RLI (RLI) 10-Q 20 Jul 18 2018 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2018	Jul. 13, 2018
Document and Entity Information
Entity Registrant Name	RLI CORP
Entity Central Index Key	84,246
Document Type	10-Q
Document Period End Date	Jun. 30, 2018
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		44,339,939
Document Fiscal Year Focus	2,018
Document Fiscal Period Focus	Q2

Consolidated Statements of Earn

Consolidated Statements of Earnings and Comprehensive Earnings - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Condensed Consolidated Statements of Earnings and Comprehensive Earnings
Net premiums earned	$ 196,522	$ 184,331	$ 386,549	$ 367,616
Net investment income	14,577	13,238	28,809	26,243
Net realized gains (losses)	20,849	(1,359)	29,309	1,355
Other-than-temporary-impairment (OTTI) losses on investments			(56)	(2,090)
Net unrealized losses on equity securities	(12,611)		(39,383)
Consolidated revenue	219,337	196,210	405,228	393,124
Losses and settlement expenses	101,653	90,347	194,074	183,737
Policy acquisition costs	66,325	60,695	133,059	124,198
Insurance operating expenses	14,398	13,546	27,783	26,881
Interest expense on debt	1,858	1,857	3,714	3,713
General corporate expenses	2,641	2,535	4,924	5,860
Total expenses	186,875	168,980	363,554	344,389
Equity in earnings of unconsolidated investees	7,100	6,806	12,266	11,744
Earnings before income taxes	39,562	34,036	53,940	60,479
Income tax expense:
Total tax expense	6,311	7,828	8,473	14,443
Net earnings	33,251	26,208	45,467	46,036
Other comprehensive earnings (loss), net of tax	(7,675)	10,599	(34,073)	22,368
Comprehensive earnings	$ 25,576	$ 36,807	$ 11,394	$ 68,404
Basic:
Net earnings per share (in dollars per share)	$ 0.75	$ 0.60	$ 1.03	$ 1.05
Comprehensive earnings per share (in dollars per share)	0.58	0.84	0.26	1.56
Diluted:
Net earnings per share (in dollars per share)	0.74	0.59	1.01	1.03
Comprehensive earnings per share (in dollars per share)	$ 0.57	$ 0.83	$ 0.25	$ 1.54
Weighted average number of common shares outstanding
Basic (in shares)	44,310	44,005	44,266	43,983
Diluted (in shares)	44,742	44,519	44,853	44,517
Cash dividends paid per common share	$ 0.22	$ 0.21	$ 0.43	$ 0.41

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Fixed income:
Available-for-sale, at fair value (amortized cost - $1,727,075 at 6/30/18 and $1,646,411 at 12/31/17)	$ 1,710,612	$ 1,672,239
Equity Securities, at fair value (cost - $207,214 at 6/30/18 and $182,002 at 12/31/17)	386,603	400,492
Short-term investments, at cost which approximates fair value		9,980
Other invested assets	36,562	33,808
Cash	34,102	24,271
Total investments and cash	2,167,879	2,140,790
Accrued investment income	14,473	15,166
Premiums and reinsurance balances receivable, net of allowances for uncollectible amounts of $16,933 at 6/30/18 and $16,935 at12/31/17	143,442	134,351
Ceded unearned premium	65,007	57,928
Reinsurance balances recoverable on unpaid losses and settlement expenses, net of allowances for uncollectible amounts of $10,005 at 6/30/18 and $10,014 at 12/31/17	315,117	301,991
Deferred policy acquisition costs	83,624	77,716
Property and equipment, at cost, net of accumulated depreciation of $51,026 at 6/30/18 and $47,676 at 12/31/17	56,019	55,849
Investment in unconsolidated investees	91,594	90,067
Goodwill and intangibles	54,693	59,302
Other assets	15,957	14,084
TOTAL ASSETS	3,007,805	2,947,244
Liabilities:
Unpaid losses and settlement expenses	1,343,248	1,271,503
Unearned premiums	482,156	451,449
Reinsurance balances payable	18,938	21,624
Funds held	68,795	74,560
Income taxes - deferred	36,432	53,768
Bonds payable, long-term debt	149,022	148,928
Accrued expenses	38,384	52,848
Other liabilities	21,033	18,966
TOTAL LIABILITIES	2,158,008	2,093,646
Shareholders' Equity
Common stock ($0.01 par value at 6/30/18 and $1.00 par value at 12/31/17, authorized 100,000,000 shares, issued 67,270,153 shares at 6/30/18 and 67,078,569 shares at 12/31/17, and outstanding 44,339,939 shares at 6/30/18 and 44,148,355 shares at 12/31/17)	673	67,079
Paid-in capital	303,245	233,077
Accumulated other comprehensive earnings	(14,648)	157,919
Retained earnings	953,526	788,522
Deferred compensation	7,936	8,640
Less: Treasury shares at cost (22,930,214 shares at 6/30/18 and 12/31/17)	(400,935)	(401,639)
TOTAL SHAREHOLDERS’ EQUITY	849,797	853,598
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$ 3,007,805	$ 2,947,244

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Condensed Consolidated Balance Sheets
Available-for-sale, amortized cost	$ 1,727,075	$ 1,646,411
Equity Securities, FV-NI, Cost	207,214	182,002
Premiums and reinsurance balances receivable, allowances for uncollectible amounts	16,933	16,935
Reinsurance balances recoverable on unpaid losses and settlement expenses, allowances for uncollectible amounts	10,005	10,014
Property and equipment, accumulated depreciation	$ 51,026	$ 47,676
Common stock, par value (in dollars per share)	$ 0.01	$ 1
Common stock, shares authorized (in shares)	100,000,000	100,000,000
Common stock, shares issued (in shares)	67,270,153	67,078,569
Common stock, shares outstanding (in shares)	44,339,939	44,148,355
Treasury stock, shares (in shares)	22,930,214	22,930,214

Consolidated Statements of Cash

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Condensed Consolidated Statements of Cash Flows
Net Cash Provided by Operating Activities	$ 100,000	$ 74,570
Net Cash Provided by (Used in) Investing Activities [Abstract]
Investments purchased	(431,061)	(207,963)
Investments sold	282,276	110,679
Investments called or matured	67,493	56,501
Net change in short-term investments	9,980	(10,995)
Net property and equipment purchased	(3,638)	(5,372)
Proceeds from (used in) other investing activities	62	(92)
Net Cash Used in Investing Activities, Total	(74,888)	(57,242)
Net Cash Provided by (Used in) Financing Activities [Abstract]
Cash dividends paid	(19,043)	(18,036)
Proceeds from stock option exercises	3,762	3,794
Net Cash Used in Financing Activities, Total	(15,281)	(14,242)
Net increase in cash	9,831	3,086
Cash at the beginning of the period	24,271	18,269
Cash at the end of the period	$ 34,102	$ 21,355

SUMMARY OF SIGNIFICANT ACCOUNTI

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	6 Months Ended
	Jun. 30, 2018
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. DESCRIPTION OF BUSINESS RLI Corp. (the “Company”) is an insurance holding company that was organized in 1965. On May 4, 2018, RLI Corp. changed its state of incorporation from the State of Illinois to the State of Delaware (the “Reincorporation”). The Reincorporation was effected by merging RLI Corp., an Illinois corporation (“RLI Illinois”) into RLI Corp., a Delaware corporation (“RLI Delaware”). The separate corporate existence of RLI Illinois ceased and RLI Delaware continues in existence as the surviving corporation and possesses all rights, privileges, powers and franchises of RLI Illinois. The Reincorporation did not result in any change in the name, business, management, fiscal year, location of the principal executive offices, assets or liabilities of the Company. Each outstanding share of RLI Illinois common stock, which had a par value of $1.00 per share, was automatically converted into one outstanding share of RLI Delaware common stock, with a par value of $0.01 per share. In order to reflect the new par value of common stock on the balance sheet, a $66.6 million reclassification from common stock to paid-in-capital was made during the second quarter. For more information on the Reincorporation, see RLI Corp.’s Form 8-K filed on May 7, 2018. B. BASIS OF PRESENTATION The unaudited condensed consolidated interim financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (GAAP) for interim financial reporting and with the instructions to Form 10-Q and Regulation S-X. Accordingly, they do not include all of the disclosures required by GAAP for complete financial statements. As such, these unaudited condensed consolidated interim financial statements should be read in conjunction with our 2017 Annual Report on Form 10-K. Management believes that the disclosures are adequate to make the information presented not misleading, and all normal and recurring adjustments necessary to present fairly the financial position at June 30, 2018 and the results of operations of RLI Corp. and subsidiaries for all periods presented have been made. The results of operations for any interim period are not necessarily indicative of the operating results for a full year. Certain reclassifications were made to 2017 to conform to the classifications used in the current year. The preparation of the unaudited condensed consolidated interim financial statements requires management to make estimates and assumptions relating to the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated interim financial statements and the reported amounts of revenue and expenses during the period. These estimates are inherently subject to change and actual results could differ significantly from these estimates. C. ADOPTED ACCOUNTING STANDARDS 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. We adopted ASU 2014-09 on January 1, 2018. 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, the revenue recognition policy we utilize aligns with the new guidance and there were no changes to the way we recognize revenue. Although the recognition of earnings from equity method investees is out of scope from the update, the recognition of revenue by our equity method investees would be subject to the new guidance if the revenue streams are within this update’s scope. Any impact on revenues would affect the net income of each of the equity method investees, upon which we calculate our portion of earnings to recognize. Our equity method investees are private companies and this guidance becomes effective for private companies in periods beginning after December 15, 2018. As a result, their earnings and our portion of those earnings are not impacted in 2018. We expect that revenue generated by both of our equity method investees will either be outside the scope of this update or largely unaffected by the changes. 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 earnings; 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 earnings 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. We adopted ASU 2016-01 on January 1, 2018. A cumulative-effect adjustment to the balance sheet was made as of the beginning of the year, which moved $142.2 million of net unrealized gains and losses on equity securities from accumulated other comprehensive earnings to retained earnings. During the first six months of 2018, we recognized $39.4 million of unrealized losses on equity securities within net earnings and $8.3 million of income tax benefit. This compares to $8.5 million of unrealized gains on equity securities, net of tax, that was recognized through other comprehensive earnings for the comparable period in 2017. The future impact to our net earnings will vary depending upon the level of volatility in the performance of the securities held in our equity portfolio and the overall market. ASU 2016-15, 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. We adopted ASU 2016-15 on January 1, 2018. The adoption did not have 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) with the change included 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. We adopted ASU 2018-02 during the first quarter of 2018. A current period adjustment was made to the balance sheet, which moved $3.7 million of stranded tax effects on the unrealized balances of our fixed income securities and equity method investees from accumulated other comprehensive earnings to retained earnings. The entire unrealized balance on equity securities was reclassified from AOCI into retained earnings from the adoption of ASU 2016-01 on January 1, 2018 and was therefore unaffected by this ASU. As there was no impact to net earnings and the balance sheet effect is limited to a reclassification within the equity section, there was not a material impact on our financial statements. D. PROSPECTIVE ACCOUNTING STANDARDS 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. Approximately $31 million of undiscounted future lease liabilities would have to be discounted to present value and added to our balance sheet with a corresponding right-of-use asset if the guidance were applicable on June 30, 2018. We have approximately $7 million of annual operating lease expenses and 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 earnings. 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 accounting standards update. Additionally, as our fixed income portfolio is weighted towards higher rated bonds (82.5 percent rated A or better at June 30, 2018) and we purchase reinsurance from financially strong reinsurers, we do not expect that credit loss will be material. ASU 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting ASU 2018-07 was issued to simplify the accounting for share-based transactions by expanding the scope of Topic 718 from only being applicable to share-based payments to employees to also include share-based payment transactions for acquiring goods and services from nonemployees. As a result, nonemployee share-based transactions will be measured by estimating the fair value of the equity instruments at the grant date, taking into consideration the probability of satisfying performance conditions. This ASU is effective for annual and interim reporting periods beginning after December 15, 2018. Early adoption is permitted. Our long term incentive plan limits the awards of share-based payments to employees and directors of the Company or any affiliate. The share-based compensation expense to nonemployee directors was less than $0.1 million in the first six months of 2018. Costs associated with such payments are not expected to materially increase and we do not expect this update to have a material impact on our financial statements. E. INTANGIBLE ASSETS Goodwill and intangible assets totaled $54.7 million and $59.3 million at June 30, 2018 and December 31, 2017, respectively, as detailed in the following table. Goodwill and Intangible Assets June 30, December 31, (in thousands) 2018 2017 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 Total goodwill $ 46,062 $ 49,657 Intangibles State insurance licenses $ 7,500 $ 7,500 Definite-lived intangibles, net of accumulated amortization of $2,862 at 6/30/18 and $5,678 at 12/31/17 1,131 2,145 Total intangibles $ 8,631 $ 9,645 Total goodwill and intangibles $ 54,693 $ 59,302 * The medical professional liability goodwill balance reflects a cumulative non-cash impairment charge of $12.4 million and $8.8 million as of June 30, 2018 and December 31, 2017, respectively. All definite-lived intangible assets are amortized against future operating results based on their estimated useful lives. Amortization of intangible assets was $0.1 million for the second quarter of 2018 and $0.2 million for the six-month period ended June 30, 2018, compared to $0.2 million for the second quarter of 2017 and $0.4 million for the six-month period ended June 30, 2017. Annual impairment testing was performed on our energy surety goodwill, miscellaneous and contract surety goodwill, small commercial goodwill and state insurance license indefinite-lived intangible asset during the second quarter of 2018. Based upon these reviews, none of the assets were impaired. In addition, as of June 30, 2018, there were no triggering events that would suggest an updated review was necessary on the above mentioned goodwill and intangible assets. As previously disclosed, adverse loss experience triggered the need to test the medical professional liability reporting unit during the first quarter of 2018 and the second quarter of 2017. The testing resulted in a $4.4 million non-cash impairment charge in 2018 and a $3.4 million non-cash impairment charge in 2017. In each instance, 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. In 2018, the carrying value exceeded the fair value, resulting in a $0.8 million non-cash impairment charge. In 2017, the resulting non-cash impairment charge on definite-lived intangibles was $1.8 million. 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 in each year, resulting in a $3.6 million non-cash impairment charge in the first quarter of 2018 and a $1.6 million non-cash impairment charge during the second quarter of 2017. Subsequent to the first quarter 2018 impairment, the medical professional liability reporting unit had no remaining goodwill or intangible assets. All impairment charges were recorded as net realized losses in the respective period’s consolidated statement of earnings. F. EARNINGS PER SHARE Basic earnings per share (EPS) excludes dilution and 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 common stock equivalents 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 the common stock equivalents. The following represents a reconciliation of the numerator and denominator of the basic and diluted EPS computations contained in the unaudited condensed consolidated interim financial statements. For the Three-Month Period For the Three-Month Period Ended June 30, 2018 Ended June 30, 2017 Income Shares Per Share Income Shares Per Share (in thousands, except per share data) (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount Basic EPS Income available to common shareholders $ 33,251 44,310 $ 0.75 $ 26,208 44,005 $ 0.60 Effect of Dilutive Securities Stock options - 432 - 514 Diluted EPS Income available to common shareholders $ 33,251 44,742 $ 0.74 $ 26,208 44,519 $ 0.59 For the Six-Month Period For the Six-Month Period Ended June 30, 2018 Ended June 30, 2017 Income Shares Per Share Income Shares Per Share (in thousands, except per share data) (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount Basic EPS Income available to common shareholders $ 45,467 44,266 $ 1.03 $ 46,036 43,983 $ 1.05 Effect of Dilutive Securities Stock options - 587 - 534 Diluted EPS Income available to common shareholders $ 45,467 44,853 $ 1.01 $ 46,036 44,517 $ 1.03 G. COMPREHENSIVE EARNINGS Our comprehensive earnings include net earnings plus after-tax unrealized gains and losses on our fixed income portfolio in 2018. In 2017, after-tax unrealized gains and losses on our equity portfolio were also included. With the adoption of ASU 2016-01 on January 1, 2018, we began recognizing unrealized gains and losses on the equity portfolio through net income. See note 1.C to the unaudited condensed consolidated interim financial statements for more information. In reporting comprehensive earnings on a net basis in the statement of earnings, we used the federal statutory tax rate of 21 percent in 2018 and 35 percent in 2017. Unrealized losses, net of tax, on the fixed income portfolio for the first six months of 2018 were $34.1 million, compared to $22.4 million of unrealized gains, net of tax, on the fixed income and equity portfolios during the same period last year. Unrealized losses in the first half of 2018 were attributable to rising interest rates, which decreased the fair value of securities held in the fixed income portfolio. In 2017, unrealized gains were primarily the result of increases in the fixed income portfolio due to slight declines in interest rates, though positive pricing movements in equity securities also contributed. The following table illustrates the changes in the balance of each component of accumulated other comprehensive earnings for each period presented in the unaudited condensed consolidated interim financial statements. The 2017 activity and balances include the net unrealized gain and loss activity on both fixed income and equity securities, while the 2018 activity and ending balance reflect only the net unrealized gain and loss activity on fixed income securities due to the aforementioned adoption of ASU 2016-01. (in thousands) For the Three-Month Periods For the Six-Month Periods Ended June 30, Ended June 30, Unrealized Gains/Losses on Available-for-Sale Securities 2018 2017 2018 2017 Beginning balance $ (6,973) $ 134,379 $ 157,919 $ 122,610 Cumulative effect adjustment of ASU 2016-01 - - (142,219) - Adjusted beginning balance $ (6,973) $ 134,379 $ 15,700 $ 122,610 Other comprehensive earnings before reclassifications (8,385) 11,753 (34,795) 23,925 Amounts reclassified from accumulated other comprehensive earnings 710 (1,154) 722 (1,557) Net current-period other comprehensive earnings (loss) $ (7,675) $ 10,599 $ (34,073) $ 22,368 Reclassification of stranded tax effect per ASU 2018-02 - - 3,725 - Ending balance $ (14,648) $ 144,978 $ (14,648) $ 144,978 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. As previously mentioned, 2018 activity is reflective of activity on fixed income securities classified as available-for-sale, while 2017 also includes activity from the equity portfolio. Amount Reclassified from Accumulated Other (in thousands) Comprehensive Earnings For the Three-Month For the Six-Month Component of Accumulated Periods Ended June 30, Periods Ended June 30, Affected line item in the Other Comprehensive Earnings 2018 2017 2018 2017 Statement of Earnings Unrealized gains and losses on available-for-sale securities $ (899) $ 1,775 $ (858) $ 4,485 Net realized gains (losses) - - (56) (2,090) Other-than-temporary impairment (OTTI) losses on investments $ (899) $ 1,775 $ (914) $ 2,395 Earnings before income taxes 189 (621) 192 (838) Income tax expense $ (710) $ 1,154 $ (722) $ 1,557 Net earnings

INVESTMENTS

INVESTMENTS	6 Months Ended
	Jun. 30, 2018
INVESTMENTS
INVESTMENTS	2. INVESTMENTS Our investments are primarily composed of fixed income debt securities and common stock equity securities. We carry our equity securities at fair value and categorize all of our debt securities as available-for-sale, which are carried at fair value. When available, we obtain quoted market prices to determine fair value for our investments. If a quoted market price is not available, fair value is estimated using a secondary pricing source or using quoted market prices of similar securities. We have no investment securities for which fair value is determined using Level 3 inputs as defined in note 3 to the unaudited condensed consolidated interim financial statements, “Fair Value Measurements.” Fixed Income Securities - Available-for-Sale The amortized cost and fair value of available-for-sale securities at June 30, 2018 and December 31, 2017 were as follows: Available-for-sale (in thousands) June 30, 2018 Cost or Gross Gross Amortized Unrealized Unrealized Fair Asset Class Cost Gains Losses Value U.S. government $ 151,446 $ 96 $ (2,377) $ 149,165 U.S. agency 30,650 213 (607) 30,256 Non-U.S. govt. & agency 8,186 - (291) 7,895 Agency MBS 364,298 1,685 (11,638) 354,345 ABS/CMBS* 101,075 152 (1,033) 100,194 Corporate 633,159 3,061 (11,534) 624,686 Municipal 438,261 8,198 (2,388) 444,071 Total Fixed Income $ 1,727,075 $ 13,405 $ (29,868) $ 1,710,612 Available-for-sale (in thousands) December 31, 2017 Cost or Gross Gross Amortized Unrealized Unrealized Fair Asset Class Cost Gains Losses Value U.S. government $ 92,561 $ 23 $ (895) $ 91,689 U.S. agency 18,541 347 (110) 18,778 Non-U.S. govt. & agency 7,501 143 (56) 7,588 Agency MBS 329,129 3,420 (4,078) 328,471 ABS/CMBS* 70,405 436 (315) 70,526 Corporate 508,128 12,575 (1,681) 519,022 Municipal 620,146 17,272 (1,253) 636,165 Total Fixed Income $ 1,646,411 $ 34,216 $ (8,388) $ 1,672,239 *Non-agency asset-backed and commercial mortgage-backed The following table presents the amortized cost and fair value of available-for-sale debt securities by contractual maturity dates as of June 30, 2018: June 30, 2018 Available-for-sale Amortized Fair (in thousands) Cost Value Due in one year or less $ 37,920 $ 37,787 Due after one year through five years 349,532 349,582 Due after five years through 10 years 653,536 648,164 Due after 10 years 220,714 220,540 Mtge/ABS/CMBS* 465,373 454,539 Total available-for-sale $ 1,727,075 $ 1,710,612 *Mortgage-backed, asset-backed and commercial mortgage-backed Unrealized Losses on Fixed Income Securities We conduct and document periodic reviews of all fixed income securities with unrealized losses to evaluate whether the impairment is other-than-temporary. The following tables are used as part of our impairment analysis and illustrate the total value of fixed income securities that were in an unrealized loss position as of June 30, 2018 and December 31, 2017. The tables segregate 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 tables further classify the securities based on the length of time they have been in an unrealized loss position. As of June 30, 2018 unrealized losses on fixed income securities, as shown in the following tables, were 1.4 percent of total invested assets. Unrealized losses increased through the first half of 2018, as interest rates increased from the end of 2017, which decreased the fair value of securities held in the fixed income portfolio. June 30, 2018 December 31, 2017 (in thousands) < 12 Mos. 12 Mos. & Total < 12 Mos. 12 Mos. & Total U.S. Government Fair value $ 104,958 $ 33,589 $ 138,547 $ 58,009 $ 30,888 $ 88,897 Cost or amortized cost 106,718 34,206 140,924 58,443 31,349 89,792 Unrealized Loss $ (1,760) $ (617) $ (2,377) $ (434) $ (461) $ (895) U.S. Agency Fair value $ 15,422 $ — $ 15,422 $ 10,917 $ — $ 10,917 Cost or amortized cost 16,029 — 16,029 11,027 — 11,027 Unrealized Loss $ (607) $ — $ (607) $ (110) $ — $ (110) Non-U.S. government Fair value $ 6,208 $ 1,687 $ 7,895 $ — $ 1,840 $ 1,840 Cost or amortized cost 6,289 1,897 8,186 — 1,896 1,896 Unrealized Loss $ (81) $ (210) $ (291) $ — $ (56) $ (56) Agency MBS Fair value $ 199,344 $ 106,745 $ 306,089 $ 122,130 $ 111,306 $ 233,436 Cost or amortized cost 205,847 111,880 317,727 123,559 113,955 237,514 Unrealized Loss $ (6,503) $ (5,135) $ (11,638) $ (1,429) $ (2,649) $ (4,078) ABS/CMBS* Fair value $ 66,925 $ 18,028 $ 84,953 $ 23,406 $ 21,587 $ 44,993 Cost or amortized cost 67,707 18,279 85,986 23,491 21,817 45,308 Unrealized Loss $ (782) $ (251) $ (1,033) $ (85) $ (230) $ (315) Corporate Fair value $ 391,379 $ 34,255 $ 425,634 $ 86,946 $ 28,600 $ 115,546 Cost or amortized cost 400,716 36,452 437,168 87,736 29,491 117,227 Unrealized Loss $ (9,337) $ (2,197) $ (11,534) $ (790) $ (891) $ (1,681) Municipal Fair value $ 85,824 $ 22,227 $ 108,051 $ 71,059 $ 60,049 $ 131,108 Cost or amortized cost 87,458 22,981 110,439 71,534 60,827 132,361 Unrealized Loss $ (1,634) $ (754) $ (2,388) $ (475) $ (778) $ (1,253) Total fixed income Fair value $ 870,060 $ 216,531 $ 1,086,591 $ 372,467 $ 254,270 $ 626,737 Cost or amortized cost 890,764 225,695 1,116,459 375,790 259,335 635,125 Unrealized Loss $ (20,704) $ (9,164) $ (29,868) $ (3,323) $ (5,065) $ (8,388) * Non-agency asset-backed and commercial mortgage-backed The following table shows the composition of the fixed income securities in unrealized loss positions at June 30, 2018 by the National Association of Insurance Commissioners (NAIC) rating and the generally equivalent Standard & Poor’s (S&P) and Moody’s ratings. The vast majority of the securities are rated by S&P and/or Moody’s. Equivalent Equivalent (dollars in thousands) NAIC S&P Moody’s Amortized Unrealized Percent Rating Rating Rating Cost Fair Value Loss to Total 1 AAA/AA/A Aaa/Aa/A $ 932,315 $ 908,318 $ (23,997) % 2 BBB Baa 124,031 119,785 (4,246) % 3 BB Ba 36,317 35,400 (917) % 4 B B 21,826 21,267 (559) % 5 CCC Caa 1,354 1,243 (111) % 6 CC or lower Ca or lower 616 578 (38) % Total $ 1,116,459 $ 1,086,591 $ (29,868) % Evaluating Fixed Income Securities for OTTI The fixed income portfolio contained 706 securities in an unrealized loss position as of June 30, 2018. The $29.9 million in associated unrealized losses for these 706 securities represents 1.7 percent of the fixed income portfolio’s cost basis. Of these 706 securities, 121 have been in an unrealized loss position for 12 consecutive months or longer. All fixed income securities in the investment portfolio continue to pay the expected coupon payments under the contractual terms of the securities. Any credit-related impairment related to fixed income securities we do not plan to sell and for which we are not more likely than not to be required to sell is recognized in net earnings, with the non-credit related impairment recognized in comprehensive earnings. Based on our analysis, our fixed income portfolio is of 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. In the first six months of 2018, we recognized $0.1 million in other-than-temporary impairment (OTTI) charges in earnings on one fixed income security that we no longer had the intent to hold. Comparatively, we recognized $2.1 million in OTTI losses in earnings on two fixed income securities that we no longer had the intent to hold in same period in 2017. There were no OTTI losses recognized in other comprehensive earnings on the fixed income portfolio for the periods presented. Unrealized Gains and Losses on Equity Securities During the second quarter of 2018, net unrealized losses on equity securities included an unrealized gain of $9.1 million on securities held as of June 30, 2018. Net unrealized losses on equity securities for the first half of 2018 included an unrealized loss of $4.8 million on securities held as of June 30, 2018. Other Invested Assets We had $36.6 million of other invested assets at June 30, 2018, compared to $33.8 million at the end of 2017. Other invested assets include investments in low income housing tax credit partnerships (LIHTC), membership in the Federal Home Loan Bank of Chicago (FHLBC) and investments in private funds. Our LIHTC investments are carried at amortized cost and our investment in FHLBC stock is carried at cost. Due to the nature of the LIHTC and our membership in the FHLBC, their carrying amounts approximate fair value. The private funds are carried at fair value, using each investment’s net asset value. Our LIHTC interests had a balance of $14.5 million at June 30, 2018, compared to $15.5 million at December 31, 2017 and recognized a total tax benefit of $0.6 million during the second quarter of 2018, the same as the prior year. For the six-month periods ended June 30, 2018 and 2017, our LIHTC interests recognized a total benefit of $1.1 million and $1.3 million, respectively. Our unfunded commitment for our LIHTC investments totaled $2.0 million at June 30, 2018 and will be paid out in installments through 2025. As of June 30, 2018, $16.8 million of investments were pledged as collateral with the FHLBC to ensure timely access to the secured lending facility that ownership of FHLBC stock provides. As of and during the six month period ending June 30, 2018, there were no outstanding borrowings with the FHLBC. We had $28.2 million of unfunded commitments related to our investments in private funds at June 30, 2018. Additionally, our interest in these investments is generally restricted from being transferred or otherwise redeemed without prior consent by the respective entities. An IPO would allow for the transfer of interest in some situations, while the timed dissolution of the partnership would trigger redemption in others. Cash and Short-term Investments Cash consists of uninvested balances in bank accounts. We had a cash balance of $34.1 million at June 30, 2018, compared to $24.3 million at the end of 2017. We did not have any short-term investments at June 30, 2018, but had $10.0 million of short-term investments that were carried at cost and approximated fair value at December 31, 2017.

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS	6 Months Ended
	Jun. 30, 2018
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS	3. FAIR VALUE MEASUREMENTS Assets and Liabilities Recorded at Fair Value on a Recurring Basis 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. Financial assets are classified based upon the lowest level of significant input that is used to determine 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. 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, agency, government and municipal securities were deemed Level 2. Mortgage-backed Securities (MBS)/Commercial Mortgage-backed Securities (CMBS) 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, prepayment assumptions and to incorporate collateral performance. To evaluate MBS and CMBS 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/CMBS and ABS with corroborated, observable inputs are classified as Level 2. All of our MBS/CMBS and ABS are deemed Level 2. Common Stock: Exchange traded equities have readily observable price levels and are classified as Level 1 (fair value based on quoted market prices). All of our common stock holdings are deemed Level 1. For the Level 2 securities, 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. Second, we obtain prices from securities brokers and compare them to the prices provided by our pricing services. In both comparisons, when discrepancies are found, we compare our prices to actual reported trade data for like securities. Based on this assessment, we determined that the fair values of our Level 2 securities provided by our pricing services are reasonable. For common stock, we receive prices from a nationally recognized pricing service. Prices are based on observable inputs in an active market and are therefore disclosed as Level 1. Based on this assessment, we determined that the fair values of our Level 1 securities provided by our pricing service are reasonable. Our investments in private funds, classified as other invested assets, are carried at fair value and are measured using each investment’s net asset value, but are not categorized within the fair value hierarchy. 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. Assets measured at fair value in the accompanying unaudited condensed consolidated interim financial statements on a recurring basis are summarized below: As of June 30, 2018 Fair Value Measurements Using Quoted Prices in Significant Other Significant Active Markets for Observable Unobservable Identical Assets Inputs Inputs (in thousands) (Level 1) (Level 2) (Level 3) Total Fixed income securities - available-for-sale U.S. government $ — $ 149,165 $ — $ 149,165 U.S. agency — 30,256 — 30,256 Non-U.S. govt. & agency — 7,895 — 7,895 Agency MBS — 354,345 — 354,345 ABS/CMBS* — 100,194 — 100,194 Corporate — 624,686 — 624,686 Municipal — 444,071 — 444,071 Total fixed income securities - available-for-sale $ — $ 1,710,612 $ — $ 1,710,612 Equity securities 386,603 — — 386,603 Total $ 386,603 $ 1,710,612 $ — $ 2,097,215 As of December 31, 2017 Fair Value Measurements Using Quoted Prices in Significant Other Significant Active Markets for Observable Unobservable Identical Assets Inputs Inputs (in thousands) (Level 1) (Level 2) (Level 3) Total Fixed income securities - available-for-sale 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 Total fixed income securities - available-for-sale $ — $ 1,672,239 $ — $ 1,672,239 Equity securities 400,492 — — 400,492 Total $ 400,492 $ 1,672,239 $ — $ 2,072,731 * Non-agency asset-backed and commercial mortgage-backed As noted in the above table, we did not have any assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the period. Additionally, there were no securities transferred in or out of levels 1 or 2 during the six-month period ended June 30, 2018.

HISTORICAL LOSS AND LAE DEVELOP

HISTORICAL LOSS AND LAE DEVELOPMENT	6 Months Ended
	Jun. 30, 2018
HISTORICAL LOSS AND LAE DEVELOPMENT
HISTORICAL LOSS AND LAE DEVELOPMENT	4. HISTORICAL LOSS AND LAE DEVELOPMENT The following table is a reconciliation of our unpaid losses and settlement expenses (LAE) for the first six months of 2018 and 2017. For the Six-Month Periods Ended June 30, (in thousands) 2018 2017 Unpaid losses and LAE at beginning of year Gross $ 1,271,503 $ 1,139,337 Ceded (301,991) (288,224) Net $ 969,512 $ 851,113 Increase (decrease) in incurred losses and LAE Current accident year $ 222,121 $ 203,371 Prior accident years (28,047) (19,634) Total incurred $ 194,074 $ 183,737 Loss and LAE payments for claims incurred Current accident year $ (16,805) $ (18,732) Prior accident year (118,650) (113,501) Total paid $ (135,455) $ (132,233) Net unpaid losses and LAE at June 30, $ 1,028,131 $ 902,617 Unpaid losses and LAE at June 30, Gross $ 1,343,248 $ 1,183,185 Ceded (315,117) (280,568) Net $ 1,028,131 $ 902,617 For the first six months of 2018, incurred losses and LAE included $28.0 million of favorable development on prior years’ loss reserves. The majority of products experienced modest amounts of favorable development on prior accident years, with notable contributions from commercial and personal umbrella, general liability, marine and surety. Executive products, transportation and medical professional liability were exceptions, experiencing adverse development. For the first six months of 2017, incurred losses and LAE included $19.6 million of favorable development on prior years’ loss reserves. Commercial umbrella, general liability, executive products, surety and marine were drivers of the favorable development, while adverse experience in transportation and medical professional liability partially offset the result.

INCOME TAXES

INCOME TAXES	6 Months Ended
	Jun. 30, 2018
INCOME TAXES
INCOME TAXES	5. INCOME TAXES Our effective tax rate for the three and six-month periods ended June 30, 2018 was 16.0 percent and 15.7 percent, respectively, compared to 23.0 percent and 23.9 percent, respectively, for the same periods in 2017. The Tax Cuts and Jobs Act of 2017 (TCJA) lowered the federal corporate tax rate from 35 percent to 21 percent effective January 1, 2018, which accounts for the majority of the decrease in effective tax rate for each period over the prior year. Effective rates are also dependent upon components of pretax earnings and the related tax effects. Tax favored investment activity was lower in 2018, which resulted in a lower spread between the corporate rate and effective rate when compared to 2017. There have been no changes to the provisional amounts that we recorded in the fourth quarter of 2017 associated with the TCJA as no new information has been made available by the Internal Revenue Service. Income tax expense attributable to income from operations for the three and six-month periods ended June 30, 2018 and 2017 differed from the amounts computed by applying the U.S. federal tax rate of 21 percent and 35 percent, respectively, to pretax income by the items detailed in the below table. In interim periods, income taxes are adjusted to reflect the effective tax rate we anticipate for the year, with adjustments flowing through the other items line. For the Three-Month Periods Ended June 30, For the Six-Month Periods Ended June 30, 2018 2017 2018 2017 (in thousands) Amount % Amount % Amount % Amount % Provision for income taxes at the statutory rate of 21% in 2018 and 35% in 2017 $ 8,308 % $ 11,912 % $ 11,327 % $ 21,168 % Increase (reduction) in taxes resulting from: Excess tax benefit on share-based compensation (924) % (2,791) % (2,067) % (3,234) % Tax exempt interest income (504) % (1,160) % (1,085) % (2,338) % Dividends received deduction (169) % (405) % (366) % (935) % ESOP dividends paid deduction (145) % (251) % (284) % (484) % Other items, net (255) % 523 % 948 % 266 % Total tax expense $ 6,311 % $ 7,828 % $ 8,473 % $ 14,443 %

STOCK BASED COMPENSATION

STOCK BASED COMPENSATION	6 Months Ended
	Jun. 30, 2018
STOCK BASED COMPENSATION
STOCK BASED COMPENSATION	6. STOCK BASED COMPENSATION 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 of common stock (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), which were adjusted as part of the special dividends paid in 2014 and prior years. 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, restricted stock units, 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 2015, we have granted 1,837,828 awards under the 2015 LTIP, including 389,253 thus far in 2018. 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, 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. The following tables summarize option activity for the periods ended June 30, 2018 and 2017: Weighted Weighted Average Aggregate Number of Average Remaining Intrinsic Options Exercise Contractual Value Outstanding Price Life (in 000’s) Outstanding options at January 1, 2018 2,257,015 $ 46.80 Options granted 367,500 $ 63.27 Options exercised (337,000) $ 31.60 $ 11,151 Options canceled/forfeited (5,200) $ 62.04 Outstanding options at June 30, 2018 2,282,315 $ 51.66 5.34 $ 33,224 Exercisable options at June 30, 2018 996,265 $ 44.04 3.89 $ 22,089 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 407,875 $ 56.88 Options exercised (134,090) $ 25.23 $ 4,328 Options canceled/forfeited (40,600) $ 48.09 Outstanding options at June 30, 2017 2,440,295 $ 44.32 5.03 $ 29,968 Exercisable options at June 30, 2017 1,162,455 $ 35.77 3.47 $ 22,859 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 issued, the approach allows for a more even expense distribution throughout the year. Thus far in 2018, 367,500 stock options were granted with a weighted average exercise price of $63.27 and a weighted average fair value of $10.20. We recognized $1.3 million of expense in the second quarter of 2018 and $2.3 million in the first six months of 2018 related to options vesting. Since options granted under our 2010 LTIP and 2015 LTIP are non-qualified, we recorded a tax benefit of $0.3 million in the second quarter of 2018 and $0.5 million in the first six months of 2018 related to this compensation expense. Total unrecognized compensation expense relating to outstanding and unvested options was $7.0 million, which will be recognized over the remainder of the vesting period. Comparatively, we recognized $1.2 million of expense in the second quarter of 2017 and $2.0 million in the first six months of 2017. We recorded a tax benefit of $0.4 million in the second quarter of 2017 and $0.7 million in the first six months of 2017 related to this compensation expense. The fair value of options was estimated using a Black-Scholes based option pricing model with the following weighted average grant-date assumptions and weighted average fair values as of June 30: 2018 2017 Weighted-average fair value of grants $ 10.20 $ Risk-free interest rates % % Dividend yield % % Expected volatility % % Expected option life 5.06 years 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 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 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) are granted with a 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. When participants terminate employment with the Company after having met the definition of retirement under the 2015 LTIP, defined as those individuals whose age and years of service equals 75, the RSUs will 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 June 30, 2018, 30,075 RSUs have been granted to employees under the 2015 LTIP, including 14,625 during 2018, and 29,675 remain outstanding. We recognized $0.1 million of expense on these units in the second quarter of 2018 and $0.2 million in the first six months of 2018. Total unrecognized compensation expense relating to outstanding and unvested RSUs was $1.1 million, which will be recognized over the remainder of the vesting period. Comparatively, we recognized $0.2 million related to this compensation expense in the three and six-month period ended June 30, 2017. In 2018, each outside director received restricted stock units with a fair market value of $50,000 on the date of grant as part of annual director compensation. The units were granted from the 2015 LTIP at the May board meeting and vest one year from the date of grant. In the second quarter of 2018, we granted a total of 7,128 restricted stock units and recognized $0.1 million of compensation expense. Total unrecognized compensation expense relating to outstanding and unvested director RSUs was $0.4 million, which will be recognized over the remainder of the vesting period.

OPERATING SEGMENT INFORMATION

OPERATING SEGMENT INFORMATION	6 Months Ended
	Jun. 30, 2018
OPERATING SEGMENT INFORMATION
OPERATING SEGMENT INFORMATION	7. OPERATING SEGMENT INFORMATION Selected information by operating segment is presented in the table below. Additionally, the table reconciles segment totals to total earnings and total revenues. For the Three-Month Periods For the Six-Month Periods REVENUES Ended June 30, Ended June 30, (in thousands) 2018 2017 2018 2017 Casualty $ 129,613 $ 119,259 $ 255,463 $ 236,243 Property 37,190 34,485 72,372 70,290 Surety 29,719 30,587 58,714 61,083 Net premiums earned $ 196,522 $ 184,331 $ 386,549 $ 367,616 Net investment income 14,577 13,238 28,809 26,243 Net realized gains (losses) 20,849 (1,359) 29,253 (735) Net unrealized losses on equity securities (12,611) - (39,383) - Total consolidated revenue $ 219,337 $ 196,210 $ 405,228 $ 393,124 NET EARNINGS (in thousands) 2018 2017 2018 2017 Casualty $ 2,854 $ 8,648 $ 4,415 $ 1,767 Property 3,647 2,863 9,529 11,667 Surety 7,645 8,232 17,689 19,366 Net underwriting income $ 14,146 $ 19,743 $ 31,633 $ 32,800 Net investment income 14,577 13,238 28,809 26,243 Net realized gains (losses) 20,849 (1,359) 29,253 (735) Net unrealized losses on equity securities (12,611) - (39,383) - General corporate expense and interest on debt (4,499) (4,392) (8,638) (9,573) Equity in earnings of unconsolidated investees 7,100 6,806 12,266 11,744 Total earnings before income taxes $ 39,562 $ 34,036 $ 53,940 $ 60,479 Income tax expense 6,311 7,828 8,473 14,443 Total net earnings $ 33,251 $ 26,208 $ 45,467 $ 46,036 The following table further summarizes revenues by major product type within each operating segment: For the Three-Month Periods For the Six-Month Periods NET PREMIUMS EARNED Ended June 30, Ended June 30, (in thousands) 2018 2017 2018 2017 Casualty Commercial and personal umbrella $ 30,649 $ 28,861 $ 60,601 $ 57,438 General liability 23,338 22,851 46,503 44,434 Commercial transportation 20,648 20,395 39,823 41,496 Professional services 19,846 20,016 39,669 39,242 Small commercial 12,901 11,765 25,791 24,052 Executive products 5,144 4,438 10,196 8,850 Medical professional liability 4,362 4,265 8,834 8,556 Other casualty 12,725 6,668 24,046 12,175 Total $ 129,613 $ 119,259 $ 255,463 $ 236,243 Property Commercial property $ 17,856 $ 15,873 $ 34,807 $ 31,591 Marine 14,941 11,607 28,798 23,893 Specialty personal 4,129 5,508 8,271 11,526 Property reinsurance 14 1,479 26 3,262 Other property 250 18 470 18 Total $ 37,190 $ 34,485 $ 72,372 $ 70,290 Surety Miscellaneous $ 11,719 $ 11,854 $ 23,361 $ 23,711 Commercial 6,761 6,938 13,474 14,081 Contract 7,012 7,147 13,358 14,231 Energy 4,227 4,648 8,521 9,060 Total $ 29,719 $ 30,587 $ 58,714 $ 61,083 Grand Total $ 196,522 $ 184,331 $ 386,549 $ 367,616

COMMITMENTS AND CONTINGENT LIAB

COMMITMENTS AND CONTINGENT LIABILITIES	6 Months Ended
	Jun. 30, 2018
COMMITMENTS AND CONTINGENT LIABILITIES
COMMITMENTS AND CONTINGENT LIABILITIES	8. CONTINGENT LIABILITIES Carriage Hill Associates Coverage Dispute In December 2010, Carriage Hill Associates of Charleston, LLC and certain other plaintiffs (collectively, “Plaintiffs”) filed a complaint in the Court of Common Pleas (the “Court”) for the Ninth Judicial Circuit of Berkeley County, South Carolina against Mt. Hawley Insurance Company (“Mt. Hawley”), a subsidiary of our principal subsidiary, RLI Insurance Company, relating to a coverage dispute. The complaint seeks, among other things, compensatory damages, punitive damages and attorneys’ fees. On May 25, 2018, the Court issued an Order finding in favor of Plaintiffs (the “Order”). The Court held that Mt. Hawley was responsible for compensatory damages relating to the alleged breach of duty to defend, breach of duty to indemnify and breach of duty of good faith totaling $21.7 million. The Court further held that Plaintiffs are entitled to attorneys’ fees and costs and that punitive damages are appropriate, with a hearing to be conducted at a later date to determine the amount of attorney fees and costs, and punitive damages. Mt. Hawley continues to vigorously contest all the claims against it in this matter and has filed certain post-trial motions seeking to, among other things, set aside the Order. Management believes Mt. Hawley has numerous meritorious legal and factual defenses that support our conclusion that the ultimate resolution of this matter will not have a material adverse effect on our results of operations, cash flows or financial position. However, litigation is subject to inherent uncertainties, and there exists a reasonable possibility of an unfavorable outcome and such outcome may have a material adverse effect on our results of operations, cash flows or financial position in the period in which it occurs. At the present time, due to the substantial uncertainties that exist, management cannot reasonably estimate the loss or range of loss that could potentially be incurred based upon future developments in this matter.

SUMMARY OF SIGNIFICANT ACCOUN14

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	6 Months Ended
	Jun. 30, 2018
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS	A. DESCRIPTION OF BUSINESS RLI Corp. (the “Company”) is an insurance holding company that was organized in 1965. On May 4, 2018, RLI Corp. changed its state of incorporation from the State of Illinois to the State of Delaware (the “Reincorporation”). The Reincorporation was effected by merging RLI Corp., an Illinois corporation (“RLI Illinois”) into RLI Corp., a Delaware corporation (“RLI Delaware”). The separate corporate existence of RLI Illinois ceased and RLI Delaware continues in existence as the surviving corporation and possesses all rights, privileges, powers and franchises of RLI Illinois. The Reincorporation did not result in any change in the name, business, management, fiscal year, location of the principal executive offices, assets or liabilities of the Company. Each outstanding share of RLI Illinois common stock, which had a par value of $1.00 per share, was automatically converted into one outstanding share of RLI Delaware common stock, with a par value of $0.01 per share. In order to reflect the new par value of common stock on the balance sheet, a $66.6 million reclassification from common stock to paid-in-capital was made during the second quarter. For more information on the Reincorporation, see RLI Corp.’s Form 8-K filed on May 7, 2018.
BASIS OF PRESENTATION	B. BASIS OF PRESENTATION The unaudited condensed consolidated interim financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (GAAP) for interim financial reporting and with the instructions to Form 10-Q and Regulation S-X. Accordingly, they do not include all of the disclosures required by GAAP for complete financial statements. As such, these unaudited condensed consolidated interim financial statements should be read in conjunction with our 2017 Annual Report on Form 10-K. Management believes that the disclosures are adequate to make the information presented not misleading, and all normal and recurring adjustments necessary to present fairly the financial position at June 30, 2018 and the results of operations of RLI Corp. and subsidiaries for all periods presented have been made. The results of operations for any interim period are not necessarily indicative of the operating results for a full year. Certain reclassifications were made to 2017 to conform to the classifications used in the current year. The preparation of the unaudited condensed consolidated interim financial statements requires management to make estimates and assumptions relating to the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated interim financial statements and the reported amounts of revenue and expenses during the period. These estimates are inherently subject to change and actual results could differ significantly from these estimates.
ADOPTED ACCOUNTING STANDARDS	C. ADOPTED ACCOUNTING STANDARDS 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. We adopted ASU 2014-09 on January 1, 2018. 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, the revenue recognition policy we utilize aligns with the new guidance and there were no changes to the way we recognize revenue. Although the recognition of earnings from equity method investees is out of scope from the update, the recognition of revenue by our equity method investees would be subject to the new guidance if the revenue streams are within this update’s scope. Any impact on revenues would affect the net income of each of the equity method investees, upon which we calculate our portion of earnings to recognize. Our equity method investees are private companies and this guidance becomes effective for private companies in periods beginning after December 15, 2018. As a result, their earnings and our portion of those earnings are not impacted in 2018. We expect that revenue generated by both of our equity method investees will either be outside the scope of this update or largely unaffected by the changes. 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 earnings; 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 earnings 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. We adopted ASU 2016-01 on January 1, 2018. A cumulative-effect adjustment to the balance sheet was made as of the beginning of the year, which moved $142.2 million of net unrealized gains and losses on equity securities from accumulated other comprehensive earnings to retained earnings. During the first six months of 2018, we recognized $39.4 million of unrealized losses on equity securities within net earnings and $8.3 million of income tax benefit. This compares to $8.5 million of unrealized gains on equity securities, net of tax, that was recognized through other comprehensive earnings for the comparable period in 2017. The future impact to our net earnings will vary depending upon the level of volatility in the performance of the securities held in our equity portfolio and the overall market. ASU 2016-15, 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. We adopted ASU 2016-15 on January 1, 2018. The adoption did not have 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) with the change included 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. We adopted ASU 2018-02 during the first quarter of 2018. A current period adjustment was made to the balance sheet, which moved $3.7 million of stranded tax effects on the unrealized balances of our fixed income securities and equity method investees from accumulated other comprehensive earnings to retained earnings. The entire unrealized balance on equity securities was reclassified from AOCI into retained earnings from the adoption of ASU 2016-01 on January 1, 2018 and was therefore unaffected by this ASU. As there was no impact to net earnings and the balance sheet effect is limited to a reclassification within the equity section, there was not a material impact on our financial statements.
PROSPECTIVE ACCOUNTING STANDARDS	D. PROSPECTIVE ACCOUNTING STANDARDS 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. Approximately $31 million of undiscounted future lease liabilities would have to be discounted to present value and added to our balance sheet with a corresponding right-of-use asset if the guidance were applicable on June 30, 2018. We have approximately $7 million of annual operating lease expenses and 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 earnings. 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 accounting standards update. Additionally, as our fixed income portfolio is weighted towards higher rated bonds (82.5 percent rated A or better at June 30, 2018) and we purchase reinsurance from financially strong reinsurers, we do not expect that credit loss will be material. ASU 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting ASU 2018-07 was issued to simplify the accounting for share-based transactions by expanding the scope of Topic 718 from only being applicable to share-based payments to employees to also include share-based payment transactions for acquiring goods and services from nonemployees. As a result, nonemployee share-based transactions will be measured by estimating the fair value of the equity instruments at the grant date, taking into consideration the probability of satisfying performance conditions. This ASU is effective for annual and interim reporting periods beginning after December 15, 2018. Early adoption is permitted. Our long term incentive plan limits the awards of share-based payments to employees and directors of the Company or any affiliate. The share-based compensation expense to nonemployee directors was less than $0.1 million in the first six months of 2018. Costs associated with such payments are not expected to materially increase and we do not expect this update to have a material impact on our financial statements.
INTANGIBLE ASSETS	E. INTANGIBLE ASSETS Goodwill and intangible assets totaled $54.7 million and $59.3 million at June 30, 2018 and December 31, 2017, respectively, as detailed in the following table. Goodwill and Intangible Assets June 30, December 31, (in thousands) 2018 2017 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 Total goodwill $ 46,062 $ 49,657 Intangibles State insurance licenses $ 7,500 $ 7,500 Definite-lived intangibles, net of accumulated amortization of $2,862 at 6/30/18 and $5,678 at 12/31/17 1,131 2,145 Total intangibles $ 8,631 $ 9,645 Total goodwill and intangibles $ 54,693 $ 59,302 * The medical professional liability goodwill balance reflects a cumulative non-cash impairment charge of $12.4 million and $8.8 million as of June 30, 2018 and December 31, 2017, respectively. All definite-lived intangible assets are amortized against future operating results based on their estimated useful lives. Amortization of intangible assets was $0.1 million for the second quarter of 2018 and $0.2 million for the six-month period ended June 30, 2018, compared to $0.2 million for the second quarter of 2017 and $0.4 million for the six-month period ended June 30, 2017. Annual impairment testing was performed on our energy surety goodwill, miscellaneous and contract surety goodwill, small commercial goodwill and state insurance license indefinite-lived intangible asset during the second quarter of 2018. Based upon these reviews, none of the assets were impaired. In addition, as of June 30, 2018, there were no triggering events that would suggest an updated review was necessary on the above mentioned goodwill and intangible assets. As previously disclosed, adverse loss experience triggered the need to test the medical professional liability reporting unit during the first quarter of 2018 and the second quarter of 2017. The testing resulted in a $4.4 million non-cash impairment charge in 2018 and a $3.4 million non-cash impairment charge in 2017. In each instance, 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. In 2018, the carrying value exceeded the fair value, resulting in a $0.8 million non-cash impairment charge. In 2017, the resulting non-cash impairment charge on definite-lived intangibles was $1.8 million. 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 in each year, resulting in a $3.6 million non-cash impairment charge in the first quarter of 2018 and a $1.6 million non-cash impairment charge during the second quarter of 2017. Subsequent to the first quarter 2018 impairment, the medical professional liability reporting unit had no remaining goodwill or intangible assets. All impairment charges were recorded as net realized losses in the respective period’s consolidated statement of earnings.
EARNINGS PER SHARE	F. EARNINGS PER SHARE Basic earnings per share (EPS) excludes dilution and 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 common stock equivalents 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 the common stock equivalents. The following represents a reconciliation of the numerator and denominator of the basic and diluted EPS computations contained in the unaudited condensed consolidated interim financial statements. For the Three-Month Period For the Three-Month Period Ended June 30, 2018 Ended June 30, 2017 Income Shares Per Share Income Shares Per Share (in thousands, except per share data) (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount Basic EPS Income available to common shareholders $ 33,251 44,310 $ 0.75 $ 26,208 44,005 $ 0.60 Effect of Dilutive Securities Stock options - 432 - 514 Diluted EPS Income available to common shareholders $ 33,251 44,742 $ 0.74 $ 26,208 44,519 $ 0.59 For the Six-Month Period For the Six-Month Period Ended June 30, 2018 Ended June 30, 2017 Income Shares Per Share Income Shares Per Share (in thousands, except per share data) (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount Basic EPS Income available to common shareholders $ 45,467 44,266 $ 1.03 $ 46,036 43,983 $ 1.05 Effect of Dilutive Securities Stock options - 587 - 534 Diluted EPS Income available to common shareholders $ 45,467 44,853 $ 1.01 $ 46,036 44,517 $ 1.03
COMPREHENSIVE EARNINGS	G. COMPREHENSIVE EARNINGS Our comprehensive earnings include net earnings plus after-tax unrealized gains and losses on our fixed income portfolio in 2018. In 2017, after-tax unrealized gains and losses on our equity portfolio were also included. With the adoption of ASU 2016-01 on January 1, 2018, we began recognizing unrealized gains and losses on the equity portfolio through net income. See note 1.C to the unaudited condensed consolidated interim financial statements for more information. In reporting comprehensive earnings on a net basis in the statement of earnings, we used the federal statutory tax rate of 21 percent in 2018 and 35 percent in 2017. Unrealized losses, net of tax, on the fixed income portfolio for the first six months of 2018 were $34.1 million, compared to $22.4 million of unrealized gains, net of tax, on the fixed income and equity portfolios during the same period last year. Unrealized losses in the first half of 2018 were attributable to rising interest rates, which decreased the fair value of securities held in the fixed income portfolio. In 2017, unrealized gains were primarily the result of increases in the fixed income portfolio due to slight declines in interest rates, though positive pricing movements in equity securities also contributed. The following table illustrates the changes in the balance of each component of accumulated other comprehensive earnings for each period presented in the unaudited condensed consolidated interim financial statements. The 2017 activity and balances include the net unrealized gain and loss activity on both fixed income and equity securities, while the 2018 activity and ending balance reflect only the net unrealized gain and loss activity on fixed income securities due to the aforementioned adoption of ASU 2016-01. (in thousands) For the Three-Month Periods For the Six-Month Periods Ended June 30, Ended June 30, Unrealized Gains/Losses on Available-for-Sale Securities 2018 2017 2018 2017 Beginning balance $ (6,973) $ 134,379 $ 157,919 $ 122,610 Cumulative effect adjustment of ASU 2016-01 - - (142,219) - Adjusted beginning balance $ (6,973) $ 134,379 $ 15,700 $ 122,610 Other comprehensive earnings before reclassifications (8,385) 11,753 (34,795) 23,925 Amounts reclassified from accumulated other comprehensive earnings 710 (1,154) 722 (1,557) Net current-period other comprehensive earnings (loss) $ (7,675) $ 10,599 $ (34,073) $ 22,368 Reclassification of stranded tax effect per ASU 2018-02 - - 3,725 - Ending balance $ (14,648) $ 144,978 $ (14,648) $ 144,978 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. As previously mentioned, 2018 activity is reflective of activity on fixed income securities classified as available-for-sale, while 2017 also includes activity from the equity portfolio. Amount Reclassified from Accumulated Other (in thousands) Comprehensive Earnings For the Three-Month For the Six-Month Component of Accumulated Periods Ended June 30, Periods Ended June 30, Affected line item in the Other Comprehensive Earnings 2018 2017 2018 2017 Statement of Earnings Unrealized gains and losses on available-for-sale securities $ (899) $ 1,775 $ (858) $ 4,485 Net realized gains (losses) - - (56) (2,090) Other-than-temporary impairment (OTTI) losses on investments $ (899) $ 1,775 $ (914) $ 2,395 Earnings before income taxes 189 (621) 192 (838) Income tax expense $ (710) $ 1,154 $ (722) $ 1,557 Net earnings

SUMMARY OF SIGNIFICANT ACCOUN15

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)	6 Months Ended
	Jun. 30, 2018
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Schedule of goodwill and intangible assets	Goodwill and Intangible Assets June 30, December 31, (in thousands) 2018 2017 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 Total goodwill $ 46,062 $ 49,657 Intangibles State insurance licenses $ 7,500 $ 7,500 Definite-lived intangibles, net of accumulated amortization of $2,862 at 6/30/18 and $5,678 at 12/31/17 1,131 2,145 Total intangibles $ 8,631 $ 9,645 Total goodwill and intangibles $ 54,693 $ 59,302 * The medical professional liability goodwill balance reflects a cumulative non-cash impairment charge of $12.4 million and $8.8 million as of June 30, 2018 and December 31, 2017, respectively.
Schedule of reconciliation of numerator and denominator of the basic and diluted earnings per share computations	For the Three-Month Period For the Three-Month Period Ended June 30, 2018 Ended June 30, 2017 Income Shares Per Share Income Shares Per Share (in thousands, except per share data) (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount Basic EPS Income available to common shareholders $ 33,251 44,310 $ 0.75 $ 26,208 44,005 $ 0.60 Effect of Dilutive Securities Stock options - 432 - 514 Diluted EPS Income available to common shareholders $ 33,251 44,742 $ 0.74 $ 26,208 44,519 $ 0.59 For the Six-Month Period For the Six-Month Period Ended June 30, 2018 Ended June 30, 2017 Income Shares Per Share Income Shares Per Share (in thousands, except per share data) (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount Basic EPS Income available to common shareholders $ 45,467 44,266 $ 1.03 $ 46,036 43,983 $ 1.05 Effect of Dilutive Securities Stock options - 587 - 534 Diluted EPS Income available to common shareholders $ 45,467 44,853 $ 1.01 $ 46,036 44,517 $ 1.03
Schedule of changes in the balance of each component of accumulated other comprehensive earnings	(in thousands) For the Three-Month Periods For the Six-Month Periods Ended June 30, Ended June 30, Unrealized Gains/Losses on Available-for-Sale Securities 2018 2017 2018 2017 Beginning balance $ (6,973) $ 134,379 $ 157,919 $ 122,610 Cumulative effect adjustment of ASU 2016-01 - - (142,219) - Adjusted beginning balance $ (6,973) $ 134,379 $ 15,700 $ 122,610 Other comprehensive earnings before reclassifications (8,385) 11,753 (34,795) 23,925 Amounts reclassified from accumulated other comprehensive earnings 710 (1,154) 722 (1,557) Net current-period other comprehensive earnings (loss) $ (7,675) $ 10,599 $ (34,073) $ 22,368 Reclassification of stranded tax effect per ASU 2018-02 - - 3,725 - Ending balance $ (14,648) $ 144,978 $ (14,648) $ 144,978
Schedule of effects of reclassifications out of accumulated other comprehensive earnings	Amount Reclassified from Accumulated Other (in thousands) Comprehensive Earnings For the Three-Month For the Six-Month Component of Accumulated Periods Ended June 30, Periods Ended June 30, Affected line item in the Other Comprehensive Earnings 2018 2017 2018 2017 Statement of Earnings Unrealized gains and losses on available-for-sale securities $ (899) $ 1,775 $ (858) $ 4,485 Net realized gains (losses) - - (56) (2,090) Other-than-temporary impairment (OTTI) losses on investments $ (899) $ 1,775 $ (914) $ 2,395 Earnings before income taxes 189 (621) 192 (838) Income tax expense $ (710) $ 1,154 $ (722) $ 1,557 Net earnings

INVESTMENTS (Tables)

INVESTMENTS (Tables)	6 Months Ended
	Jun. 30, 2018
Schedule of amortized cost and fair value of available-for-sale securities	Available-for-sale (in thousands) June 30, 2018 Cost or Gross Gross Amortized Unrealized Unrealized Fair Asset Class Cost Gains Losses Value U.S. government $ 151,446 $ 96 $ (2,377) $ 149,165 U.S. agency 30,650 213 (607) 30,256 Non-U.S. govt. & agency 8,186 - (291) 7,895 Agency MBS 364,298 1,685 (11,638) 354,345 ABS/CMBS* 101,075 152 (1,033) 100,194 Corporate 633,159 3,061 (11,534) 624,686 Municipal 438,261 8,198 (2,388) 444,071 Total Fixed Income $ 1,727,075 $ 13,405 $ (29,868) $ 1,710,612 Available-for-sale (in thousands) December 31, 2017 Cost or Gross Gross Amortized Unrealized Unrealized Fair Asset Class Cost Gains Losses Value U.S. government $ 92,561 $ 23 $ (895) $ 91,689 U.S. agency 18,541 347 (110) 18,778 Non-U.S. govt. & agency 7,501 143 (56) 7,588 Agency MBS 329,129 3,420 (4,078) 328,471 ABS/CMBS* 70,405 436 (315) 70,526 Corporate 508,128 12,575 (1,681) 519,022 Municipal 620,146 17,272 (1,253) 636,165 Total Fixed Income $ 1,646,411 $ 34,216 $ (8,388) $ 1,672,239 *Non-agency asset-backed and commercial mortgage-backed
Schedule of securities in an unrealized loss position segregated by type and length of time in an unrealized loss position	June 30, 2018 December 31, 2017 (in thousands) < 12 Mos. 12 Mos. & Total < 12 Mos. 12 Mos. & Total U.S. Government Fair value $ 104,958 $ 33,589 $ 138,547 $ 58,009 $ 30,888 $ 88,897 Cost or amortized cost 106,718 34,206 140,924 58,443 31,349 89,792 Unrealized Loss $ (1,760) $ (617) $ (2,377) $ (434) $ (461) $ (895) U.S. Agency Fair value $ 15,422 $ — $ 15,422 $ 10,917 $ — $ 10,917 Cost or amortized cost 16,029 — 16,029 11,027 — 11,027 Unrealized Loss $ (607) $ — $ (607) $ (110) $ — $ (110) Non-U.S. government Fair value $ 6,208 $ 1,687 $ 7,895 $ — $ 1,840 $ 1,840 Cost or amortized cost 6,289 1,897 8,186 — 1,896 1,896 Unrealized Loss $ (81) $ (210) $ (291) $ — $ (56) $ (56) Agency MBS Fair value $ 199,344 $ 106,745 $ 306,089 $ 122,130 $ 111,306 $ 233,436 Cost or amortized cost 205,847 111,880 317,727 123,559 113,955 237,514 Unrealized Loss $ (6,503) $ (5,135) $ (11,638) $ (1,429) $ (2,649) $ (4,078) ABS/CMBS* Fair value $ 66,925 $ 18,028 $ 84,953 $ 23,406 $ 21,587 $ 44,993 Cost or amortized cost 67,707 18,279 85,986 23,491 21,817 45,308 Unrealized Loss $ (782) $ (251) $ (1,033) $ (85) $ (230) $ (315) Corporate Fair value $ 391,379 $ 34,255 $ 425,634 $ 86,946 $ 28,600 $ 115,546 Cost or amortized cost 400,716 36,452 437,168 87,736 29,491 117,227 Unrealized Loss $ (9,337) $ (2,197) $ (11,534) $ (790) $ (891) $ (1,681) Municipal Fair value $ 85,824 $ 22,227 $ 108,051 $ 71,059 $ 60,049 $ 131,108 Cost or amortized cost 87,458 22,981 110,439 71,534 60,827 132,361 Unrealized Loss $ (1,634) $ (754) $ (2,388) $ (475) $ (778) $ (1,253) Total fixed income Fair value $ 870,060 $ 216,531 $ 1,086,591 $ 372,467 $ 254,270 $ 626,737 Cost or amortized cost 890,764 225,695 1,116,459 375,790 259,335 635,125 Unrealized Loss $ (20,704) $ (9,164) $ (29,868) $ (3,323) $ (5,065) $ (8,388) * Non-agency asset-backed and commercial mortgage-backed
Schedule of credit quality indicators for investments in unrealized loss positions	Equivalent Equivalent (dollars in thousands) NAIC S&P Moody’s Amortized Unrealized Percent Rating Rating Rating Cost Fair Value Loss to Total 1 AAA/AA/A Aaa/Aa/A $ 932,315 $ 908,318 $ (23,997) % 2 BBB Baa 124,031 119,785 (4,246) % 3 BB Ba 36,317 35,400 (917) % 4 B B 21,826 21,267 (559) % 5 CCC Caa 1,354 1,243 (111) % 6 CC or lower Ca or lower 616 578 (38) % Total $ 1,116,459 $ 1,086,591 $ (29,868) %
Available for sale securities
Schedule of contractual maturity of securities	June 30, 2018 Available-for-sale Amortized Fair (in thousands) Cost Value Due in one year or less $ 37,920 $ 37,787 Due after one year through five years 349,532 349,582 Due after five years through 10 years 653,536 648,164 Due after 10 years 220,714 220,540 Mtge/ABS/CMBS* 465,373 454,539 Total available-for-sale $ 1,727,075 $ 1,710,612 *Mortgage-backed, asset-backed and commercial mortgage-backed

FAIR VALUE MEASUREMENTS (Tables

FAIR VALUE MEASUREMENTS (Tables)	6 Months Ended
	Jun. 30, 2018
FAIR VALUE MEASUREMENTS
Schedule of assets measured at fair value on recurring basis	As of June 30, 2018 Fair Value Measurements Using Quoted Prices in Significant Other Significant Active Markets for Observable Unobservable Identical Assets Inputs Inputs (in thousands) (Level 1) (Level 2) (Level 3) Total Fixed income securities - available-for-sale U.S. government $ — $ 149,165 $ — $ 149,165 U.S. agency — 30,256 — 30,256 Non-U.S. govt. & agency — 7,895 — 7,895 Agency MBS — 354,345 — 354,345 ABS/CMBS* — 100,194 — 100,194 Corporate — 624,686 — 624,686 Municipal — 444,071 — 444,071 Total fixed income securities - available-for-sale $ — $ 1,710,612 $ — $ 1,710,612 Equity securities 386,603 — — 386,603 Total $ 386,603 $ 1,710,612 $ — $ 2,097,215 As of December 31, 2017 Fair Value Measurements Using Quoted Prices in Significant Other Significant Active Markets for Observable Unobservable Identical Assets Inputs Inputs (in thousands) (Level 1) (Level 2) (Level 3) Total Fixed income securities - available-for-sale 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 Total fixed income securities - available-for-sale $ — $ 1,672,239 $ — $ 1,672,239 Equity securities 400,492 — — 400,492 Total $ 400,492 $ 1,672,239 $ — $ 2,072,731 * Non-agency asset-backed and commercial mortgage-backed

HISTORICAL LOSS AND LAE DEVEL18

HISTORICAL LOSS AND LAE DEVELOPMENT (Tables)	6 Months Ended
	Jun. 30, 2018
HISTORICAL LOSS AND LAE DEVELOPMENT
Schedule of reconciliation of unpaid losses and settlement expenses (LAE)	For the Six-Month Periods Ended June 30, (in thousands) 2018 2017 Unpaid losses and LAE at beginning of year Gross $ 1,271,503 $ 1,139,337 Ceded (301,991) (288,224) Net $ 969,512 $ 851,113 Increase (decrease) in incurred losses and LAE Current accident year $ 222,121 $ 203,371 Prior accident years (28,047) (19,634) Total incurred $ 194,074 $ 183,737 Loss and LAE payments for claims incurred Current accident year $ (16,805) $ (18,732) Prior accident year (118,650) (113,501) Total paid $ (135,455) $ (132,233) Net unpaid losses and LAE at June 30, $ 1,028,131 $ 902,617 Unpaid losses and LAE at June 30, Gross $ 1,343,248 $ 1,183,185 Ceded (315,117) (280,568) Net $ 1,028,131 $ 902,617

INCOME TAXES (Tables)

INCOME TAXES (Tables)	6 Months Ended
	Jun. 30, 2018
INCOME TAXES
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	For the Three-Month Periods Ended June 30, For the Six-Month Periods Ended June 30, 2018 2017 2018 2017 (in thousands) Amount % Amount % Amount % Amount % Provision for income taxes at the statutory rate of 21% in 2018 and 35% in 2017 $ 8,308 % $ 11,912 % $ 11,327 % $ 21,168 % Increase (reduction) in taxes resulting from: Excess tax benefit on share-based compensation (924) % (2,791) % (2,067) % (3,234) % Tax exempt interest income (504) % (1,160) % (1,085) % (2,338) % Dividends received deduction (169) % (405) % (366) % (935) % ESOP dividends paid deduction (145) % (251) % (284) % (484) % Other items, net (255) % 523 % 948 % 266 % Total tax expense $ 6,311 % $ 7,828 % $ 8,473 % $ 14,443 %

STOCK BASED COMPENSATION (Table

STOCK BASED COMPENSATION (Tables)	6 Months Ended
	Jun. 30, 2018
STOCK BASED COMPENSATION
Schedule of stock option activity	Weighted Weighted Average Aggregate Number of Average Remaining Intrinsic Options Exercise Contractual Value Outstanding Price Life (in 000’s) Outstanding options at January 1, 2018 2,257,015 $ 46.80 Options granted 367,500 $ 63.27 Options exercised (337,000) $ 31.60 $ 11,151 Options canceled/forfeited (5,200) $ 62.04 Outstanding options at June 30, 2018 2,282,315 $ 51.66 5.34 $ 33,224 Exercisable options at June 30, 2018 996,265 $ 44.04 3.89 $ 22,089 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 407,875 $ 56.88 Options exercised (134,090) $ 25.23 $ 4,328 Options canceled/forfeited (40,600) $ 48.09 Outstanding options at June 30, 2017 2,440,295 $ 44.32 5.03 $ 29,968 Exercisable options at June 30, 2017 1,162,455 $ 35.77 3.47 $ 22,859
Schedule of stock option assumptions for fair value estimate	2018 2017 Weighted-average fair value of grants $ 10.20 $ Risk-free interest rates % % Dividend yield % % Expected volatility % % Expected option life 5.06 years years

OPERATING SEGMENT INFORMATION (

OPERATING SEGMENT INFORMATION (Tables)	6 Months Ended
	Jun. 30, 2018
OPERATING SEGMENT INFORMATION
Schedule of revenues and net earnings by segment	For the Three-Month Periods For the Six-Month Periods REVENUES Ended June 30, Ended June 30, (in thousands) 2018 2017 2018 2017 Casualty $ 129,613 $ 119,259 $ 255,463 $ 236,243 Property 37,190 34,485 72,372 70,290 Surety 29,719 30,587 58,714 61,083 Net premiums earned $ 196,522 $ 184,331 $ 386,549 $ 367,616 Net investment income 14,577 13,238 28,809 26,243 Net realized gains (losses) 20,849 (1,359) 29,253 (735) Net unrealized losses on equity securities (12,611) - (39,383) - Total consolidated revenue $ 219,337 $ 196,210 $ 405,228 $ 393,124 NET EARNINGS (in thousands) 2018 2017 2018 2017 Casualty $ 2,854 $ 8,648 $ 4,415 $ 1,767 Property 3,647 2,863 9,529 11,667 Surety 7,645 8,232 17,689 19,366 Net underwriting income $ 14,146 $ 19,743 $ 31,633 $ 32,800 Net investment income 14,577 13,238 28,809 26,243 Net realized gains (losses) 20,849 (1,359) 29,253 (735) Net unrealized losses on equity securities (12,611) - (39,383) - General corporate expense and interest on debt (4,499) (4,392) (8,638) (9,573) Equity in earnings of unconsolidated investees 7,100 6,806 12,266 11,744 Total earnings before income taxes $ 39,562 $ 34,036 $ 53,940 $ 60,479 Income tax expense 6,311 7,828 8,473 14,443 Total net earnings $ 33,251 $ 26,208 $ 45,467 $ 46,036
Schedule of net premiums earned by major product type	For the Three-Month Periods For the Six-Month Periods NET PREMIUMS EARNED Ended June 30, Ended June 30, (in thousands) 2018 2017 2018 2017 Casualty Commercial and personal umbrella $ 30,649 $ 28,861 $ 60,601 $ 57,438 General liability 23,338 22,851 46,503 44,434 Commercial transportation 20,648 20,395 39,823 41,496 Professional services 19,846 20,016 39,669 39,242 Small commercial 12,901 11,765 25,791 24,052 Executive products 5,144 4,438 10,196 8,850 Medical professional liability 4,362 4,265 8,834 8,556 Other casualty 12,725 6,668 24,046 12,175 Total $ 129,613 $ 119,259 $ 255,463 $ 236,243 Property Commercial property $ 17,856 $ 15,873 $ 34,807 $ 31,591 Marine 14,941 11,607 28,798 23,893 Specialty personal 4,129 5,508 8,271 11,526 Property reinsurance 14 1,479 26 3,262 Other property 250 18 470 18 Total $ 37,190 $ 34,485 $ 72,372 $ 70,290 Surety Miscellaneous $ 11,719 $ 11,854 $ 23,361 $ 23,711 Commercial 6,761 6,938 13,474 14,081 Contract 7,012 7,147 13,358 14,231 Energy 4,227 4,648 8,521 9,060 Total $ 29,719 $ 30,587 $ 58,714 $ 61,083 Grand Total $ 196,522 $ 184,331 $ 386,549 $ 367,616

SUMMARY OF SIGNIFICANT ACCOUN22

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Description of Business (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Common Stock, Par or Stated Value Per Share	$ 0.01	$ 1
Reclassification From Common Stock	$ 66.6
Reclassification Into Paid In Capital	$ 66.6

SUMMARY OF SIGNIFICANT ACCOUN23

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Accounting Standards (Details) - USD ($) $ in Thousands	3 Months Ended			6 Months Ended		12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Mar. 31, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017	Mar. 31, 2018	Jan. 01, 2018
Accumulated other comprehensive earnings	$ (14,648)			$ (14,648)		$ 157,919
Retained earnings	953,526			953,526		788,522
Net unrealized losses on equity securities	(12,611)			(39,383)
Expected Value Of Asset And Liability Addition From Adoption Of ASU 2016-02	$ 31,000			$ 31,000
Expense associated with operating leases						$ 7,000
Percentage Of Fixed Income Portfolio Rated A Or Better	82.50%			82.50%
Tax rate used (as a percent)	21.00%	35.00%		21.00%	35.00%
Allocated Share-based Compensation Expense	$ 1,300	$ 1,200		$ 2,300	$ 2,000
Accounting Standards Update 2014-09
Percent of Revenue Out of Scope of ASU 2014-09				99.00%
Accounting Standards Update 2016-01
Accumulated other comprehensive earnings								$ (142,200)
Retained earnings								$ 142,200
Net unrealized losses on equity securities				$ (39,400)
Unrealized Gain (Loss) Net Of Tax On Equity Securities Recognized in Other Comprehensive Income					8,500
Reduction to income tax expense				$ 8,300
Accounting Standards Update 2018-02
Accumulated other comprehensive earnings							$ 3,700
Retained earnings							$ (3,700)
Tax rate used (as a percent)				21.00%		35.00%
Restricted Stock Units (RSUs) [Member]
Allocated Share-based Compensation Expense	100		$ 200	$ 200	$ 200
Outside director | Restricted Stock Units (RSUs) [Member]
Allocated Share-based Compensation Expense	$ 100			$ 100

SUMMARY OF SIGNIFICANT ACCOUN24

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Intangible Assets and EPS (Details) - USD ($) $ / shares in Units, shares in Thousands	3 Months Ended			6 Months Ended
	Jun. 30, 2018	Mar. 31, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Business Acquisition [Line Items]
Goodwill	$ 46,062,000			$ 46,062,000		$ 49,657,000
State insurance licenses	7,500,000			7,500,000		7,500,000
Definite-lived intangibles, net of accumulated amortization of $2,862 at 6/30/18 and $5,678 at 12/31/17	1,131,000			1,131,000		2,145,000
Total intangibles	8,631,000			8,631,000		9,645,000
Goodwill and intangibles	54,693,000			54,693,000		59,302,000
Accumulated amortization of definite-lived intangibles	2,862,000			2,862,000		5,678,000
Amortization of intangible assets	100,000		$ 200,000	200,000	$ 400,000
Basic EPS, Income (Numerator)
Income available to common shareholders	33,251,000		26,208,000	45,467,000	46,036,000
Diluted EPS, Income (Numerator)
Income available to common shareholders	$ 33,251,000		$ 26,208,000	$ 45,467,000	$ 46,036,000
Basic EPS, Weighted Average Shares (Denominator)
Number of shares outstanding	44,310		44,005	44,266	43,983
Effect of Dilutive Securities, Shares (Denominator)
Stock options (in shares)	432		514	587	534
Diluted EPS, Weighted Average Shares (Denominator)
Number of shares outstanding	44,742		44,519	44,853	44,517
Basic EPS, Per Share Amount
Basic net earnings per share (in dollars per share)	$ 0.75		$ 0.60	$ 1.03	$ 1.05
Diluted EPS, Per Share Amount
Diluted earnings per share (in dollars per share)	$ 0.74		$ 0.59	$ 1.01	$ 1.03
Contractors Bonding and Insurance Company
Business Acquisition [Line Items]
Impairment of indefinite-lived intangible assets	$ 0
Energy Surety
Business Acquisition [Line Items]
Goodwill	25,706,000			$ 25,706,000		25,706,000
Goodwill, Impairment Loss	0
Miscellaneous and Contract Surety
Business Acquisition [Line Items]
Goodwill	15,110,000			15,110,000		15,110,000
Goodwill, Impairment Loss	0
Small commercial
Business Acquisition [Line Items]
Goodwill	5,246,000			5,246,000		5,246,000
Goodwill, Impairment Loss	0
Medical professional liability
Business Acquisition [Line Items]
Goodwill	0	$ 0		0		3,595,000
Goodwill and Intangible Asset Impairment		4,400,000	$ 3,400,000
Goodwill, Impairment Loss		3,600,000	1,600,000
Goodwill, Impaired, Accumulated Impairment Loss	$ 12,400,000			$ 12,400,000		$ 8,800,000
Impairment of Intangible Assets, Finite-lived		$ 800,000	$ 1,800,000

SUMMARY OF SIGNIFICANT ACCOUN25

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Changes in Accumulated Other Comprehensive Earnings (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
COMPREHENSIVE EARNINGS
Tax rate used (as a percent)	21.00%	35.00%	21.00%	35.00%
Changes in the balance of each component of accumulated other comprehensive earnings
Beginning balance			$ 157,919
Net current-period other comprehensive earnings (loss)	$ (7,675)	$ 10,599	(34,073)	$ 22,368
Ending balance	(14,648)		(14,648)		$ 157,919
Reclassification Adjustment Out of Accumulated Other Comprehensive Income Abstract
Net realized gains (losses)	20,849	(1,359)	29,309	1,355
Earnings before income taxes	39,562	34,036	53,940	60,479
Income tax expense	(6,311)	(7,828)	(8,473)	(14,443)
Net earnings	33,251	26,208	45,467	46,036
Unrealized Gains and Losses on Available-for-Sale Securities
Changes in the balance of each component of accumulated other comprehensive earnings
Beginning balance	(6,973)	134,379	157,919	122,610	122,610
Cumulative effect adjustment of ASU 2016-01	(142,219)		(142,219)
Accumulated Other Comprehensive Income Loss Net Of Tax Adjusted Balance	(6,973)	134,379	15,700	122,610	122,610
Other comprehensive earnings before reclassifications	(8,385)	11,753	(34,795)	23,925
Amounts reclassified from accumulated other comprehensive earnings	710	(1,154)	722	(1,557)
Net current-period other comprehensive earnings (loss)	(7,675)	10,599	(34,073)	22,368
Tax Cuts And Jobs Act Of 2017 Reclassification From Aoci To Retained Earnings Tax Effect			3,725
Ending balance	(14,648)	144,978	(14,648)	144,978	$ 157,919
Reclassifications out of accumulated other comprehensive earnings | Unrealized Gains and Losses on Available-for-Sale Securities
Reclassification Adjustment Out of Accumulated Other Comprehensive Income Abstract
Net realized gains (losses)	(899)	1,775	(858)	4,485
Other-than-temporary impairment (OTTI) losses on investments			(56)	(2,090)
Earnings before income taxes	(899)	1,775	(914)	2,395
Income tax expense	189	(621)	192	(838)
Net earnings	$ (710)	$ 1,154	$ (722)	$ 1,557

INVESTMENTS - Amortized Cost an

INVESTMENTS - Amortized Cost and Fair Value (Details) - USD ($) $ in Thousands		Jun. 30, 2018	Dec. 31, 2017
Available-for-sale
Total amortized cost		$ 1,727,075	$ 1,646,411
Available-for-sale Securities, Debt Securities		1,710,612	1,672,239
Amortized Cost
Due in one year or less		37,920
Due after one year through five years		349,532
Due after five years through 10 years		653,536
Due after 10 years		220,714
Mtge/ABS/CMBS	[1]	465,373
Total amortized cost		1,727,075	1,646,411
Fair Value
Due in one year or less		37,787
Due after one year through five years		349,582
Due after five years through 10 years		648,164
Due after 10 years		220,540
Mtge/ABS/CMBS	[1]	454,539
Total fair value		1,710,612	1,672,239
Fair value measured on recurring basis
Available-for-sale
Available-for-sale Securities, Debt Securities		1,710,612	1,672,239
Fair Value
Total fair value		1,710,612	1,672,239
Fair value measured on recurring basis | Significant Unobservable Inputs (Level 3)
INVESTMENTS
Total assets at fair value		0
Debt securities
Available-for-sale
Total amortized cost		1,727,075	1,646,411
Available-for-sale Debt Securities, Accumulated Gross Unrealized Gain, before Tax		13,405	34,216
Available-for-sale Debt Securities, Accumulated Gross Unrealized Loss, before Tax		29,868	8,388
Available-for-sale Securities, Debt Securities		1,710,612	1,672,239
Amortized Cost
Total amortized cost		1,727,075	1,646,411
Fair Value
Total fair value		1,710,612	1,672,239
U.S. government
Available-for-sale
Total amortized cost		151,446	92,561
Available-for-sale Debt Securities, Accumulated Gross Unrealized Gain, before Tax		96	23
Available-for-sale Debt Securities, Accumulated Gross Unrealized Loss, before Tax		2,377	895
Available-for-sale Securities, Debt Securities		149,165	91,689
Amortized Cost
Total amortized cost		151,446	92,561
Fair Value
Total fair value		149,165	91,689
U.S. Agency
Available-for-sale
Total amortized cost		30,650	18,541
Available-for-sale Debt Securities, Accumulated Gross Unrealized Gain, before Tax		213	347
Available-for-sale Debt Securities, Accumulated Gross Unrealized Loss, before Tax		607	110
Available-for-sale Securities, Debt Securities		30,256	18,778
Amortized Cost
Total amortized cost		30,650	18,541
Fair Value
Total fair value		30,256	18,778
Non-U.S. govt. & agency
Available-for-sale
Total amortized cost		8,186	7,501
Available-for-sale Debt Securities, Accumulated Gross Unrealized Gain, before Tax			143
Available-for-sale Debt Securities, Accumulated Gross Unrealized Loss, before Tax		291	56
Available-for-sale Securities, Debt Securities		7,895	7,588
Amortized Cost
Total amortized cost		8,186	7,501
Fair Value
Total fair value		7,895	7,588
Mortgage-backed
Available-for-sale
Total amortized cost		364,298	329,129
Available-for-sale Debt Securities, Accumulated Gross Unrealized Gain, before Tax		1,685	3,420
Available-for-sale Debt Securities, Accumulated Gross Unrealized Loss, before Tax		11,638	4,078
Available-for-sale Securities, Debt Securities		354,345	328,471
Amortized Cost
Total amortized cost		364,298	329,129
Fair Value
Total fair value		354,345	328,471
ABS/CMBS
Available-for-sale
Total amortized cost	[2]	101,075	70,405
Available-for-sale Debt Securities, Accumulated Gross Unrealized Gain, before Tax	[2]	152	436
Available-for-sale Debt Securities, Accumulated Gross Unrealized Loss, before Tax	[2]	1,033	315
Available-for-sale Securities, Debt Securities	[2]	100,194	70,526
Amortized Cost
Total amortized cost	[2]	101,075	70,405
Fair Value
Total fair value	[2]	100,194	70,526
Corporate Debt
Available-for-sale
Total amortized cost		633,159	508,128
Available-for-sale Debt Securities, Accumulated Gross Unrealized Gain, before Tax		3,061	12,575
Available-for-sale Debt Securities, Accumulated Gross Unrealized Loss, before Tax		11,534	1,681
Available-for-sale Securities, Debt Securities		624,686	519,022
Amortized Cost
Total amortized cost		633,159	508,128
Fair Value
Total fair value		624,686	519,022
Municipal
Available-for-sale
Total amortized cost		438,261	620,146
Available-for-sale Debt Securities, Accumulated Gross Unrealized Gain, before Tax		8,198	17,272
Available-for-sale Debt Securities, Accumulated Gross Unrealized Loss, before Tax		2,388	1,253
Available-for-sale Securities, Debt Securities		444,071	636,165
Amortized Cost
Total amortized cost		438,261	620,146
Fair Value
Total fair value		$ 444,071	$ 636,165
[1]	Mortgage-backed, asset-backed and commercial mortgage-backed
[2]	Non-agency asset-backed and commercial mortgage-backed

INVESTMENTS - Unrealized Losses

INVESTMENTS - Unrealized Losses (Details) - USD ($) $ in Thousands		Jun. 30, 2018	Dec. 31, 2017
Investment positions with unrealized losses
Unrealized losses relative to total invested assets (as a percent)		1.40%
Debt securities
Fair value
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months		$ 870,060	$ 372,467
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer		216,531	254,270
Debt Securities, Available-for-sale, Unrealized Loss Position		1,086,591	626,737
Cost or amortized Cost
Less than 12 months		890,764	375,790
12 months and greater		225,695	259,335
Total Cost or Amortized Cost		1,116,459	635,125
Unrealized Loss
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss		20,704	3,323
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss		9,164	5,065
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss		$ 29,868	8,388
Percent to Total		100.00%
Debt securities | NAIC Rating 1 | AAA/AA/A | Aaa/Aa/A
Fair value
Debt Securities, Available-for-sale, Unrealized Loss Position		$ 908,318
Cost or amortized Cost
Total Cost or Amortized Cost		932,315
Unrealized Loss
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss		$ 23,997
Percent to Total		80.30%
Debt securities | NAIC Rating 2 | BBB | Baa
Fair value
Debt Securities, Available-for-sale, Unrealized Loss Position		$ 119,785
Cost or amortized Cost
Total Cost or Amortized Cost		124,031
Unrealized Loss
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss		$ 4,246
Percent to Total		14.20%
Debt securities | NAIC Rating 3 | BB | Ba
Fair value
Debt Securities, Available-for-sale, Unrealized Loss Position		$ 35,400
Cost or amortized Cost
Total Cost or Amortized Cost		36,317
Unrealized Loss
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss		$ 917
Percent to Total		3.10%
Debt securities | NAIC Rating 4 | B | B
Fair value
Debt Securities, Available-for-sale, Unrealized Loss Position		$ 21,267
Cost or amortized Cost
Total Cost or Amortized Cost		21,826
Unrealized Loss
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss		$ 559
Percent to Total		1.90%
Debt securities | NAIC Rating 5 | CCC | Caa
Fair value
Debt Securities, Available-for-sale, Unrealized Loss Position		$ 1,243
Cost or amortized Cost
Total Cost or Amortized Cost		1,354
Unrealized Loss
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss		$ 111
Percent to Total		0.40%
Debt securities | NAIC Six Rating Member | Standard Poors CC Or Lower Member | Ca
Fair value
Debt Securities, Available-for-sale, Unrealized Loss Position		$ 578
Cost or amortized Cost
Total Cost or Amortized Cost		616
Unrealized Loss
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss		$ 38
Percent to Total		0.10%
U.S. government
Fair value
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months		$ 104,958	58,009
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer		33,589	30,888
Debt Securities, Available-for-sale, Unrealized Loss Position		138,547	88,897
Cost or amortized Cost
Less than 12 months		106,718	58,443
12 months and greater		34,206	31,349
Total Cost or Amortized Cost		140,924	89,792
Unrealized Loss
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss		1,760	434
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss		617	461
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss		2,377	895
U.S. Agency
Fair value
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months		15,422	10,917
Debt Securities, Available-for-sale, Unrealized Loss Position		15,422	10,917
Cost or amortized Cost
Less than 12 months		16,029	11,027
Total Cost or Amortized Cost		16,029	11,027
Unrealized Loss
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss		607	110
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss		607	110
Non-U.S. govt. & agency
Fair value
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months		6,208
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer		1,687	1,840
Debt Securities, Available-for-sale, Unrealized Loss Position		7,895	1,840
Cost or amortized Cost
Less than 12 months		6,289
12 months and greater		1,897	1,896
Total Cost or Amortized Cost		8,186	1,896
Unrealized Loss
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss		81
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss		210	56
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss		291	56
Mortgage-backed
Fair value
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months		199,344	122,130
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer		106,745	111,306
Debt Securities, Available-for-sale, Unrealized Loss Position		306,089	233,436
Cost or amortized Cost
Less than 12 months		205,847	123,559
12 months and greater		111,880	113,955
Total Cost or Amortized Cost		317,727	237,514
Unrealized Loss
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss		6,503	1,429
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss		5,135	2,649
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss		11,638	4,078
ABS/CMBS
Fair value
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months	[1]	66,925	23,406
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer	[1]	18,028	21,587
Debt Securities, Available-for-sale, Unrealized Loss Position	[1]	84,953	44,993
Cost or amortized Cost
Less than 12 months	[1]	67,707	23,491
12 months and greater	[1]	18,279	21,817
Total Cost or Amortized Cost	[1]	85,986	45,308
Unrealized Loss
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	[1]	782	85
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	[1]	251	230
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss	[1]	1,033	315
Corporate Debt
Fair value
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months		391,379	86,946
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer		34,255	28,600
Debt Securities, Available-for-sale, Unrealized Loss Position		425,634	115,546
Cost or amortized Cost
Less than 12 months		400,716	87,736
12 months and greater		36,452	29,491
Total Cost or Amortized Cost		437,168	117,227
Unrealized Loss
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss		9,337	790
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss		2,197	891
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss		11,534	1,681
Municipal
Fair value
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months		85,824	71,059
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer		22,227	60,049
Debt Securities, Available-for-sale, Unrealized Loss Position		108,051	131,108
Cost or amortized Cost
Less than 12 months		87,458	71,534
12 months and greater		22,981	60,827
Total Cost or Amortized Cost		110,439	132,361
Unrealized Loss
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss		1,634	475
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss		754	778
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss		$ 2,388	$ 1,253
[1]	Non-agency asset-backed and commercial mortgage-backed

INVESTMENTS Debt Securities and

INVESTMENTS Debt Securities and Common Stock (Details) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2018USD ($)securityposition	Jun. 30, 2018USD ($)securityposition	Jun. 30, 2017USD ($)security
Securities in unrealized loss positions
Other-than-temporary impairment (OTTI) losses		$ 56	$ 2,090
Equity Securities, FV-NI, Unrealized Gain (Loss)	$ 9,100	$ 4,800
Debt securities
Securities in unrealized loss positions
Number of unrealized loss positions | position	706	706
Number of securities in unrealized loss positions for 12 months or longer | security	121	121
Unrealized losses as percentage of fixed income portfolio cost basis	1.70%	1.70%
Number of securities with OTTI losses recognized in earnings | security	1	1	2
Other than Temporary Impairment Losses recognized in earnings		$ 100	$ 2,100
Other than Temporary Impairment Losses recognized in other comprehensive earnings		$ 0	$ 0

INVESTMENTS Debt and Short-term

INVESTMENTS Debt and Short-term Investments (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017	Dec. 31, 2016
Other invested assets
Other investments	$ 36,562		$ 36,562		$ 33,808
Cash and Short-term Investments
Cash	34,102	$ 21,355	34,102	$ 21,355	24,271	$ 18,269
Short-term investments, at cost which approximates fair value					9,980
Investment In Low Income Housing Tax Credit Partnership Net Of Amortization Member
Other invested assets
Other investments	14,500		14,500		$ 15,500
Total tax benefit on investments in housing tax credit partnership	600	$ 600	1,100	$ 1,300
Qualified Affordable Housing Project Investments, Commitment	2,000		2,000
Investment in Federal Home Loan Bank Stock [Member]
Other invested assets
Available-for-sale Securities Pledged as Collateral	16,800		16,800
Federal Home Loan Bank Borrowings, Fair Value Disclosure	0		0
Investment in Private Funds [Member]
Other invested assets
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share, Unfunded Commitments	$ 28,200		$ 28,200

FAIR VALUE MEASUREMENTS (Detail

FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands		Jun. 30, 2018	Dec. 31, 2017
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Debt Securities		$ 1,710,612	$ 1,672,239
Equity Securities, at fair value (cost - $207,214 at 6/30/18 and $182,002 at 12/31/17)		386,603	400,492
Transfers in (out of) level 1		0
Transfers in (out of) level 2		0
Fair value measured on recurring basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Debt Securities		1,710,612	1,672,239
Equity Securities, at fair value (cost - $207,214 at 6/30/18 and $182,002 at 12/31/17)		386,603	400,492
Marketable Securities		2,097,215	2,072,731
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair value measured on recurring basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity Securities, at fair value (cost - $207,214 at 6/30/18 and $182,002 at 12/31/17)		386,603	400,492
Marketable Securities		386,603	400,492
Significant Other Observable Inputs (Level 2) | Fair value measured on recurring basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Debt Securities		1,710,612	1,672,239
Marketable Securities		1,710,612	1,672,239
U.S. government | Fair value measured on recurring basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Debt Securities		149,165	91,689
U.S. government | Significant Other Observable Inputs (Level 2) | Fair value measured on recurring basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Debt Securities		149,165	91,689
U.S. Agency | Fair value measured on recurring basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Debt Securities		30,256	18,778
U.S. Agency | Significant Other Observable Inputs (Level 2) | Fair value measured on recurring basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Debt Securities		30,256	18,778
Non-U.S. govt. & agency | Fair value measured on recurring basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Debt Securities		7,895	7,588
Non-U.S. govt. & agency | Significant Other Observable Inputs (Level 2) | Fair value measured on recurring basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Debt Securities		7,895	7,588
Mortgage-backed | Fair value measured on recurring basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Debt Securities		354,345	328,471
Mortgage-backed | Significant Other Observable Inputs (Level 2) | Fair value measured on recurring basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Debt Securities		354,345	328,471
ABS/CMBS | Fair value measured on recurring basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Debt Securities	[1]	100,194	70,526
ABS/CMBS | Significant Other Observable Inputs (Level 2) | Fair value measured on recurring basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Debt Securities	[1]	100,194	70,526
Corporate Bond Securities [Member] | Fair value measured on recurring basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Debt Securities		624,686	519,022
Corporate Bond Securities [Member] | Significant Other Observable Inputs (Level 2) | Fair value measured on recurring basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Debt Securities		624,686	519,022
Municipal | Fair value measured on recurring basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Debt Securities		444,071	636,165
Municipal | Significant Other Observable Inputs (Level 2) | Fair value measured on recurring basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Debt Securities		$ 444,071	$ 636,165
[1]	Non-agency asset-backed and commercial mortgage-backed

HISTORICAL LOSS AND LAE DEVEL31

HISTORICAL LOSS AND LAE DEVELOPMENT - Unpaid Losses and Settlement Expenses (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Unpaid losses and LAE at beginning of year:
Gross	$ 1,271,503	$ 1,139,337
Ceded	(301,991)	(288,224)
Net	969,512	851,113
Increase (decrease) in incurred losses and LAE:
Current accident year	222,121	203,371
Prior accident years	(28,047)	(19,634)
Total incurred	194,074	183,737
Loss and LAE payments for claims incurred:
Current accident year	(16,805)	(18,732)
Prior accident year	(118,650)	(113,501)
Total paid	(135,455)	(132,233)
Net	1,028,131	902,617
Unpaid losses and LAE at year end
Gross	1,343,248	1,183,185
Ceded	(315,117)	(280,568)
Net	$ 1,028,131	$ 902,617

INCOME TAXES (Details)

INCOME TAXES (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Reconciliation of income tax expense reported to amount computed by applying the U.S. federal tax rate
Provision for income taxes at the statutory rate of 21% in 2018 and 35% in 2017	$ 8,308	$ 11,912	$ 11,327	$ 21,168
Excess tax benefit on share-based compensation	(924)	(2,791)	(2,067)	(3,234)
Tax-exempt interest income	(504)	(1,160)	(1,085)	(2,338)
Dividends received deduction	(169)	(405)	(366)	(935)
ESOP dividends paid deduction	(145)	(251)	(284)	(484)
Other items, net	(255)	523	948	266
Total tax expense	$ 6,311	$ 7,828	$ 8,473	$ 14,443
Reconciliation of income tax expense rate to the U.S. federal tax rate
U.S. federal tax rate (as a percent)	21.00%	35.00%	21.00%	35.00%
Excess tax benefit on share-based compensation	(2.30%)	(8.20%)	(3.90%)	(5.30%)
Effective rate reduction due to tax exempt interest income (as a percent)	(1.30%)	(3.40%)	(2.00%)	(3.90%)
Effective rate reduction due to dividend received (as a percent)	(0.40%)	(1.20%)	(0.70%)	(1.50%)
Effective rate reduction due to dividend paid to ESOP (as a percent)	(0.40%)	(0.70%)	(0.50%)	(0.80%)
Effective rate reduction due to other items, net (as a percent)	(0.60%)	1.50%	1.80%	0.40%
Effective Income Tax Rate Reconciliation, Percent, Total	16.00%	23.00%	15.70%	23.90%

STOCK BASED COMPENSATION (Detai

STOCK BASED COMPENSATION (Details) - USD ($)	3 Months Ended			6 Months Ended		38 Months Ended	60 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Mar. 31, 2017	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	May 06, 2015	May 05, 2010
Weighted Number of Options Outstanding
Outstanding options at the beginning of the period (in shares)			2,207,110	2,257,015	2,207,110
Options granted (in shares)				367,500	407,875
Options exercised (in shares)				(337,000)	(134,090)
Options canceled/forfeited (in shares)				(5,200)	(40,600)
Outstanding options at the end of the period (in shares)	2,282,315	2,440,295		2,282,315	2,440,295	2,282,315
Exercisable options at the end of the period (in shares)	996,265	1,162,455		996,265	1,162,455	996,265
Weighted Average Exercise Price
Outstanding options at the beginning of the period (in dollars per share)			$ 40.90	$ 46.80	$ 40.90
Options granted (in dollars per share)				63.27	56.88
Options exercised (in dollars per share)				31.60	25.23
Options canceled/forfeited (in dollars per share)				62.04	48.09
Outstanding options at the end of the period (in dollars per share)	$ 51.66	$ 44.32		51.66	44.32	$ 51.66
Exercisable options at the end of the period (in dollars per share)	$ 44.04	$ 35.77		$ 44.04	$ 35.77	$ 44.04
Weighted Average Remaining Contractual Life
Weighted-average remaining contractual term of options outstanding				5 years 4 months 2 days	5 years 11 days
Weighted-average remaining contractual term of exercisable options				3 years 10 months 21 days	3 years 5 months 19 days
Aggregate Intrinsic Value
Options exercised (in dollars)				$ 11,151,000	$ 4,328,000
Outstanding options at the end of the period (in dollars)	$ 33,224,000	$ 29,968,000		33,224,000	29,968,000	$ 33,224,000
Exercisable options at the end of the period (in dollars)	22,089,000	22,859,000		$ 22,089,000	$ 22,859,000	22,089,000
Weighted-average fair value of grants (in dollars per share)				$ 10.20	$ 7.94
Stock-based compensation expenses (in dollars)	1,300,000	1,200,000		$ 2,300,000	$ 2,000,000
Income tax benefit from stock-based compensation (in dollars)	300,000	$ 400,000		500,000	$ 700,000
Unrecognized stock-based compensation expense (in dollars)	7,000,000			$ 7,000,000		7,000,000
Weighted average grant date assumptions and weighted average fair value
Weighted-average fair value of grants (in dollars per share)				$ 10.20	$ 7.94
Risk-free interest rates (as a percent)				2.69%	1.89%
Dividend yield (as a percent)				3.15%	3.60%
Expected volatility (as a percent)				22.88%	22.95%
Expected option life				5 years 22 days	5 years 18 days
Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award
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)	100,000		$ 200,000	$ 200,000	$ 200,000
Unrecognized stock-based compensation expense (in dollars)	$ 1,100,000			$ 1,100,000		$ 1,100,000
Weighted average grant date assumptions and weighted average fair value
RSUs Granted				14,625		30,075
RSUs Outstanding	29,675			29,675		29,675
Outside director | Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award
Award vesting period				1 year
Aggregate Intrinsic Value
Stock-based compensation expenses (in dollars)	$ 100,000			$ 100,000
Unrecognized stock-based compensation expense (in dollars)	$ 400,000			$ 400,000		$ 400,000
Weighted average grant date assumptions and weighted average fair value
RSUs Granted	7,128
Grant date fair value of RSUs	$ 50,000
RLI Corp. Long-Term Incentive Plan (LTIP) and Omnibus Stock Plan
Share-based Compensation Arrangement by Share-based Payment Award
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
Share-based Compensation Arrangement by Share-based Payment Award
Shares authorized for grant								3,000,000
Weighted Number of Options Outstanding
Options granted (in shares)								2,458,059
RLI Corp. Long-Term Incentive Plan (2010 LTIP)
Share-based Compensation Arrangement by Share-based Payment Award
Shares authorized for grant							4,000,000
Weighted Number of Options Outstanding
Options granted (in shares)							2,878,000
RLI Corp. Long-Term Incentive Plan (2015 LTIP)
Share-based Compensation Arrangement by Share-based Payment Award
Shares authorized for grant	4,000,000			4,000,000		4,000,000
Weighted Number of Options Outstanding
Options granted (in shares)				389,253		1,837,828

OPERATING SEGMENT INFORMATION -

OPERATING SEGMENT INFORMATION - Reconciliation of Segment Totals to Total Earnings (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
REVENUES
Net premiums earned	$ 196,522	$ 184,331	$ 386,549	$ 367,616
Net investment income	14,577	13,238	28,809	26,243
Net realized gains	20,849	(1,359)	29,253	(735)
Net unrealized losses on equity securities	(12,611)		(39,383)
Consolidated revenue	219,337	196,210	405,228	393,124
NET EARNINGS
Net underwriting income	14,146	19,743	31,633	32,800
Net investment income	14,577	13,238	28,809	26,243
Net realized gains	20,849	(1,359)	29,253	(735)
Net unrealized losses on equity securities	(12,611)		(39,383)
General corporate expense and interest on debt	(4,499)	(4,392)	(8,638)	(9,573)
Equity in earnings of unconsolidated investees	7,100	6,806	12,266	11,744
Earnings before income taxes	39,562	34,036	53,940	60,479
Income tax expense	6,311	7,828	8,473	14,443
Net earnings	33,251	26,208	45,467	46,036
Casualty segment
REVENUES
Net premiums earned	129,613	119,259	255,463	236,243
NET EARNINGS
Net underwriting income	2,854	8,648	4,415	1,767
Property segment
REVENUES
Net premiums earned	37,190	34,485	72,372	70,290
NET EARNINGS
Net underwriting income	3,647	2,863	9,529	11,667
Surety segment
REVENUES
Net premiums earned	29,719	30,587	58,714	61,083
NET EARNINGS
Net underwriting income	$ 7,645	$ 8,232	$ 17,689	$ 19,366

OPERATING SEGMENT INFORMATION35

OPERATING SEGMENT INFORMATION - Major Products (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Revenue by major product
Net premiums earned	$ 196,522	$ 184,331	$ 386,549	$ 367,616
Casualty segment
Revenue by major product
Net premiums earned	129,613	119,259	255,463	236,243
Casualty segment | Commercial and personal umbrella
Revenue by major product
Net premiums earned	30,649	28,861	60,601	57,438
Casualty segment | General liability
Revenue by major product
Net premiums earned	23,338	22,851	46,503	44,434
Casualty segment | Transportation
Revenue by major product
Net premiums earned	20,648	20,395	39,823	41,496
Casualty segment | Professional services
Revenue by major product
Net premiums earned	19,846	20,016	39,669	39,242
Casualty segment | Small commercial
Revenue by major product
Net premiums earned	12,901	11,765	25,791	24,052
Casualty segment | Executive products
Revenue by major product
Net premiums earned	5,144	4,438	10,196	8,850
Casualty segment | Medical professional liability
Revenue by major product
Net premiums earned	4,362	4,265	8,834	8,556
Casualty segment | Other casualty
Revenue by major product
Net premiums earned	12,725	6,668	24,046	12,175
Property segment
Revenue by major product
Net premiums earned	37,190	34,485	72,372	70,290
Property segment | Commercial
Revenue by major product
Net premiums earned	17,856	15,873	34,807	31,591
Property segment | Marine
Revenue by major product
Net premiums earned	14,941	11,607	28,798	23,893
Property segment | Specialty Personal
Revenue by major product
Net premiums earned	4,129	5,508	8,271	11,526
Property segment | Property reinsurance
Revenue by major product
Net premiums earned	14	1,479	26	3,262
Property segment | Other property
Revenue by major product
Net premiums earned	250	18	470	18
Surety segment
Revenue by major product
Net premiums earned	29,719	30,587	58,714	61,083
Surety segment | Miscellaneous
Revenue by major product
Net premiums earned	11,719	11,854	23,361	23,711
Surety segment | Commercial surety product
Revenue by major product
Net premiums earned	6,761	6,938	13,474	14,081
Surety segment | Contract
Revenue by major product
Net premiums earned	7,012	7,147	13,358	14,231
Surety segment | Energy Surety
Revenue by major product
Net premiums earned	$ 4,227	$ 4,648	$ 8,521	$ 9,060

COMMITMENTS AND CONTINGENT LI36

COMMITMENTS AND CONTINGENT LIABILITIES (Details) $ in Millions	3 Months Ended
	Jun. 30, 2018USD ($)
Loss Contingency, Information about Litigation Matters [Abstract]
Loss Contingency, Damages Sought, Value	$ 21.7