ (579) U.S. agency 5,473 5,813 340 — Non-U.S. govt. & agency 9,517 9,151 2 (368) Agency MBS 283,002 284,069 4,635 (3,568) ABS/CMBS* 93,791 93,910 676 (557) Corporate 503,041 508,367 10,996 (5,670) Municipal 624,349 627,336 9,575 (6,588) Total fixed income $ 1,596,227 $ 1,605,209 $ 26,312 $ (17,330) Equity securities 187,573 369,219 182,912 (1,266) Total available-for-sale $ 1,783,800 $ 1,974,428 $ 209,224 $ (18,596) * Non-agency asset-backed & commercial mortgage-backed
Schedule of securities in an unrealized loss position segregated by type and length of time in an unrealized loss position	December 31, 2017 December 31, 2016 12 Mos. 12 Mos. (in thousands) < 12 Mos. & Greater Total < 12 Mos. & Greater Total U.S. Government Fair value $ 58,009 $ 30,888 $ 88,897 $ 48,500 $ — $ 48,500 Cost or amortized cost 58,443 31,349 89,792 49,079 — 49,079 Unrealized Loss $ (434) $ (461) $ (895) $ (579) $ — $ (579) U.S. Agency Fair value $ 10,917 $ — $ 10,917 $ — $ — $ — Cost or amortized cost 11,027 — 11,027 — — — Unrealized Loss $ (110) $ — $ (110) $ — $ — $ — Non-U.S. Government Fair value $ — $ 1,840 $ 1,840 $ 7,647 $ — $ 7,647 Cost or amortized cost — 1,896 1,896 8,015 — 8,015 Unrealized Loss $ — $ (56) $ (56) $ (368) $ — $ (368) Agency MBS Fair value $ 122,130 $ 111,306 $ 233,436 $ 175,858 $ 5,737 $ 181,595 Cost or amortized cost 123,559 113,955 237,514 179,238 5,925 185,163 Unrealized Loss $ (1,429) $ (2,649) $ (4,078) $ (3,380) $ (188) $ (3,568) ABS/CMBS* Fair value $ 23,406 $ 21,587 $ 44,993 $ 48,907 $ 5,272 $ 54,179 Cost or amortized cost 23,491 21,817 45,308 49,372 5,364 54,736 Unrealized Loss $ (85) $ (230) $ (315) $ (465) $ (92) $ (557) Corporate Fair value $ 86,946 $ 28,600 $ 115,546 $ 144,353 $ 15,535 $ 159,888 Cost or amortized cost 87,736 29,491 117,227 146,979 18,579 165,558 Unrealized Loss $ (790) $ (891) $ (1,681) $ (2,626) $ (3,044) $ (5,670) Municipal Fair value $ 71,059 $ 60,049 $ 131,108 $ 250,930 $ — $ 250,930 Cost or amortized cost 71,534 60,827 132,361 257,518 — 257,518 Unrealized Loss $ (475) $ (778) $ (1,253) $ (6,588) $ — $ (6,588) Subtotal, fixed income Fair value $ 372,467 $ 254,270 $ 626,737 $ 676,195 $ 26,544 $ 702,739 Cost or amortized cost 375,790 259,335 635,125 690,201 29,868 720,069 Unrealized Loss $ (3,323) $ (5,065) $ (8,388) $ (14,006) $ (3,324) $ (17,330) Equity securities Fair value $ 4,373 $ 2,156 $ 6,529 $ 7,438 $ 1,973 $ 9,411 Cost or amortized cost 4,581 2,804 7,385 8,029 2,648 10,677 Unrealized Loss $ (208) $ (648) $ (856) $ (591) $ (675) $ (1,266) Total Fair value $ 376,840 $ 256,426 $ 633,266 $ 683,633 $ 28,517 $ 712,150 Cost or amortized cost 380,371 262,139 642,510 698,230 32,516 730,746 Unrealized Loss $ (3,531) $ (5,713) $ (9,244) $ (14,597) $ (3,999) $ (18,596) *Non-agency asset-backed & commercial mortgage-backed

POLICY ACQUISITION COSTS (Table

POLICY ACQUISITION COSTS (Tables)	12 Months Ended
	Dec. 31, 2017
POLICY ACQUISITION COSTS
Schedule of policy acquisition costs deferred and amortized to income	Policy acquisition costs deferred and amortized to income for the years ended December 31 are summarized as follows: (in thousands) 2017 2016 2015 Deferred policy acquisition costs (DAC), beginning of year $ 73,147 $ 69,829 $ 65,123 Deferred: Direct commissions $ 157,723 $ 150,390 $ 146,507 Premium taxes 11,651 11,759 11,087 Ceding commissions (18,096) (17,488) (17,403) Net deferred $ 151,278 $ 144,661 $ 140,191 Amortized 146,709 141,343 135,485 DAC, end of year $ 77,716 $ 73,147 $ 69,829 Policy acquisition costs: Amortized to expense - DAC $ 146,709 $ 141,343 $ 135,485 Period costs: Ceding commission - contingent (3,575) (1,524) (1,834) Other underwriting expenses 109,381 109,793 107,427 Total policy acquisition costs $ 252,515 $ 249,612 $ 241,078

REINSURANCE (Tables)

REINSURANCE (Tables)	12 Months Ended
	Dec. 31, 2017
REINSURANCE
Schedule of premiums written and earned along with losses and settlement expenses incurred	(in thousands) 2017 2016 2015 WRITTEN Direct $ 848,153 $ 844,430 $ 819,130 Reinsurance assumed 37,159 30,434 34,456 Reinsurance ceded (135,458) (133,912) (131,615) Net $ 749,854 $ 740,952 $ 721,971 EARNED Direct $ 835,118 $ 835,294 $ 797,180 Reinsurance assumed 32,521 27,886 35,724 Reinsurance ceded (129,702) (134,572) (132,743) Net $ 737,937 $ 728,608 $ 700,161 LOSSES AND SETTLEMENT EXPENSES INCURRED Direct $ 486,986 $ 405,873 $ 307,445 Reinsurance assumed 16,072 13,196 23,184 Reinsurance ceded (101,474) (69,291) (31,584) Net $ 401,584 $ 349,778 $ 299,045
Schedule of net reinsurance balances recoverable, after consideration of collateral, from top 10 reinsurers	Net Reinsurer Ceded A.M. Best S & P Exposure as of Percent of Premiums Percent of (dollars in thousands) Rating Rating 12/31/2017 Total Written Total Munich Re / HSB A+, Superior AA-, Very Strong $ 59,277 17.0 % $ 24,747 18.3 % Swiss Re / Westport Ins. Corp. A+, Superior AA-, Very Strong 47,680 13.6 % 10,671 7.9 % Endurance Re A+, Superior A, Strong 29,771 8.5 % 5,695 4.2 % Aspen UK Ltd. A, Excellent A, Strong 26,204 7.5 % 6,895 5.1 % Berkley Insurance Co. A+, Superior A+, Strong 17,404 5.0 % 5,589 4.1 % Transatlantic Re A, Excellent A+, Strong 15,726 4.5 % 6,212 4.6 % General Re A++, Superior AA+, Very Strong 14,997 4.3 % 3,694 2.7 % Scor Reinsurance Co. A+, Superior AA-, Very Strong 14,226 4.1 % 5,433 4.0 % Tokio Millennium Re A++, Superior A+, Strong 14,133 4.0 % 7,775 5.7 % Hannover Ruckversicherung A+, Superior AA-, Very Strong 13,649 3.9 % 7,302 5.4 % All other reinsurers* 96,643 27.6 % 51,445 38.0 % Total ceded exposure $ 349,710 100.0 % $ 135,458 100.0 % * All other reinsurance balances recoverable, when considered by individual reinsurer, are less than 2 percent of shareholders’ equity.

HISTORICAL LOSS AND LAE DEVEL31

HISTORICAL LOSS AND LAE DEVELOPMENT (Tables)	12 Months Ended
	Dec. 31, 2017
HISTORICAL LOSS AND LAE DEVELOPMENT
Schedule of reconciliation of unpaid losses and settlement expenses (LAE)	The following table is a reconciliation of our unpaid losses and settlement expenses (LAE) for the years 2017, 2016 and 2015: (in thousands) 2017 2016 2015 Unpaid losses and LAE at beginning of year: Gross $ 1,139,337 $ 1,103,785 $ 1,121,040 Ceded (288,224) (297,844) (335,106) Net $ 851,113 $ 805,941 $ 785,934 Increase (decrease) in incurred losses and LAE: Current accident year $ 440,452 $ 391,772 $ 364,472 Prior accident years (38,868) (41,994) (65,427) Total incurred $ 401,584 $ 349,778 $ 299,045 Loss and LAE payments for claims incurred: Current accident year $ (73,392) $ (70,540) $ (71,853) Prior accident year (209,793) (234,066) (207,185) Total paid $ (283,185) $ (304,606) $ (279,038) Net unpaid losses and LAE at end of year $ 969,512 $ 851,113 $ 805,941 Unpaid losses and LAE at end of year: Gross $ 1,271,503 $ 1,139,337 $ 1,103,785 Ceded (301,991) (288,224) (297,844) Net $ 969,512 $ 851,113 $ 805,941
Schedule of incurred and paid claims development	Casualty - Primary Occurrence (in thousands, except number of claims) Incurred Losses and Loss Adjustment Expenses, Net of Reinsurance As of December 31, 2017 For the Years Ended December 31, Cumulative Number of Reported AY 2008* 2009* 2010* 2011* 2012* 2013* 2014* 2015* 2016* 2017 Total IBNR Claims 2008 $ 96,829 $ 100,454 $ 91,734 $ 83,367 $ 78,218 $ 74,174 $ 73,859 $ 73,696 $ 74,837 $ 74,672 $ 1,505 5,423 2009 85,476 119,957 99,765 91,441 86,888 82,651 81,138 80,518 80,350 2,068 5,705 2010 87,875 96,582 93,589 88,820 85,034 80,289 78,685 78,991 2,216 6,107 2011 91,139 98,428 94,145 89,622 86,342 83,181 82,193 3,413 5,839 2012 91,807 78,406 65,893 61,072 59,028 59,488 4,100 5,148 2013 80,823 67,297 62,882 60,329 60,162 9,631 4,267 2014 88,092 79,497 71,592 67,237 17,335 4,190 2015 94,835 84,975 83,579 33,109 4,201 2016 101,950 96,753 54,413 3,920 2017 119,741 93,852 3,496 Total $ Cumulative Paid Loss and Loss Adjustment Expenses, Net of Reinsurance For the Years Ended December 31, AY 2008* 2009* 2010* 2011* 2012* 2013* 2014* 2015* 2016* 2017 2008 $ 3,022 $ 9,399 $ 20,539 $ 33,605 $ 48,108 $ 56,288 $ 62,511 $ 64,814 $ 67,572 $ 69,605 2009 1,972 9,233 24,115 43,702 58,460 65,913 70,220 74,920 75,948 2010 2,587 13,025 29,312 44,051 55,992 61,929 66,399 69,514 2011 5,924 17,124 32,978 48,822 60,769 67,358 71,413 2012 5,897 14,539 23,889 33,822 43,276 47,970 2013 6,334 13,021 22,366 34,786 40,609 2014 11,436 18,771 29,545 40,270 2015 10,157 19,902 33,020 2016 10,142 24,186 2017 13,154 * Presented as unaudited required supplementary information. Total $ All outstanding liabilities before 2008, net of reinsurance 7,705 Liabilities for losses and loss adjustment expenses, net of reinsurance $ Average Annual Percentage Payout of Incurred Losses by Age, Net of Reinsurance Years 1 2 3 4 5 6 7 8 9 10 % % % % % % % % % % Casualty - Excess Occurrence (in thousands, except number of claims) Incurred Losses and Loss Adjustment Expenses, Net of Reinsurance As of December 31, 2017 For the Years Ended December 31, Cumulative Number of Reported AY 2008* 2009* 2010* 2011* 2012* 2013* 2014* 2015* 2016* 2017 Total IBNR Claims 2008 $ 35,209 $ 22,666 $ 17,347 $ 14,472 $ 13,869 $ 13,862 $ 13,816 $ 13,695 $ 13,487 $ 13,671 $ 308 638 2009 30,267 19,719 14,981 12,893 12,966 12,459 12,601 11,982 12,055 268 566 2010 29,314 24,244 22,111 18,932 20,044 22,044 21,018 20,530 381 499 2011 26,272 17,148 17,443 18,641 19,160 20,959 21,295 964 578 2012 29,042 21,558 21,021 21,885 21,231 22,433 1,417 837 2013 39,984 34,824 26,857 25,425 25,599 4,654 925 2014 50,889 39,095 35,119 32,274 9,801 844 2015 53,672 50,857 47,392 22,168 608 2016 56,341 49,385 39,381 486 2017 62,863 58,246 287 Total $ Cumulative Paid Loss and Loss Adjustment Expenses, Net of Reinsurance For the Years Ended December 31, AY 2008* 2009* 2010* 2011* 2012* 2013* 2014* 2015* 2016* 2017 2008 $ 115 $ 3,224 $ 8,212 $ 11,231 $ 11,755 $ 11,938 $ 12,163 $ 13,166 $ 13,183 $ 13,281 2009 956 3,947 6,585 9,460 11,001 10,808 11,776 11,780 11,786 2010 7 6,002 10,705 13,282 15,512 17,302 19,175 19,256 2011 2,169 5,145 6,981 8,793 10,772 16,494 17,769 2012 1,315 3,573 8,843 15,380 16,879 17,747 2013 1,060 5,701 10,967 14,545 16,967 2014 1,899 4,006 11,002 18,852 2015 2,048 10,127 19,571 2016 1,068 3,396 2017 17 * Presented as unaudited required supplementary information. Total $ All outstanding liabilities before 2008, net of reinsurance 20,108 Liabilities for losses and loss adjustment expenses, net of reinsurance $ Average Annual Percentage Payout of Incurred Losses by Age, Net of Reinsurance Years 1 2 3 4 5 6 7 8 9 10 % % % % % % % % % % Casualty - Claims Made (in thousands, except number of claims) Incurred Losses and Loss Adjustment Expenses, Net of Reinsurance As of December 31, 2017 For the Years Ended December 31, Cumulative Number of Reported AY 2008* 2009* 2010* 2011* 2012* 2013* 2014* 2015* 2016* 2017 Total IBNR Claims 2008 $ 11,083 $ 12,754 $ 3,915 $ 3,043 $ 7,811 $ 6,878 $ 5,568 $ 4,848 $ 4,584 $ 4,528 $ 103 300 2009 12,918 13,703 9,687 13,562 11,710 13,117 12,810 12,053 11,827 302 383 2010 13,690 15,556 9,776 10,429 11,689 10,581 9,175 9,024 490 502 2011 17,416 17,454 12,260 10,619 8,510 7,720 7,852 693 682 2012 27,576 26,144 20,727 19,590 18,022 17,612 2,156 803 2013 40,095 41,488 44,054 40,288 38,473 5,773 1,042 2014 53,929 55,386 58,152 55,350 13,240 1,302 2015 55,006 47,831 42,206 19,844 1,332 2016 59,992 67,760 30,727 1,481 2017 60,572 46,522 1,534 Total $ Cumulative Paid Loss and Loss Adjustment Expenses, Net of Reinsurance For the Years Ended December 31, AY 2008* 2009* 2010* 2011* 2012* 2013* 2014* 2015* 2016* 2017 2008 $ 9 $ 227 $ 703 $ 705 $ 707 $ 712 $ 4,380 $ 4,385 $ 4,424 $ 4,424 2009 113 442 773 3,413 5,176 10,678 11,217 11,398 11,475 2010 259 1,548 2,308 3,626 5,733 5,749 6,956 8,485 2011 330 1,949 4,508 5,947 5,637 6,209 6,835 2012 433 4,086 6,898 9,218 10,968 14,378 2013 792 7,073 18,425 26,121 29,678 2014 1,705 9,775 27,923 35,755 2015 2,215 10,738 16,774 2016 2,060 14,558 2017 2,455 * Presented as unaudited required supplementary information. Total $ All outstanding liabilities before 2008, net of reinsurance 854 Liabilities for losses and loss adjustment expenses, net of reinsurance $ Average Annual Percentage Payout of Incurred Losses by Age, Net of Reinsurance Years 1 2 3 4 5 6 7 8 9 10 % % % % % % % % % % Casualty - Transportation (in thousands, except number of claims) Incurred Losses and Loss Adjustment Expenses, Net of Reinsurance As of December 31, 2017 For the Years Ended December 31, Cumulative Number of Reported AY 2008* 2009* 2010* 2011* 2012* 2013* 2014* 2015* 2016* 2017 Total IBNR Claims 2008 $ 32,071 $ 27,752 $ 25,520 $ 23,497 $ 24,255 $ 24,110 $ 23,764 $ 23,673 $ 23,690 $ 23,672 $ 23 2,834 2009 26,349 23,366 23,174 22,929 22,613 22,340 21,958 21,969 21,926 36 2,644 2010 27,239 23,390 24,912 25,593 23,981 23,625 23,701 23,786 52 2,842 2011 22,957 23,479 25,747 25,272 25,431 25,376 25,167 71 2,469 2012 21,452 22,203 22,924 23,511 23,689 23,620 129 2,282 2013 32,742 32,853 32,989 37,673 38,811 702 2,849 2014 38,361 33,015 36,452 38,590 1,698 3,093 2015 38,561 46,258 47,021 6,051 3,167 2016 50,430 53,519 11,987 3,879 2017 55,640 17,396 3,361 Total $ 351,752 Cumulative Paid Loss and Loss Adjustment Expenses, Net of Reinsurance For the Years Ended December 31, AY 2008* 2009* 2010* 2011* 2012* 2013* 2014* 2015* 2016* 2017 2008 $ 6,153 $ 10,821 $ 14,489 $ 18,359 $ 21,110 $ 23,293 $ 23,387 $ 23,614 $ 23,616 $ 23,628 2009 5,035 8,698 14,613 19,933 21,100 21,325 21,640 21,650 21,650 2010 6,296 10,116 15,475 20,045 21,792 23,063 23,488 23,533 2011 5,295 9,485 14,477 19,443 22,375 23,537 23,941 2012 4,466 8,533 12,394 17,318 20,931 22,566 2013 5,306 11,978 19,761 28,220 33,480 2014 7,125 13,933 19,676 27,457 2015 6,984 20,709 29,554 2016 8,923 18,354 2017 7,979 * Presented as unaudited required supplementary information. Total $ 232,142 All outstanding liabilities before 2008, net of reinsurance 94 Liabilities for losses and loss adjustment expenses, net of reinsurance $ 119,704 Average Annual Percentage Payout of Incurred Losses by Age, Net of Reinsurance Years 1 2 3 4 5 6 7 8 9 10 % % % % % % % % % % Property (in thousands, except number of claims) Incurred Losses and Loss Adjustment Expenses, Net of Reinsurance As of December 31, 2017 For the Years Ended December 31, Cumulative Number of Reported AY 2008* 2009* 2010* 2011* 2012* 2013* 2014* 2015* 2016* 2017 Total IBNR Claims 2008 $ 75,951 $ 79,774 $ 78,378 $ 78,946 $ 75,974 $ 76,089 $ 75,281 $ 75,313 $ 75,288 $ 75,217 $ 20 2,718 2009 59,975 55,821 52,286 49,534 48,969 48,857 48,707 49,267 49,323 58 2,631 2010 63,194 59,145 55,427 53,937 54,153 52,927 52,964 52,952 85 2,850 2011 70,246 66,924 64,976 63,724 62,770 62,570 62,456 300 3,027 2012 85,485 80,155 79,181 77,569 79,175 78,125 335 2,639 2013 63,864 62,090 62,173 62,114 61,914 698 2,995 2014 56,587 49,441 48,801 48,761 534 4,558 2015 59,863 56,103 53,958 1,727 4,070 2016 62,900 55,594 3,759 3,352 2017 90,803 24,892 2,609 Total $ 629,103 Cumulative Paid Loss and Loss Adjustment Expenses, Net of Reinsurance For the Years Ended December 31, AY 2008* 2009* 2010* 2011* 2012* 2013* 2014* 2015* 2016* 2017 2008 $ 31,573 $ 59,695 $ 66,028 $ 69,811 $ 71,938 $ 73,619 $ 74,692 $ 74,766 $ 74,827 $ 74,896 2009 25,464 40,775 43,758 46,004 48,031 48,297 48,329 49,051 49,173 2010 25,274 43,091 47,743 50,055 52,729 52,426 52,719 52,851 2011 27,676 48,756 55,778 59,099 60,272 61,428 61,834 2012 39,074 66,509 72,057 73,705 75,640 76,152 2013 32,208 50,840 57,407 59,259 60,520 2014 30,550 43,380 46,148 46,528 2015 32,184 49,348 50,197 2016 33,134 46,921 2017 41,314 * Presented as unaudited required supplementary information. Total $ 560,386 All outstanding liabilities before 2008, net of reinsurance 150 Liabilities for losses and loss adjustment expenses, net of reinsurance $ 68,867 Average Annual Percentage Payout of Incurred Losses by Age, Net of Reinsurance Years 1 2 3 4 5 6 7 8 9 10 % % % % % % % % % % Surety (in thousands, except number of claims) Incurred Losses and Loss Adjustment Expenses, Net of Reinsurance As of December 31, 2017 For the Years Ended December 31, Cumulative Number of Reported AY 2008* 2009* 2010* 2011* 2012* 2013* 2014* 2015* 2016* 2017 Total IBNR Claims 2008 $ 8,055 $ 4,045 $ 3,469 $ 3,267 $ 2,832 $ 2,850 $ 2,877 $ 2,856 $ 2,939 $ 2,818 $ 3 2,084 2009 15,474 4,896 4,708 4,246 4,146 4,551 4,288 4,923 5,990 7 1,660 2010 13,961 8,205 6,630 7,076 6,810 7,136 7,645 6,850 32 1,533 2011 13,842 17,832 17,792 17,321 16,766 16,695 16,480 31 1,669 2012 17,114 11,452 8,667 8,180 7,867 7,471 104 1,459 2013 16,080 7,516 6,170 5,399 5,271 108 1,398 2014 16,450 8,106 5,225 4,427 349 1,318 2015 16,958 12,957 11,113 1,724 1,149 2016 18,928 11,062 3,018 1,167 2017 16,127 14,938 793 Total $ Cumulative Paid Loss and Loss Adjustment Expenses, Net of Reinsurance For the Years Ended December 31, AY 2008* 2009* 2010* 2011* 2012* 2013* 2014* 2015* 2016* 2017 2008 $ 643 $ 2,110 $ 2,722 $ 2,665 $ 2,731 $ 2,745 $ 2,816 $ 2,803 $ 2,919 $ 2,931 2009 892 1,914 2,382 2,493 3,490 4,336 3,919 3,908 5,978 2010 1,724 3,205 5,702 7,092 7,151 7,285 7,822 7,269 2011 8,160 16,932 17,151 17,403 17,212 17,086 17,086 2012 1,883 6,680 6,726 7,416 7,536 7,406 2013 1,116 2,856 4,701 4,911 5,098 2014 722 4,283 4,166 4,059 2015 3,192 6,719 7,695 2016 3,087 5,817 2017 979 * Presented as unaudited required supplementary information. Total $ All outstanding liabilities before 2008, net of reinsurance 84 Liabilities for losses and loss adjustment expenses, net of reinsurance $ Average Annual Percentage Payout of Incurred Losses by Age, Net of Reinsurance Years 1 2 3 4 5 6 7 8 9 10 % % % % % % % -2.9 % % %
Schedule of reconciliation of the net incurred and paid loss development tables to the liability for unpaid losses and settlement expenses in the consolidated balance sheet	Reconciliation of the Disclosure of Incurred and Paid Loss Development to the Liability for Unpaid Losses and Settlement Expenses (in thousands) December 31, 2017 December 31, 2016 Net outstanding liabilities: Casualty - Primary Occurrence $ 325,182 $ 293,256 Casualty - Excess Occurrence 188,963 163,801 Casualty - Claims Made 171,241 152,031 Casualty - Transportation 119,704 98,604 Property 68,867 47,769 Surety 23,375 24,388 Unallocated loss adjustment expenses 48,844 46,286 Allowance for uncollectible reinsurance balances recoverable on unpaid losses and settlement expenses 10,014 10,699 Other 13,322 14,279 Liabilities for unpaid loss and settlement expenses, net of reinsurance $ 969,512 $ 851,113 Reinsurance recoverable on unpaid claims: Casualty - Primary Occurrence $ 36,158 $ 43,662 Casualty - Excess Occurrence 74,400 69,858 Casualty - Claims Made 117,436 113,891 Casualty - Transportation 46,590 41,173 Property 28,613 17,548 Surety 7,079 10,606 Allowance for uncollectible reinsurance balances recoverable on unpaid losses and settlement expenses Other 1,729 2,185 Total reinsurance balances recoverable on unpaid losses and settlement expenses $ 301,991 $ 288,224 Total gross liability for unpaid loss and settlement expenses $ 1,271,503 $ 1,139,337
Schedule of prior accident years' loss reserve development by segment	(FAVORABLE)/UNFAVORABLE RESERVE DEVELOPMENT BY SEGMENT (in thousands) 2017 2016 2015 Casualty $ (17,462) $ (32,401) $ (45,654) Property (12,134) (4,793) (11,848) Surety (9,272) (4,800) (7,925) Total $ (38,868) $ (41,994) $ (65,427)
Schedule of paid and unpaid environmental, asbestos and mass tort claims data (including incurred but not reported losses)	(in thousands) 2017 2016 2015 Loss and LAE Payments (Cumulative): Gross $ 132,883 $ 130,358 $ 119,632 Ceded (67,507) (66,644) (62,463) Net $ 65,376 $ 63,714 $ 57,169 Unpaid Losses and LAE at End of Year: Gross $ 28,042 $ 28,815 $ 41,062 Ceded (5,715) (4,987) (12,559) Net $ 22,327 $ 23,828 $ 28,503

INCOME TAXES (Tables)

INCOME TAXES (Tables)	12 Months Ended
	Dec. 31, 2017
INCOME TAXES
Schedule of deferred tax assets and deferred tax liabilities	(in thousands) 2017 2016 Deferred tax assets: Tax discounting of unpaid losses and settlement expenses $ 20,020 $ 17,330 Unearned premium offset 16,528 26,712 Deferred compensation 1,435 4,727 Stock option expense 2,283 4,114 Other 578 685 Deferred tax assets before allowance $ 40,844 $ 53,568 Less valuation allowance — — Total deferred tax assets $ 40,844 $ 53,568 Deferred tax liabilities: Net unrealized appreciation of securities $ 51,448 $ 66,973 Deferred policy acquisition costs 16,320 25,602 Discounting of unpaid losses and settlement expenses - TCJA implementation offset 9,466 — Book/tax depreciation 3,159 4,819 Intangible assets 584 1,980 Undistributed earnings of unconsolidated investees 13,431 18,397 Other 204 291 Total deferred tax liabilities $ 94,612 $ 118,062 Net deferred tax liability $ (53,768) $ (64,494)
Schedule of reconciliation of income tax expense attributable to income from operations with amounts computed by applying the U.S. federal tax rate to pretax income from continuing operations	(in thousands) 2017 2016 2015 Provision for income taxes at the statutory federal tax rates $ 29,606 35.0 % $ 54,979 35.0 % $ 68,839 35.0 % Increase (reduction) in taxes resulting from: Enactment of Tax Cuts and Jobs Act (TCJA) (32,821) (38.8) % — — % — — % Excess tax benefit on share-based compensation (5,798) (6.9) % — — % — — % Dividends received deduction (2,025) (2.4) % (2,216) (1.4) % (2,278) (1.2) % ESOP dividends paid deduction (2,905) (3.4) % (3,302) (2.1) % (3,377) (1.7) % Tax-exempt interest income (4,671) (5.5) % (4,263) (2.7) % (4,214) (2.1) % Unconsolidated investee dividends (1,351) (1.6) % (2,772) (1.8) % — — % Other items, net (474) (0.6) % (264) (0.2) % 168 0.1 % Total $ (20,439)    (24.2) % $ 42,162    26.8 % $ 59,138    30.1 %

EMPLOYEE BENEFITS (Tables)

EMPLOYEE BENEFITS (Tables)	12 Months Ended
	Dec. 31, 2017
EMPLOYEE BENEFITS
Schedule of stock option activity	The following tables summarize option activity in 2017, 2016 and 2015: Weighted Weighted Average Aggregate Number of Average Remaining Intrinsic Options Exercise Contractual Value Outstanding Price Life (in 000’s) Outstanding options at January 1, 2017 2,207,110 $ 40.90 Options granted 482,375 $ 57.12 Options exercised (390,870) $ 26.07 $ 12,779 Options canceled/forfeited (41,600) $ 48.30 Outstanding options at December 31, 2017 2,257,015 $ 46.80 4.88 $ 32,620 Exercisable options at December 31, 2017 975,055 $ 38.66 3.25 $ 21,780 Weighted Weighted Average Aggregate Number of Average Remaining Intrinsic Options Exercise Contractual Value Outstanding Price Life (in 000’s) Outstanding options at January 1, 2016 2,582,220 $ 32.42 Options granted 440,750 $ 63.54 Options exercised (756,380) $ 24.87 $ 31,328 Options canceled/forfeited (59,480) $ 44.39 Outstanding options at December 31, 2016 2,207,110 $ 40.90 4.93 $ 49,531 Exercisable options at December 31, 2016 862,605 $ 31.23 3.27 $ 27,523 Weighted Weighted Average Aggregate Number of Average Remaining Intrinsic Options Exercise Contractual Value Outstanding Price Life (in 000’s) Outstanding options at January 1, 2015 2,892,717 $ 26.65 Options granted 563,500 $ 49.01 Options exercised (865,957) $ 19.23 $ 32,135 Options canceled/forfeited (8,040) $ 32.12 Outstanding options at December 31, 2015 2,582,220 $ 32.42 5.32 $ 75,725 Exercisable options at December 31, 2015 899,680 $ 23.60 3.98 $ 34,327
Schedule of stock option assumptions for fair value estimate	2017 2016 2015 Weighted-average fair value of grants $ 8.00 $ 11.38 $ 9.25 Risk-free interest rates 1.90 % 1.21 % 1.54 % Dividend yield 3.60 % 1.61 % 1.81 % Expected volatility 22.95 % 23.06 % 22.91 % Expected option life 5.05 years 5.04 years 5.21 years

STATUTORY INFORMATION AND DIV34

STATUTORY INFORMATION AND DIVIDEND RESTRICTIONS (Tables)	12 Months Ended
	Dec. 31, 2017
STATUTORY INFORMATION AND DIVIDEND RESTRICTIONS
Schedule of selected information for insurance subsidiaries	(in thousands) 2017 2016 2015 Consolidated net income, statutory basis $ 72,889 $ 128,165 $ 178,502 Consolidated surplus, statutory basis $ 864,554 $ 859,976 $ 865,268

COMMITMENTS AND CONTINGENT LI35

COMMITMENTS AND CONTINGENT LIABILITIES (Tables)	12 Months Ended
	Dec. 31, 2017
COMMITMENTS AND CONTINGENT LIABILITIES
Schedule of minimum future rental payments under noncancellable leases	(in thousands) 2018 $ 5,589 2019 5,238 2020 5,138 2021 5,026 2022 4,991 2023-2034 6,644 Total minimum future rental payments $ 32,626

OPERATING SEGMENT INFORMATION (

OPERATING SEGMENT INFORMATION (Tables)	12 Months Ended
	Dec. 31, 2017
OPERATING SEGMENT INFORMATION
Schedule of revenues and net earnings by segment	REVENUES (in thousands) 2017 2016 2015 Casualty $ 478,603 $ 454,843 $ 412,248 Property 138,346 152,167 170,924 Surety 120,988 121,598 116,989 Net premiums earned $ 737,937 $ 728,608 $ 700,161 Net investment income 54,876 53,075 54,644 Net realized gains 4,411 34,645 39,829 Total $ 797,224 $ 816,328 $ 794,634 INSURANCE EXPENSES (in thousands) 2017 2016 2015 Loss and settlement expenses: Casualty $ 305,679 $ 259,907 $ 218,414 Property 85,027 71,350 69,851 Surety 10,878 18,521 10,780 Total net loss and settlement expenses $ 401,584 $ 349,778 $ 299,045 Policy acquisition costs: Casualty $ 136,135 $ 128,566 $ 119,529 Property 51,070 54,167 57,214 Surety 65,310 66,879 64,335 Total policy acquisition costs $ 252,515 $ 249,612 $ 241,078 Other insurance expenses: Casualty $ 32,885 $ 30,040 $ 28,042 Property 14,108 13,819 14,834 Surety 10,001 9,234 8,604 Total other insurance expenses $ 56,994 $ 53,093 $ 51,480 Total $ 711,093 $ 652,483 $ 591,603 NET EARNINGS (LOSSES) (in thousands) 2017 2016 2015 Casualty $ 3,904 $ 36,329 $ 46,263 Property (11,859) 12,832 29,025 Surety 34,799 26,964 33,270 Net underwriting income $ 26,844 $ 76,125 $ 108,558 Net investment income 54,876 53,075 54,644 Net realized gains 4,411 34,645 39,829 General corporate expense and interest on debt (18,766) (17,596) (17,263) Equity in earnings of unconsolidated investees 17,224 10,833 10,914 Total earnings before incomes taxes $ 84,589 $ 157,082 $ 196,682 Income tax expense (benefit) $ (20,439) $ 42,162 $ 59,138 Total $ 105,028 $ 114,920 $ 137,544
Schedule of net premiums earned by major product type	NET PREMIUMS EARNED Year ended December 31, (in thousands) 2017 2016 2015 CASUALTY Commercial and personal umbrella $ 115,543 $ 111,079 $ 104,598 General liability 90,283 86,853 84,165 Professional services 78,508 75,872 71,034 Commercial transportation 78,061 81,402 65,564 Small commercial 49,601 45,660 40,410 Executive products 18,086 18,755 17,892 Medical professional liability 17,072 17,449 12,292 Other casualty 31,449 17,773 16,293 Total $ 478,603 $ 454,843 $ 412,248 PROPERTY Commercial property $ 63,117 $ 68,165 $ 75,749 Marine 50,931 48,301 47,016 Specialty personal 20,793 24,981 26,395 Other property 3,505 10,720 21,764 Total $ 138,346 $ 152,167 $ 170,924 SURETY Miscellaneous $ 47,237 $ 46,235 $ 42,372 Contract 28,573 28,240 28,269 Commercial 27,625 29,105 29,529 Energy 17,553 18,018 16,819 Total $ 120,988 $ 121,598 $ 116,989 Grand total $ 737,937 $ 728,608 $ 700,161

UNAUDITED INTERIM FINANCIAL I37

UNAUDITED INTERIM FINANCIAL INFORMATION (Tables)	12 Months Ended
	Dec. 31, 2017
UNAUDITED INTERIM FINANCIAL INFORMATION
Schedule of selected quarterly information	Select unaudited quarterly information is as follows: (in thousands, except per share data) First Second Third Fourth Year 2017 Net premiums earned $ 183,285 $ 184,331 $ 182,025 $ 188,296 $ 737,937 Net investment income 13,005 13,238 14,187 14,446 54,876 Net realized gains (losses) 624 (1,359) 35 5,111 4,411 Earnings (losses) before income taxes 26,443 34,036 (862) 24,972 84,589 Net earnings 19,828 26,208 1,734 57,258 105,028 Basic earnings per share(1) $ 0.45 $ 0.60 $ 0.04 $ 1.30 $ 2.39 Diluted earnings per share(1) $ 0.45 $ 0.59 $ 0.04 $ 1.29 $ 2.36 2016 Net premiums earned $ 176,918 $ 180,226 $ 183,595 $ 187,869 $ 728,608 Net investment income 13,370 13,048 13,504 13,153 53,075 Net realized gains (losses) 11,400 2,710 9,252 11,283 34,645 Earnings (losses) before income taxes 45,593 42,341 31,142 38,006 157,082 Net earnings 31,393 29,077 22,263 32,187 114,920 Basic earnings per share(1) $ 0.72 $ 0.67 $ 0.51 $ 0.73 $ 2.63 Diluted earnings per share(1) $ 0.71 $ 0.65 $ 0.50 $ 0.72 $ 2.59 Since the weighted-average shares for the quarters are calculated independently of the weighted-average shares for the year, quarterly earnings per share may not total to annual earnings per share.

SUMMARY OF SIGNIFICANT ACCOUN38

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Description of Business (Details)	12 Months Ended
	Dec. 31, 2017statecompany
DESCRIPTION OF BUSINESS
Number of insurance companies through which the entity conducts operations | company	3
RLI Ins.
DESCRIPTION OF BUSINESS
Number of states in which entity operates	50
Mt. Hawley Insurance Company
DESCRIPTION OF BUSINESS
Number of states in which entity operates	50
Contractors Bonding and Insurance Company
DESCRIPTION OF BUSINESS
Number of states in which entity operates	50

SUMMARY OF SIGNIFICANT ACCOUN39

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Accounting Standards (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Reduction to income tax expense		$ (9,302)	$ (41,034)	$ (52,104)
Net Cash Provided by Operating Activities		197,525	174,463	152,586
Net Cash Used in Financing Activities		(110,311)	(113,653)	(111,528)
Accumulated other comprehensive earnings		157,919	122,610
Retained earnings		788,522	797,307
Expense associated with operating leases		6,800	$ 6,400	$ 6,100
Expected Value Of Asset And Liability Addition From Adoption Of ASU 2016-02		$ 32,600
Percentage Of Fixed Income Portfolio Rated A Or Better		83.00%
Percentage Of Fixed Income Portfolio Rated Double A Or Better		66.00%
Tax rate used (as a percent)		35.00%	35.00%	35.00%
Accounting Standards Update 2016-09
Reduction to income tax expense		$ 5,800
Net Cash Provided by Operating Activities		5,800
Net Cash Used in Financing Activities		$ (5,800)
Accounting Standards Update 2014-09
Percent of Revenue Out of Scope of ASU 2014-09		99.00%
Scenario, Forecast [Member]
Tax rate used (as a percent)	21.00%
Scenario, Forecast [Member] | Accounting Standards Update 2016-01
Accumulated other comprehensive earnings	$ (142,200)
Retained earnings	142,200
Scenario, Forecast [Member] | Accounting Standards Update 2018-02
Accumulated other comprehensive earnings	(4,100)
Retained earnings	$ 4,100
Tax rate used (as a percent)	21.00%
PARENT COMPANY
Net Cash Provided by Operating Activities		$ (8,650)	$ 2,120	$ (3,162)
Net Cash Used in Financing Activities		(120,745)	(124,936)	$ (122,649)
Accumulated other comprehensive earnings		157,919	122,610
Retained earnings		$ 788,522	$ 797,307

SUMMARY OF SIGNIFICANT ACCOUN40

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Investments (Details)	Dec. 31, 2017itemcategory
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Number of categories for debt and equity securities | category	3
Number of investments in low income housing tax credit partnerships | item	3

SUMMARY OF SIGNIFICANT ACCOUN41

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property and Equipment (Details)	12 Months Ended
	Dec. 31, 2017
Equipment | Minimum
PROPERTY AND EQUIPMENT
Useful life	3 years
Equipment | Maximum
PROPERTY AND EQUIPMENT
Useful life	10 years
Buildings and improvements | Maximum
PROPERTY AND EQUIPMENT
Useful life	30 years

SUMMARY OF SIGNIFICANT ACCOUN42

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Investment in Unconsolidated Investees (Details)	12 Months Ended
	Dec. 31, 2017USD ($)item	Dec. 31, 2016USD ($)	Dec. 31, 2015USD ($)
INVESTMENT IN UNCONSOLIDATED INVESTEES:
Investment amount	$ 90,067,000	$ 72,240,000
Investee earnings recorded in income	17,224,000	10,833,000	$ 10,914,000
Amount of investment			1,711,000
Reinsurance assumed	37,159,000	30,434,000	34,456,000
Net premiums earned	737,937,000	728,608,000	700,161,000
Additional summarized financial information for investee
Dividends received	0	9,900,000	0
Maui Jim Inc.
INVESTMENT IN UNCONSOLIDATED INVESTEES:
Investment amount	77,700,000	62,600,000
Investee earnings recorded in income	14,400,000	9,700,000	9,900,000
Total investee net income	$ 34,400,000	26,900,000	23,700,000
Equity ownership interest (as a percent)	40.00%
Additional summarized financial information for investee
Total assets	$ 259,400,000	246,900,000
Total liabilities	88,000,000	112,400,000
Total equity	171,400,000	134,500,000
Undistributed earnings included in retained earnings	66,300,000
Dividends received	0	9,900,000	0
Prime Holdings Insurance Services, Inc. (Prime)
INVESTMENT IN UNCONSOLIDATED INVESTEES:
Investment amount	12,400,000	9,600,000
Investee earnings recorded in income	$ 2,800,000	1,100,000	1,000,000
Number of insurance carriers Company writes through | item	2
Equity ownership interest (as a percent)	23.00%
Percentage of quota share reinsurance treaty, effective January 1, 2014	25.00%
Reinsurance assumed	$ 29,600,000	13,400,000	11,300,000
Net premiums earned	$ 21,000,000	$ 11,400,000	$ 10,900,000

SUMMARY OF SIGNIFICANT ACCOUN43

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Goodwill and Intangible Assets
Goodwill			$ 49,657	$ 51,270
State insurance licenses			7,500	7,500
Definite-lived intangibles, net of accumulated amortization of $5,678 at 12/31/17 and $5,546 at 12/31/16			2,145	5,601
Accumulated amortization of definite-lived intangibles			5,678	5,546
Total intangibles			9,645	13,101
Goodwill and intangibles			59,302	64,371
Goodwill, Impairment Loss			3,400
Amortization of intangible assets			700	900	$ 900
Finite-Lived Intangible Assets, Amortization Expense, Next Twelve Months			500
Finite-Lived Intangible Assets, Amortization Expense, Year Two			500
Finite-Lived Intangible Assets, Amortization Expense, Year Three			500
Finite-Lived Intangible Assets, Amortization Expense, Year Four			200
Finite-Lived Intangible Assets, Amortization Expense, Year Five			100
Indefinite-lived Intangible Assets, Written off Related to Sale of Business Unit			1,000
Energy Surety
Goodwill and Intangible Assets
Goodwill			25,706	25,706
Miscellaneous and Contract Surety
Goodwill and Intangible Assets
Goodwill			15,110	15,110
Small commercial
Goodwill and Intangible Assets
Goodwill			5,246	5,246
Medical professional liability
Goodwill and Intangible Assets
Goodwill			3,595	5,208
Casualty segment | Medical professional liability
Goodwill and Intangible Assets
Goodwill, Impaired, Accumulated Impairment Loss			$ 8,800	$ 7,200
Goodwill and Intangible Asset Impairment	$ 3,400
Goodwill, Impairment Loss	1,600	$ 7,200
Impairment of Intangible Assets, Finite-lived	$ 1,800

SUMMARY OF SIGNIFICANT ACCOUN44

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Basic EPS, Income (Numerator)
Income available to common shareholders	$ 57,258	$ 1,734	$ 26,208	$ 19,828	$ 32,187	$ 22,263	$ 29,077	$ 31,393	$ 105,028	$ 114,920	$ 137,544
Diluted EPS, Income (Numerator)
Income available to common shareholders									$ 105,028	$ 114,920	$ 137,544
Basic EPS, Weighted Average Shares (Denominator)
Number of shares outstanding									44,033	43,772	43,299
Effect of Dilutive Securities, Shares (Denominator)
Stock options (in shares)									467	660	832
Diluted EPS, Weighted Average Shares (Denominator)
Number of shares outstanding									44,500	44,432	44,131
Basic EPS, Per Share Amount
Basic net earnings per share (in dollars per share)	$ 1.30	$ 0.04	$ 0.60	$ 0.45	$ 0.73	$ 0.51	$ 0.67	$ 0.72	$ 2.39	$ 2.63	$ 3.18
Diluted EPS, Per Share Amount
Diluted earnings per share (in dollars per share)	$ 1.29	$ 0.04	$ 0.59	$ 0.45	$ 0.72	$ 0.50	$ 0.65	$ 0.71	$ 2.36	$ 2.59	$ 3.12

SUMMARY OF SIGNIFICANT ACCOUN45

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Changes in Accumulated Other Comprehensive Earnings (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
COMPREHENSIVE EARNINGS
Tax rate used (as a percent)									35.00%	35.00%	35.00%
Other comprehensive income (loss), tax									$ 19,000	$ (600)	$ (25,300)
Changes in the balance of each component of accumulated other comprehensive earnings
Beginning balance				$ 122,610					122,610
Net current-period other comprehensive earnings (loss)									35,309	(1,164)	(47,609)
Ending balance	$ 157,919				$ 122,610				157,919	122,610
Relassification Adjustment Out of Accumulated Other Comprehensive Income Abstract
Net realized gains									6,970	34,740	39,829
Earnings (loss) before income taxes	24,972	$ (862)	$ 34,036	26,443	38,006	$ 31,142	$ 42,341	$ 45,593	84,589	157,082	196,682
Income tax expense									20,439	(42,162)	(59,138)
Net earnings	57,258	$ 1,734	$ 26,208	19,828	32,187	$ 22,263	$ 29,077	31,393	105,028	114,920	137,544
Unrealized Gains and Losses on Available-for-Sale Securities
Changes in the balance of each component of accumulated other comprehensive earnings
Beginning balance				$ 122,610				$ 123,774	122,610	123,774	171,383
Other comprehensive earnings before reclassifications									40,887	26,740	(26,199)
Amounts reclassified from accumulated other comprehensive earnings									(5,578)	(27,904)	(21,410)
Net current-period other comprehensive earnings (loss)									35,309	(1,164)	(47,609)
Ending balance	$ 157,919				$ 122,610				157,919	122,610	123,774
Reclassifications out of accumulated other comprehensive earnings
Relassification Adjustment Out of Accumulated Other Comprehensive Income Abstract
Net realized gains									11,141	43,024	32,939
Other-than-temporary impairment (OTTI) losses on investments									(2,559)	(95)
Earnings (loss) before income taxes									8,582	42,929	32,939
Income tax expense									(3,004)	(15,025)	(11,529)
Net earnings									$ 5,578	$ 27,904	$ 21,410

SUMMARY OF SIGNIFICANT ACCOUN46

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Insurance Risk (Details) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Unpaid losses and settlement expenses	$ 1,271,503	$ 1,139,337	$ 1,103,785	$ 1,121,040

SUMMARY OF SIGNIFICANT ACCOUN47

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Catastrophe Exposures (Details) $ in Millions	12 Months Ended
	Dec. 31, 2017USD ($)
California earthquake
Catastrophe Exposures
Catastrophe reinsurance	$ 300
First-dollar retention	25
Non-California earthquake
Catastrophe Exposures
Catastrophe reinsurance	325
First-dollar retention	25
Other perils
Catastrophe Exposures
Catastrophe reinsurance	225
First-dollar retention	$ 25

INVESTMENTS - Net Investment In

INVESTMENTS - Net Investment Income (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Net investment income
Gross investment income									$ 59,794	$ 57,883	$ 59,482
Less investment expenses									(4,918)	(4,808)	(4,838)
Net Investment Income	$ 14,446	$ 14,187	$ 13,238	$ 13,005	$ 13,153	$ 13,504	$ 13,048	$ 13,370	54,876	53,075	54,644
Debt securities
Net investment income
Gross investment income									48,343	46,834	48,064
Equity securities
Net investment income
Gross investment income									10,506	10,929	11,407
Cash and Short-term Investments
Net investment income
Gross investment income									$ 945	$ 120	$ 11

INVESTMENTS - Realized and Unre

INVESTMENTS - Realized and Unrealized Gains (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
INVESTMENTS
Net realized gains (losses), excluding OTTI									$ 6,970	$ 34,740	$ 39,829
OTTI									(2,559)	(95)	0
Realized Gain (Loss) on Marketable Securities, Cost Method Investments and Other Investments, Total	$ 5,111	$ 35	$ (1,359)	$ 624	$ 11,283	$ 9,252	$ 2,710	$ 11,400	4,411	34,645	39,829
Net changes in unrealized gains (losses) on investments:									54,323	(1,791)	(72,935)
Net realized gains (losses) and changes in unrealized gains (losses) on investments									58,734	32,854	(33,106)
Disposal Group, Not Discontinued Operation, Gain (Loss) on Disposal											6,698
Goodwill, Impairment Loss									3,400
Debt securities | Available for sale securities
INVESTMENTS
Net realized gains (losses), excluding OTTI									859	4,314	10,832
Net changes in unrealized gains (losses) on investments:									16,846	(10,972)	(26,929)
Equity securities
INVESTMENTS
Net realized gains (losses), excluding OTTI									10,282	38,709	22,107
Net changes in unrealized gains (losses) on investments:									36,844	8,659	(44,120)
Other
INVESTMENTS
Net realized gains (losses), excluding OTTI									(4,171)	(8,283)	192
Net changes in unrealized gains (losses) on investments:									29
Equity Method Investments [Member]
INVESTMENTS
Net changes in unrealized gains (losses) on investments:									$ 604	$ 522	$ (1,886)

INVESTMENTS - Disposition of Fi

INVESTMENTS - Disposition of Fixed Securities and Equities (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Debt securities | Available for sale securities | SALES
Summary of the disposition of fixed maturities and equities
Proceeds From Sales	$ 169,002	$ 329,091	$ 436,680
Gross Realized Gains	2,406	7,158	14,691
Gross Realized Losses	(1,670)	(3,287)	(4,067)
Marketable Securities, Realized Gain (Loss), Excluding Other than Temporary Impairments, Total	736	3,871	10,624
Debt securities | Available for sale securities | CALLS/MATURITIES
Summary of the disposition of fixed maturities and equities
Proceeds From Sales	195,617	141,255	156,980
Gross Realized Gains	262	445	217
Gross Realized Losses	(139)	(2)	(9)
Marketable Securities, Realized Gain (Loss), Excluding Other than Temporary Impairments, Total	123	443	208
Equity securities | SALES
Summary of the disposition of fixed maturities and equities
Proceeds From Sales	36,573	89,909	53,110
Gross Realized Gains	13,178	39,668	25,985
Gross Realized Losses	(2,896)	(959)	(3,878)
Marketable Securities, Realized Gain (Loss), Excluding Other than Temporary Impairments, Total	$ 10,282	$ 38,709	$ 22,107

INVESTMENTS - Assets Measured A

INVESTMENTS - Assets Measured At Fair Value (Details) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Assets measured at Fair Value
Available-for-sale securities	$ 2,072,731	$ 1,974,428
Transfers in (out of) level 1	0	0
Transfers in (out of) level 2	0	0
U.S. government
Assets measured at Fair Value
Available-for-sale securities	91,689	76,563
U.S. Agency
Assets measured at Fair Value
Available-for-sale securities	18,778	5,813
Non-U.S. govt. & agency
Assets measured at Fair Value
Available-for-sale securities	7,588	9,151
Mortgage-backed
Assets measured at Fair Value
Available-for-sale securities	328,471	284,069
ABS/CMBS
Assets measured at Fair Value
Available-for-sale securities	70,526	93,910
Corporate Debt
Assets measured at Fair Value
Available-for-sale securities	519,022	508,367
Municipal
Assets measured at Fair Value
Available-for-sale securities	636,165	627,336
Equity securities
Assets measured at Fair Value
Available-for-sale securities	400,492	369,219
Fair value measured on recurring basis
Assets measured at Fair Value
Available-for-sale securities	2,072,731	1,974,428
Fair value measured on recurring basis | U.S. government
Assets measured at Fair Value
Available-for-sale securities	91,689	76,563
Fair value measured on recurring basis | U.S. Agency
Assets measured at Fair Value
Available-for-sale securities	18,778	5,813
Fair value measured on recurring basis | Non-U.S. govt. & agency
Assets measured at Fair Value
Available-for-sale securities	7,588	9,151
Fair value measured on recurring basis | Mortgage-backed
Assets measured at Fair Value
Available-for-sale securities	328,471	284,069
Fair value measured on recurring basis | ABS/CMBS
Assets measured at Fair Value
Available-for-sale securities	70,526	93,910
Fair value measured on recurring basis | Corporate Debt
Assets measured at Fair Value
Available-for-sale securities	519,022	508,367
Fair value measured on recurring basis | Municipal
Assets measured at Fair Value
Available-for-sale securities	636,165	627,336
Fair value measured on recurring basis | Equity securities
Assets measured at Fair Value
Available-for-sale securities	400,492	369,219
Fair value measured on recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1)
Assets measured at Fair Value
Available-for-sale securities	400,492	369,219
Fair value measured on recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Equity securities
Assets measured at Fair Value
Available-for-sale securities	400,492	369,219
Fair value measured on recurring basis | Significant Other Observable Inputs (Level 2)
Assets measured at Fair Value
Available-for-sale securities	1,672,239	1,605,209
Fair value measured on recurring basis | Significant Other Observable Inputs (Level 2) | U.S. government
Assets measured at Fair Value
Available-for-sale securities	91,689	76,563
Fair value measured on recurring basis | Significant Other Observable Inputs (Level 2) | U.S. Agency
Assets measured at Fair Value
Available-for-sale securities	18,778	5,813
Fair value measured on recurring basis | Significant Other Observable Inputs (Level 2) | Non-U.S. govt. & agency
Assets measured at Fair Value
Available-for-sale securities	7,588	9,151
Fair value measured on recurring basis | Significant Other Observable Inputs (Level 2) | Mortgage-backed
Assets measured at Fair Value
Available-for-sale securities	328,471	284,069
Fair value measured on recurring basis | Significant Other Observable Inputs (Level 2) | ABS/CMBS
Assets measured at Fair Value
Available-for-sale securities	70,526	93,910
Fair value measured on recurring basis | Significant Other Observable Inputs (Level 2) | Corporate Debt
Assets measured at Fair Value
Available-for-sale securities	519,022	508,367
Fair value measured on recurring basis | Significant Other Observable Inputs (Level 2) | Municipal
Assets measured at Fair Value
Available-for-sale securities	$ 636,165	$ 627,336

INVESTMENTS - Fixed Income Secu

INVESTMENTS - Fixed Income Securities By Contractual Maturity (Details) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Amortized cost of available-for-sale debt securities by contractual maturity
Due in one year or less	$ 16,023
Due after one year through five years	318,411
Due after five years through 10 years	586,340
Due after 10 years	326,103
Total amortized cost	1,646,411	$ 1,596,227
Fair value of available-for-sale debt securities by contractual maturity
Due in one year or less	15,984
Due after one year through five years	322,988
Due after five years through 10 years	598,041
Due after 10 years	336,229
Total fair value	1,672,239	$ 1,605,209
Mtge/ABS/CMBS
Amortized cost of available-for-sale debt securities by contractual maturity
Total amortized cost	399,534
Fair value of available-for-sale debt securities by contractual maturity
Total fair value	$ 398,997

INVESTMENTS - Investments In Fi

INVESTMENTS - Investments In Fixed Income Securities (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Available-for-sale
Amortized Cost	$ 1,828,413	$ 1,783,800
Fair Value	2,072,731	1,974,428
Gross Unrealized Gains	253,562	209,224
Gross Unrealized Losses	(9,244)	(18,596)
Total fixed income and equity securities
Net unrealized appreciation of available-for-sale fixed maturities and equity securities	244,300	190,600
U.S. government
Available-for-sale
Amortized Cost	92,561	77,054
Fair Value	91,689	76,563
Gross Unrealized Gains	23	88
Gross Unrealized Losses	(895)	(579)
U.S. Agency
Available-for-sale
Amortized Cost	18,541	5,473
Fair Value	18,778	5,813
Gross Unrealized Gains	347	340
Gross Unrealized Losses	(110)
Non-U.S. govt. & agency
Available-for-sale
Amortized Cost	7,501	9,517
Fair Value	7,588	9,151
Gross Unrealized Gains	143	2
Gross Unrealized Losses	(56)	(368)
Mtge/ABS/CMO
Available-for-sale
Gross Unrealized Losses	(4,400)
Mortgage-backed
Available-for-sale
Amortized Cost	329,129	283,002
Fair Value	328,471	284,069
Gross Unrealized Gains	3,420	4,635
Gross Unrealized Losses	(4,078)	(3,568)
ABS/CMBS
Available-for-sale
Amortized Cost	70,405	93,791
Fair Value	70,526	93,910
Gross Unrealized Gains	436	676
Gross Unrealized Losses	(315)	(557)
Corporate Debt
Available-for-sale
Amortized Cost	508,128	503,041
Fair Value	519,022	508,367
Gross Unrealized Gains	12,575	10,996
Gross Unrealized Losses	(1,681)	(5,670)
Municipal
Available-for-sale
Amortized Cost	620,146	624,349
Fair Value	636,165	627,336
Gross Unrealized Gains	17,272	9,575
Gross Unrealized Losses	$ (1,253)	(6,588)
General obligations to state and local governments Percentage	43.00%
Revenue based obligations percentage	57.00%
Percentage of securities of portfolio rated as AA or better	88.00%
Percentage of securities of portfolio rated as A or better	99.00%
Debt securities
Available-for-sale
Amortized Cost	$ 1,646,411	1,596,227
Fair Value	1,672,239	1,605,209
Gross Unrealized Gains	34,216	26,312
Gross Unrealized Losses	(8,388)	(17,330)
Equity securities
Available-for-sale
Amortized Cost	182,002	187,573
Fair Value	400,492	369,219
Gross Unrealized Gains	219,346	182,912
Gross Unrealized Losses	(856)	$ (1,266)
(Increase) decrease in Gross Unrealized Losses	$ 400

INVESTMENTS - Types of Debt and

INVESTMENTS - Types of Debt and Equity Securities (Details) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Fair value
Less than 12 months	$ 376,840	$ 683,633
12 Months and Greater	256,426	28,517
Total Fair value	633,266	712,150
Cost or amortized Cost
Less than 12 months	380,371	698,230
12 months and greater	262,139	32,516
Total Cost or Amortized Cost	642,510	730,746
Unrealized Loss
Less than 12 months	(3,531)	(14,597)
12 Months and Greater	(5,713)	(3,999)
Total Unrealized Loss	(9,244)	(18,596)
Debt securities
Fair value
Less than 12 months	372,467	676,195
12 Months and Greater	254,270	26,544
Total Fair value	626,737	702,739
Cost or amortized Cost
Less than 12 months	375,790	690,201
12 months and greater	259,335	29,868
Total Cost or Amortized Cost	635,125	720,069
Unrealized Loss
Less than 12 months	(3,323)	(14,006)
12 Months and Greater	(5,065)	(3,324)
Total Unrealized Loss	(8,388)	(17,330)
U.S. government
Fair value
Less than 12 months	58,009	48,500
12 Months and Greater	30,888
Total Fair value	88,897	48,500
Cost or amortized Cost
Less than 12 months	58,443	49,079
12 months and greater	31,349
Total Cost or Amortized Cost	89,792	49,079
Unrealized Loss
Less than 12 months	(434)	(579)
12 Months and Greater	(461)
Total Unrealized Loss	(895)	(579)
U.S. Agency
Fair value
Less than 12 months	10,917
Total Fair value	10,917
Cost or amortized Cost
Less than 12 months	11,027
Total Cost or Amortized Cost	11,027
Unrealized Loss
Less than 12 months	(110)
Total Unrealized Loss	(110)
Non-U.S. govt. & agency
Fair value
Less than 12 months		7,647
12 Months and Greater	1,840
Total Fair value	1,840	7,647
Cost or amortized Cost
Less than 12 months		8,015
12 months and greater	1,896
Total Cost or Amortized Cost	1,896	8,015
Unrealized Loss
Less than 12 months		(368)
12 Months and Greater	(56)
Total Unrealized Loss	(56)	(368)
Mortgage-backed
Fair value
Less than 12 months	122,130	175,858
12 Months and Greater	111,306	5,737
Total Fair value	233,436	181,595
Cost or amortized Cost
Less than 12 months	123,559	179,238
12 months and greater	113,955	5,925
Total Cost or Amortized Cost	237,514	185,163
Unrealized Loss
Less than 12 months	(1,429)	(3,380)
12 Months and Greater	(2,649)	(188)
Total Unrealized Loss	(4,078)	(3,568)
ABS/CMBS
Fair value
Less than 12 months	23,406	48,907
12 Months and Greater	21,587	5,272
Total Fair value	44,993	54,179
Cost or amortized Cost
Less than 12 months	23,491	49,372
12 months and greater	21,817	5,364
Total Cost or Amortized Cost	45,308	54,736
Unrealized Loss
Less than 12 months	(85)	(465)
12 Months and Greater	(230)	(92)
Total Unrealized Loss	(315)	(557)
Corporate Debt
Fair value
Less than 12 months	86,946	144,353
12 Months and Greater	28,600	15,535
Total Fair value	115,546	159,888
Cost or amortized Cost
Less than 12 months	87,736	146,979
12 months and greater	29,491	18,579
Total Cost or Amortized Cost	117,227	165,558
Unrealized Loss
Less than 12 months	(790)	(2,626)
12 Months and Greater	(891)	(3,044)
Total Unrealized Loss	(1,681)	(5,670)
Municipal
Fair value
Less than 12 months	71,059	250,930
12 Months and Greater	60,049
Total Fair value	131,108	250,930
Cost or amortized Cost
Less than 12 months	71,534	257,518
12 months and greater	60,827
Total Cost or Amortized Cost	132,361	257,518
Unrealized Loss
Less than 12 months	(475)	(6,588)
12 Months and Greater	(778)
Total Unrealized Loss	(1,253)	(6,588)
Equity securities
Fair value
Less than 12 months	4,373	7,438
12 Months and Greater	2,156	1,973
Total Fair value	6,529	9,411
Cost or amortized Cost
Less than 12 months	4,581	8,029
12 months and greater	2,804	2,648
Total Cost or Amortized Cost	7,385	10,677
Unrealized Loss
Less than 12 months	(208)	(591)
12 Months and Greater	(648)	(675)
Total Unrealized Loss	$ (856)	$ (1,266)

INVESTMENTS - Portfolio Analysi

INVESTMENTS - Portfolio Analysis (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2017USD ($)positionsecurity	Dec. 31, 2016USD ($)	Dec. 31, 2015USD ($)
Securities in unrealized loss positions
Total unrealized loss	$ 9,244	$ 18,596
Other-than-temporary impairment (OTTI) losses	2,559	95	$ 0
Unrealized losses for 12 consecutive months or longer	5,713	$ 3,999
Fixed maturities and short-term investments on deposit with either regulatory authorities or banks	$ 42,200
Debt securities
Securities in unrealized loss positions
Number of unrealized loss positions | position	346
Number of securities in unrealized loss positions for 12 months or longer | security	133
Common stock security
Securities in unrealized loss positions
Number of unrealized loss positions | security	3
Number of securities in unrealized loss positions of greater than 20 percent | security	0
Maximum period for securities with unrealized losses greater than 20 percent	6 months
Common stock security | Maximum
Securities in unrealized loss positions
Maximum percentage of unrealized loss to portfolio for more than six consecutive months	20.00%

INVESTMENTS - Other Invested As

INVESTMENTS - Other Invested Assets (Details) $ in Thousands	3 Months Ended	12 Months Ended
	Dec. 31, 2017USD ($)item	Dec. 31, 2017USD ($)item	Dec. 31, 2016USD ($)	Dec. 31, 2015USD ($)
Other invested assets
Number of investments in low income housing tax credit partnerships | item	3	3
Other Investments	$ 33,808	$ 33,808	$ 24,115
Qualified Affordable Housing Project Investments, Commitment	3,100	3,100
Investment in FHLBC	1,000	1,000	1,600
Available-for-sale Securities Pledged as Collateral	18,900	18,900
Proceeds from Federal Home Loan Bank Borrowings	5,500
Repayments of Federal Home Loan Bank Borrowings	5,500
Federal Home Loan Bank Borrowings, Fair Value Disclosure	0	0
Investment in Real Estate Fund
Other invested assets
Other Investments	$ 2,500	$ 2,500	5,000
Investment In Low Income Housing Tax Credit Partnership Net Of Amortization Member
Other invested assets
Number of investments in low income housing tax credit partnerships | item	3	3
Other Investments	$ 15,500	$ 15,500	17,500
Qualified Affordable Housing Project Investments, Commitment	3,100	3,100
Total tax benefit on investments in housing tax credit partnership		2,400	$ 1,900	$ 1,100
Investment in BDC
Other invested assets
Other Investments	7,300	7,300
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share, Unfunded Commitments	17,700	17,700
Investment In Global Credit Fund
Other invested assets
Other Investments	7,500	7,500
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share, Unfunded Commitments	$ 7,200	$ 7,200

POLICY ACQUISITION COSTS (Detai

POLICY ACQUISITION COSTS (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Policy acquisition costs deferred and amortized to income
Deferred policy acquisition costs (DAC), beginning of year	$ 73,147	$ 69,829	$ 65,123
Deferred:
Direct commissions	157,723	150,390	146,507
Premium taxes	11,651	11,759	11,087
Ceding commissions	(18,096)	(17,488)	(17,403)
Net deferred	151,278	144,661	140,191
Amortized	146,709	141,343	135,485
DAC/VOBA*, end of year	77,716	73,147	69,829
Policy acquisition costs:
Amortized to expense - DAC	146,709	141,343	135,485
Period costs:
Ceding commission - contingent	(3,575)	(1,524)	(1,834)
Other underwriting expenses	109,381	109,793	107,427
Total policy acquisition costs	$ 252,515	$ 249,612	$ 241,078

DEBT (Details)

DEBT (Details) - USD ($) $ in Thousands	Dec. 12, 2013	Oct. 02, 2013	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	May 31, 2014
Debt
Outstanding long-term senior notes			$ 148,928	$ 148,741
Interest expense incurred on outstanding debt			$ 7,426	$ 7,426	$ 7,426
Senior Notes
Debt
Average interest rate on debt (as a percent)			4.91%	4.91%	4.91%
Senior notes maturing September 15, 2023
Debt
Issue of senior notes by public debt offering		$ 150,000
Stated interest rate, payable semi-annually (as a percent)		4.875%
Proceeds from issuance of debt, net of discount and commission		$ 148,600
Estimated fair value of senior notes			$ 160,300
Senior notes maturing January 15, 2014
Debt
Amount of principle redeemed	$ 100,000
Line of credit
Debt
Borrowing capacity under revolving line of credit facility			40,000			$ 25,000
Maximum borrowing capacity conditional expansion			$ 65,000
Term of facility			4 years
Amount outstanding on this facility			$ 0	$ 0	$ 0
PARENT COMPANY
Debt
Outstanding long-term senior notes			148,928	148,741
Interest expense incurred on outstanding debt			$ 7,426	$ 7,426	$ 7,426

REINSURANCE - Summary of Premiu

REINSURANCE - Summary of Premiums and Losses (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
REINSURANCE
Maximum amount beyond which net loss on any individual risk is limited through the purchase of reinsurance	$ 3,000
WRITTEN
Direct	848,153	$ 844,430	$ 819,130
Reinsurance assumed	37,159	30,434	34,456
Reinsurance ceded	(135,458)	(133,912)	(131,615)
Net	749,854	740,952	721,971
EARNED
Direct	835,118	835,294	797,180
Reinsurance assumed	32,521	27,886	35,724
Reinsurance ceded	(129,702)	(134,572)	(132,743)
Net amount	737,937	728,608	700,161
LOSSES AND SETTLEMENT EXPENSES INCURRED
Direct	486,986	405,873	307,445
Reinsurance assumed	16,072	13,196	23,184
Reinsurance ceded	(101,474)	(69,291)	(31,584)
Net	$ 401,584	$ 349,778	$ 299,045

REINSURANCE - Summary of Reinsu

REINSURANCE - Summary of Reinsurers (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2017USD ($)item	Dec. 31, 2016USD ($)	Dec. 31, 2015USD ($)
Net reinsurance balances recoverable
Prepaid reinsurance premiums and recoverables on paid and unpaid losses and settlement expenses	$ 349,700
Percentage of reinsurance recoverables due from companies with financial strength ratings of "A" or better by A.M. Best and S&P rating services	94.00%
Number of top reinsurers | item	10
Reinsurer Exposure	$ 349,710
Ceded Premium Written	$ 135,458	$ 133,912	$ 131,615
Percent of Total Ceded Premium Written	100.00%
Reinsurance balances recoverable as a percentage of shareholder's equity, threshold for disclosure	2.00%
Amount of allowance for uncollectible amounts on paid recoverables	$ 15,900	15,200
Reinsurance balances recoverable on unpaid losses and settlement expenses, allowances for uncollectible amounts	$ 10,014	$ 10,699
Threshold period for including reinsurance receivables in the allowance for uncollectible amounts	1 year
Reinsurer Concentration Risk [Member] | Reinsurance Recoverable [Member]
Net reinsurance balances recoverable
Percent of Total Net Reinsurer Exposure	100.00%
Munich Re America / HSB | A.M. Best Rating, A+, Superior | S&P Rating, AA-, Very Strong
Net reinsurance balances recoverable
Reinsurer Exposure	$ 59,277
Ceded Premium Written	$ 24,747
Percent of Total Ceded Premium Written	18.30%
Munich Re America / HSB | A.M. Best Rating, A+, Superior | S&P Rating, AA-, Very Strong | Reinsurer Concentration Risk [Member] | Reinsurance Recoverable [Member]
Net reinsurance balances recoverable
Percent of Total Net Reinsurer Exposure	17.00%
Swiss Re /Westport Ins. Corp. | A.M. Best Rating, A+, Superior | S&P Rating, AA-, Very Strong
Net reinsurance balances recoverable
Reinsurer Exposure	$ 47,680
Ceded Premium Written	$ 10,671
Percent of Total Ceded Premium Written	7.90%
Swiss Re /Westport Ins. Corp. | A.M. Best Rating, A+, Superior | S&P Rating, AA-, Very Strong | Reinsurer Concentration Risk [Member] | Reinsurance Recoverable [Member]
Net reinsurance balances recoverable
Percent of Total Net Reinsurer Exposure	13.60%
Endurance Re | A.M. Best Rating, A+, Superior | S&P Rating, A, Strong
Net reinsurance balances recoverable
Reinsurer Exposure	$ 29,771
Ceded Premium Written	$ 5,695
Percent of Total Ceded Premium Written	4.20%
Endurance Re | A.M. Best Rating, A+, Superior | S&P Rating, A, Strong | Reinsurer Concentration Risk [Member] | Reinsurance Recoverable [Member]
Net reinsurance balances recoverable
Percent of Total Net Reinsurer Exposure	8.50%
Aspen UK Ltd. | A.M. Best Rating, A, Excellent | S&P Rating, A, Strong
Net reinsurance balances recoverable
Reinsurer Exposure	$ 26,204
Ceded Premium Written	$ 6,895
Percent of Total Ceded Premium Written	5.10%
Aspen UK Ltd. | A.M. Best Rating, A, Excellent | S&P Rating, A, Strong | Reinsurer Concentration Risk [Member] | Reinsurance Recoverable [Member]
Net reinsurance balances recoverable
Percent of Total Net Reinsurer Exposure	7.50%
Berkley Insurance Co. | A.M. Best Rating, A+, Superior | S&P Rating, A+, Strong
Net reinsurance balances recoverable
Reinsurer Exposure	$ 17,404
Ceded Premium Written	$ 5,589
Percent of Total Ceded Premium Written	4.10%
Berkley Insurance Co. | A.M. Best Rating, A+, Superior | S&P Rating, A+, Strong | Reinsurer Concentration Risk [Member] | Reinsurance Recoverable [Member]
Net reinsurance balances recoverable
Percent of Total Net Reinsurer Exposure	5.00%
Transatlantic Re | A.M. Best Rating, A, Excellent | S&P Rating, A+, Strong
Net reinsurance balances recoverable
Reinsurer Exposure	$ 15,726
Ceded Premium Written	$ 6,212
Percent of Total Ceded Premium Written	4.60%
Transatlantic Re | A.M. Best Rating, A, Excellent | S&P Rating, A+, Strong | Reinsurer Concentration Risk [Member] | Reinsurance Recoverable [Member]
Net reinsurance balances recoverable
Percent of Total Net Reinsurer Exposure	4.50%
General Re | AM Best, A++ Rating [Member] | Standard & Poor's, AA+ Rating
Net reinsurance balances recoverable
Reinsurer Exposure	$ 14,997
Ceded Premium Written	$ 3,694
Percent of Total Ceded Premium Written	2.70%
General Re | AM Best, A++ Rating [Member] | Standard & Poor's, AA+ Rating | Reinsurer Concentration Risk [Member] | Reinsurance Recoverable [Member]
Net reinsurance balances recoverable
Percent of Total Net Reinsurer Exposure	4.30%
Scor Reinsurance Co. | A.M. Best Rating, A+, Superior | S&P Rating, AA-, Very Strong
Net reinsurance balances recoverable
Reinsurer Exposure	$ 14,226
Ceded Premium Written	$ 5,433
Percent of Total Ceded Premium Written	4.00%
Scor Reinsurance Co. | A.M. Best Rating, A+, Superior | S&P Rating, AA-, Very Strong | Reinsurer Concentration Risk [Member] | Reinsurance Recoverable [Member]
Net reinsurance balances recoverable
Percent of Total Net Reinsurer Exposure	4.10%
Tokio Millennium Re | AM Best, A++ Rating [Member] | S&P Rating, A+, Strong
Net reinsurance balances recoverable
Reinsurer Exposure	$ 14,133
Ceded Premium Written	$ 7,775
Percent of Total Ceded Premium Written	5.70%
Tokio Millennium Re | AM Best, A++ Rating [Member] | S&P Rating, A+, Strong | Reinsurer Concentration Risk [Member] | Reinsurance Recoverable [Member]
Net reinsurance balances recoverable
Percent of Total Net Reinsurer Exposure	4.00%
Hannover Ruckversicherung Member | A.M. Best Rating, A+, Superior | S&P Rating, AA-, Very Strong
Net reinsurance balances recoverable
Reinsurer Exposure	$ 13,649
Ceded Premium Written	$ 7,302
Percent of Total Ceded Premium Written	5.40%
Hannover Ruckversicherung Member | A.M. Best Rating, A+, Superior | S&P Rating, AA-, Very Strong | Reinsurer Concentration Risk [Member] | Reinsurance Recoverable [Member]
Net reinsurance balances recoverable
Percent of Total Net Reinsurer Exposure	3.90%
All other reinsurers
Net reinsurance balances recoverable
Reinsurer Exposure	$ 96,643
Ceded Premium Written	$ 51,445
Percent of Total Ceded Premium Written	38.00%
All other reinsurers | Reinsurer Concentration Risk [Member] | Reinsurance Recoverable [Member]
Net reinsurance balances recoverable
Percent of Total Net Reinsurer Exposure	27.60%

HISTORICAL LOSS AND LAE DEVEL61

HISTORICAL LOSS AND LAE DEVELOPMENT - Unpaid Losses and Settlement Expenses (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Unpaid losses and LAE at beginning of year:
Gross	$ 1,139,337	$ 1,103,785	$ 1,121,040
Ceded	(288,224)	(297,844)	(335,106)
Net	851,113	805,941	785,934
Increase (decrease) in incurred losses and LAE:
Current accident year	440,452	391,772	364,472
Prior accident years	(38,868)	(41,994)	(65,427)
Total incurred	401,584	349,778	299,045
Loss and LAE payments for claims incurred:
Current accident year	(73,392)	(70,540)	(71,853)
Prior accident year	(209,793)	(234,066)	(207,185)
Total paid	(283,185)	(304,606)	(279,038)
Net	969,512	851,113	805,941
Unpaid losses and LAE at year end
Gross	1,271,503	1,139,337	1,103,785
Ceded	(301,991)	(288,224)	(297,844)
Net	$ 969,512	$ 851,113	$ 805,941

HISTORICAL LOSS AND LAE DEVEL62

HISTORICAL LOSS AND LAE DEVELOPMENT - Incurred Losses and Loss Adjustment Expenses, Net of Reinsurance (Details) $ in Thousands	Dec. 31, 2017USD ($)claim	Dec. 31, 2016USD ($)	Dec. 31, 2015USD ($)	Dec. 31, 2014USD ($)	Dec. 31, 2013USD ($)	Dec. 31, 2012USD ($)	Dec. 31, 2011USD ($)	Dec. 31, 2010USD ($)	Dec. 31, 2009USD ($)	Dec. 31, 2008USD ($)
Claims Development [Line Items]
Liabilities for losses and loss adjustment expenses, net of reinsurance	$ 969,512	$ 851,113
Casualty segment | Primary Occurrence
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	803,166
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	485,689
All outstanding liabilities before 2007, net of reinsurance	7,705
Liabilities for losses and loss adjustment expenses, net of reinsurance	325,182	293,256
Casualty segment | Primary Occurrence | 2008
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	74,672	74,837	$ 73,696	$ 73,859	$ 74,174	$ 78,218	$ 83,367	$ 91,734	$ 100,454	$ 96,829
Total IBNR	$ 1,505
Cumulative number of reported claims | claim	5,423
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 69,605	67,572	64,814	62,511	56,288	48,108	33,605	20,539	9,399	3,022
Casualty segment | Primary Occurrence | 2009
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	80,350	80,518	81,138	82,651	86,888	91,441	99,765	119,957	85,476
Total IBNR	$ 2,068
Cumulative number of reported claims | claim	5,705
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 75,948	74,920	70,220	65,913	58,460	43,702	24,115	9,233	1,972
Casualty segment | Primary Occurrence | 2010
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	78,991	78,685	80,289	85,034	88,820	93,589	96,582	87,875
Total IBNR	$ 2,216
Cumulative number of reported claims | claim	6,107
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 69,514	66,399	61,929	55,992	44,051	29,312	13,025	2,587
Casualty segment | Primary Occurrence | 2011
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	82,193	83,181	86,342	89,622	94,145	98,428	91,139
Total IBNR	$ 3,413
Cumulative number of reported claims | claim	5,839
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 71,413	67,358	60,769	48,822	32,978	17,124	5,924
Casualty segment | Primary Occurrence | 2012
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	59,488	59,028	61,072	65,893	78,406	91,807
Total IBNR	$ 4,100
Cumulative number of reported claims | claim	5,148
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 47,970	43,276	33,822	23,889	14,539	5,897
Casualty segment | Primary Occurrence | 2013
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	60,162	60,329	62,882	67,297	80,823
Total IBNR	$ 9,631
Cumulative number of reported claims | claim	4,267
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 40,609	34,786	22,366	13,021	6,334
Casualty segment | Primary Occurrence | 2014
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	67,237	71,592	79,497	88,092
Total IBNR	$ 17,335
Cumulative number of reported claims | claim	4,190
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 40,270	29,545	18,771	11,436
Casualty segment | Primary Occurrence | 2015
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	83,579	84,975	94,835
Total IBNR	$ 33,109
Cumulative number of reported claims | claim	4,201
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 33,020	19,902	10,157
Casualty segment | Primary Occurrence | 2016
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	96,753	101,950
Total IBNR	$ 54,413
Cumulative number of reported claims | claim	3,920
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 24,186	10,142
Casualty segment | Primary Occurrence | 2017
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	119,741
Total IBNR	$ 93,852
Cumulative number of reported claims | claim	3,496
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 13,154
Casualty segment | Excess Occurrence
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	307,497
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	138,642
All outstanding liabilities before 2007, net of reinsurance	20,108
Liabilities for losses and loss adjustment expenses, net of reinsurance	188,963	163,801
Casualty segment | Excess Occurrence | 2008
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	13,671	13,487	13,695	13,816	13,862	13,869	14,472	17,347	22,666	35,209
Total IBNR	$ 308
Cumulative number of reported claims | claim	638
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 13,281	13,183	13,166	12,163	11,938	11,755	11,231	8,212	3,224	115
Casualty segment | Excess Occurrence | 2009
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	12,055	11,982	12,601	12,459	12,966	12,893	14,981	19,719	30,267
Total IBNR	$ 268
Cumulative number of reported claims | claim	566
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 11,786	11,780	11,776	10,808	11,001	9,460	6,585	3,947	956
Casualty segment | Excess Occurrence | 2010
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	20,530	21,018	22,044	20,044	18,932	22,111	24,244	29,314
Total IBNR	$ 381
Cumulative number of reported claims | claim	499
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 19,256	19,175	17,302	15,512	13,282	10,705	6,002	7
Casualty segment | Excess Occurrence | 2011
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	21,295	20,959	19,160	18,641	17,443	17,148	26,272
Total IBNR	$ 964
Cumulative number of reported claims | claim	578
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 17,769	16,494	10,772	8,793	6,981	5,145	2,169
Casualty segment | Excess Occurrence | 2012
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	22,433	21,231	21,885	21,021	21,558	29,042
Total IBNR	$ 1,417
Cumulative number of reported claims | claim	837
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 17,747	16,879	15,380	8,843	3,573	1,315
Casualty segment | Excess Occurrence | 2013
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	25,599	25,425	26,857	34,824	39,984
Total IBNR	$ 4,654
Cumulative number of reported claims | claim	925
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 16,967	14,545	10,967	5,701	1,060
Casualty segment | Excess Occurrence | 2014
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	32,274	35,119	39,095	50,889
Total IBNR	$ 9,801
Cumulative number of reported claims | claim	844
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 18,852	11,002	4,006	1,899
Casualty segment | Excess Occurrence | 2015
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	47,392	50,857	53,672
Total IBNR	$ 22,168
Cumulative number of reported claims | claim	608
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 19,571	10,127	2,048
Casualty segment | Excess Occurrence | 2016
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	49,385	56,341
Total IBNR	$ 39,381
Cumulative number of reported claims | claim	486
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 3,396	1,068
Casualty segment | Excess Occurrence | 2017
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	62,863
Total IBNR	$ 58,246
Cumulative number of reported claims | claim	287
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 17
Casualty segment | Claims Made
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	315,204
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	144,817
All outstanding liabilities before 2007, net of reinsurance	854
Liabilities for losses and loss adjustment expenses, net of reinsurance	171,241	152,031
Casualty segment | Claims Made | 2008
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	4,528	4,584	4,848	5,568	6,878	7,811	3,043	3,915	12,754	11,083
Total IBNR	$ 103
Cumulative number of reported claims | claim	300
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 4,424	4,424	4,385	4,380	712	707	705	703	227	9
Casualty segment | Claims Made | 2009
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	11,827	12,053	12,810	13,117	11,710	13,562	9,687	13,703	12,918
Total IBNR	$ 302
Cumulative number of reported claims | claim	383
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 11,475	11,398	11,217	10,678	5,176	3,413	773	442	113
Casualty segment | Claims Made | 2010
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	9,024	9,175	10,581	11,689	10,429	9,776	15,556	13,690
Total IBNR	$ 490
Cumulative number of reported claims | claim	502
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 8,485	6,956	5,749	5,733	3,626	2,308	1,548	259
Casualty segment | Claims Made | 2011
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	7,852	7,720	8,510	10,619	12,260	17,454	17,416
Total IBNR	$ 693
Cumulative number of reported claims | claim	682
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 6,835	6,209	5,637	5,947	4,508	1,949	330
Casualty segment | Claims Made | 2012
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	17,612	18,022	19,590	20,727	26,144	27,576
Total IBNR	$ 2,156
Cumulative number of reported claims | claim	803
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 14,378	10,968	9,218	6,898	4,086	433
Casualty segment | Claims Made | 2013
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	38,473	40,288	44,054	41,488	40,095
Total IBNR	$ 5,773
Cumulative number of reported claims | claim	1,042
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 29,678	26,121	18,425	7,073	792
Casualty segment | Claims Made | 2014
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	55,350	58,152	55,386	53,929
Total IBNR	$ 13,240
Cumulative number of reported claims | claim	1,302
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 35,755	27,923	9,775	1,705
Casualty segment | Claims Made | 2015
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	42,206	47,831	55,006
Total IBNR	$ 19,844
Cumulative number of reported claims | claim	1,332
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 16,774	10,738	2,215
Casualty segment | Claims Made | 2016
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	67,760	59,992
Total IBNR	$ 30,727
Cumulative number of reported claims | claim	1,481
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 14,558	2,060
Casualty segment | Claims Made | 2017
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	60,572
Total IBNR	$ 46,522
Cumulative number of reported claims | claim	1,534
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 2,455
Casualty segment | Transportation
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	351,752
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	232,142
All outstanding liabilities before 2007, net of reinsurance	94
Liabilities for losses and loss adjustment expenses, net of reinsurance	119,704	98,604
Casualty segment | Transportation | 2008
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	23,672	23,690	23,673	23,764	24,110	24,255	23,497	25,520	27,752	32,071
Total IBNR	$ 23
Cumulative number of reported claims | claim	2,834
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 23,628	23,616	23,614	23,387	23,293	21,110	18,359	14,489	10,821	6,153
Casualty segment | Transportation | 2009
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	21,926	21,969	21,958	22,340	22,613	22,929	23,174	23,366	26,349
Total IBNR	$ 36
Cumulative number of reported claims | claim	2,644
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 21,650	21,650	21,640	21,325	21,100	19,933	14,613	8,698	5,035
Casualty segment | Transportation | 2010
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	23,786	23,701	23,625	23,981	25,593	24,912	23,390	27,239
Total IBNR	$ 52
Cumulative number of reported claims | claim	2,842
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 23,533	23,488	23,063	21,792	20,045	15,475	10,116	6,296
Casualty segment | Transportation | 2011
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	25,167	25,376	25,431	25,272	25,747	23,479	22,957
Total IBNR	$ 71
Cumulative number of reported claims | claim	2,469
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 23,941	23,537	22,375	19,443	14,477	9,485	5,295
Casualty segment | Transportation | 2012
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	23,620	23,689	23,511	22,924	22,203	21,452
Total IBNR	$ 129
Cumulative number of reported claims | claim	2,282
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 22,566	20,931	17,318	12,394	8,533	4,466
Casualty segment | Transportation | 2013
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	38,811	37,673	32,989	32,853	32,742
Total IBNR	$ 702
Cumulative number of reported claims | claim	2,849
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 33,480	28,220	19,761	11,978	5,306
Casualty segment | Transportation | 2014
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	38,590	36,452	33,015	38,361
Total IBNR	$ 1,698
Cumulative number of reported claims | claim	3,093
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 27,457	19,676	13,933	7,125
Casualty segment | Transportation | 2015
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	47,021	46,258	38,561
Total IBNR	$ 6,051
Cumulative number of reported claims | claim	3,167
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 29,554	20,709	6,984
Casualty segment | Transportation | 2016
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	53,519	50,430
Total IBNR	$ 11,987
Cumulative number of reported claims | claim	3,879
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 18,354	8,923
Casualty segment | Transportation | 2017
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	55,640
Total IBNR	$ 17,396
Cumulative number of reported claims | claim	3,361
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 7,979
Property segment
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	629,103
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	560,386
All outstanding liabilities before 2007, net of reinsurance	150
Liabilities for losses and loss adjustment expenses, net of reinsurance	68,867	47,769
Property segment | 2008
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	75,217	75,288	75,313	75,281	76,089	75,974	78,946	78,378	79,774	75,951
Total IBNR	$ 20
Cumulative number of reported claims | claim	2,718
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 74,896	74,827	74,766	74,692	73,619	71,938	69,811	66,028	59,695	31,573
Property segment | 2009
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	49,323	49,267	48,707	48,857	48,969	49,534	52,286	55,821	59,975
Total IBNR	$ 58
Cumulative number of reported claims | claim	2,631
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 49,173	49,051	48,329	48,297	48,031	46,004	43,758	40,775	25,464
Property segment | 2010
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	52,952	52,964	52,927	54,153	53,937	55,427	59,145	63,194
Total IBNR	$ 85
Cumulative number of reported claims | claim	2,850
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 52,851	52,719	52,426	52,729	50,055	47,743	43,091	25,274
Property segment | 2011
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	62,456	62,570	62,770	63,724	64,976	66,924	70,246
Total IBNR	$ 300
Cumulative number of reported claims | claim	3,027
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 61,834	61,428	60,272	59,099	55,778	48,756	27,676
Property segment | 2012
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	78,125	79,175	77,569	79,181	80,155	85,485
Total IBNR	$ 335
Cumulative number of reported claims | claim	2,639
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 76,152	75,640	73,705	72,057	66,509	39,074
Property segment | 2013
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	61,914	62,114	62,173	62,090	63,864
Total IBNR	$ 698
Cumulative number of reported claims | claim	2,995
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 60,520	59,259	57,407	50,840	32,208
Property segment | 2014
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	48,761	48,801	49,441	56,587
Total IBNR	$ 534
Cumulative number of reported claims | claim	4,558
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 46,528	46,148	43,380	30,550
Property segment | 2015
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	53,958	56,103	59,863
Total IBNR	$ 1,727
Cumulative number of reported claims | claim	4,070
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 50,197	49,348	32,184
Property segment | 2016
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	55,594	62,900
Total IBNR	$ 3,759
Cumulative number of reported claims | claim	3,352
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 46,921	33,134
Property segment | 2017
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	90,803
Total IBNR	$ 24,892
Cumulative number of reported claims | claim	2,609
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 41,314
Surety segment
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	87,609
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	64,318
All outstanding liabilities before 2007, net of reinsurance	84
Liabilities for losses and loss adjustment expenses, net of reinsurance	23,375	24,388
Surety segment | 2008
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	2,818	2,939	2,856	2,877	2,850	2,832	3,267	3,469	4,045	8,055
Total IBNR	$ 3
Cumulative number of reported claims | claim	2,084
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 2,931	2,919	2,803	2,816	2,745	2,731	2,665	2,722	2,110	$ 643
Surety segment | 2009
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	5,990	4,923	4,288	4,551	4,146	4,246	4,708	4,896	15,474
Total IBNR	$ 7
Cumulative number of reported claims | claim	1,660
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 5,978	3,908	3,919	4,336	3,490	2,493	2,382	1,914	$ 892
Surety segment | 2010
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	6,850	7,645	7,136	6,810	7,076	6,630	8,205	13,961
Total IBNR	$ 32
Cumulative number of reported claims | claim	1,533
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 7,269	7,822	7,285	7,151	7,092	5,702	3,205	$ 1,724
Surety segment | 2011
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	16,480	16,695	16,766	17,321	17,792	17,832	13,842
Total IBNR	$ 31
Cumulative number of reported claims | claim	1,669
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 17,086	17,086	17,212	17,403	17,151	16,932	$ 8,160
Surety segment | 2012
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	7,471	7,867	8,180	8,667	11,452	17,114
Total IBNR	$ 104
Cumulative number of reported claims | claim	1,459
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 7,406	7,536	7,416	6,726	6,680	$ 1,883
Surety segment | 2013
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	5,271	5,399	6,170	7,516	16,080
Total IBNR	$ 108
Cumulative number of reported claims | claim	1,398
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 5,098	4,911	4,701	2,856	$ 1,116
Surety segment | 2014
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	4,427	5,225	8,106	16,450
Total IBNR	$ 349
Cumulative number of reported claims | claim	1,318
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 4,059	4,166	4,283	$ 722
Surety segment | 2015
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	11,113	12,957	16,958
Total IBNR	$ 1,724
Cumulative number of reported claims | claim	1,149
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 7,695	6,719	$ 3,192
Surety segment | 2016
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	11,062	18,928
Total IBNR	$ 3,018
Cumulative number of reported claims | claim	1,167
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 5,817	$ 3,087
Surety segment | 2017
Claims Development [Line Items]
Incurred losses and loss adjustment expenses, net of reinsurance	16,127
Total IBNR	$ 14,938
Cumulative number of reported claims | claim	793
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 979

HISTORICAL LOSS AND LAE DEVEL63

HISTORICAL LOSS AND LAE DEVELOPMENT - Cumulative Paid Loss and Loss Adjustment Expenses, Net of Reinsurance (Details)	Dec. 31, 2017
Property segment
Short-duration Insurance Contracts, Historical Claims Duration [Line Items]
Average annual percentage payout of incurred losses by age, Year 1	51.50%
Average annual percentage payout of incurred losses by age, Year 2	31.60%
Average annual percentage payout of incurred losses by age, Year 3	7.40%
Average annual percentage payout of incurred losses by age, Year 4	3.60%
Average annual percentage payout of incurred losses by age, Year 5	3.10%
Average annual percentage payout of incurred losses by age, Year 6	0.90%
Average annual percentage payout of incurred losses by age, Year 7	0.70%
Average annual percentage payout of incurred losses by age, Year 8	0.60%
Average annual percentage payout of incurred losses by age, Year 9	0.20%
Average annual percentage payout of incurred losses by age, Year 10	0.10%
Surety segment
Short-duration Insurance Contracts, Historical Claims Duration [Line Items]
Average annual percentage payout of incurred losses by age, Year 1	23.80%
Average annual percentage payout of incurred losses by age, Year 2	42.00%
Average annual percentage payout of incurred losses by age, Year 3	13.60%
Average annual percentage payout of incurred losses by age, Year 4	4.60%
Average annual percentage payout of incurred losses by age, Year 5	4.00%
Average annual percentage payout of incurred losses by age, Year 6	2.80%
Average annual percentage payout of incurred losses by age, Year 7	0.80%
Average annual percentage payout of incurred losses by age, Year 8	(2.90%)
Average annual percentage payout of incurred losses by age, Year 9	19.30%
Average annual percentage payout of incurred losses by age, Year 10	0.40%
Primary Occurrence | Casualty segment
Short-duration Insurance Contracts, Historical Claims Duration [Line Items]
Average annual percentage payout of incurred losses by age, Year 1	8.80%
Average annual percentage payout of incurred losses by age, Year 2	11.90%
Average annual percentage payout of incurred losses by age, Year 3	17.00%
Average annual percentage payout of incurred losses by age, Year 4	19.00%
Average annual percentage payout of incurred losses by age, Year 5	15.50%
Average annual percentage payout of incurred losses by age, Year 6	8.70%
Average annual percentage payout of incurred losses by age, Year 7	6.10%
Average annual percentage payout of incurred losses by age, Year 8	4.30%
Average annual percentage payout of incurred losses by age, Year 9	2.50%
Average annual percentage payout of incurred losses by age, Year 10	2.70%
Excess Occurrence | Casualty segment
Short-duration Insurance Contracts, Historical Claims Duration [Line Items]
Average annual percentage payout of incurred losses by age, Year 1	4.10%
Average annual percentage payout of incurred losses by age, Year 2	16.40%
Average annual percentage payout of incurred losses by age, Year 3	21.90%
Average annual percentage payout of incurred losses by age, Year 4	19.20%
Average annual percentage payout of incurred losses by age, Year 5	8.80%
Average annual percentage payout of incurred losses by age, Year 6	7.80%
Average annual percentage payout of incurred losses by age, Year 7	6.20%
Average annual percentage payout of incurred losses by age, Year 8	2.60%
Average annual percentage payout of incurred losses by age, Year 9	0.10%
Average annual percentage payout of incurred losses by age, Year 10	0.70%
Claims Made | Casualty segment
Short-duration Insurance Contracts, Historical Claims Duration [Line Items]
Average annual percentage payout of incurred losses by age, Year 1	2.80%
Average annual percentage payout of incurred losses by age, Year 2	14.80%
Average annual percentage payout of incurred losses by age, Year 3	18.40%
Average annual percentage payout of incurred losses by age, Year 4	14.70%
Average annual percentage payout of incurred losses by age, Year 5	8.90%
Average annual percentage payout of incurred losses by age, Year 6	14.70%
Average annual percentage payout of incurred losses by age, Year 7	26.70%
Average annual percentage payout of incurred losses by age, Year 8	6.20%
Average annual percentage payout of incurred losses by age, Year 9	0.80%
Average annual percentage payout of incurred losses by age, Year 10	0.00%
Transportation | Casualty segment
Short-duration Insurance Contracts, Historical Claims Duration [Line Items]
Average annual percentage payout of incurred losses by age, Year 1	19.30%
Average annual percentage payout of incurred losses by age, Year 2	18.70%
Average annual percentage payout of incurred losses by age, Year 3	19.40%
Average annual percentage payout of incurred losses by age, Year 4	20.30%
Average annual percentage payout of incurred losses by age, Year 5	10.80%
Average annual percentage payout of incurred losses by age, Year 6	5.40%
Average annual percentage payout of incurred losses by age, Year 7	1.30%
Average annual percentage payout of incurred losses by age, Year 8	0.40%
Average annual percentage payout of incurred losses by age, Year 9	0.00%
Average annual percentage payout of incurred losses by age, Year 10	0.10%

HISTORICAL LOSS AND LAE DEVEL64

HISTORICAL LOSS AND LAE DEVELOPMENT - Reconciliation of Incurred and Paid Loss Develeopment to the Liability for Unpaid Losses and Settlement Expenses (Details) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Short-duration Insurance Contracts, Reconciliation of Claims Development to Liability [Line Items]
Net outstanding liabilities	$ 1,271,503	$ 1,139,337	$ 1,103,785	$ 1,121,040
Unallocated loss adjustment expenses	48,844	46,286
Other	13,322	14,279
Liabilities for losses and loss adjustment expenses, net of reinsurance	969,512	851,113
Allowance for uncollectible reinsurance balances recoverable on unpaid losses and settlement expenses	10,014	10,699
Other	1,729	2,185
Reinsurance recoverable on unpaid claims	301,991	288,224	$ 297,844	$ 335,106
Total gross liability for unpaid loss and settlement expenses	1,271,503	1,139,337
Casualty segment | Primary Occurrence
Short-duration Insurance Contracts, Reconciliation of Claims Development to Liability [Line Items]
Liabilities for losses and loss adjustment expenses, net of reinsurance	325,182	293,256
Reinsurance recoverable on unpaid claims	36,158	43,662
Casualty segment | Excess Occurrence
Short-duration Insurance Contracts, Reconciliation of Claims Development to Liability [Line Items]
Liabilities for losses and loss adjustment expenses, net of reinsurance	188,963	163,801
Reinsurance recoverable on unpaid claims	74,400	69,858
Casualty segment | Claims Made
Short-duration Insurance Contracts, Reconciliation of Claims Development to Liability [Line Items]
Liabilities for losses and loss adjustment expenses, net of reinsurance	171,241	152,031
Reinsurance recoverable on unpaid claims	117,436	113,891
Casualty segment | Transportation
Short-duration Insurance Contracts, Reconciliation of Claims Development to Liability [Line Items]
Liabilities for losses and loss adjustment expenses, net of reinsurance	119,704	98,604
Reinsurance recoverable on unpaid claims	46,590	41,173
Property segment
Short-duration Insurance Contracts, Reconciliation of Claims Development to Liability [Line Items]
Liabilities for losses and loss adjustment expenses, net of reinsurance	68,867	47,769
Reinsurance recoverable on unpaid claims	28,613	17,548
Surety segment
Short-duration Insurance Contracts, Reconciliation of Claims Development to Liability [Line Items]
Liabilities for losses and loss adjustment expenses, net of reinsurance	23,375	24,388
Reinsurance recoverable on unpaid claims	$ 7,079	$ 10,606

HISTORICAL LOSS AND LAE DEVEL65

HISTORICAL LOSS AND LAE DEVELOPMENT - Reserve Development (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
(Favorable)/unfavorable reserve development
(Favorable)/unfavorable reserve development	$ (38,868)	$ (41,994)	$ (65,427)
Casualty segment
(Favorable)/unfavorable reserve development
(Favorable)/unfavorable reserve development	(17,462)	(32,401)	(45,654)
Property segment
(Favorable)/unfavorable reserve development
(Favorable)/unfavorable reserve development	(12,134)	(4,793)	(11,848)
Property segment | Marine
(Favorable)/unfavorable reserve development
(Favorable)/unfavorable reserve development	(6,800)	(2,100)	(9,200)
Property segment | Assumed property
(Favorable)/unfavorable reserve development
(Favorable)/unfavorable reserve development		(2,500)	(4,900)
Property segment | Recreational Vehicle
(Favorable)/unfavorable reserve development
(Favorable)/unfavorable reserve development			1,300
Property segment | Commercial property
(Favorable)/unfavorable reserve development
(Favorable)/unfavorable reserve development	(3,200)
Property segment | Other direct property products
(Favorable)/unfavorable reserve development
(Favorable)/unfavorable reserve development		200
Surety segment
(Favorable)/unfavorable reserve development
(Favorable)/unfavorable reserve development	(9,272)	(4,800)	(7,925)
Surety segment | Commercial surety product
(Favorable)/unfavorable reserve development
(Favorable)/unfavorable reserve development	(3,500)	(1,700)	(4,000)
Surety segment | Contract surety product
(Favorable)/unfavorable reserve development
(Favorable)/unfavorable reserve development	(4,400)	(100)	(2,200)
Surety segment | Energy surety product
(Favorable)/unfavorable reserve development
(Favorable)/unfavorable reserve development	(1,500)	(1,900)	(2,000)
Surety segment | Miscellaneous Surety Product
(Favorable)/unfavorable reserve development
(Favorable)/unfavorable reserve development	100	(1,100)	300
Primary Occurrence | Casualty segment | General liability
(Favorable)/unfavorable reserve development
(Favorable)/unfavorable reserve development	(4,600)	(17,600)	(15,400)
Primary Occurrence | Casualty segment | P&C Package
(Favorable)/unfavorable reserve development
(Favorable)/unfavorable reserve development	(3,200)	(6,200)	(6,600)
Primary Occurrence | Casualty segment | Professional services
(Favorable)/unfavorable reserve development
(Favorable)/unfavorable reserve development			3,200
Excess Occurrence | Casualty segment | Commercial products
(Favorable)/unfavorable reserve development
(Favorable)/unfavorable reserve development	(9,900)	(13,800)	(10,700)
Excess Occurrence | Casualty segment | Personal umbrella
(Favorable)/unfavorable reserve development
(Favorable)/unfavorable reserve development	(1,100)	4,900
Excess Occurrence | Casualty segment | Runoff casualty business
(Favorable)/unfavorable reserve development
(Favorable)/unfavorable reserve development			5,400
Claims Made | Casualty segment
(Favorable)/unfavorable reserve development
(Favorable)/unfavorable reserve development			(3,900)
Claims Made | Casualty segment | Executive products
(Favorable)/unfavorable reserve development
(Favorable)/unfavorable reserve development	(4,400)	(14,700)
Claims Made | Casualty segment | Medical professional liability
(Favorable)/unfavorable reserve development
(Favorable)/unfavorable reserve development	3,700
Claims Made | Casualty segment | Miscellaneous Professional Liability Member
(Favorable)/unfavorable reserve development
(Favorable)/unfavorable reserve development		(800)
Transportation | Casualty segment | Transportation
(Favorable)/unfavorable reserve development
(Favorable)/unfavorable reserve development	$ 7,400	$ 15,400	$ (5,400)

HISTORICAL LOSS AND LAE DEVEL66

HISTORICAL LOSS AND LAE DEVELOPMENT - Environmental, Asbestos and Mass Tort Exposures (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
UNPAID LOSSES AND LAE AT END OF YEAR
Gross	$ 1,271,503	$ 1,139,337	$ 1,103,785	$ 1,121,040
Net	$ 969,512	851,113	805,941	$ 785,934
Minimum period for which product lines related to majority of reserves have been in runoff	20 years
Asbestos and environmental exposures
LOSS AND LAE PAYMENTS (CUMULATIVE)
Gross	$ 132,883	130,358	119,632
Ceded	(67,507)	(66,644)	(62,463)
Net	65,376	63,714	57,169
UNPAID LOSSES AND LAE AT END OF YEAR
Gross	28,042	28,815	41,062
Ceded	(5,715)	(4,987)	(12,559)
Net	$ 22,327	$ 23,828	$ 28,503

INCOME TAXES (Details)

INCOME TAXES (Details) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Deferred tax assets:
Tax discounting of claim reserves		$ 20,020,000	$ 17,330,000
Unearned premium offset		16,528,000	26,712,000
Deferred compensation		1,435,000	4,727,000
Stock option expense		2,283,000	4,114,000
Other		578,000	685,000
Deferred tax assets before allowance		40,844,000	53,568,000
Total deferred tax assets		40,844,000	53,568,000
Deferred tax liabilities:
Net unrealized appreciation of securities		51,448,000	66,973,000
Deferred policy acquisition costs		16,320,000	25,602,000
Deferred Tax Liabilities Discounting Of Unpaid Losses TCJA Offset		9,466,000
Book/tax depreciation		3,159,000	4,819,000
Intangible assets		584,000	1,980,000
Undistributed earnings of unconsolidated investees		13,431,000	18,397,000
Other		204,000	291,000
Total deferred tax liabilities		94,612,000	118,062,000
Net deferred tax liability		$ (53,768,000)	$ (64,494,000)
U.S. federal tax rate (as a percent)		35.00%	35.00%	35.00%
Increase (reduction) in taxes resulting from:
Provision for income taxes at the statutory rate of 35%		$ 29,606,000	$ 54,979,000	$ 68,839,000
Enactment Of Tax Cuts And Jobs Act		(32,821,000)
Excess tax benefit on share-based compensation		(5,798,000)
Dividends received deduction		(2,025,000)	(2,216,000)	(2,278,000)
ESOP dividends paid deduction		(2,905,000)	(3,302,000)	(3,377,000)
Tax-exempt interest income		(4,671,000)	(4,263,000)	(4,214,000)
Unconsolidated investee dividends		(1,351,000)	(2,772,000)
Other items, net		(474,000)	(264,000)	168,000
Total tax expense (benefit)		$ (20,439,000)	$ 42,162,000	$ 59,138,000
Reconciliation of income tax expense rate to the U.S. federal tax rate
U.S. federal tax rate (as a percent)		35.00%	35.00%	35.00%
Enactment of Tax Cuts and Jobs Act (TCJA)		(38.80%)
Excess tax benefit on share-based compensation		(6.90%)
Effective rate reduction due to dividend received (as a percent)		(2.40%)	(1.40%)	(1.20%)
Effective rate reduction due to dividend paid to ESOP (as a percent)		(3.40%)	(2.10%)	(1.70%)
Effective rate reduction due to tax exempt interest income (as a percent)		(5.50%)	(2.70%)	(2.10%)
Effective rate reduction due to unconsolidated investee dividends		(1.60%)	(1.80%)
Effective rate reduction due to other items, net (as a percent)		(0.60%)	(0.20%)	0.10%
Effective Income Tax Rate Reconciliation, Percent, Total		(24.20%)	26.80%	30.10%
Total tax expense (benefit)		$ (20,439,000)	$ 42,162,000	$ 59,138,000
Effective tax rates (as a percent)		(24.20%)	26.80%	30.10%
Capital gains rate (as a percent)		21.00%
TCJA Provisional Deferred Tax Expense		$ 2,300,000
Dividend received		$ 0	$ 9,900,000	$ 0
Lower tax rate (as a percent)			7.00%
Effective rate reduction due to dividends paid to ESOP (as a percent)		3.40%	2.10%	1.70%
Expected effective tax rate when deferred items reverse in future years (as a percent)		21.00%
Federal and state income taxes paid		$ 10,400,000	$ 26,900,000	$ 44,200,000
Scenario, Forecast [Member]
Deferred tax liabilities:
U.S. federal tax rate (as a percent)	21.00%
Reconciliation of income tax expense rate to the U.S. federal tax rate
U.S. federal tax rate (as a percent)	21.00%
Anticipated Equity Method Investment Dividends	$ 9,900,000
Lower tax rate (as a percent)	7.35%

EMPLOYEE BENEFITS - Stock Owner

EMPLOYEE BENEFITS - Stock Ownership and Incentive Plans (Details) - USD ($) $ / shares in Units, $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Employee Stock Ownership, 401(K) And Deferred Compensation Plan
Annual expenses for incentive plans	$ 19.7	$ 19.2	$ 20.4
ESOP and 401(k) Plans
Employee Stock Ownership, 401(K) And Deferred Compensation Plan
Vesting period of profit sharing contributions	3 years
Expenses recognized	$ 12.5	$ 11.7	$ 11.6
Employee Stock Ownership Plan (ESOP)
Employee Stock Ownership, 401(K) And Deferred Compensation Plan
Shares purchased under defined contribution plan	124,186	112,608	178,492
Average price of shares purchased (in dollars per share)	$ 58.02	$ 64.20	$ 49.98
Aggregate price of shares purchased	$ 7.2	$ 7.2	$ 8.9
Shares held by the ESOP	3,206,518
Employee 401(k) Plans
Employee Stock Ownership, 401(K) And Deferred Compensation Plan
Employer contribution as a percent of eligible compensation	3.00%
Vesting percentage in basic and voluntary contributions	100.00%
Deferred compensation plan
Employee Stock Ownership, 401(K) And Deferred Compensation Plan
Shares purchased under defined contribution plan	7,464	6,702	9,348
Average price of shares purchased (in dollars per share)	$ 58.66	$ 61.61	$ 53.15
Aggregate price of shares purchased	$ 0.4	$ 0.4	$ 0.5
Assets held under trust	$ 33.2

EMPLOYEE BENEFITS - Stock Optio

EMPLOYEE BENEFITS - Stock Options and Stock Plans (Details) - USD ($) $ / shares in Units, $ in Thousands	Dec. 27, 2017	Nov. 09, 2017	Dec. 23, 2016	Nov. 10, 2016	Dec. 22, 2015	Nov. 12, 2015	May 31, 2017	May 31, 2016	May 31, 2015	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2017	May 06, 2015	May 05, 2010	May 07, 2015
Stock options and stock plans
Dividend paid (in dollars per share)										$ 2.58	$ 2.79	$ 2.75
Weighted Number of Options Outstanding
Outstanding options at the beginning of the period (in shares)										2,207,110	2,582,220	2,892,717
Options granted (in shares)							384,750	345,750	412,000	482,375	440,750	563,500
Options exercised (in shares)										(390,870)	(756,380)	(865,957)
Options canceled/forfeited (in shares)										(41,600)	(59,480)	(8,040)
Outstanding options at the end of the period (in shares)										2,257,015	2,207,110	2,582,220	2,257,015
Exercisable options at the end of the period (in shares)										975,055	862,605	899,680	975,055
Weighted Average Exercise Price
Outstanding options at the beginning of the period (in dollars per share)										$ 40.90	$ 32.42	$ 26.65
Options granted (in dollars per share)										57.12	63.54	49.01
Options exercised (in dollars per share)										26.07	24.87	19.23
Options canceled/forfeited (in dollars per share)										48.30	44.39	32.12
Outstanding options at the end of the period (in dollars per share)										46.80	40.90	32.42	$ 46.80
Exercisable options at the end of the period (in dollars per share)										$ 38.66	$ 31.23	$ 23.60	$ 38.66
Weighted Average Remaining Contractual Life
Weighted-average remaining contractual term of options outstanding										4 years 10 months 17 days	4 years 11 months 5 days	5 years 3 months 26 days
Weighted-average remaining contractual term of exercisable options										3 years 3 months	3 years 3 months 7 days	3 years 11 months 23 days
Aggregate Intrinsic Value
Options exercised (in dollars)										$ 12,779	$ 31,328	$ 32,135
Outstanding options at the end of the period (in dollars)										32,620	49,531	75,725	$ 32,620
Exercisable options at the end of the period (in dollars)										$ 21,780	$ 27,523	$ 34,327	21,780
Weighted-average fair value of options granted (in dollars per share)							$ 7.91	$ 11.42	$ 8.94	$ 8	$ 11.38	$ 9.25
Stock-based compensation expenses (in dollars)										$ 4,400	$ 4,100	$ 4,100
Income tax benefit from stock-based compensation (in dollars)										1,500	1,400	1,400
Unrecognized stock-based compensation expense (in dollars)										$ 5,700	$ 6,200	$ 5,700	$ 5,700
Weighted average grant date assumptions and weighted average fair value
Weighted-average fair value of grants (in dollars per share)							$ 7.91	$ 11.42	$ 8.94	$ 8	$ 11.38	$ 9.25
Risk-free interest rates (as a percent)										1.90%	1.21%	1.54%
Dividend yield (as a percent)										3.60%	1.61%	1.81%
Expected volatility (as a percent)										22.95%	23.06%	22.91%
Expected option life										5 years 18 days	5 years 15 days	5 years 2 months 16 days
Period for which annualized dividends is considered to calculate dividend yield										5 years
Special Cash Dividends Member
Stock options and stock plans
Dividend declared (in dollars per share)		$ 1.75		$ 2		$ 2
Dividend paid (in dollars per share)	$ 1.75		$ 2		$ 2
RLI Corp. Long-Term Incentive Plan (LTIP) and Omnibus Stock Plan
Stock options and stock plans
Award vesting period										5 years
Term of options										8 years
Age and period of service of the participant to be eligible for retirement										75 years
Omnibus Stock Plan
Stock options and stock plans
Shares authorized for grant															3,000,000
Stock options granted to date (in shares)															2,458,059
RLI Corp. Long-Term Incentive Plan (2010 LTIP)
Stock options and stock plans
Shares authorized for grant																4,000,000
Stock options granted to date (in shares)														2,878,000
RLI Corp. Long-Term Incentive Plan (2015 LITP)
Stock options and stock plans
Shares authorized for grant										4,000,000			4,000,000
Stock options granted to date (in shares)													1,448,575
Weighted Number of Options Outstanding
Options granted (in shares)										497,825
Restricted Stock Units (RSUs) [Member] | RLI Corp. Long-Term Incentive Plan (2015 LITP)
Stock options and stock plans
Award vesting period										3 years
Age and period of service of the participant to be eligible for retirement										75 years
Aggregate Intrinsic Value
Stock-based compensation expenses (in dollars)										$ 400
Unrecognized stock-based compensation expense (in dollars)										$ 500			$ 500
Weighted average grant date assumptions and weighted average fair value
RSUs Granted										15,450
RSUs Outstanding										15,300			15,300
Weighted average grant date fair value of RSUs										$ 56.71

STATUTORY INFORMATION AND DIV70

STATUTORY INFORMATION AND DIVIDEND RESTRICTIONS (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2017USD ($)company	Dec. 31, 2016USD ($)	Dec. 31, 2015USD ($)	Dec. 31, 2014USD ($)
Statutory information and dividend restrictions
Number of insurance companies | company	3
Remaining unrestricted equity, liquid assets	$ 23,500
Equity	853,598	$ 823,572	$ 823,469	$ 845,062
Fair Value of Investment in Affiliate Included in Statutory Surplus	106,900	104,400	117,500
Cost Basis of Investment in Affiliate Included in Statutory Surplus	64,600
RLI Ins.
Statutory information and dividend restrictions
Authorized control level RBC	157,700	127,000	123,600
Selected information for insurance subsidiaries
Consolidated surplus, statutory basis	$ 864,600	860,000	865,300
Dividend restriction as percentage of policyholder surplus	10.00%
Payments of Ordinary Dividends	$ 107,000	123,600	125,000
Extraordinary dividend paid after seeking and receiving approval from the Illinois regulatory authorities	0	0	0
Insurance subsidiaries
Selected information for insurance subsidiaries
Consolidated net income, statutory basis	72,889	128,165	178,502
Consolidated surplus, statutory basis	$ 864,554	$ 859,976	$ 865,268

COMMITMENTS AND CONTINGENT LI71

COMMITMENTS AND CONTINGENT LIABILITIES (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Expense associated with operating leases	$ 6,800	$ 6,400	$ 6,100
Minimum future rental payments under noncancellable leases
2,016	5,589
2,017	5,238
2,018	5,138
2,019	5,026
2,020	4,991
2021-2034	6,644
Total minimum future rental payments	32,626
Other Assets [Abstract]
Qualified Affordable Housing Project Investments, Commitment	3,100
Investment In Low Income Housing Tax Credit Partnership Net Of Amortization Member
Other Assets [Abstract]
Qualified Affordable Housing Project Investments, Commitment	3,100
Investment in BDC
Other Assets [Abstract]
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share, Unfunded Commitments	17,700
Investment In Global Credit Fund
Other Assets [Abstract]
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share, Unfunded Commitments	$ 7,200

OPERATING SEGMENT INFORMATION -

OPERATING SEGMENT INFORMATION - Summary of Segments (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
REVENUES
Net premiums earned	$ 188,296	$ 182,025	$ 184,331	$ 183,285	$ 187,869	$ 183,595	$ 180,226	$ 176,918	$ 737,937	$ 728,608	$ 700,161
Net investment income	14,446	14,187	13,238	13,005	13,153	13,504	13,048	13,370	54,876	53,075	54,644
Net realized gains (losses)	5,111	35	(1,359)	624	11,283	9,252	2,710	11,400	4,411	34,645	39,829
Consolidated revenue									797,224	816,328	794,634
INSURANCE EXPENSES
Loss and settlement expenses									401,584	349,778	299,045
Policy acquisition costs									252,515	249,612	241,078
Other insurance expenses									56,994	53,093	51,480
Insurance expenses									711,093	652,483	591,603
NET EARNINGS
Net underwriting income									26,844	76,125	108,558
Net investment income	14,446	14,187	13,238	13,005	13,153	13,504	13,048	13,370	54,876	53,075	54,644
Net realized gains (losses)	5,111	35	(1,359)	624	11,283	9,252	2,710	11,400	4,411	34,645	39,829
General corporate expense and interest on debt									(18,766)	(17,596)	(17,263)
Equity in earnings of unconsolidated investees									17,224	10,833	10,914
Earnings (loss) before income taxes	24,972	(862)	34,036	26,443	38,006	31,142	42,341	45,593	84,589	157,082	196,682
Income tax expense									(20,439)	42,162	59,138
Net earnings	$ 57,258	$ 1,734	$ 26,208	$ 19,828	$ 32,187	$ 22,263	$ 29,077	$ 31,393	105,028	114,920	137,544
PARENT COMPANY
REVENUES
Net investment income									647	942	810
Net realized gains (losses)									(36)	(360)	139
NET EARNINGS
Net investment income									647	942	810
Net realized gains (losses)									(36)	(360)	139
Equity in earnings of unconsolidated investees									14,436	9,764	9,893
Earnings (loss) before income taxes									(3,719)	(7,250)	(6,421)
Income tax expense									(16,601)	(8,467)	(5,499)
Net earnings									$ 105,028	114,920	137,544
Maui Jim Inc.
Segment reporting information
Ownership percentage	40.00%								40.00%
NET EARNINGS
Equity in earnings of unconsolidated investees									$ 14,400	9,700	9,900
Prime Holdings Insurance Services, Inc. (Prime)
Segment reporting information
Ownership percentage	23.00%								23.00%
NET EARNINGS
Equity in earnings of unconsolidated investees									$ 2,800	1,100	1,000
Casualty segment
REVENUES
Net premiums earned									478,603	454,843	412,248
INSURANCE EXPENSES
Loss and settlement expenses									305,679	259,907	218,414
Policy acquisition costs									136,135	128,566	119,529
Other insurance expenses									32,885	30,040	28,042
NET EARNINGS
Net underwriting income									3,904	36,329	46,263
Property segment
REVENUES
Net premiums earned									138,346	152,167	170,924
INSURANCE EXPENSES
Loss and settlement expenses									85,027	71,350	69,851
Policy acquisition costs									51,070	54,167	57,214
Other insurance expenses									14,108	13,819	14,834
NET EARNINGS
Net underwriting income									(11,859)	12,832	29,025
Surety segment
REVENUES
Net premiums earned									120,988	121,598	116,989
INSURANCE EXPENSES
Loss and settlement expenses									10,878	18,521	10,780
Policy acquisition costs									65,310	66,879	64,335
Other insurance expenses									10,001	9,234	8,604
NET EARNINGS
Net underwriting income									$ 34,799	$ 26,964	$ 33,270

OPERATING SEGMENT INFORMATION73

OPERATING SEGMENT INFORMATION - Revenue by Product (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Revenue by major product
Net premiums earned	$ 188,296	$ 182,025	$ 184,331	$ 183,285	$ 187,869	$ 183,595	$ 180,226	$ 176,918	$ 737,937	$ 728,608	$ 700,161
Casualty segment
Revenue by major product
Net premiums earned									478,603	454,843	412,248
Casualty segment | Commercial and personal umbrella
Revenue by major product
Net premiums earned									115,543	111,079	104,598
Casualty segment | General liability
Revenue by major product
Net premiums earned									90,283	86,853	84,165
Casualty segment | Professional services
Revenue by major product
Net premiums earned									78,508	75,872	71,034
Casualty segment | Transportation
Revenue by major product
Net premiums earned									78,061	81,402	65,564
Casualty segment | Small commercial
Revenue by major product
Net premiums earned									49,601	45,660	40,410
Casualty segment | Executive products
Revenue by major product
Net premiums earned									18,086	18,755	17,892
Casualty segment | Medical professional liability
Revenue by major product
Net premiums earned									17,072	17,449	12,292
Casualty segment | Other casualty
Revenue by major product
Net premiums earned									31,449	17,773	16,293
Property segment
Revenue by major product
Net premiums earned									138,346	152,167	170,924
Property segment | Commercial property
Revenue by major product
Net premiums earned									63,117	68,165	75,749
Property segment | Marine
Revenue by major product
Net premiums earned									50,931	48,301	47,016
Property segment | Specialty Personal
Revenue by major product
Net premiums earned									20,793	24,981	26,395
Property segment | Other property
Revenue by major product
Net premiums earned									3,505	10,720	21,764
Surety segment
Revenue by major product
Net premiums earned									120,988	121,598	116,989
Surety segment | Miscellaneous
Revenue by major product
Net premiums earned									47,237	46,235	42,372
Surety segment | Contract
Revenue by major product
Net premiums earned									28,573	28,240	28,269
Surety segment | Commercial
Revenue by major product
Net premiums earned									27,625	29,105	29,529
Surety segment | Energy Surety
Revenue by major product
Net premiums earned									$ 17,553	$ 18,018	$ 16,819

UNAUDITED INTERIM FINANCIAL I74

UNAUDITED INTERIM FINANCIAL INFORMATION (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
UNAUDITED INTERIM FINANCIAL INFORMATION
Net premiums earned	$ 188,296	$ 182,025	$ 184,331	$ 183,285	$ 187,869	$ 183,595	$ 180,226	$ 176,918	$ 737,937	$ 728,608	$ 700,161
Net investment income	14,446	14,187	13,238	13,005	13,153	13,504	13,048	13,370	54,876	53,075	54,644
Net realized gains (losses)	5,111	35	(1,359)	624	11,283	9,252	2,710	11,400	4,411	34,645	39,829
Earnings before income taxes	24,972	(862)	34,036	26,443	38,006	31,142	42,341	45,593	84,589	157,082	196,682
Net earnings	$ 57,258	$ 1,734	$ 26,208	$ 19,828	$ 32,187	$ 22,263	$ 29,077	$ 31,393	$ 105,028	$ 114,920	$ 137,544
Basic earnings per share (in dollars per share)	$ 1.30	$ 0.04	$ 0.60	$ 0.45	$ 0.73	$ 0.51	$ 0.67	$ 0.72	$ 2.39	$ 2.63	$ 3.18
Diluted earnings per share (in dollars per share)	$ 1.29	$ 0.04	$ 0.59	$ 0.45	$ 0.72	$ 0.50	$ 0.65	$ 0.71	$ 2.36	$ 2.59	$ 3.12

ACQUISITIONS AND DISPOSITIONS (

ACQUISITIONS AND DISPOSITIONS (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Business acquisition
Amount of investment			$ 1,711
Reinsurance assumed	$ 37,159	$ 30,434	34,456
Cash consideration for purchase of agency		$ 850
Proceeds from Divestiture of Interest in Consolidated Subsidiaries	$ 408		$ 7,500
RIC
Business acquisition
Percentage of quota share reinsurance treaty, effective January 1, 2014			100.00%
Proceeds from Divestiture of Interest in Consolidated Subsidiaries			$ 7,500

SCHEDULE I-SUMMARY OF INVESTM76

SCHEDULE I-SUMMARY OF INVESTMENTS-OTHER THAN INVESTMENTS IN RELATED PARTIES (Details) $ in Thousands	Dec. 31, 2017USD ($)
SCHEDULE I - SUMMARY OF INVESTMENTS-OTHER THAN INVESTMENTS IN RELATED PARTIES
Cost	$ 1,896,443
Fair Value	2,140,790
Amount at which shown in the balance sheet	2,140,790
Available for sale securities
SCHEDULE I - SUMMARY OF INVESTMENTS-OTHER THAN INVESTMENTS IN RELATED PARTIES
Cost	1,646,411
Fair Value	1,672,239
Amount at which shown in the balance sheet	1,672,239
Debt securities
SCHEDULE I - SUMMARY OF INVESTMENTS-OTHER THAN INVESTMENTS IN RELATED PARTIES
Cost	1,646,411
Fair Value	1,672,239
Amount at which shown in the balance sheet	1,672,239
U.S. government | Available for sale securities
SCHEDULE I - SUMMARY OF INVESTMENTS-OTHER THAN INVESTMENTS IN RELATED PARTIES
Cost	92,561
Fair Value	91,689
Amount at which shown in the balance sheet	91,689
U.S. Agency | Available for sale securities
SCHEDULE I - SUMMARY OF INVESTMENTS-OTHER THAN INVESTMENTS IN RELATED PARTIES
Cost	18,541
Fair Value	18,778
Amount at which shown in the balance sheet	18,778
Non-U.S. govt. & agency | Available for sale securities
SCHEDULE I - SUMMARY OF INVESTMENTS-OTHER THAN INVESTMENTS IN RELATED PARTIES
Cost	7,501
Fair Value	7,588
Amount at which shown in the balance sheet	7,588
Mtge/ABS/CMBS | Available for sale securities
SCHEDULE I - SUMMARY OF INVESTMENTS-OTHER THAN INVESTMENTS IN RELATED PARTIES
Cost	329,129
Fair Value	328,471
Amount at which shown in the balance sheet	328,471
ABS/CMBS | Available for sale securities
SCHEDULE I - SUMMARY OF INVESTMENTS-OTHER THAN INVESTMENTS IN RELATED PARTIES
Cost	70,405
Fair Value	70,526
Amount at which shown in the balance sheet	70,526
Corporate Debt | Available for sale securities
SCHEDULE I - SUMMARY OF INVESTMENTS-OTHER THAN INVESTMENTS IN RELATED PARTIES
Cost	508,128
Fair Value	519,022
Amount at which shown in the balance sheet	519,022
Municipal | Available for sale securities
SCHEDULE I - SUMMARY OF INVESTMENTS-OTHER THAN INVESTMENTS IN RELATED PARTIES
Cost	620,146
Fair Value	636,165
Amount at which shown in the balance sheet	636,165
Equity securities | Available for sale securities
SCHEDULE I - SUMMARY OF INVESTMENTS-OTHER THAN INVESTMENTS IN RELATED PARTIES
Cost	182,002
Fair Value	400,492
Amount at which shown in the balance sheet	400,492
Ind Misc & all other | Available for sale securities
SCHEDULE I - SUMMARY OF INVESTMENTS-OTHER THAN INVESTMENTS IN RELATED PARTIES
Cost	108,815
Fair Value	256,360
Amount at which shown in the balance sheet	256,360
ETFs (Ind/misc) | Available for sale securities
SCHEDULE I - SUMMARY OF INVESTMENTS-OTHER THAN INVESTMENTS IN RELATED PARTIES
Cost	73,187
Fair Value	144,132
Amount at which shown in the balance sheet	144,132
Cash and Short-term Investments | Available for sale securities
SCHEDULE I - SUMMARY OF INVESTMENTS-OTHER THAN INVESTMENTS IN RELATED PARTIES
Cost	34,251
Fair Value	34,251
Amount at which shown in the balance sheet	34,251
Other Invested Assets | Available for sale securities
SCHEDULE I - SUMMARY OF INVESTMENTS-OTHER THAN INVESTMENTS IN RELATED PARTIES
Cost	33,779
Fair Value	33,808
Amount at which shown in the balance sheet	$ 33,808

SCHEDULE II-CONDENSED FINANCI77

SCHEDULE II-CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY) - Balance Sheets (Details) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
ASSETS
Cash	$ 24,271	$ 18,269	$ 11,081	$ 30,620
Short-term investments, at cost which approximates fair value	9,980	5,015
Investments in unconsolidated investee, at equity value	90,067	72,240
Fixed income:
Available-for-sale, at fair value (amortized cost - $23,184 in 2017 and $45,901 in 2016)	1,672,239	1,605,209
Property and equipment, at cost, net of accumulated depreciation of $1,426 in 2017 and $1,523 in 2016	55,849	54,606
TOTAL ASSETS	2,947,244	2,777,633
Liabilities:
Bonds payable, long-term debt	148,928	148,741
TOTAL LIABILITIES	2,093,646	1,954,061
Shareholders' Equity
Common stock ($1 par value, authorized 100,000,000 shares, issued 67,078,569 shares in 2017 and 66,874,911 shares in 2016, and outstanding 44,148,355 shares in 2017 and 43,944,697 shares in 2016)	67,079	66,875
Paid-in capital	233,077	229,779
Accumulated other comprehensive earnings	157,919	122,610
Retained earnings	788,522	797,307
Deferred compensation	8,640	11,496
Treasury shares at cost (22,930,214 shares in 2017 and 2016)	(401,639)	(404,495)
TOTAL SHAREHOLDERS’ EQUITY	853,598	823,572	823,469	845,062
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	2,947,244	2,777,633
PARENT COMPANY
ASSETS
Cash	204	21	$ 178	$ 374
Short-term investments, at cost which approximates fair value	70	23
Accounts receivable, affiliates	1,057	127
Investments in subsidiaries, at equity value	912,515	882,095
Investments in unconsolidated investee, at equity value	77,720	62,604
Fixed income:
Available-for-sale, at fair value (amortized cost - $23,184 in 2017 and $45,901 in 2016)	23,210	45,885
Property and equipment, at cost, net of accumulated depreciation of $1,426 in 2017 and $1,523 in 2016	1,982	2,213
Income taxes receivable - current	1,542	858
Other assets	156	329
TOTAL ASSETS	1,018,456	994,155
Liabilities:
Income taxes payable--deferred	13,207	19,145
Bonds payable, long-term debt	148,928	148,741
Interest payable, long-term debt	2,153	2,153
Other liabilities	570	544
TOTAL LIABILITIES	164,858	170,583
Shareholders' Equity
Common stock ($1 par value, authorized 100,000,000 shares, issued 67,078,569 shares in 2017 and 66,874,911 shares in 2016, and outstanding 44,148,355 shares in 2017 and 43,944,697 shares in 2016)	67,079	66,875
Paid-in capital	233,077	229,779
Accumulated other comprehensive earnings	157,919	122,610
Retained earnings	788,522	797,307
Deferred compensation	8,640	11,496
Treasury shares at cost (22,930,214 shares in 2017 and 2016)	(401,639)	(404,495)
TOTAL SHAREHOLDERS’ EQUITY	853,598	823,572
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$ 1,018,456	$ 994,155

SCHEDULE II-CONDENSED FINANCI78

SCHEDULE II-CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY) - Balance Sheets (Parenthietical) (Details) - USD ($) $ / shares in Units, $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
CONDENSED BALANCE SHEETS (Parenthetical)
Available-for-sale, amortized cost	$ 1,646,411	$ 1,596,227
Property and equipment, accumulated depreciation	$ 47,676	$ 41,999
Common stock, par value (in dollars per share)	$ 1	$ 1
Common stock, shares authorized (in shares)	100,000,000	100,000,000
Common stock, shares issued (in shares)	67,078,569	66,874,911
Common stock, shares outstanding (in shares)	44,148,355	43,944,697
Treasury stock, shares (in shares)	22,930,214	22,930,214
PARENT COMPANY
CONDENSED BALANCE SHEETS (Parenthetical)
Available-for-sale, amortized cost	$ 23,184	$ 45,901
Property and equipment, accumulated depreciation	$ 1,426	$ 1,523
Common stock, par value (in dollars per share)	$ 1	$ 1
Common stock, shares authorized (in shares)	100,000,000	100,000,000
Common stock, shares issued (in shares)	67,078,569	66,874,911
Common stock, shares outstanding (in shares)	44,148,355	43,944,697
Treasury stock, shares (in shares)	22,930,214	22,930,214

SCHEDULE II-CONDENSED FINANCI79

SCHEDULE II-CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY) - Statements of Earnings and Comprehensive Earnings (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
CONDENSED STATEMENTS OF EARNINGS AND COMPREHENSIVE EARNINGS
Net investment income	$ 14,446	$ 14,187	$ 13,238	$ 13,005	$ 13,153	$ 13,504	$ 13,048	$ 13,370	$ 54,876	$ 53,075	$ 54,644
Net realized gains (losses)	5,111	35	(1,359)	624	11,283	9,252	2,710	11,400	4,411	34,645	39,829
Equity in earnings of unconsolidated investees									17,224	10,833	10,914
Interest expense on debt									(7,426)	(7,426)	(7,426)
Loss before income taxes	24,972	(862)	34,036	26,443	38,006	31,142	42,341	45,593	84,589	157,082	196,682
Income tax benefit									(20,439)	42,162	59,138
Net earnings	$ 57,258	$ 1,734	$ 26,208	$ 19,828	$ 32,187	$ 22,263	$ 29,077	$ 31,393	105,028	114,920	137,544
Unrealized gains (losses) on securities:
Other comprehensive earnings (loss), net of tax									35,309	(1,164)	(47,609)
Comprehensive earnings									140,337	113,756	89,935
PARENT COMPANY
CONDENSED STATEMENTS OF EARNINGS AND COMPREHENSIVE EARNINGS
Net investment income									647	942	810
Net realized gains (losses)									(36)	(360)	139
Equity in earnings of unconsolidated investees									14,436	9,764	9,893
Selling, general and administrative expenses									(11,340)	(10,170)	(9,837)
Interest expense on debt									(7,426)	(7,426)	(7,426)
Loss before income taxes									(3,719)	(7,250)	(6,421)
Income tax benefit									(16,601)	(8,467)	(5,499)
Net earnings (loss) before equity in net earnings of subsidiaries									12,882	1,217	(922)
Equity in net earnings of subsidiaries									92,146	113,703	138,466
Net earnings									105,028	114,920	137,544
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during the period									21	308	(40)
Less: reclassification adjustment for losses (gains) included in net earnings									6	(131)	(90)
Other Comprehensive Income (Loss), Net of Tax, Total									27	177	(130)
Equity in other comprehensive earnings (loss) of subsidiaries/investees									35,282	(1,341)	(47,479)
Other comprehensive earnings (loss), net of tax									35,309	(1,164)	(47,609)
Comprehensive earnings									$ 140,337	$ 113,756	$ 89,935

SCHEDULE II-CONDENSED FINANCI80

SCHEDULE II-CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY) - Statements of Cash Flows (Details) - USD ($)	3 Months Ended								12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Adjustments to reconcile net losses to net cash provided by (used in) operating activities:
Net realized (gains) losses	$ (5,111,000)	$ (35,000)	$ 1,359,000	$ (624,000)	$ (11,283,000)	$ (9,252,000)	$ (2,710,000)	$ (11,400,000)	$ (4,411,000)	$ (34,645,000)	$ (39,829,000)
Depreciation									6,944,000	6,430,000	5,406,000
Other items, net									16,368,000	17,699,000	15,006,000
Change in:
Stock option excess tax benefit										(9,576,000)	(11,413,000)
Changes in investment in unconsolidated investees:
Undistributed earnings									(17,224,000)	(10,833,000)	(10,914,000)
Dividends received									0	9,900,000	0
Net Cash Provided by Operating Activities									197,525,000	174,463,000	152,586,000
Purchase of:
Fixed income, available-for-sale									(430,727,000)	(557,067,000)	(665,422,000)
Short-term investments, net									(4,965,000)
Property and equipment									(9,238,000)	(16,155,000)	(10,035,000)
Sale of:
Fixed income, available-for-sale									168,760,000	329,091,000	436,680,000
Short-term investments, net										2,564,000	6,637,000
Property and equipment									128,000	1,688,000	76,000
Call or maturity of:
Fixed income, available-for-sale									195,617,000	141,255,000	156,980,000
Net Cash Provided by (Used in) Investing Activities, Total									(81,212,000)	(53,622,000)	(60,597,000)
Cash flows from financing activities
Excess tax benefit from exercise of stock options										9,576,000	11,413,000
Stock plan share issuance									(3,502,000)	741,000	3,364,000
Net Cash Used in Financing Activities, Total									(110,311,000)	(113,653,000)	(111,528,000)
Net increase (decrease) in cash									6,002,000	7,188,000	(19,539,000)
Cash at the beginning of the period				18,269,000				11,081,000	18,269,000	11,081,000	30,620,000
Cash at the end of the period	24,271,000				18,269,000				24,271,000	18,269,000	11,081,000
PARENT COMPANY
Cash flows from operating activities
Earnings (loss) before equity in net earnings of subsidiaries									12,882,000	1,217,000	(922,000)
Adjustments to reconcile net losses to net cash provided by (used in) operating activities:
Net realized (gains) losses									36,000	360,000	(139,000)
Depreciation									77,000	196,000	237,000
Other items, net									595,000	560,000	530,000
Change in:
Affiliate balances receivable/payable									(930,000)	(535,000)	4,211,000
Federal income taxes									(6,874,000)	9,762,000	14,227,000
Stock option excess tax benefit										(9,576,000)	(11,413,000)
Changes in investment in unconsolidated investees:
Undistributed earnings									(14,436,000)	(9,764,000)	(9,893,000)
Dividends received										9,900,000
Net Cash Provided by Operating Activities									(8,650,000)	2,120,000	(3,162,000)
Purchase of:
Fixed income, available-for-sale									(5,773,000)	(12,844,000)	(16,031,000)
Short-term investments, net									(47,000)
Sale of:
Fixed income, available-for-sale									24,771,000	4,981,000	7,048,000
Short-term investments, net										63,000	91,000
Property and equipment									128,000
Call or maturity of:
Fixed income, available-for-sale									3,499,000	6,859,000	9,507,000
Cash dividends received-subsidiaries									107,000,000	123,600,000	125,000,000
Net Cash Provided by (Used in) Investing Activities, Total									129,578,000	122,659,000	125,615,000
Cash flows from financing activities
Excess tax benefit from exercise of stock options										9,576,000	11,413,000
Stock plan share issuance									(3,502,000)	741,000	3,364,000
Cash dividends paid									(124,247,000)	(133,771,000)	(130,698,000)
Net Cash Used in Financing Activities, Total									(120,745,000)	(124,936,000)	(122,649,000)
Net increase (decrease) in cash									183,000	(157,000)	(196,000)
Cash at the beginning of the period				$ 21,000				$ 178,000	21,000	178,000	374,000
Cash at the end of the period	$ 204,000				$ 21,000				204,000	21,000	178,000
Interest paid on outstanding debt									$ 7,300,000	$ 7,300,000	$ 7,300,000

SCHEDULE III-SUPPLEMENTARY IN81

SCHEDULE III-SUPPLEMENTARY INSURANCE INFORMATION (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Supplementary insurance information
Deferred policy acquisition costs	$ 77,716	$ 73,147	$ 69,829
Unpaid losses and settlement expenses, gross	1,271,503	1,139,337	1,103,785
Unearned premiums, gross	451,449	433,777	422,094
Net premiums earned	737,937	728,608	700,161
Incurred losses and settlement expenses
Current accident year	440,452	391,772	364,472
Prior accident years	(38,868)	(41,994)	(65,427)
Policy acquisition costs	252,515	249,612	241,078
Other operating expenses	56,994	53,093	51,480
Net premiums written	749,854	740,952	721,971
Casualty segment
Supplementary insurance information
Deferred policy acquisition costs	44,358	39,131	35,464
Unpaid losses and settlement expenses, gross	1,127,787	1,021,506	993,717
Unearned premiums, gross	296,751	276,096	260,227
Net premiums earned	478,603	454,843	412,248
Incurred losses and settlement expenses
Current accident year	323,141	292,308	264,068
Prior accident years	(17,462)	(32,401)	(45,654)
Policy acquisition costs	136,135	128,566	119,529
Other operating expenses	32,885	30,040	28,042
Net premiums written	494,649	470,082	435,409
Property segment
Supplementary insurance information
Deferred policy acquisition costs	13,029	13,115	13,332
Unpaid losses and settlement expenses, gross	107,304	76,989	77,584
Unearned premiums, gross	84,010	84,425	88,808
Net premiums earned	138,346	152,167	170,924
Incurred losses and settlement expenses
Current accident year	97,161	76,143	81,699
Prior accident years	(12,134)	(4,793)	(11,848)
Policy acquisition costs	51,070	54,167	57,214
Other operating expenses	14,108	13,819	14,834
Net premiums written	137,031	149,170	166,659
Surety segment
Supplementary insurance information
Deferred policy acquisition costs	20,329	20,901	21,033
Unpaid losses and settlement expenses, gross	36,412	40,842	32,484
Unearned premiums, gross	70,688	73,256	73,059
Net premiums earned	120,988	121,598	116,989
Incurred losses and settlement expenses
Current accident year	20,150	23,321	18,705
Prior accident years	(9,272)	(4,800)	(7,925)
Policy acquisition costs	65,310	66,879	64,335
Other operating expenses	10,001	9,234	8,604
Net premiums written	$ 118,174	$ 121,700	$ 119,903

SCHEDULE IV-REINSURANCE (Detail

SCHEDULE IV-REINSURANCE (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
RLI Insurance Group Premiums earned
Direct amount	$ 835,118	$ 835,294	$ 797,180
Ceded to other companies	129,702	134,572	132,743
Assumed from other companies	32,521	27,886	35,724
Net amount	$ 737,937	$ 728,608	$ 700,161
Percentage of amount assumed to net	4.40%	3.80%	5.10%
Casualty segment
RLI Insurance Group Premiums earned
Direct amount	$ 536,085	$ 528,691	$ 484,435
Ceded to other companies	86,190	89,635	84,311
Assumed from other companies	28,708	15,787	12,124
Net amount	$ 478,603	$ 454,843	$ 412,248
Percentage of amount assumed to net	6.00%	3.50%	2.90%
Property segment
RLI Insurance Group Premiums earned
Direct amount	$ 172,668	$ 179,460	$ 190,678
Ceded to other companies	37,607	38,353	42,731
Assumed from other companies	3,285	11,060	22,977
Net amount	$ 138,346	$ 152,167	$ 170,924
Percentage of amount assumed to net	2.40%	7.30%	13.40%
Surety segment
RLI Insurance Group Premiums earned
Direct amount	$ 126,365	$ 127,143	$ 122,067
Ceded to other companies	5,905	6,584	5,701
Assumed from other companies	528	1,039	623
Net amount	$ 120,988	$ 121,598	$ 116,989
Percentage of amount assumed to net	0.40%	0.90%	0.50%

SCHEDULE V-VALUATION AND QUAL83

SCHEDULE V-VALUATION AND QUALIFYING ACCOUNTS (Details) - Allowance for uncollectible reinsurance - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Allowance for uncollectible reinsurance
Balance at beginning of period	$ 25,911	$ 25,911	$ 26,404
Amounts charged to expense
Amounts recovered (written off)			(493)
Balance at end of period	$ 25,911	$ 25,911	$ 25,911

SCHEDULE VI-SUPPLEMENTARY INF84

SCHEDULE VI-SUPPLEMENTARY INFORMATION CONCERNING PROPERTY-CASUALTY INSURANCE OPERATIONS (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Claims and claim adjustment expenses incurred related to:
Current accident year	$ 440,452	$ 391,772	$ 364,472
Prior accident years	(38,868)	(41,994)	(65,427)
Amortization of deferred acquisition costs	252,515	249,612	241,078
Consolidated property-casualty insurance operations
SUPPLEMENTARY INFORMATION CONCERNING PROPERTY-CASUALTY INSURANCE OPERATIONS
Deferred policy acquisition costs	77,716	73,147	69,829
Claims and claim adjustment expense reserves	1,271,503	1,139,337	1,103,785
Unearned premiums, gross	451,449	433,777	422,094
Net premiums earned	737,937	728,608	700,161
Net investment income	54,876	53,075	54,644
Claims and claim adjustment expenses incurred related to:
Current accident year	440,452	391,772	364,472
Prior accident years	(38,868)	(41,994)	(65,427)
Amortization of deferred acquisition costs	252,515	249,612	241,078
Paid claims and claims adjustment expenses	283,185	304,606	279,038
Net premiums written	$ 749,854	$ 740,952	$ 721,971