FOR IMMEDIATE RELEASE | CONTACT: John Robison | |
|
| (309) 693-5846 |
John_Robison@rlicorp.com www.rlicorp.com | ||
PEORIA, ILLINOIS, April 18, 2007 — RLI Corp. (NYSE: RLI) — RLI Corp. reported first quarter 2007 net earnings of $32.5 million ($1.32 per share), compared to $25.7 million ($0.97 per share) from the same period last year.
Earnings Per Diluted Share |
| 2007 |
| 2006 |
| ||
Net earnings |
| $ | 1.32 |
| $ | 0.97 |
|
Operating earnings |
| $ | 1.20 |
| $ | 0.86 |
|
Highlights for the quarter included:
· $29.5 million ($1.20 per share) operating earnings
· $25.3 million net operating cash flow
· $12.3 million ($0.32 per share) favorable development in prior years’ casualty loss reserves, net of bonus and profit sharing-related expenses
· 81.4 combined ratio
· 13.7% investment income growth
· 2.7% growth in book value per share, to $32.00 per share
· $100 million share repurchase program completed, at an average cost of $51.08 per share
“We are proud of these results in a challenging environment,” said RLI Corp. President & CEO Jonathan E. Michael. “While portions of the marketplace have softened, we continue to find advantageous opportunities. Our underwriters have displayed the discipline we expect of them and delivered strong first quarter results.”
First quarter underwriting results
RLI achieved $25.6 million of underwriting income in the first quarter of 2007 on an 81.4 combined ratio, compared to $15.9 million of underwriting income on an 87.5 combined ratio in the first quarter of 2006. The following results incorporate the favorable loss development noted above and favorable loss development from prior years’ casualty loss reserves of $2.3 million ($0.06 per share) from the same period last year.
Gross Premiums |
| First Quarter |
|
|
| First Quarter | ||||
Written (in millions) |
| 2007 |
| 2006 |
| Combined Ratio |
| 2007 |
| 2006 |
Casualty |
| $11.4 |
| $115.2 |
| Casualty |
| 878.8 |
| 89.8 |
Property |
| 42.1 |
| 42.9 |
| Property |
| 88.6 |
| 80.2 |
Surety |
| 17.8 |
| 17.1 |
| Surety |
| 80.3 |
| 86.5 |
Total |
| $171.3 |
| $175.2 |
| Total |
| 81.4 |
| 87.5 |
-- more --
Other income
First quarter investment income grew 13.7% to $19.0 million due to continued strong operating cash flows. The investment portfolio’s total return for the quarter was 1.6%, with the bond and equity portfolios’ returns both 1.6%.
During the quarter, equity in earnings of unconsolidated investees was $1.3 million, all related to Maui Jim, Inc. The first quarter of 2006 reflected $2.7 million in income, which included $1.9 million related to Maui Jim, Inc. and $0.8 million from Taylor Bean & Whitaker. In the fourth quarter of 2006, RLI sold its equity interest in Taylor Bean & Whitaker. Comprehensive earnings, which include after-tax unrealized gains/losses from the investment portfolio, were $33.1 million for the quarter ($1.34 per share) compared to $22.1 million ($0.84 per share) over the same period in 2006.
Other RLI news
In the first quarter of 2006, RLI announced a stock repurchase program for up to $100 million of RLI common stock. During the first quarter of 2007, we repurchased 333,494 shares at an average cost of $56.77 per share. This completed the buyback program at an average per share cost of $51.08.
The company paid a quarterly cash dividend of $0.20 per share on April 13, 2007, the same amount as in the prior quarter. This payment brings RLI’s cumulative return to shareholders to more than $137 million over 123 consecutive quarterly dividends. Over the last five years, the company’s quarterly dividend has grown by an average of 20.1%, and by an average of 13.6% over the last 10 years. Mergent’s Dividend Achievers currently ranks RLI 83rd among 11,000 public companies for having the longest record of consecutive dividend increases. The company has increased dividends for 32 straight years.
At 10 a.m. CDT today, April 18, 2007, RLI management will hold a conference call to discuss quarterly results with insurance industry analysts. Interested parties may listen to the discussion through the Internet at RLI’s website, www.rlicorp.com.
Operating earnings and earnings per share (EPS) from operations and other per share items are non-GAAP financial measures, and we believe that investors’ understanding of RLI’s core operating performance is enhanced by our disclosure of these financial measures. Operating earnings and EPS from operations consist of our net earnings reduced by net realized investment gains and taxes related to net realized gains. Our definitions of these items may not be comparable to the definitions used by other companies. Net earnings and net earnings per share are the GAAP financial measures that are most directly comparable to operating earnings and EPS from operations. All earnings per share data are calculated using fully diluted shares. Combined ratio refers to a GAAP combined ratio.
Except for historical information, this news release may include forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934) including, without limitation, statements reflecting our current expectations about the future performance of our company or our business segments or about future market conditions. These statements are subject to certain risk factors that could cause actual results to differ materially. Various risk factors that could affect future results are listed in the company’s filings with the Securities and Exchange Commission, including the Form 10-K Annual Report for the year ended December 31, 2006.
RLI, a specialty insurance company, offers a diversified portfolio of property and casualty coverages and surety bonds serving “niche” or underserved markets. RLI operates in all 50 states from 25 office locations. The company’s talented associates have delivered underwriting profits in 26 of the last 30 years, including the last 11. RLI’s insurance subsidiaries — RLI Insurance Company, Mt. Hawley Insurance Company and RLI Indemnity Company — are rated A+ “Superior” by A.M. Best Company and A+ “Strong” by Standard & Poor’s.
For additional information, contact Treasurer John Robison at (309) 693-5846 or at john_robison@rlicorp.com or visit our website at www.rlicorp.com.
-- more --
RLI CORP.
2007 FINANCIAL HIGHLIGHTS
(Unaudited)
(Dollars in thousands, except per share amounts)
|
| Three Months Ended March 31, |
| ||||||
|
| 2007 |
| 2006 |
| % Change |
| ||
SUMMARIZED INCOME STATEMENT DATA: |
|
|
|
|
|
|
| ||
Net premiums earned |
| $ | 137,977 |
| $ | 127,387 |
| 8.3 | % |
Net investment income |
| 18,990 |
| 16,708 |
| 13.7 | % | ||
Net realized investment gains |
| 4,625 |
| 4,442 |
| 4.1 | % | ||
Consolidated revenue |
| 161,592 |
| 148,537 |
| 8.8 | % | ||
|
|
|
|
|
|
|
| ||
Loss and settlement expenses |
| 63,060 |
| 66,677 |
| -5.4 | % | ||
Policy acquisition costs |
| 39,764 |
| 35,599 |
| 11.7 | % | ||
Other insurance expenses |
| 9,556 |
| 9,201 |
| 3.9 | % | ||
Interest expense on debt |
| 1,510 |
| 1,682 |
| -10.2 | % | ||
General corporate expenses |
| 1,877 |
| 1,855 |
| 1.2 | % | ||
Total expenses |
| 115,767 |
| 115,014 |
| 0.7 | % | ||
|
|
|
|
|
|
|
| ||
Equity in earnings of |
|
|
|
|
|
|
| ||
unconsolidated investees |
| 1,313 |
| 2,740 |
| -52.1 | % | ||
|
|
|
|
|
|
|
| ||
Earnings before income taxes |
| 47,138 |
| 36,263 |
| 30.0 | % | ||
Income tax expense |
| 14,621 |
| 10,607 |
| 37.8 | % | ||
Net Earnings |
| $ | 32,517 |
| $ | 25,656 |
| 26.7 | % |
Other comprehensive earnings (loss), net of tax |
| 600 |
| (3,595 | ) | 116.7 | % | ||
Comprehensive earnings |
| $ | 33,117 |
| $ | 22,061 |
| 50.1 | % |
|
|
|
|
|
|
|
| ||
Operating Earnings:(1) |
|
|
|
|
|
|
| ||
Net Earnings |
| $ | 32,517 |
| $ | 25,656 |
| 26.7 | % |
Less: Realized investment gains, net of tax |
| 3,006 |
| 2,887 |
| 4.1 | % | ||
Operating earnings |
| $ | 29,511 |
| $ | 22,769 |
| 29.6 | % |
|
|
|
|
|
|
|
| ||
Return on Equity: |
|
|
|
|
|
|
| ||
Net earnings (trailing four quarters) |
| 19.9 | % | 15.3 | % |
|
| ||
Comprehensive earnings (trailing four quarters) |
| 23.7 | % | 13.5 | % |
|
| ||
|
|
|
|
|
|
|
| ||
Per Share Data |
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
| ||
Diluted: |
|
|
|
|
|
|
| ||
Weighted average shares outstanding (in 000's) |
| 24,702 |
| 26,400 |
|
|
| ||
|
|
|
|
|
|
|
| ||
EPS from operations (1) |
| $ | 1.20 |
| $ | 0.86 |
| 39.5 | % |
Realized gains, net of tax |
| 0.12 |
| 0.11 |
| 9.1 | % | ||
Net earnings per share |
| $ | 1.32 |
| $ | 0.97 |
| 36.1 | % |
|
|
|
|
|
|
|
| ||
Comprehensive earnings per share |
| $ | 1.34 |
| $ | 0.84 |
| 59.5 | % |
|
|
|
|
|
|
|
| ||
Cash dividends per share |
| $ | 0.20 |
| $ | 0.17 |
| 17.6 | % |
|
|
|
|
|
|
|
| ||
Net Cash Flow from Operations |
| $ | 25,310 |
| $ | 21,709 |
| 16.6 | % |
(1) See discussion on page 2.
RLI CORP.
2007 FINANCIAL HIGHLIGHTS
(Unaudited)
(Dollars in thousands, except per share amounts)
|
| March 31, |
| December 31, |
|
|
| ||
|
| 2007 |
| 2006 |
| % Change |
| ||
SUMMARIZED BALANCE SHEET DATA: |
|
|
|
|
|
|
| ||
Fixed income and short-term investments |
| $ | 1,463,086 |
| $ | 1,460,046 |
| 0.2 | % |
(amortized cost - $1,468,087 at 3/31/07) |
|
|
|
|
|
|
| ||
(amortized cost - $1,465,660 at12/31/06) |
|
|
|
|
|
|
| ||
Equity securities |
| 374,668 |
| 368,195 |
| 1.8 | % | ||
(cost - $209,621 at 3/31/07) |
|
|
|
|
|
|
| ||
(cost - $201,443 at 12/31/06) |
|
|
|
|
|
|
| ||
Total investments |
| 1,837,754 |
| 1,828,241 |
| 0.5 | % | ||
|
|
|
|
|
|
|
| ||
Premiums and reinsurance balances receivable |
| 104,737 |
| 126,021 |
| -16.9 | % | ||
Ceded unearned premiums |
| 87,494 |
| 97,596 |
| -10.4 | % | ||
Reinsurance recoverable on unpaid losses |
| 527,700 |
| 525,671 |
| 0.4 | % | ||
Deferred acquisition costs |
| 71,206 |
| 73,817 |
| -3.5 | % | ||
Property and equipment |
| 20,068 |
| 20,590 |
| -2.5 | % | ||
Investment in unconsolidated investees |
| 32,022 |
| 36,667 |
| -12.7 | % | ||
Goodwill |
| 26,214 |
| 26,214 |
| 0.0 | % | ||
Other assets |
| 43,941 |
| 36,479 |
| 20.5 | % | ||
Total assets |
| $ | 2,751,136 |
| $ | 2,771,296 |
| -0.7 | % |
|
|
|
|
|
|
|
| ||
Unpaid losses and settlement expenses |
| 1,333,523 |
| 1,318,777 |
| 1.1 | % | ||
Unearned premiums |
| 359,232 |
| 387,811 |
| -7.4 | % | ||
Reinsurance balances payable |
| 74,365 |
| 85,046 |
| -12.6 | % | ||
Long-term debt - bonds payable |
| 100,000 |
| 100,000 |
| 0.0 | % | ||
Income taxes - deferred |
| 27,179 |
| 27,069 |
| 0.4 | % | ||
Other liabilities |
| 90,062 |
| 96,073 |
| -6.3 | % | ||
Total liabilities |
| 1,984,361 |
| 2,014,776 |
| -1.5 | % | ||
Shareholders' equity |
| 766,775 |
| 756,520 |
| 1.4 | % | ||
Total liabilities & shareholders' equity |
| $ | 2,751,136 |
| $ | 2,771,296 |
| -0.7 | % |
|
|
|
|
|
|
|
| ||
OTHER DATA |
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
| ||
Common shares outstanding (in 000's) |
| 23,961 |
| 24,273 |
|
|
| ||
|
|
|
|
|
|
|
| ||
Book Value per share |
| $ | 32.00 |
| $ | 31.17 |
| 2.7 | % |
Closing stock price per share |
| $ | 54.93 |
| $ | 56.42 |
| -2.6 | % |
|
|
|
|
|
|
|
| ||
Statutory Surplus |
| $ | 779,563 |
| $ | 746,905 |
| 4.4 | % |
RLI CORP.
2007 FINANCIAL HIGHLIGHTS
UNDERWRITING SEGMENT DATA
(Unaudited)
(Dollars in thousands, except per share amounts)
Three Months Ended March 31, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
| GAAP |
|
|
| GAAP |
|
|
| GAAP |
|
|
| GAAP |
| ||||
|
| Casualty |
| Ratios |
| Property |
| Ratios |
| Surety |
| Ratios |
| Total |
| Ratios |
| ||||
2007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Gross premiums written |
| $ | 111,357 |
|
|
| $ | 42,152 |
|
|
| $ | 17,807 |
|
|
| $ | 171,316 |
|
|
|
Net premiums written |
| 79,694 |
|
|
| 23,140 |
|
|
| 16,666 |
|
|
| 119,500 |
|
|
| ||||
Net premiums earned |
| 88,015 |
|
|
| 34,609 |
|
|
| 15,353 |
|
|
| 137,977 |
|
|
| ||||
Net loss & settlement expenses |
| 42,782 |
| 48.6 | % | 17,550 |
| 50.7 | % | 2,728 |
| 17.8 | % | 63,060 |
| 45.7 | % | ||||
Net operating expenses |
| 26,616 |
| 30.2 | % | 13,110 |
| 37.9 | % | 9,594 |
| 62.5 | % | 49,320 |
| 35.7 | % | ||||
Underwriting income |
| $ | 18,617 |
| 78.8 | % | $ | 3,949 |
| 88.6 | % | $ | 3,031 |
| 80.3 | % | $ | 25,597 |
| 81.4 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Gross premiums written |
| $ | 115,156 |
|
|
| $ | 42,892 |
|
|
| $ | 17,105 |
|
|
| $ | 175,153 |
|
|
|
Net premiums written |
| 80,504 |
|
|
| 24,703 |
|
|
| 15,961 |
|
|
| 121,168 |
|
|
| ||||
Net premiums earned |
| 87,266 |
|
|
| 25,622 |
|
|
| 14,499 |
|
|
| 127,387 |
|
|
| ||||
Net loss & settlement expenses |
| 53,691 |
| 61.5 | % | 9,674 |
| 37.8 | % | 3,312 |
| 22.8 | % | 66,677 |
| 52.3 | % | ||||
Net operating expenses |
| 24,689 |
| 28.3 | % | 10,870 |
| 42.4 | % | 9,241 |
| 63.7 | % | 44,800 |
| 35.2 | % | ||||
Underwriting income |
| $ | 8,886 |
| 89.8 | % | $ | 5,078 |
| 80.2 | % | $ | 1,946 |
| 86.5 | % | $ | 15,910 |
| 87.5 | % |
