Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2015 | Apr. 13, 2015 | |
Document and Entity Information | ||
Entity Registrant Name | RLI CORP | |
Entity Central Index Key | 84246 | |
Document Type | 10-Q | |
Document Period End Date | 31-Mar-15 | |
Amendment Flag | FALSE | |
Current Fiscal Year End Date | -19 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 43,190,481 | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q1 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements of Earnings and Comprehensive Earnings (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Condensed Consolidated Statements of Earnings and Comprehensive Earnings | ||
Net premiums earned | $169,003 | $161,132 |
Net investment income | 13,495 | 13,582 |
Net realized investment gains | 13,286 | 6,501 |
Consolidated revenue | 195,784 | 181,215 |
Losses and settlement expenses | 80,861 | 71,016 |
Policy acquisition costs | 58,973 | 55,051 |
Insurance operating expenses | 11,531 | 12,533 |
Interest expense on debt | 1,856 | 1,851 |
General corporate expenses | 2,244 | 2,198 |
Total expenses | 155,465 | 142,649 |
Equity in earnings of unconsolidated investees | 4,194 | 3,425 |
Earnings before income taxes | 44,513 | 41,991 |
Income tax expense | 13,915 | 13,022 |
Net earnings | 30,598 | 28,969 |
Other comprehensive earnings (loss), net of tax | -7,595 | 17,737 |
Comprehensive earnings | $23,003 | $46,706 |
Basic: | ||
Net earnings per share (in dollars per share) | $0.71 | $0.67 |
Comprehensive earnings per share (in dollars per share) | $0.53 | $1.09 |
Diluted: | ||
Net earnings per share (in dollars per share) | $0.70 | $0.66 |
Comprehensive earnings per share (in dollars per share) | $0.52 | $1.07 |
Weighted average number of common shares outstanding | ||
Basic (in shares) | 43,141 | 42,985 |
Diluted (in shares) | 43,992 | 43,674 |
Cash dividends paid per common share (in dollars per share) | $0.18 | $0.17 |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Fixed income: | ||
Available-for-sale, at fair value | $1,529,559 | $1,495,087 |
Equity securities, at fair value | 391,663 | 410,642 |
Short-term investments, at cost | 16,008 | 16,339 |
Other invested assets | 11,402 | 11,597 |
Cash | 31,514 | 30,620 |
Total investments and cash | 1,980,146 | 1,964,285 |
Accrued investment income | 12,411 | 14,629 |
Premiums and reinsurance balances receivable | 145,948 | 154,573 |
Ceded unearned premium | 49,011 | 53,961 |
Reinsurance balances recoverable on unpaid losses | 336,747 | 335,106 |
Deferred policy acquisition costs | 65,247 | 65,123 |
Property and equipment | 42,458 | 42,549 |
Investment in unconsolidated investees | 65,089 | 60,046 |
Goodwill and intangibles | 72,472 | 72,695 |
Other assets | 11,035 | 12,575 |
TOTAL ASSETS | 2,780,564 | 2,775,542 |
Liabilities: | ||
Unpaid losses and settlement expenses | 1,150,795 | 1,121,040 |
Unearned premiums | 388,776 | 401,412 |
Reinsurance balances payable | 33,083 | 38,013 |
Funds held | 53,713 | 51,481 |
Income taxes - deferred | 79,356 | 82,285 |
Bonds payable, long-term debt | 149,636 | 149,625 |
Accrued expenses | 33,902 | 63,148 |
Other liabilities | 29,308 | 23,476 |
TOTAL LIABILITIES | 1,918,569 | 1,930,480 |
Shareholders' Equity | ||
Common stock ($1 par value, 100,000,000 shares authorized)(66,120,695 shares issued, 43,190,481 shares outstanding at 3/31/15)(66,032,929 shares issued, 43,102,715 shares outstanding at 12/31/14) | 66,121 | 66,033 |
Paid-in capital | 215,345 | 213,737 |
Accumulated other comprehensive earnings | 163,788 | 171,383 |
Retained earnings | 809,740 | 786,908 |
Deferred compensation | 13,946 | 13,769 |
Less: Treasury shares at cost (22,930,214 shares at 3/31/15 and 12/31/14) | -406,945 | -406,768 |
TOTAL SHAREHOLDERS’ EQUITY | 861,995 | 845,062 |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $2,780,564 | $2,775,542 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Parenthetical) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Condensed Consolidated Balance Sheets | ||
Common stock, par value (in dollars per share) | $1 | $1 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 66,120,695 | 66,032,929 |
Common stock, shares outstanding (in shares) | 43,190,481 | 43,102,715 |
Treasury stock, shares (in shares) | 22,930,214 | 22,930,214 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Condensed Consolidated Statements of Cash Flows | ||
Net cash provided by (used in) operating activities | $23,407 | ($2,007) |
Cash Flows from Investing Activities | ||
Investments purchased | -196,468 | -129,559 |
Investments sold | 140,445 | 92,989 |
Investments called or matured | 39,781 | 31,770 |
Net change in short-term investments | 2,572 | 2,286 |
Net property and equipment purchased | -1,062 | -2,933 |
Investment in equity method investee | -1,711 | -5,301 |
Net cash used in investing activities | -16,443 | -10,748 |
Cash Flows from Financing Activities | ||
Cash dividends paid | -7,766 | -7,305 |
Stock plan share issuance | 330 | 1,123 |
Excess tax benefit from exercise of stock options | 1,366 | 86 |
Net cash used in financing activities | -6,070 | -6,096 |
Net increase (decrease) in cash | 894 | -18,851 |
Cash at the beginning of the period | 30,620 | 39,469 |
Cash at March 31 | $31,514 | $20,618 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||||||||||||
A. 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 2014 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 March 31, 2015 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. | |||||||||||||||||
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. | |||||||||||||||||
B. ADOPTED ACCOUNTING STANDARDS | |||||||||||||||||
No new accounting standards have been adopted as no issued updates would impact our financial statements. | |||||||||||||||||
C. PROSPECTIVE ACCOUNTING STANDARDS | |||||||||||||||||
ASU 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs | |||||||||||||||||
This ASU was issued to simplify the presentation of debt issuance costs by requiring them to be presented in the balance sheet as a direct deduction from the carrying amount of the related recognized debt liability, consistent with debt discounts. This ASU is effective for annual and interim reporting periods beginning after December 15, 2015. Early adoption is permitted. We have not early-adopted this ASU and do not believe adoption will have a material effect on our financial statements. | |||||||||||||||||
D. INTANGIBLE ASSETS | |||||||||||||||||
In accordance with GAAP guidelines, the amortization of goodwill and indefinite-lived intangible assets is not permitted. Goodwill and indefinite-lived intangible assets remain on the balance sheet and are tested for impairment on an annual basis, or earlier if there is reason to suspect that their values may have been diminished or impaired. Goodwill and intangible assets totaled $72.5 million at March 31, 2015. | |||||||||||||||||
Goodwill and intangible assets resulting from acquisitions completed prior to 2011 totaled $26.2 million and is attributable to our surety segment. Of this $26.2 million, $25.6 million relates to goodwill and $0.6 million relates to an indefinite-lived intangible asset. Goodwill and intangible assets resulting from the Contractors Bonding and Insurance Company (CBIC) acquisition in April 2011 totaled $30.5 million. The CBIC-related assets include goodwill attributable to our casualty and surety segments of $5.3 million and $15.1 million, respectively, and an indefinite-lived intangible asset in the amount of $7.5 million, which relates to state insurance licenses. Impairment testing is performed on each of these goodwill and indefinite-lived intangible assets during the second quarter of each year. There were no triggering events that occurred during the first quarter of 2015 that would suggest an updated review was necessary. Definite-lived intangible assets related to the CBIC acquisition totaled $2.6 million, net of amortization, as of March 31, 2015. | |||||||||||||||||
The remaining $15.8 million of goodwill and intangibles relates to our purchase of Rockbridge Underwriting Agency (Rockbridge) in November 2012. Of this amount, $12.4 million is recorded as goodwill attributable to our casualty segment. The remaining $3.4 million relates to definite-lived intangible assets, net of amortization, as of March 31, 2015. Impairment testing is performed on this goodwill asset in the fourth quarter of each year. There were no triggering events that occurred during the first quarter of 2015 that would suggest an updated review was necessary. | |||||||||||||||||
The aforementioned definite-lived intangible assets are amortized against future operating results based on their estimated useful lives. Amortization of intangible assets resulting from the acquisitions of CBIC and Rockbridge was $0.2 million for the first quarter of 2015. | |||||||||||||||||
E. 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 March 31, 2015 | Ended March 31, 2014 | ||||||||||||||||
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 | $ | 30,598 | 43,141 | $ | 0.71 | $ | 28,969 | 42,985 | $ | 0.67 | |||||||
Effect of Dilutive Securities | |||||||||||||||||
Stock options | - | 851 | - | 689 | |||||||||||||
Diluted EPS | |||||||||||||||||
Income available to common shareholders | $ | 30,598 | 43,992 | $ | 0.70 | $ | 28,969 | 43,674 | $ | 0.66 | |||||||
F. COMPREHENSIVE EARNINGS | |||||||||||||||||
Our comprehensive earnings include net earnings plus unrealized gains/losses on our available-for-sale investment securities, net of tax. In reporting comprehensive earnings on a net basis in the statement of earnings, we used the federal statutory tax rate of 35 percent. 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. | |||||||||||||||||
(in thousands) | For the Three-Month Periods | ||||||||||||||||
Ended March 31, | |||||||||||||||||
Unrealized Gains/Losses on Available-for-Sale Securities | 2015 | 2014 | |||||||||||||||
Beginning balance | $ | 171,383 | $ | 136,027 | |||||||||||||
Other comprehensive earnings before reclassifications | 996 | 21,960 | |||||||||||||||
Amounts reclassified from accumulated other comprehensive earnings | -8,591 | -4,223 | |||||||||||||||
Net current-period other comprehensive earnings | $ | -7,595 | $ | 17,737 | |||||||||||||
Ending balance | $ | 163,788 | $ | 153,764 | |||||||||||||
The sale or other-than-temporary impairment of an available-for-sale security results in amounts being reclassified from accumulated other comprehensive earnings to current period net earnings. The effects of reclassifications out of accumulated other comprehensive earnings by the respective line items of net earnings are presented in the following table. | |||||||||||||||||
Amount Reclassified from Accumulated Other | |||||||||||||||||
(in thousands) | Comprehensive Earnings | ||||||||||||||||
For the Three-Month | |||||||||||||||||
Component of Accumulated | Periods Ended March 31, | Affected line item in the | |||||||||||||||
Other Comprehensive Earnings | 2015 | 2014 | Statement of Earnings | ||||||||||||||
Unrealized gains and losses on available-for-sale securities | $ | 13,217 | $ | 6,497 | Net realized investment gains | ||||||||||||
- | - | Other-than-temporary impairment (OTTI) losses on investments | |||||||||||||||
$ | 13,217 | $ | 6,497 | Earnings before income taxes | |||||||||||||
-4,626 | -2,274 | Income tax expense | |||||||||||||||
$ | 8,591 | $ | 4,223 | Net earnings | |||||||||||||
INVESTMENTS
INVESTMENTS | 3 Months Ended | ||||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||||
INVESTMENTS | |||||||||||||||||||
INVESTMENTS | 2. INVESTMENTS | ||||||||||||||||||
Our investments include fixed income debt securities and common stock equity securities. As disclosed in our 2014 Annual Report on Form 10-K, we present all of our investments as available-for-sale, which are carried at fair value. During the fourth quarter of 2014, we sold our last remaining fixed income security that was classified as held-to-maturity. 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.” | |||||||||||||||||||
The following tables show the amortized cost, unrealized gains/losses, fair value and contractual maturities for our available-for-sale securities. | |||||||||||||||||||
Available-for-Sale Securities | |||||||||||||||||||
The amortized cost and fair value of available-for-sale securities at March 31, 2015 and December 31, 2014 were as follows: | |||||||||||||||||||
Available-for-sale | |||||||||||||||||||
(in thousands) | |||||||||||||||||||
3/31/15 | |||||||||||||||||||
Cost or | Gross | Gross | |||||||||||||||||
Amortized | Unrealized | Unrealized | Fair | ||||||||||||||||
Asset Class | Cost | Gains | Losses | Value | |||||||||||||||
U.S. government | $ | 33,313 | $ | 279 | $ | - | $ | 33,592 | |||||||||||
U.S. agency | 13,498 | 554 | - | 14,052 | |||||||||||||||
Non-U.S. govt. & agency | 1,892 | 125 | - | 2,017 | |||||||||||||||
Agency MBS | 244,344 | 10,480 | -510 | 254,314 | |||||||||||||||
ABS/CMBS* | 125,847 | 2,298 | -223 | 127,922 | |||||||||||||||
Corporate | 593,814 | 25,378 | -3,130 | 616,062 | |||||||||||||||
Municipal | 463,355 | 18,517 | -272 | 481,600 | |||||||||||||||
Total Fixed Income | $ | 1,476,063 | $ | 57,631 | $ | -4,135 | $ | 1,529,559 | |||||||||||
Equity | $ | 191,993 | $ | 200,630 | $ | -960 | $ | 391,663 | |||||||||||
Available-for-sale | |||||||||||||||||||
(in thousands) | |||||||||||||||||||
12/31/14 | |||||||||||||||||||
Cost or | Gross | Gross | |||||||||||||||||
Amortized | Unrealized | Unrealized | Fair | ||||||||||||||||
Asset Class | Cost | Gains | Losses | Value | |||||||||||||||
U.S. government | $ | 33,668 | $ | 131 | $ | -11 | $ | 33,788 | |||||||||||
U.S. agency | 6,385 | 362 | - | 6,747 | |||||||||||||||
Non-U.S. govt. & agency | 9,862 | 803 | - | 10,665 | |||||||||||||||
Agency MBS | 256,443 | 9,401 | -1,376 | 264,468 | |||||||||||||||
ABS/CMBS* | 133,894 | 1,821 | -411 | 135,304 | |||||||||||||||
Corporate | 543,183 | 23,697 | -4,190 | 562,690 | |||||||||||||||
Municipal | 464,769 | 16,789 | -133 | 481,425 | |||||||||||||||
Total Fixed Income | $ | 1,448,204 | $ | 53,004 | $ | -6,121 | $ | 1,495,087 | |||||||||||
Equity | $ | 193,535 | $ | 218,105 | $ | -998 | $ | 410,642 | |||||||||||
*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 March 31, 2015: | |||||||||||||||||||
3/31/15 | |||||||||||||||||||
AFS | Amortized | Fair | |||||||||||||||||
(in thousands) | Cost | Value | |||||||||||||||||
Due in one year or less | $ | 15,466 | $ | 15,604 | |||||||||||||||
Due after one year through five years | 240,318 | 249,737 | |||||||||||||||||
Due after five years through 10 years | 571,095 | 592,340 | |||||||||||||||||
Due after 10 years | 278,993 | 289,642 | |||||||||||||||||
Mtge/ABS/CMBS* | 370,191 | 382,236 | |||||||||||||||||
Total available-for-sale | $ | 1,476,063 | $ | 1,529,559 | |||||||||||||||
*Mortgage-backed, asset-backed and commercial mortgage-backed | |||||||||||||||||||
Unrealized Losses | |||||||||||||||||||
We conduct and document periodic reviews of all 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 securities that were in an unrealized loss position as of March 31, 2015 and December 31, 2014. 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 March 31, 2015 unrealized losses, as shown in the following tables, were 0.3 percent of total invested assets. Unrealized losses decreased in 2015, as interest rates declined during the first quarter of the year. | |||||||||||||||||||
March 31, 2015 | December 31, 2014 | ||||||||||||||||||
(in thousands) | < 12 Mos. | 12 Mos. & | Total | < 12 Mos. | 12 Mos. & | Total | |||||||||||||
Greater | Greater | ||||||||||||||||||
U.S. Government | |||||||||||||||||||
Fair value | $ | — | $ | — | $ | — | $ | 4,416 | $ | — | $ | 4,416 | |||||||
Cost or amortized cost | — | — | — | 4,427 | — | 4,427 | |||||||||||||
Unrealized Loss | $ | — | $ | — | $ | — | $ | -11 | $ | — | $ | -11 | |||||||
Agency MBS | |||||||||||||||||||
Fair value | $ | 15,867 | $ | 15,778 | $ | 31,645 | $ | 12,840 | $ | 61,534 | $ | 74,374 | |||||||
Cost or amortized cost | 15,976 | 16,179 | 32,155 | 12,947 | 62,803 | 75,750 | |||||||||||||
Unrealized Loss | $ | -109 | $ | -401 | $ | -510 | $ | -107 | $ | -1,269 | $ | -1,376 | |||||||
ABS/CMBS* | |||||||||||||||||||
Fair value | $ | 33,838 | $ | 11,464 | $ | 45,302 | $ | 63,782 | $ | 11,616 | $ | 75,398 | |||||||
Cost or amortized cost | 34,014 | 11,511 | 45,525 | 64,084 | 11,725 | 75,809 | |||||||||||||
Unrealized Loss | $ | -176 | $ | -47 | $ | -223 | $ | -302 | $ | -109 | $ | -411 | |||||||
Corporate | |||||||||||||||||||
Fair value | $ | 69,222 | $ | 9,796 | $ | 79,018 | $ | 123,617 | $ | 14,488 | $ | 138,105 | |||||||
Cost or amortized cost | 72,219 | 9,929 | 82,148 | 127,634 | 14,661 | 142,295 | |||||||||||||
Unrealized Loss | $ | -2,997 | $ | -133 | $ | -3,130 | $ | -4,017 | $ | -173 | $ | -4,190 | |||||||
Municipal | |||||||||||||||||||
Fair value | $ | 22,189 | $ | — | $ | 22,189 | $ | 12,382 | $ | 19,019 | $ | 31,401 | |||||||
Cost or amortized cost | 22,461 | — | 22,461 | 12,411 | 19,123 | 31,534 | |||||||||||||
Unrealized Loss | $ | -272 | $ | — | $ | -272 | $ | -29 | $ | -104 | $ | -133 | |||||||
Subtotal, fixed income | |||||||||||||||||||
Fair value | $ | 141,116 | $ | 37,038 | $ | 178,154 | $ | 217,037 | $ | 106,657 | $ | 323,694 | |||||||
Cost or amortized cost | 144,670 | 37,619 | 182,289 | 221,503 | 108,312 | 329,815 | |||||||||||||
Unrealized Loss | $ | -3,554 | $ | -581 | $ | -4,135 | $ | -4,466 | $ | -1,655 | $ | -6,121 | |||||||
Equity securities | |||||||||||||||||||
Fair value | $ | 13,135 | $ | — | $ | 13,135 | $ | 10,837 | $ | — | $ | 10,837 | |||||||
Cost or amortized cost | 14,095 | — | 14,095 | 11,835 | — | 11,835 | |||||||||||||
Unrealized Loss | $ | -960 | $ | — | $ | -960 | $ | -998 | $ | — | $ | -998 | |||||||
Total | |||||||||||||||||||
Fair value | $ | 154,251 | $ | 37,038 | $ | 191,289 | $ | 227,874 | $ | 106,657 | $ | 334,531 | |||||||
Cost or amortized cost | 158,765 | 37,619 | 196,384 | 233,338 | 108,312 | 341,650 | |||||||||||||
Unrealized Loss | $ | -4,514 | $ | -581 | $ | -5,095 | $ | -5,464 | $ | -1,655 | $ | -7,119 | |||||||
* Non-agency asset-backed and commercial mortgage-backed | |||||||||||||||||||
The following table shows the composition of the fixed income securities in unrealized loss positions at March 31, 2015 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 | $ | 128,145 | $ | 126,749 | $ | -1,396 | 33.8 | % | |||||||||
2 | BBB | Baa | 17,721 | 16,908 | -813 | 19.7 | % | ||||||||||||
3 | BB | Ba | 21,179 | 20,096 | -1,083 | 26.2 | % | ||||||||||||
4 | B | B | 14,884 | 14,072 | -812 | 19.6 | % | ||||||||||||
5 | CCC or lower | Caa or lower | 360 | 329 | -31 | 0.7 | % | ||||||||||||
6 | — | — | — | — | |||||||||||||||
Total | $ | 182,289 | $ | 178,154 | $ | -4,135 | 100.0 | % | |||||||||||
Evaluating Investments for OTTI | |||||||||||||||||||
The fixed income portfolio contained 154 securities in an unrealized loss position as of March 31, 2015. The $4.1 million in associated unrealized losses for these 154 securities represents 0.3 percent of the fixed income portfolio’s cost basis. Of these 154 securities, 33 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. There were no other-than-temporary impairment (OTTI) losses recognized in net earnings or other comprehensive earnings in the periods presented on the fixed income portfolio. | |||||||||||||||||||
As of March 31, 2015, we held four common stock securities that were in an unrealized loss position. The unrealized loss on these securities was $1.0 million. Based on our analysis, we believe each security will recover in a reasonable period of time and we have the intent and ability to hold them until recovery. No equity securities have been in an unrealized loss position for 12 consecutive months or longer. There were no OTTI losses recognized in the periods presented on the equity portfolio. | |||||||||||||||||||
Other Invested Assets | |||||||||||||||||||
Other invested assets include an investment in a low income housing tax credit partnership, carried at amortized cost, and membership in the Federal Home Loan Bank Chicago (FHLBC), carried at cost. Our interest in a low income housing tax credit partnership had a balance of $9.6 million at March 31, 2015 compared to $9.8 million at December 31, 2014 and recognized a total tax benefit of $0.3 million during the first quarter of 2015. Our investment in FHLBC stock totaled $1.8 million at March 31, 2015 and December 31, 2014. | |||||||||||||||||||
Cash and Short-term Investments | |||||||||||||||||||
Cash consists of uninvested balances in bank accounts. We had a cash balance of $31.5 million at the end of the first quarter of 2015, compared to $30.6 million at the end of 2014. Short-term investments are carried at cost, which approximates fair value. The balance at March 31, 2015 was $16.0 million compared to $16.3 million at December 31, 2014. | |||||||||||||||||||
FAIR_VALUE_MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended | ||||||||||||
Mar. 31, 2015 | |||||||||||||
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. GAAP guidance requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The guidance also describes three levels of inputs that may be used to measure 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 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. | |||||||||||||
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 March 31, 2015 | |||||||||||||
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 | |||||||||
Available-for-sale securities | |||||||||||||
U.S. government | $ | — | $ | 33,592 | $ | — | $ | 33,592 | |||||
U.S. agency | — | 14,052 | — | 14,052 | |||||||||
Non-U.S. govt. & agency | — | 2,017 | — | 2,017 | |||||||||
Agency MBS | — | 254,314 | — | 254,314 | |||||||||
ABS/CMBS* | — | 127,922 | — | 127,922 | |||||||||
Corporate | — | 616,062 | — | 616,062 | |||||||||
Municipal | — | 481,600 | — | 481,600 | |||||||||
Equity | 391,663 | — | — | 391,663 | |||||||||
Total available-for-sale securities | $ | 391,663 | $ | 1,529,559 | $ | — | $ | 1,921,222 | |||||
*Non-agency asset-backed and commercial mortgage-backed | |||||||||||||
As of December 31, 2014 | |||||||||||||
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 | |||||||||
Available-for-sale securities | |||||||||||||
U.S. government | $ | — | $ | 33,788 | $ | — | $ | 33,788 | |||||
U.S. agency | — | 6,747 | — | 6,747 | |||||||||
Non-U.S. govt. & agency | — | 10,665 | — | 10,665 | |||||||||
Agency MBS | — | 264,468 | — | 264,468 | |||||||||
ABS/CMBS* | — | 135,304 | — | 135,304 | |||||||||
Corporate | — | 562,690 | — | 562,690 | |||||||||
Municipal | — | 481,425 | — | 481,425 | |||||||||
Equity | 410,642 | — | — | 410,642 | |||||||||
Total available-for-sale securities | $ | 410,642 | $ | 1,495,087 | $ | — | $ | 1,905,729 | |||||
* 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 three-month period ended March 31, 2015. | |||||||||||||
STOCK_BASED_COMPENSATION
STOCK BASED COMPENSATION | 3 Months Ended | ||||||||||
Mar. 31, 2015 | |||||||||||
STOCK BASED COMPENSATION | |||||||||||
STOCK BASED COMPENSATION | 4. 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 (LTIP), which provides for equity-based compensation and replaced the omnibus plan. In conjunction with the adoption of the LTIP, effective May 6, 2010, options were no longer granted under the omnibus plan. Awards under the LTIP may be in the form of restricted stock, stock options (non-qualified only), stock appreciation rights, performance units, as well as other stock-based awards. Eligibility under the LTIP is limited to employees or directors of the company or any affiliate. The granting of awards under the LTIP is solely at the discretion of the board of directors. The maximum number of shares of common stock available for distribution under the LTIP is 4,000,000 shares (subject to adjustment for changes in our capitalization and other events). Since 2010, we have granted 2,878,000 stock options under the LTIP, including 53,500 thus far in 2015. | |||||||||||
Under the LTIP, as under the 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 March 31, 2015 and 2014: | |||||||||||
Weighted | |||||||||||
Weighted | Average | Aggregate | |||||||||
Number of | Average | Remaining | Intrinsic | ||||||||
Options | Exercise | Contractual | Value | ||||||||
Outstanding | Price | Life | (in 000’s) | ||||||||
Outstanding options at January 1, 2015 | 2,892,717 | $ | 26.65 | ||||||||
Options granted | 53,500 | $ | 48.82 | ||||||||
Options exercised | -148,952 | $ | 16.66 | $ | 4,908 | ||||||
Options canceled/forfeited | -3,760 | $ | 30.09 | ||||||||
Outstanding options at March 31, 2015 | 2,793,505 | $ | 27.60 | 5.11 | $ | 69,299 | |||||
Exercisable options at March 31, 2015 | 1,141,065 | $ | 20.84 | 3.90 | $ | 36,022 | |||||
Weighted | |||||||||||
Weighted | Average | Aggregate | |||||||||
Number of | Average | Remaining | Intrinsic | ||||||||
Options | Exercise | Contractual | Value | ||||||||
Outstanding | Price | Life | (in 000’s) | ||||||||
Outstanding options at January 1, 2014 | 2,595,084 | $ | 26.04 | ||||||||
Options granted | 50,500 | $ | 40.43 | ||||||||
Options exercised | -4,700 | $ | 18.53 | $ | 115 | ||||||
Options canceled/forfeited | -740 | $ | 16.51 | ||||||||
Outstanding options at March 31, 2014 | 2,640,144 | $ | 26.33 | 5.36 | $ | 47,359 | |||||
Exercisable options at March 31, 2014 | 972,284 | $ | 20.66 | 4.07 | $ | 22,927 | |||||
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 2015, 53,500 stock options were granted with a weighted average exercise price of $48.82 and a weighted average fair value of $8.97. We recognized $0.9 million of expense in the first three months of 2015 related to options vesting. Since options granted under our LTIP are non-qualified, we recorded a tax benefit of $0.3 million in the first three months of 2015 related to this compensation expense. Total unrecognized compensation expense relating to outstanding and unvested options was $4.3 million, which will be recognized over the remainder of the vesting period. Comparatively, we recognized $0.9 million of expense in the first three months of 2014 and a tax benefit of $0.3 million 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 March 31: | |||||||||||
2015 | 2014 | ||||||||||
Weighted-average fair value of grants | $ | 8.97 | $ | 8.14 | |||||||
Risk-free interest rates | 1.19 | % | 1.76 | % | |||||||
Dividend yield | 1.80 | % | 1.92 | % | |||||||
Expected volatility | 22.98 | % | 25.20 | % | |||||||
Expected option life | 5.43 | years | 5.66 | 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 calculated based on the average annualized dividends paid during the most recent five-year period. It excluded the special dividends paid in the fourth quarters of 2014 and prior years. In 2015, the expected volatility was calculated based on the median of the rolling volatilities for the expected life of the options. In 2014, expected volatility was calculated based on the mean reversion of RLI’s stock. 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. | |||||||||||
During the first quarter of 2014, each outside director received $10,000 worth of restricted common shares from the LTIP as part of director compensation. The shares were directly owned by each director on the date of issuance and included a one-year restriction on the sale or transfer of such shares. In the first quarter of 2014, we issued a total of 2,097 restricted shares and recognized $0.1 million of compensation expense. This restricted share program was terminated in 2014. | |||||||||||
OPERATING_SEGMENT_INFORMATION
OPERATING SEGMENT INFORMATION | 3 Months Ended | ||||||
Mar. 31, 2015 | |||||||
OPERATING SEGMENT INFORMATION | |||||||
OPERATING SEGMENT INFORMATION | 5. 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 | |||||||
REVENUES | Ended March 31, | ||||||
(in thousands) | 2015 | 2014 | |||||
Net premiums earned: | |||||||
Casualty | $ | 98,768 | $ | 90,977 | |||
Property | 42,118 | 43,318 | |||||
Surety | 28,117 | 26,837 | |||||
Segment totals before income taxes | $ | 169,003 | $ | 161,132 | |||
Net investment income | 13,495 | 13,582 | |||||
Net realized gains | 13,286 | 6,501 | |||||
Total consolidated revenue | $ | 195,784 | $ | 181,215 | |||
NET EARNINGS | |||||||
(in thousands) | 2015 | 2014 | |||||
Casualty | $ | 5,272 | $ | 6,078 | |||
Property | 8,176 | 9,678 | |||||
Surety | 4,190 | 6,776 | |||||
Net underwriting income | $ | 17,638 | $ | 22,532 | |||
Net investment income | 13,495 | 13,582 | |||||
Net realized gains | 13,286 | 6,501 | |||||
General corporate expense and interest on debt | -4,100 | -4,049 | |||||
Equity in earnings of unconsolidated investees | 4,194 | 3,425 | |||||
Total earnings before income taxes | $ | 44,513 | $ | 41,991 | |||
Income tax expense | 13,915 | 13,022 | |||||
Total net earnings | $ | 30,598 | $ | 28,969 | |||
The following table further summarizes revenues by major product type within each operating segment: | |||||||
For the Three-Month Periods | |||||||
NET PREMIUMS EARNED | Ended March 31, | ||||||
(in thousands) | 2015 | 2014 | |||||
Casualty | |||||||
Commercial and personal umbrella | $ | 25,297 | $ | 24,756 | |||
General liability | 19,972 | 19,932 | |||||
Professional services | 17,080 | 12,861 | |||||
Commercial transportation | 14,681 | 14,511 | |||||
P&C package business | 9,649 | 8,283 | |||||
Executive products | 4,685 | 4,684 | |||||
Medical professional liability | 3,104 | 3,700 | |||||
Other casualty | 4,300 | 2,250 | |||||
Total | $ | 98,768 | $ | 90,977 | |||
Property | |||||||
Commercial property | $ | 19,903 | $ | 20,433 | |||
Marine | 11,917 | 12,201 | |||||
Specialty personal | 6,790 | 6,108 | |||||
Property reinsurance | 3,017 | 3,361 | |||||
Crop reinsurance | 465 | 1,186 | |||||
Other property | 26 | 29 | |||||
Total | $ | 42,118 | $ | 43,318 | |||
Surety | |||||||
Miscellaneous | $ | 10,168 | $ | 9,482 | |||
Commercial | 6,901 | 6,134 | |||||
Contract | 6,830 | 6,761 | |||||
Oil and Gas | 4,218 | 4,460 | |||||
Total | $ | 28,117 | $ | 26,837 | |||
Grand Total | $ | 169,003 | $ | 161,132 | |||
ACQUISITION
ACQUISITION | 3 Months Ended |
Mar. 31, 2015 | |
ACQUISITIONS | |
ACQUISITIONS | 6. ACQUISITION |
On February 5, 2014, we invested $5.3 million for a 20 percent equity ownership interest in Prime Holdings Insurance Services, Inc. (Prime), an Illinois domiciled insurance carrier based in Salt Lake City, Utah. On March 4, 2015 we invested an additional $1.7 million, increasing our total equity ownership to 27 percent. Prime’s primary subsidiary, Prime Insurance Company, is a privately-held excess and surplus lines insurance company operating in 49 states and territories through a network of wholesale brokers and specializing in hard-to-place risks. The investment in Prime is reflected on our balance sheet as an investment in unconsolidated investee. Under the equity method of accounting we recognize our proportionate share of Prime’s income as equity in earnings of unconsolidated investees. Our share of Prime’s earnings amounted to $0.5 million and $0.1 million in the first quarter of 2015 and 2014, respectively. | |
Additionally, we entered into a 25 percent quota share reinsurance treaty with Prime’s two insurance subsidiaries, effective January 1, 2014. We assumed gross premiums of $3.0 million and $2.5 million related to this quota share agreement in the first quarter of 2015 and 2014, respectively. | |
SUMMARY_OF_SIGNIFICANT_ACCOUNT1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||||||||||||||
BASIS OF PRESENTATION | A. 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 2014 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 March 31, 2015 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. | |||||||||||||||||
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. | |||||||||||||||||
INTANGIBLE ASSETS | D. INTANGIBLE ASSETS | ||||||||||||||||
In accordance with GAAP guidelines, the amortization of goodwill and indefinite-lived intangible assets is not permitted. Goodwill and indefinite-lived intangible assets remain on the balance sheet and are tested for impairment on an annual basis, or earlier if there is reason to suspect that their values may have been diminished or impaired. Goodwill and intangible assets totaled $72.5 million at March 31, 2015. | |||||||||||||||||
Goodwill and intangible assets resulting from acquisitions completed prior to 2011 totaled $26.2 million and is attributable to our surety segment. Of this $26.2 million, $25.6 million relates to goodwill and $0.6 million relates to an indefinite-lived intangible asset. Goodwill and intangible assets resulting from the Contractors Bonding and Insurance Company (CBIC) acquisition in April 2011 totaled $30.5 million. The CBIC-related assets include goodwill attributable to our casualty and surety segments of $5.3 million and $15.1 million, respectively, and an indefinite-lived intangible asset in the amount of $7.5 million, which relates to state insurance licenses. Impairment testing is performed on each of these goodwill and indefinite-lived intangible assets during the second quarter of each year. There were no triggering events that occurred during the first quarter of 2015 that would suggest an updated review was necessary. Definite-lived intangible assets related to the CBIC acquisition totaled $2.6 million, net of amortization, as of March 31, 2015. | |||||||||||||||||
The remaining $15.8 million of goodwill and intangibles relates to our purchase of Rockbridge Underwriting Agency (Rockbridge) in November 2012. Of this amount, $12.4 million is recorded as goodwill attributable to our casualty segment. The remaining $3.4 million relates to definite-lived intangible assets, net of amortization, as of March 31, 2015. Impairment testing is performed on this goodwill asset in the fourth quarter of each year. There were no triggering events that occurred during the first quarter of 2015 that would suggest an updated review was necessary. | |||||||||||||||||
The aforementioned definite-lived intangible assets are amortized against future operating results based on their estimated useful lives. Amortization of intangible assets resulting from the acquisitions of CBIC and Rockbridge was $0.2 million for the first quarter of 2015. | |||||||||||||||||
EARNINGS PER SHARE | E. 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 March 31, 2015 | Ended March 31, 2014 | ||||||||||||||||
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 | $ | 30,598 | 43,141 | $ | 0.71 | $ | 28,969 | 42,985 | $ | 0.67 | |||||||
Effect of Dilutive Securities | |||||||||||||||||
Stock options | - | 851 | - | 689 | |||||||||||||
Diluted EPS | |||||||||||||||||
Income available to common shareholders | $ | 30,598 | 43,992 | $ | 0.70 | $ | 28,969 | 43,674 | $ | 0.66 | |||||||
COMPREHENSIVE EARNINGS | F. COMPREHENSIVE EARNINGS | ||||||||||||||||
Our comprehensive earnings include net earnings plus unrealized gains/losses on our available-for-sale investment securities, net of tax. In reporting comprehensive earnings on a net basis in the statement of earnings, we used the federal statutory tax rate of 35 percent. 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. | |||||||||||||||||
(in thousands) | For the Three-Month Periods | ||||||||||||||||
Ended March 31, | |||||||||||||||||
Unrealized Gains/Losses on Available-for-Sale Securities | 2015 | 2014 | |||||||||||||||
Beginning balance | $ | 171,383 | $ | 136,027 | |||||||||||||
Other comprehensive earnings before reclassifications | 996 | 21,960 | |||||||||||||||
Amounts reclassified from accumulated other comprehensive earnings | -8,591 | -4,223 | |||||||||||||||
Net current-period other comprehensive earnings | $ | -7,595 | $ | 17,737 | |||||||||||||
Ending balance | $ | 163,788 | $ | 153,764 | |||||||||||||
The sale or other-than-temporary impairment of an available-for-sale security results in amounts being reclassified from accumulated other comprehensive earnings to current period net earnings. The effects of reclassifications out of accumulated other comprehensive earnings by the respective line items of net earnings are presented in the following table. | |||||||||||||||||
Amount Reclassified from Accumulated Other | |||||||||||||||||
(in thousands) | Comprehensive Earnings | ||||||||||||||||
For the Three-Month | |||||||||||||||||
Component of Accumulated | Periods Ended March 31, | Affected line item in the | |||||||||||||||
Other Comprehensive Earnings | 2015 | 2014 | Statement of Earnings | ||||||||||||||
Unrealized gains and losses on available-for-sale securities | $ | 13,217 | $ | 6,497 | Net realized investment gains | ||||||||||||
- | - | Other-than-temporary impairment (OTTI) losses on investments | |||||||||||||||
$ | 13,217 | $ | 6,497 | Earnings before income taxes | |||||||||||||
-4,626 | -2,274 | Income tax expense | |||||||||||||||
$ | 8,591 | $ | 4,223 | Net earnings | |||||||||||||
SUMMARY_OF_SIGNIFICANT_ACCOUNT2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||||||||||||||
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 March 31, 2015 | Ended March 31, 2014 | ||||||||||||||||
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 | $ | 30,598 | 43,141 | $ | 0.71 | $ | 28,969 | 42,985 | $ | 0.67 | |||||||
Effect of Dilutive Securities | |||||||||||||||||
Stock options | - | 851 | - | 689 | |||||||||||||
Diluted EPS | |||||||||||||||||
Income available to common shareholders | $ | 30,598 | 43,992 | $ | 0.70 | $ | 28,969 | 43,674 | $ | 0.66 | |||||||
Schedule of changes in the balance of each component of accumulated other comprehensive earnings | |||||||||||||||||
(in thousands) | For the Three-Month Periods | ||||||||||||||||
Ended March 31, | |||||||||||||||||
Unrealized Gains/Losses on Available-for-Sale Securities | 2015 | 2014 | |||||||||||||||
Beginning balance | $ | 171,383 | $ | 136,027 | |||||||||||||
Other comprehensive earnings before reclassifications | 996 | 21,960 | |||||||||||||||
Amounts reclassified from accumulated other comprehensive earnings | -8,591 | -4,223 | |||||||||||||||
Net current-period other comprehensive earnings | $ | -7,595 | $ | 17,737 | |||||||||||||
Ending balance | $ | 163,788 | $ | 153,764 | |||||||||||||
Schedule of effects of reclassifications out of accumulated other comprehensive earnings | |||||||||||||||||
Amount Reclassified from Accumulated Other | |||||||||||||||||
(in thousands) | Comprehensive Earnings | ||||||||||||||||
For the Three-Month | |||||||||||||||||
Component of Accumulated | Periods Ended March 31, | Affected line item in the | |||||||||||||||
Other Comprehensive Earnings | 2015 | 2014 | Statement of Earnings | ||||||||||||||
Unrealized gains and losses on available-for-sale securities | $ | 13,217 | $ | 6,497 | Net realized investment gains | ||||||||||||
- | - | Other-than-temporary impairment (OTTI) losses on investments | |||||||||||||||
$ | 13,217 | $ | 6,497 | Earnings before income taxes | |||||||||||||
-4,626 | -2,274 | Income tax expense | |||||||||||||||
$ | 8,591 | $ | 4,223 | Net earnings | |||||||||||||
INVESTMENTS_Tables
INVESTMENTS (Tables) | 3 Months Ended | ||||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||||
INVESTMENTS | |||||||||||||||||||
Schedule of securities in an unrealized loss position segregated by type and length of time in an unrealized loss position | |||||||||||||||||||
March 31, 2015 | December 31, 2014 | ||||||||||||||||||
(in thousands) | < 12 Mos. | 12 Mos. & | Total | < 12 Mos. | 12 Mos. & | Total | |||||||||||||
Greater | Greater | ||||||||||||||||||
U.S. Government | |||||||||||||||||||
Fair value | $ | — | $ | — | $ | — | $ | 4,416 | $ | — | $ | 4,416 | |||||||
Cost or amortized cost | — | — | — | 4,427 | — | 4,427 | |||||||||||||
Unrealized Loss | $ | — | $ | — | $ | — | $ | -11 | $ | — | $ | -11 | |||||||
Agency MBS | |||||||||||||||||||
Fair value | $ | 15,867 | $ | 15,778 | $ | 31,645 | $ | 12,840 | $ | 61,534 | $ | 74,374 | |||||||
Cost or amortized cost | 15,976 | 16,179 | 32,155 | 12,947 | 62,803 | 75,750 | |||||||||||||
Unrealized Loss | $ | -109 | $ | -401 | $ | -510 | $ | -107 | $ | -1,269 | $ | -1,376 | |||||||
ABS/CMBS* | |||||||||||||||||||
Fair value | $ | 33,838 | $ | 11,464 | $ | 45,302 | $ | 63,782 | $ | 11,616 | $ | 75,398 | |||||||
Cost or amortized cost | 34,014 | 11,511 | 45,525 | 64,084 | 11,725 | 75,809 | |||||||||||||
Unrealized Loss | $ | -176 | $ | -47 | $ | -223 | $ | -302 | $ | -109 | $ | -411 | |||||||
Corporate | |||||||||||||||||||
Fair value | $ | 69,222 | $ | 9,796 | $ | 79,018 | $ | 123,617 | $ | 14,488 | $ | 138,105 | |||||||
Cost or amortized cost | 72,219 | 9,929 | 82,148 | 127,634 | 14,661 | 142,295 | |||||||||||||
Unrealized Loss | $ | -2,997 | $ | -133 | $ | -3,130 | $ | -4,017 | $ | -173 | $ | -4,190 | |||||||
Municipal | |||||||||||||||||||
Fair value | $ | 22,189 | $ | — | $ | 22,189 | $ | 12,382 | $ | 19,019 | $ | 31,401 | |||||||
Cost or amortized cost | 22,461 | — | 22,461 | 12,411 | 19,123 | 31,534 | |||||||||||||
Unrealized Loss | $ | -272 | $ | — | $ | -272 | $ | -29 | $ | -104 | $ | -133 | |||||||
Subtotal, fixed income | |||||||||||||||||||
Fair value | $ | 141,116 | $ | 37,038 | $ | 178,154 | $ | 217,037 | $ | 106,657 | $ | 323,694 | |||||||
Cost or amortized cost | 144,670 | 37,619 | 182,289 | 221,503 | 108,312 | 329,815 | |||||||||||||
Unrealized Loss | $ | -3,554 | $ | -581 | $ | -4,135 | $ | -4,466 | $ | -1,655 | $ | -6,121 | |||||||
Equity securities | |||||||||||||||||||
Fair value | $ | 13,135 | $ | — | $ | 13,135 | $ | 10,837 | $ | — | $ | 10,837 | |||||||
Cost or amortized cost | 14,095 | — | 14,095 | 11,835 | — | 11,835 | |||||||||||||
Unrealized Loss | $ | -960 | $ | — | $ | -960 | $ | -998 | $ | — | $ | -998 | |||||||
Total | |||||||||||||||||||
Fair value | $ | 154,251 | $ | 37,038 | $ | 191,289 | $ | 227,874 | $ | 106,657 | $ | 334,531 | |||||||
Cost or amortized cost | 158,765 | 37,619 | 196,384 | 233,338 | 108,312 | 341,650 | |||||||||||||
Unrealized Loss | $ | -4,514 | $ | -581 | $ | -5,095 | $ | -5,464 | $ | -1,655 | $ | -7,119 | |||||||
* 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 | $ | 128,145 | $ | 126,749 | $ | -1,396 | 33.8 | % | |||||||||
2 | BBB | Baa | 17,721 | 16,908 | -813 | 19.7 | % | ||||||||||||
3 | BB | Ba | 21,179 | 20,096 | -1,083 | 26.2 | % | ||||||||||||
4 | B | B | 14,884 | 14,072 | -812 | 19.6 | % | ||||||||||||
5 | CCC or lower | Caa or lower | 360 | 329 | -31 | 0.7 | % | ||||||||||||
6 | — | — | — | — | |||||||||||||||
Total | $ | 182,289 | $ | 178,154 | $ | -4,135 | 100.0 | % | |||||||||||
Available for sale securities | |||||||||||||||||||
INVESTMENTS | |||||||||||||||||||
Schedule of amortized cost and fair value of available-for-sale securities | |||||||||||||||||||
Available-for-sale | |||||||||||||||||||
(in thousands) | |||||||||||||||||||
3/31/15 | |||||||||||||||||||
Cost or | Gross | Gross | |||||||||||||||||
Amortized | Unrealized | Unrealized | Fair | ||||||||||||||||
Asset Class | Cost | Gains | Losses | Value | |||||||||||||||
U.S. government | $ | 33,313 | $ | 279 | $ | - | $ | 33,592 | |||||||||||
U.S. agency | 13,498 | 554 | - | 14,052 | |||||||||||||||
Non-U.S. govt. & agency | 1,892 | 125 | - | 2,017 | |||||||||||||||
Agency MBS | 244,344 | 10,480 | -510 | 254,314 | |||||||||||||||
ABS/CMBS* | 125,847 | 2,298 | -223 | 127,922 | |||||||||||||||
Corporate | 593,814 | 25,378 | -3,130 | 616,062 | |||||||||||||||
Municipal | 463,355 | 18,517 | -272 | 481,600 | |||||||||||||||
Total Fixed Income | $ | 1,476,063 | $ | 57,631 | $ | -4,135 | $ | 1,529,559 | |||||||||||
Equity | $ | 191,993 | $ | 200,630 | $ | -960 | $ | 391,663 | |||||||||||
Available-for-sale | |||||||||||||||||||
(in thousands) | |||||||||||||||||||
12/31/14 | |||||||||||||||||||
Cost or | Gross | Gross | |||||||||||||||||
Amortized | Unrealized | Unrealized | Fair | ||||||||||||||||
Asset Class | Cost | Gains | Losses | Value | |||||||||||||||
U.S. government | $ | 33,668 | $ | 131 | $ | -11 | $ | 33,788 | |||||||||||
U.S. agency | 6,385 | 362 | - | 6,747 | |||||||||||||||
Non-U.S. govt. & agency | 9,862 | 803 | - | 10,665 | |||||||||||||||
Agency MBS | 256,443 | 9,401 | -1,376 | 264,468 | |||||||||||||||
ABS/CMBS* | 133,894 | 1,821 | -411 | 135,304 | |||||||||||||||
Corporate | 543,183 | 23,697 | -4,190 | 562,690 | |||||||||||||||
Municipal | 464,769 | 16,789 | -133 | 481,425 | |||||||||||||||
Total Fixed Income | $ | 1,448,204 | $ | 53,004 | $ | -6,121 | $ | 1,495,087 | |||||||||||
Equity | $ | 193,535 | $ | 218,105 | $ | -998 | $ | 410,642 | |||||||||||
*Non-agency asset-backed and commercial mortgage-backed | |||||||||||||||||||
Schedule of contractual maturity of securities | |||||||||||||||||||
3/31/15 | |||||||||||||||||||
AFS | Amortized | Fair | |||||||||||||||||
(in thousands) | Cost | Value | |||||||||||||||||
Due in one year or less | $ | 15,466 | $ | 15,604 | |||||||||||||||
Due after one year through five years | 240,318 | 249,737 | |||||||||||||||||
Due after five years through 10 years | 571,095 | 592,340 | |||||||||||||||||
Due after 10 years | 278,993 | 289,642 | |||||||||||||||||
Mtge/ABS/CMBS* | 370,191 | 382,236 | |||||||||||||||||
Total available-for-sale | $ | 1,476,063 | $ | 1,529,559 | |||||||||||||||
*Mortgage-backed, asset-backed and commercial mortgage-backed | |||||||||||||||||||
FAIR_VALUE_MEASUREMENTS_Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended | ||||||||||||
Mar. 31, 2015 | |||||||||||||
Accounting Changes and Error Corrections [Abstract] | |||||||||||||
Schedule of assets measured at fair value on recurring basis | |||||||||||||
As of March 31, 2015 | |||||||||||||
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 | |||||||||
Available-for-sale securities | |||||||||||||
U.S. government | $ | — | $ | 33,592 | $ | — | $ | 33,592 | |||||
U.S. agency | — | 14,052 | — | 14,052 | |||||||||
Non-U.S. govt. & agency | — | 2,017 | — | 2,017 | |||||||||
Agency MBS | — | 254,314 | — | 254,314 | |||||||||
ABS/CMBS* | — | 127,922 | — | 127,922 | |||||||||
Corporate | — | 616,062 | — | 616,062 | |||||||||
Municipal | — | 481,600 | — | 481,600 | |||||||||
Equity | 391,663 | — | — | 391,663 | |||||||||
Total available-for-sale securities | $ | 391,663 | $ | 1,529,559 | $ | — | $ | 1,921,222 | |||||
*Non-agency asset-backed and commercial mortgage-backed | |||||||||||||
As of December 31, 2014 | |||||||||||||
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 | |||||||||
Available-for-sale securities | |||||||||||||
U.S. government | $ | — | $ | 33,788 | $ | — | $ | 33,788 | |||||
U.S. agency | — | 6,747 | — | 6,747 | |||||||||
Non-U.S. govt. & agency | — | 10,665 | — | 10,665 | |||||||||
Agency MBS | — | 264,468 | — | 264,468 | |||||||||
ABS/CMBS* | — | 135,304 | — | 135,304 | |||||||||
Corporate | — | 562,690 | — | 562,690 | |||||||||
Municipal | — | 481,425 | — | 481,425 | |||||||||
Equity | 410,642 | — | — | 410,642 | |||||||||
Total available-for-sale securities | $ | 410,642 | $ | 1,495,087 | $ | — | $ | 1,905,729 | |||||
* Non-agency asset-backed and commercial mortgage-backed | |||||||||||||
STOCK_BASED_COMPENSATION_Table
STOCK BASED COMPENSATION (Tables) | 3 Months Ended | ||||||||||
Mar. 31, 2015 | |||||||||||
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, 2015 | 2,892,717 | $ | 26.65 | ||||||||
Options granted | 53,500 | $ | 48.82 | ||||||||
Options exercised | -148,952 | $ | 16.66 | $ | 4,908 | ||||||
Options canceled/forfeited | -3,760 | $ | 30.09 | ||||||||
Outstanding options at March 31, 2015 | 2,793,505 | $ | 27.60 | 5.11 | $ | 69,299 | |||||
Exercisable options at March 31, 2015 | 1,141,065 | $ | 20.84 | 3.90 | $ | 36,022 | |||||
Weighted | |||||||||||
Weighted | Average | Aggregate | |||||||||
Number of | Average | Remaining | Intrinsic | ||||||||
Options | Exercise | Contractual | Value | ||||||||
Outstanding | Price | Life | (in 000’s) | ||||||||
Outstanding options at January 1, 2014 | 2,595,084 | $ | 26.04 | ||||||||
Options granted | 50,500 | $ | 40.43 | ||||||||
Options exercised | -4,700 | $ | 18.53 | $ | 115 | ||||||
Options canceled/forfeited | -740 | $ | 16.51 | ||||||||
Outstanding options at March 31, 2014 | 2,640,144 | $ | 26.33 | 5.36 | $ | 47,359 | |||||
Exercisable options at March 31, 2014 | 972,284 | $ | 20.66 | 4.07 | $ | 22,927 | |||||
Schedule of stock option assumptions for fair value estimate | |||||||||||
2015 | 2014 | ||||||||||
Weighted-average fair value of grants | $ | 8.97 | $ | 8.14 | |||||||
Risk-free interest rates | 1.19 | % | 1.76 | % | |||||||
Dividend yield | 1.80 | % | 1.92 | % | |||||||
Expected volatility | 22.98 | % | 25.20 | % | |||||||
Expected option life | 5.43 | years | 5.66 | years | |||||||
OPERATING_SEGMENT_INFORMATION_
OPERATING SEGMENT INFORMATION (Tables) | 3 Months Ended | ||||||
Mar. 31, 2015 | |||||||
OPERATING SEGMENT INFORMATION | |||||||
Schedule of revenues and net earnings by segment | |||||||
For the Three-Month Periods | |||||||
REVENUES | Ended March 31, | ||||||
(in thousands) | 2015 | 2014 | |||||
Net premiums earned: | |||||||
Casualty | $ | 98,768 | $ | 90,977 | |||
Property | 42,118 | 43,318 | |||||
Surety | 28,117 | 26,837 | |||||
Segment totals before income taxes | $ | 169,003 | $ | 161,132 | |||
Net investment income | 13,495 | 13,582 | |||||
Net realized gains | 13,286 | 6,501 | |||||
Total consolidated revenue | $ | 195,784 | $ | 181,215 | |||
NET EARNINGS | |||||||
(in thousands) | 2015 | 2014 | |||||
Casualty | $ | 5,272 | $ | 6,078 | |||
Property | 8,176 | 9,678 | |||||
Surety | 4,190 | 6,776 | |||||
Net underwriting income | $ | 17,638 | $ | 22,532 | |||
Net investment income | 13,495 | 13,582 | |||||
Net realized gains | 13,286 | 6,501 | |||||
General corporate expense and interest on debt | -4,100 | -4,049 | |||||
Equity in earnings of unconsolidated investees | 4,194 | 3,425 | |||||
Total earnings before income taxes | $ | 44,513 | $ | 41,991 | |||
Income tax expense | 13,915 | 13,022 | |||||
Total net earnings | $ | 30,598 | $ | 28,969 | |||
Schedule of net premiums earned by major product type | |||||||
For the Three-Month Periods | |||||||
NET PREMIUMS EARNED | Ended March 31, | ||||||
(in thousands) | 2015 | 2014 | |||||
Casualty | |||||||
Commercial and personal umbrella | $ | 25,297 | $ | 24,756 | |||
General liability | 19,972 | 19,932 | |||||
Professional services | 17,080 | 12,861 | |||||
Commercial transportation | 14,681 | 14,511 | |||||
P&C package business | 9,649 | 8,283 | |||||
Executive products | 4,685 | 4,684 | |||||
Medical professional liability | 3,104 | 3,700 | |||||
Other casualty | 4,300 | 2,250 | |||||
Total | $ | 98,768 | $ | 90,977 | |||
Property | |||||||
Commercial property | $ | 19,903 | $ | 20,433 | |||
Marine | 11,917 | 12,201 | |||||
Specialty personal | 6,790 | 6,108 | |||||
Property reinsurance | 3,017 | 3,361 | |||||
Crop reinsurance | 465 | 1,186 | |||||
Other property | 26 | 29 | |||||
Total | $ | 42,118 | $ | 43,318 | |||
Surety | |||||||
Miscellaneous | $ | 10,168 | $ | 9,482 | |||
Commercial | 6,901 | 6,134 | |||||
Contract | 6,830 | 6,761 | |||||
Oil and Gas | 4,218 | 4,460 | |||||
Total | $ | 28,117 | $ | 26,837 | |||
Grand Total | $ | 169,003 | $ | 161,132 | |||
SUMMARY_OF_SIGNIFICANT_ACCOUNT3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $) | 3 Months Ended | ||
Share data in Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 |
INTANGIBLE ASSETS | |||
Goodwill and intangibles | $72,472,000 | $72,695,000 | |
Basic EPS, Income (Numerator) | |||
Income available to common shareholders | 30,598,000 | 28,969,000 | |
Diluted EPS, Income (Numerator) | |||
Income available to common shareholders | 30,598,000 | 28,969,000 | |
Basic EPS, Weighted Average Shares (Denominator) | |||
Number of shares outstanding | 43,141 | 42,985 | |
Effect of Dilutive Securities, Shares (Denominator) | |||
Stock options (in shares) | 851 | 689 | |
Diluted EPS, Weighted Average Shares (Denominator) | |||
Number of shares outstanding | 43,992 | 43,674 | |
Basic EPS, Per Share Amount | |||
Basic net earnings per share (in dollars per share) | $0.71 | $0.67 | |
Diluted EPS, Per Share Amount | |||
Diluted earnings per share (in dollars per share) | $0.70 | $0.66 | |
CBIC and Rockbridge | |||
INTANGIBLE ASSETS | |||
Amortization of intangible assets | 200,000 | ||
Surety segment | Acquisitions prior to 2011 | |||
INTANGIBLE ASSETS | |||
Goodwill and intangibles | 26,200,000 | ||
Goodwill | 25,600,000 | ||
Indefinite-Lived Intangible Assets (Excluding Goodwill) | 600,000 | ||
Surety segment | Contractors Bonding and Insurance Company | |||
INTANGIBLE ASSETS | |||
Goodwill | 15,100,000 | ||
Casualty and Surety segment | Contractors Bonding and Insurance Company | |||
INTANGIBLE ASSETS | |||
Goodwill and intangibles | 30,500,000 | ||
Indefinite-Lived Intangible Assets (Excluding Goodwill) | 7,500,000 | ||
Definite-lived intangible assets, net of amortization | 2,600,000 | ||
Casualty segment | Contractors Bonding and Insurance Company | |||
INTANGIBLE ASSETS | |||
Goodwill | 5,300,000 | ||
Casualty segment | Rockbridge | |||
INTANGIBLE ASSETS | |||
Goodwill and intangibles | 15,800,000 | ||
Goodwill | 12,400,000 | ||
Definite-lived intangible assets, net of amortization | $3,400,000 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Unrealized Gains and Losses (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Changes in the balance of each component of accumulated other comprehensive earnings | ||
Tax rate used (as a percent) | 35.00% | 35.00% |
Changes in the balance of each component of accumulated other comprehensive earnings | ||
Beginning balance | $171,383 | |
Net current-period other comprehensive earnings (loss) | -7,595 | 17,737 |
Ending balance | 163,788 | |
Unrealized Gains and Losses on Available-for-Sale Securities | ||
Changes in the balance of each component of accumulated other comprehensive earnings | ||
Beginning balance | 171,383 | 136,027 |
Other comprehensive earnings before reclassifications | 996 | 21,960 |
Amounts reclassified from accumulated other comprehensive earnings | -8,591 | -4,223 |
Net current-period other comprehensive earnings (loss) | -7,595 | 17,737 |
Ending balance | $163,788 | $153,764 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Reclassification (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Amount Reclassified from Accumulated Other Comprehensive Earnings | ||
Net realized investment gains | $13,286 | $6,501 |
Earnings before income taxes | 44,513 | 41,991 |
Income tax expense | -13,915 | -13,022 |
Net earnings | 30,598 | 28,969 |
Reclassifications out of accumulated other comprehensive earnings | Unrealized Gains and Losses on Available-for-Sale Securities | ||
Amount Reclassified from Accumulated Other Comprehensive Earnings | ||
Net realized investment gains | 13,217 | 6,497 |
Earnings before income taxes | 13,217 | 6,497 |
Income tax expense | -4,626 | -2,274 |
Net earnings | $8,591 | $4,223 |
INVESTMENTS_Details
INVESTMENTS (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Amortized Cost | ||
Due in one year or less | $15,466 | |
Due after one year through five years | 240,318 | |
Due after five years through 10 years | 571,095 | |
Due after 10 years | 278,993 | |
Total amoritzed cost | 1,476,063 | |
Fair Value | ||
Due in one year or less | 15,604 | |
Due after one year through five years | 249,737 | |
Due after five years through 10 years | 592,340 | |
Due after 10 years | 289,642 | |
Total fair value | 1,529,559 | 1,495,087 |
Fair value measured on recurring basis | Significant Unobservable Inputs (Level 3) | ||
INVESTMENTS | ||
Total assets at fair value | 0 | |
Debt securities | ||
Available-for-sale | ||
Available-for-sale Securities, Amortized Cost Basis, Total | 1,476,063 | 1,448,204 |
Gross Unrealized Gains | 57,631 | 53,004 |
Gross Unrealized Losses | -4,135 | -6,121 |
Fair Value | 1,529,559 | 1,495,087 |
U.S. government | ||
Available-for-sale | ||
Available-for-sale Securities, Amortized Cost Basis, Total | 33,313 | 33,668 |
Gross Unrealized Gains | 279 | 131 |
Gross Unrealized Losses | -11 | |
Fair Value | 33,592 | 33,788 |
U.S. Agency | ||
Available-for-sale | ||
Available-for-sale Securities, Amortized Cost Basis, Total | 13,498 | 6,385 |
Gross Unrealized Gains | 554 | 362 |
Fair Value | 14,052 | 6,747 |
Non-U.S. govt. & agency | ||
Available-for-sale | ||
Available-for-sale Securities, Amortized Cost Basis, Total | 1,892 | 9,862 |
Gross Unrealized Gains | 125 | 803 |
Fair Value | 2,017 | 10,665 |
ABS/CMBS | ||
Available-for-sale | ||
Available-for-sale Securities, Amortized Cost Basis, Total | 125,847 | 133,894 |
Gross Unrealized Gains | 2,298 | 1,821 |
Gross Unrealized Losses | -223 | -411 |
Fair Value | 127,922 | 135,304 |
Agency MBS | ||
Available-for-sale | ||
Available-for-sale Securities, Amortized Cost Basis, Total | 244,344 | 256,443 |
Gross Unrealized Gains | 10,480 | 9,401 |
Gross Unrealized Losses | -510 | -1,376 |
Fair Value | 254,314 | 264,468 |
Corporate | ||
Available-for-sale | ||
Available-for-sale Securities, Amortized Cost Basis, Total | 593,814 | 543,183 |
Gross Unrealized Gains | 25,378 | 23,697 |
Gross Unrealized Losses | -3,130 | -4,190 |
Fair Value | 616,062 | 562,690 |
Municipal | ||
Available-for-sale | ||
Available-for-sale Securities, Amortized Cost Basis, Total | 463,355 | 464,769 |
Gross Unrealized Gains | 18,517 | 16,789 |
Gross Unrealized Losses | -272 | -133 |
Fair Value | 481,600 | 481,425 |
Mtge/ABS/CMBS | ||
Available-for-sale | ||
Available-for-sale Securities, Amortized Cost Basis, Total | 370,191 | |
Fair Value | 382,236 | |
Equity securities | ||
Available-for-sale | ||
Available-for-sale Securities, Amortized Cost Basis, Total | 191,993 | 193,535 |
Gross Unrealized Gains | 200,630 | 218,105 |
Gross Unrealized Losses | -960 | -998 |
Fair Value | $391,663 | $410,642 |
INVESTMENTS_Unrealized_Losses_
INVESTMENTS Unrealized Losses (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||||
Investment positions with unrealized losses | ||||
Unrealized losses relative to total invested assets (as a percent) | 0.30% | |||
Fair value | ||||
Less than 12 months | $154,251 | $227,874 | ||
12 Months and Greater | 37,038 | 106,657 | ||
Total Fair value | 191,289 | 334,531 | ||
Cost or amortized Cost | ||||
Less than 12 months | 158,765 | 233,338 | ||
12 months and greater | 37,619 | 108,312 | ||
Total Cost or Amortized Cost | 196,384 | 341,650 | ||
Unrealized Loss | ||||
Less than 12 months | -4,514 | -5,464 | ||
12 Months and Greater | -581 | -1,655 | ||
Total Unrealized Loss | -5,095 | -7,119 | ||
Cash and Short-term Investments | ||||
Cash | 31,514 | 30,620 | 20,618 | 39,469 |
Short-term investments, at cost which approximates fair value | 16,008 | 16,339 | ||
Debt securities | ||||
Fair value | ||||
Less than 12 months | 141,116 | 217,037 | ||
12 Months and Greater | 37,038 | 106,657 | ||
Total Fair value | 178,154 | 323,694 | ||
Cost or amortized Cost | ||||
Less than 12 months | 144,670 | 221,503 | ||
12 months and greater | 37,619 | 108,312 | ||
Total Cost or Amortized Cost | 182,289 | 329,815 | ||
Unrealized Loss | ||||
Less than 12 months | -3,554 | -4,466 | ||
12 Months and Greater | -581 | -1,655 | ||
Total Unrealized Loss | -4,135 | -6,121 | ||
Percent to Total | 100.00% | |||
Debt securities | NAIC Rating 1 | AAA/AA/A | Aaa/Aa/A | ||||
Fair value | ||||
Total Fair value | 126,749 | |||
Cost or amortized Cost | ||||
Total Cost or Amortized Cost | 128,145 | |||
Unrealized Loss | ||||
Total Unrealized Loss | -1,396 | |||
Percent to Total | 33.80% | |||
Debt securities | NAIC Rating 2 | BBB | Baa | ||||
Fair value | ||||
Total Fair value | 16,908 | |||
Cost or amortized Cost | ||||
Total Cost or Amortized Cost | 17,721 | |||
Unrealized Loss | ||||
Total Unrealized Loss | -813 | |||
Percent to Total | 19.70% | |||
Debt securities | NAIC Rating 3 | BB | Ba | ||||
Fair value | ||||
Total Fair value | 20,096 | |||
Cost or amortized Cost | ||||
Total Cost or Amortized Cost | 21,179 | |||
Unrealized Loss | ||||
Total Unrealized Loss | -1,083 | |||
Percent to Total | 26.20% | |||
Debt securities | NAIC Rating 4 | B | ||||
Fair value | ||||
Total Fair value | 14,072 | |||
Cost or amortized Cost | ||||
Total Cost or Amortized Cost | 14,884 | |||
Unrealized Loss | ||||
Total Unrealized Loss | -812 | |||
Percent to Total | 19.60% | |||
Debt securities | NAIC Rating 5 | CCC or lower | ||||
Fair value | ||||
Total Fair value | 329 | |||
Cost or amortized Cost | ||||
Total Cost or Amortized Cost | 360 | |||
Unrealized Loss | ||||
Total Unrealized Loss | -31 | |||
Percent to Total | 0.70% | |||
U.S. government | ||||
Fair value | ||||
Less than 12 months | 4,416 | |||
Total Fair value | 4,416 | |||
Cost or amortized Cost | ||||
Less than 12 months | 4,427 | |||
Total Cost or Amortized Cost | 4,427 | |||
Unrealized Loss | ||||
Less than 12 months | -11 | |||
Total Unrealized Loss | -11 | |||
Agency MBS | ||||
Fair value | ||||
Less than 12 months | 15,867 | 12,840 | ||
12 Months and Greater | 15,778 | 61,534 | ||
Total Fair value | 31,645 | 74,374 | ||
Cost or amortized Cost | ||||
Less than 12 months | 15,976 | 12,947 | ||
12 months and greater | 16,179 | 62,803 | ||
Total Cost or Amortized Cost | 32,155 | 75,750 | ||
Unrealized Loss | ||||
Less than 12 months | -109 | -107 | ||
12 Months and Greater | -401 | -1,269 | ||
Total Unrealized Loss | -510 | -1,376 | ||
ABS/CMBS | ||||
Fair value | ||||
Less than 12 months | 33,838 | 63,782 | ||
12 Months and Greater | 11,464 | 11,616 | ||
Total Fair value | 45,302 | 75,398 | ||
Cost or amortized Cost | ||||
Less than 12 months | 34,014 | 64,084 | ||
12 months and greater | 11,511 | 11,725 | ||
Total Cost or Amortized Cost | 45,525 | 75,809 | ||
Unrealized Loss | ||||
Less than 12 months | -176 | -302 | ||
12 Months and Greater | -47 | -109 | ||
Total Unrealized Loss | -223 | -411 | ||
Corporate | ||||
Fair value | ||||
Less than 12 months | 69,222 | 123,617 | ||
12 Months and Greater | 9,796 | 14,488 | ||
Total Fair value | 79,018 | 138,105 | ||
Cost or amortized Cost | ||||
Less than 12 months | 72,219 | 127,634 | ||
12 months and greater | 9,929 | 14,661 | ||
Total Cost or Amortized Cost | 82,148 | 142,295 | ||
Unrealized Loss | ||||
Less than 12 months | -2,997 | -4,017 | ||
12 Months and Greater | -133 | -173 | ||
Total Unrealized Loss | -3,130 | -4,190 | ||
Municipal | ||||
Fair value | ||||
Less than 12 months | 22,189 | 12,382 | ||
12 Months and Greater | 19,019 | |||
Total Fair value | 22,189 | 31,401 | ||
Cost or amortized Cost | ||||
Less than 12 months | 22,461 | 12,411 | ||
12 months and greater | 19,123 | |||
Total Cost or Amortized Cost | 22,461 | 31,534 | ||
Unrealized Loss | ||||
Less than 12 months | -272 | -29 | ||
12 Months and Greater | -104 | |||
Total Unrealized Loss | -272 | -133 | ||
Equity securities | ||||
Fair value | ||||
Less than 12 months | 13,135 | 10,837 | ||
Total Fair value | 13,135 | 10,837 | ||
Cost or amortized Cost | ||||
Less than 12 months | 14,095 | 11,835 | ||
Total Cost or Amortized Cost | 14,095 | 11,835 | ||
Unrealized Loss | ||||
Less than 12 months | -960 | -998 | ||
Total Unrealized Loss | ($960) | ($998) |
INVESTMENTS_Debt_and_Common_St
INVESTMENTS Debt and Common Stock Securities (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Dec. 31, 2014 | |
Fixed income securities in unrealized loss positions | ||
Other Investments | $11,402,000 | $11,597,000 |
Total tax benefit on investments in housing tax credit partnership | 300,000 | |
Investment in FHLBC | 1,800,000 | 1,800,000 |
Investment In Low Income Housing Tax Credit Partnership Net Of Amortization Member | ||
Fixed income securities in unrealized loss positions | ||
Other Investments | $9,600,000 | $9,800,000 |
INVESTMENTS_Details1
INVESTMENTS (Details) (USD $) | 3 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
Fixed income securities in unrealized loss positions | |||
Unrealized Loss | $5,095,000 | $7,119,000 | |
Unrealized losses as percentage of fixed income portfolio cost basis | 0.30% | ||
Other-than-temporary impairment (OTTI) losses recognized in other comprehensive earnings | 0 | 0 | |
Debt securities | |||
Fixed income securities in unrealized loss positions | |||
Number of unrealized loss positions | 154 | ||
Number of securities in unrealized loss positions for 12 months or longer | 33 | ||
Unrealized Loss | 4,100,000 | ||
Common Stock | |||
Fixed income securities in unrealized loss positions | |||
Number of unrealized loss positions | 4 | ||
Number of securities in unrealized loss positions for 12 months or longer | 0 | ||
Unrealized Loss | 1,000,000 | ||
Other-than-temporary impairment (OTTI) losses recognized in other comprehensive earnings | $0 | $0 |
FAIR_VALUE_MEASUREMENTS_Detail
FAIR VALUE MEASUREMENTS (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Transfers in (out of) level 1 | $0 | |
Transfers in (out of) level 2 | 0 | |
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] | ||
Available-for-sale Securities | 391,663 | 410,642 |
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 | 1,529,559 | 1,495,087 |
Significant Unobservable Inputs (Level 3) | Fair value measured on recurring basis | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets at fair value | 0 | |
Total | Fair value measured on recurring basis | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale Securities | 1,921,222 | 1,905,729 |
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 | 33,592 | 33,788 |
U.S. government | Total | Fair value measured on recurring basis | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale Securities | 33,592 | 33,788 |
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 | 14,052 | 6,747 |
U.S. Agency | Total | Fair value measured on recurring basis | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale Securities | 14,052 | 6,747 |
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 | 2,017 | 10,665 |
Non-U.S. govt. & agency | Total | Fair value measured on recurring basis | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale Securities | 2,017 | 10,665 |
Agency MBS | 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 | 254,314 | 264,468 |
Agency MBS | Total | Fair value measured on recurring basis | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale Securities | 254,314 | 264,468 |
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 | 127,922 | 135,304 |
ABS/CMBS | Total | Fair value measured on recurring basis | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale Securities | 127,922 | 135,304 |
Corporate. | 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 | 616,062 | 562,690 |
Corporate. | Total | Fair value measured on recurring basis | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale Securities | 616,062 | 562,690 |
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 | 481,600 | 481,425 |
Municipal | Total | Fair value measured on recurring basis | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale Securities | 481,600 | 481,425 |
Equity securities | 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] | ||
Available-for-sale Securities | 391,663 | 410,642 |
Equity securities | Total | Fair value measured on recurring basis | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale Securities | $391,663 | $410,642 |
STOCK_BASED_COMPENSATION_Detai
STOCK BASED COMPENSATION (Details) (USD $) | 3 Months Ended | 60 Months Ended | 59 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | 6-May-10 | Mar. 31, 2015 | |
Weighted Number of Options Outstanding | ||||
Outstanding options at the beginning of the period (in shares) | 2,892,717 | 2,595,084 | ||
Options granted (in shares) | 53,500 | 50,500 | ||
Options exercised (in shares) | -148,952 | -4,700 | ||
Options canceled/forfeited (in shares) | -3,760 | -740 | ||
Outstanding options at the end of the period (in shares) | 2,793,505 | 2,640,144 | 2,793,505 | |
Exercisable options at the end of the period (in shares) | 1,141,065 | 972,284 | 1,141,065 | |
Weighted Average Exercise Price | ||||
Outstanding options at the beginning of the period (in dollars per share) | $26.65 | $26.04 | ||
Options granted (in dollars per share) | $48.82 | $40.43 | ||
Options exercised (in dollars per share) | $16.66 | $18.53 | ||
Options canceled/forfeited (in dollars per share) | $30.09 | $16.51 | ||
Outstanding options at the end of the period (in dollars per share) | $27.60 | $26.33 | 27.6 | |
Exercisable options at the end of the period (in dollars per share) | $20.84 | $20.66 | 20.84 | |
Weighted Average Remaining Contractual Life | ||||
Weighted-average remaining contractual term of options outstanding | 5 years 1 month 10 days | 5 years 4 months 10 days | ||
Weighted-average remaining contractual term of exercisable options | 3 years 10 months 24 days | 4 years 26 days | ||
Aggregate Intrinsic Value | ||||
Options exercised (in dollars) | $4,908,000 | $115,000 | ||
Outstanding options at the end of the period (in dollars) | 69,299,000 | 47,359,000 | 69,299,000 | |
Exercisable options at the end of the period (in dollars) | 36,022,000 | 22,927,000 | 36,022,000 | |
Weighted-average fair value of grants (in dollars per share) | $8.97 | $8.14 | ||
Stock-based compensation expenses (in dollars) | 900,000 | 900,000 | ||
Income tax benefit from stock-based compensation (in dollars) | 300,000 | 300,000 | ||
Unrecognized stock-based compensation expense (in dollars) | 4,300,000 | 4,300,000 | ||
Weighted average grant date assumptions and weighted average fair value | ||||
Weighted-average fair value of grants (in dollars per share) | $8.97 | $8.14 | ||
Risk-free interest rates (as a percent) | 1.19% | 1.76% | ||
Dividend yield (as a percent) | 1.80% | 1.92% | ||
Expected volatility (as a percent) | 22.98% | 25.20% | ||
Expected option life | 5 years 5 months 5 days | 5 years 7 months 28 days | ||
Period for which annualized dividends is considered to calculate dividend yield | 5 years | |||
RLI Corp. Long-Term Incentive Plan (LTIP) and Omnibus Stock Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Award vesting period | 5 years | |||
Term of options | 8 years | |||
Omnibus Stock Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
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 (LTIP) | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares authorized for grant | 4,000,000 | 4,000,000 | ||
Age and period of service of the participant to be eligible for retirement | 75 years | |||
Weighted Number of Options Outstanding | ||||
Options granted (in shares) | 53,500 | 2,878,000 | ||
RLI Corp. Long-Term Incentive Plan (LTIP) | Outside director | ||||
Weighted average grant date assumptions and weighted average fair value | ||||
Restricted shares issued per recipient (in dollars) | 10,000 | |||
Outside Directors' Stock Option Plan (the director's plan) | ||||
Aggregate Intrinsic Value | ||||
Stock-based compensation expenses (in dollars) | $100,000 | |||
Weighted average grant date assumptions and weighted average fair value | ||||
Restriction period | 1 year | |||
Restricted shares issued | 2,097 |
OPERATING_SEGMENT_INFORMATION_1
OPERATING SEGMENT INFORMATION (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
REVENUES | ||
Segment totals before income taxes | $169,003 | $161,132 |
Net investment income | 13,495 | 13,582 |
Net realized gains | 13,286 | 6,501 |
Consolidated revenue | 195,784 | 181,215 |
NET EARNINGS (LOSSES) | ||
Net underwriting income | 17,638 | 22,532 |
Net investment income | 13,495 | 13,582 |
Net realized gains | 13,286 | 6,501 |
General corporate expense and interest on debt | -4,100 | -4,049 |
Equity in earnings of unconsolidated investees | 4,194 | 3,425 |
Earnings before income taxes | 44,513 | 41,991 |
Income tax expense | 13,915 | 13,022 |
Net earnings | 30,598 | 28,969 |
Casualty segment | ||
REVENUES | ||
Segment totals before income taxes | 98,768 | 90,977 |
NET EARNINGS (LOSSES) | ||
Net underwriting income | 5,272 | 6,078 |
Property segment | ||
REVENUES | ||
Segment totals before income taxes | 42,118 | 43,318 |
NET EARNINGS (LOSSES) | ||
Net underwriting income | 8,176 | 9,678 |
Surety segment | ||
REVENUES | ||
Segment totals before income taxes | 28,117 | 26,837 |
NET EARNINGS (LOSSES) | ||
Net underwriting income | $4,190 | $6,776 |
OPERATING_SEGMENT_INFORMATION_2
OPERATING SEGMENT INFORMATION Major Products (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Revenue by major product | ||
Net premiums earned | $169,003 | $161,132 |
Casualty segment | ||
Revenue by major product | ||
Net premiums earned | 98,768 | 90,977 |
Casualty segment | Commercial and personal umbrella | ||
Revenue by major product | ||
Net premiums earned | 25,297 | 24,756 |
Casualty segment | General liability | ||
Revenue by major product | ||
Net premiums earned | 19,972 | 19,932 |
Casualty segment | Commercial transportation | ||
Revenue by major product | ||
Net premiums earned | 14,681 | 14,511 |
Casualty segment | Professional services | ||
Revenue by major product | ||
Net premiums earned | 17,080 | 12,861 |
Casualty segment | P&C package business | ||
Revenue by major product | ||
Net premiums earned | 9,649 | 8,283 |
Casualty segment | Executive products | ||
Revenue by major product | ||
Net premiums earned | 4,685 | 4,684 |
Casualty segment | Medical professional liability | ||
Revenue by major product | ||
Net premiums earned | 3,104 | 3,700 |
Casualty segment | Other casualty | ||
Revenue by major product | ||
Net premiums earned | 4,300 | 2,250 |
Property segment | ||
Revenue by major product | ||
Net premiums earned | 42,118 | 43,318 |
Property segment | Commercial property | ||
Revenue by major product | ||
Net premiums earned | 19,903 | 20,433 |
Property segment | Marine | ||
Revenue by major product | ||
Net premiums earned | 11,917 | 12,201 |
Property segment | Crop reinsurance | ||
Revenue by major product | ||
Net premiums earned | 465 | 1,186 |
Property segment | Specialty Personal | ||
Revenue by major product | ||
Net premiums earned | 6,790 | 6,108 |
Property segment | Property reinsurance | ||
Revenue by major product | ||
Net premiums earned | 3,017 | 3,361 |
Property segment | Other property | ||
Revenue by major product | ||
Net premiums earned | 26 | 29 |
Surety segment | ||
Revenue by major product | ||
Net premiums earned | 28,117 | 26,837 |
Surety segment | Miscellaneous | ||
Revenue by major product | ||
Net premiums earned | 10,168 | 9,482 |
Surety segment | Contract | ||
Revenue by major product | ||
Net premiums earned | 6,830 | 6,761 |
Surety segment | Commercial | ||
Revenue by major product | ||
Net premiums earned | 6,901 | 6,134 |
Surety segment | Oil and Gas | ||
Revenue by major product | ||
Net premiums earned | $4,218 | $4,460 |
ACQUISITION_Details
ACQUISITION (Details) (USD $) | 0 Months Ended | 3 Months Ended | |||
Mar. 04, 2015 | Feb. 05, 2014 | Mar. 31, 2015 | Mar. 31, 2014 | Mar. 04, 2015 | |
subsidiary | |||||
state | |||||
Business acquisition | |||||
Amount of investment | $1,711,000 | $5,301,000 | |||
Equity in earnings of unconsolidated investees | 4,194,000 | 3,425,000 | |||
Prime Holdings Insurance Services, Inc. (Prime) [Member] | |||||
Business acquisition | |||||
Amount of investment | 1,700,000 | 5,300,000 | |||
Equity ownership interest (as a percent) | 27.00% | 20.00% | 27.00% | ||
Number of states in which entity operates | 49 | ||||
Equity in earnings of unconsolidated investees | 500,000 | 100,000 | |||
Percentage of quota share reinsurance treaty, effective January 1, 2014 | 25.00% | ||||
Number of insurance subsidiaries | 2 | ||||
Reinsurance assumed | $3,000,000 | $2,500,000 |