RLI (RLI) 10-Q 23 Oct 15 2015 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2015	Oct. 12, 2015
Document and Entity Information
Entity Registrant Name	RLI CORP
Entity Central Index Key	84,246
Document Type	10-Q
Document Period End Date	Sep. 30, 2015
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		43,384,236
Document Fiscal Year Focus	2,015
Document Fiscal Period Focus	Q3

Condensed Consolidated Statemen

Condensed Consolidated Statements of Earnings and Comprehensive Earnings - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Condensed Consolidated Statements of Earnings and Comprehensive Earnings
Net premiums earned	$ 179,448	$ 177,747	$ 520,790	$ 507,483
Net investment income	13,964	14,200	40,890	41,764
Net realized investment gains	7,534	5,708	25,622	22,640
Consolidated revenue	200,946	197,655	587,302	571,887
Losses and settlement expenses	73,051	76,019	218,461	220,380
Policy acquisition costs	60,505	58,180	178,965	168,387
Insurance operating expenses	12,299	13,120	37,297	39,187
Interest expense on debt	1,857	1,857	5,570	5,582
General corporate expenses	1,958	2,800	6,950	7,547
Total expenses	149,670	151,976	447,243	441,083
Equity in earnings of unconsolidated investees	661	2,915	11,041	12,204
Earnings before income taxes	51,937	48,594	151,100	143,008
Income tax expense	16,029	15,340	47,409	45,060
Net earnings	35,908	33,254	103,691	97,948
Other comprehensive earnings (loss), net of tax	(16,136)	(12,353)	(48,663)	25,318
Comprehensive earnings	$ 19,772	$ 20,901	$ 55,028	$ 123,266
Basic:
Net earnings per share (in dollars per share)	$ 0.83	$ 0.77	$ 2.40	$ 2.28
Comprehensive earnings per share (in dollars per share)	0.46	0.49	1.27	2.87
Diluted:
Net earnings per share (in dollars per share)	0.81	0.76	2.35	2.24
Comprehensive earnings per share (in dollars per share)	$ 0.45	$ 0.48	$ 1.25	$ 2.82
Weighted average number of common shares outstanding
Basic (in shares)	43,342	43,026	43,232	43,004
Diluted (in shares)	44,153	43,712	44,031	43,692
Cash dividends paid per common share (in dollars per share)	$ 0.19	$ 0.18	$ 0.56	$ 0.53

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Fixed income:
Available-for-sale, at fair value	$ 1,532,304	$ 1,495,087
Equity securities, at fair value	369,047	410,642
Short-term investments, at cost	58,983	16,339
Other invested assets	10,873	11,597
Cash	28,188	30,620
Total investments and cash	1,999,395	1,964,285
Accrued investment income	13,741	14,629
Premiums and reinsurance balances receivable	170,942	154,573
Ceded unearned premium	52,161	53,961
Reinsurance balances recoverable on unpaid losses	317,737	335,106
Deferred policy acquisition costs	72,300	65,123
Property and equipment	45,038	42,549
Investment in unconsolidated investees	71,451	60,046
Goodwill and intangibles	72,026	72,695
Other assets	14,598	12,575
TOTAL ASSETS	2,829,389	2,775,542
Liabilities:
Unpaid losses and settlement expenses	1,140,733	1,121,040
Unearned premiums	432,278	401,412
Reinsurance balances payable	38,829	38,013
Funds held	54,237	51,481
Income taxes - deferred	60,583	82,285
Bonds payable, long-term debt	149,658	149,625
Accrued expenses	47,609	63,148
Other liabilities	22,311	23,476
TOTAL LIABILITIES	1,946,238	1,930,480
Shareholders' Equity
Common stock ($1 par value, 100,000,000 shares authorized)(66,313,950 shares issued, 43,383,736 shares outstanding at 9/30/15)(66,032,929 shares issued, 43,102,715 shares outstanding at 12/31/14)	66,314	66,033
Paid-in capital	220,738	213,737
Accumulated other comprehensive earnings	122,720	171,383
Retained earnings	866,378	786,908
Deferred compensation	9,342	13,769
Less: Treasury shares at cost (22,930,214 shares at 9/30/15 and 12/31/14)	(402,341)	(406,768)
TOTAL SHAREHOLDERS’ EQUITY	883,151	845,062
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$ 2,829,389	$ 2,775,542

Condensed Consolidated Balance4

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 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)	66,313,950	66,032,929
Common stock, shares outstanding (in shares)	43,383,736	43,102,715
Treasury stock, shares (in shares)	22,930,214	22,930,214

Consolidated Statements of Cash

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Condensed Consolidated Statements of Cash Flows
Net cash provided by operating activities	$ 121,367	$ 85,894
Cash Flows from Investing Activities
Investments purchased	(540,159)	(422,287)
Investments sold	349,411	285,886
Investments called or matured	135,750	77,611
Net change in short-term investments	(43,745)	40,027
Net property and equipment purchased	(6,405)	(5,543)
Investment in equity method investee	(1,711)	(5,301)
Net cash used in investing activities	(106,859)	(29,607)
Cash Flows from Financing Activities
Cash dividends paid	(24,221)	(22,791)
Stock plan share issuance	39	3,672
Excess tax benefit from exercise of stock options	7,242	400
Net cash used in financing activities	(16,940)	(18,719)
Net increase (decrease) in cash	(2,432)	37,568
Cash at the beginning of the period	30,620	39,469
Cash at September 30	$ 28,188	$ 77,037

SUMMARY OF SIGNIFICANT ACCOUNTI

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	9 Months Ended
	Sep. 30, 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 September 30, 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. ASU 2015-09, Financial Services-Insurance (Topic 944): Disclosures about Short-Duration Contracts This ASU was issued to enhance disclosures about an entity’s insurance liabilities, including the nature, amount, timing and uncertainty of cash flows related to those liabilities. The new guidance requires the disclosure of the following information related to unpaid claims and claim adjustment expenses: a. Net incurred and paid claims development information by accident year for the number of years for which claims incurred typically remain outstanding, but need not exceed 10 years; b. A reconciliation of incurred and paid claims development information to the aggregate carrying amount of the liability for unpaid claims and claim adjustment expenses, with separate disclosure of reinsurance recoverable on unpaid claims for each period presented in the statement of financial position; c. For each accident year presented, the total of incurred-but-not-reported liabilities plus expected development on reported claims included in the liability for unpaid claims and claim adjustment expenses; d. For each accident year presented, quantitative information about claim frequency accompanied by a qualitative description of methodologies used for determining claim frequency information; and e. For all claims, the average annual percentage payout of incurred claims by age. This ASU is effective for annual reporting periods beginning after December 15, 2015 and for interim periods beginning after December 15, 2016. Early adoption is permitted. We have not early-adopted this ASU and while disclosures will be increased, we 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 $ 72.0 million at September 30, 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 $30.2 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. Annual impairment testing was performed on each of these goodwill and indefinite-lived intangible assets during the second quarter of 2015. Based upon these reviews, none of the assets were impaired. In addition, as of September 30, 2015, there were no triggering events that occurred that would suggest further review was necessary. Definite-lived intangible assets related to the CBIC acquisition totaled $2.3 million, net of amortization, as of September 30, 2015. The remaining $15.6 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 $3.2 million relates to definite-lived intangible assets, net of amortization, as of September 30, 2015. For the second consecutive year, interim impairment testing was triggered on this goodwill asset during the third quarter as a result of actual premium production falling below anticipated levels. We used a quantitative analysis to determine the impact of the difference and concluded that the asset was not impaired. However, as a result of the further decline in premium, the margin of fair value over carrying value is smaller than in previous years. We continue to monitor the performance of the reporting unit and will reevaluate the assumptions used in our valuation model during the normal annual testing to be conducted in the fourth quarter. 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 third quarter of 2015 and $0.7 million for the nine-month period ended September 30, 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 September 30, 2015 Ended September 30, 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 $ $ $ $ Effect of Dilutive Securities Stock options - - Diluted EPS Income available to common shareholders $ $ $ $ For the Nine-Month Period For the Nine-Month Period Ended September 30, 2015 Ended September 30, 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 $ $ $ $ Effect of Dilutive Securities Stock options - - Diluted EPS Income available to common shareholders $ $ $ $ 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. Unrealized losses for the first nine months of 2015 were $48.7 million , compared to unrealized gains of $25.3 million during the same period last year. Unrealized losses during the current year are attributable to the negative price performance of the equity portfolio as well as credit spreads moving wider throughout the corporate bond sector. In 2014, both fixed income and equity securities experienced positive price movements. 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 For the Nine-Month Periods Ended September 30, Ended September 30, Unrealized Gains/Losses on Available-for-Sale Securities 2015 2014 2015 2014 Beginning balance $ $ $ $ Other comprehensive earnings before reclassifications Amounts reclassified from accumulated other comprehensive earnings Net current-period other comprehensive earnings (loss) $ $ $ $ Ending balance $ $ $ $ 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 For the Nine-Month Component of Accumulated Periods Ended September 30, Periods Ended September 30, Affected line item in the Other Comprehensive Earnings 2015 2014 2015 2014 Statement of Earnings Unrealized gains and losses on available-for-sale securities $ $ $ $ Net realized investment gains - - - - Other-than-temporary impairment (OTTI) losses on investments $ $ $ $ Earnings before income taxes Income tax expense $ $ $ $ Net earnings

INVESTMENTS

INVESTMENTS	9 Months Ended
	Sep. 30, 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.” Available-for-Sale Securities The amortized cost and fair value of available-for-sale securities at September 30, 2015 and December 31, 2014 were as follows: Available-for-sale (in thousands) 9/30/2015 Cost or Gross Gross Amortized Unrealized Unrealized Fair Asset Class Cost Gains Losses Value U.S. government $ $ $ - $ U.S. agency Non-U.S. govt. & agency - Agency MBS ABS/CMBS* Corporate Municipal Total Fixed Income $ $ $ $ Equity $ $ $ $ *Non-agency asset-backed and commercial mortgage-backed Available-for-sale (in thousands) 12/31/2014 Cost or Gross Gross Amortized Unrealized Unrealized Fair Asset Class Cost Gains Losses Value U.S. government $ $ $ $ U.S. agency - Non-U.S. govt. & agency - Agency MBS ABS/CMBS* Corporate Municipal Total Fixed Income $ $ $ $ Equity $ $ $ $ *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 September 30, 2015: 9/30/2015 Available-for-sale Amortized Fair (in thousands) Cost Value Due in one year or less $ $ Due after one year through five years Due after five years through 10 years Due after 10 years Mtge/ABS/CMBS* Total available-for-sale $ $ *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 September 30, 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 September 30, 2015 unrealized losses, as shown in the following tables, were 0.8 percent of total invested assets. Unrealized losses increased in 2015, primarily due to credit spreads moving wider throughout the corporate sector. September 30, 2015 December 31, 2014 (in thousands) < 12 Mos. 12 Mos. & Greater Total < 12 Mos. 12 Mos. & Greater Total U.S. Government Fair value $ — $ — $ — $ $ — $ Cost or amortized cost — — — — Unrealized Loss $ — $ — $ — $ $ — $ U.S. Agency Fair value $ $ — $ $ — $ — $ — Cost or amortized cost — — — — Unrealized Loss $ $ — $ $ — $ — $ — Non-U.S. government Fair value $ $ — $ $ — $ — $ — Cost or amortized cost — — — — Unrealized Loss $ $ — $ $ — $ — $ — Agency MBS Fair value $ $ $ $ $ $ Cost or amortized cost Unrealized Loss $ $ $ $ $ $ ABS/CMBS* Fair value $ $ $ $ $ $ Cost or amortized cost Unrealized Loss $ $ $ $ $ $ Corporate Fair value $ $ $ $ $ $ Cost or amortized cost Unrealized Loss $ $ $ $ $ $ Municipal Fair value $ $ — $ $ $ $ Cost or amortized cost — Unrealized Loss $ $ — $ $ $ $ Subtotal, fixed income Fair value $ $ $ $ $ $ Cost or amortized cost Unrealized Loss $ $ $ $ $ $ Equity securities Fair value $ $ — $ $ $ — $ Cost or amortized cost — — Unrealized Loss $ $ — $ $ $ — $ Total Fair value $ $ $ $ $ $ Cost or amortized cost Unrealized Loss $ $ $ $ $ $ * Non-agency asset-backed and commercial mortgage-backed The following table shows the composition of the fixed income securities in unrealized loss positions at September 30, 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 $ $ $ % 2 BBB Baa % 3 BB Ba % 4 B B % 5 CCC or lower Caa or lower % 6 — — — — Total $ $ $ % Evaluating Investments for OTTI The fixed income portfolio contained 361 securities in an unrealized loss position as of September 30, 2015. The $13.2 million in associated unrealized losses for these 361 securities represents 0.9 percent of the fixed income portfolio’s cost basis. Of these 361 securities, 42 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 September 30, 2015, we held 10 common stock securities that were in an unrealized loss position. The unrealized loss on these securities was $2.9 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 of Chicago (FHLBC), carried at cost. Our interest in a low income housing tax credit partnership had a balance of $9.3 million at September 30, 2015 , compared to $9.8 million at December 31, 2014 and recognized a total tax benefit of $0.3 million during the third quarter of 2015 and $0.8 million during the nine-month period ended September 30, 2015. Our investment in FHLBC stock totaled $1.6 million at September 30, 2015 , compared to $1.8 million at December 31, 2014. Cash and Short-term Investments Cash consists of uninvested balances in bank accounts. We had a cash balance of $ 28.2 million at the end of the third 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 September 30, 2015 was $59.0 million , compared to $16. 3 million at December 31, 2014.

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS	9 Months Ended
	Sep. 30, 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 approximate order of priority for use) benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, market bids/offers and other reference data. The pricing vendor also monitors market indicators, as well as industry and economic events. All bonds valued using these techniques are classified as Level 2. All corporate, agency, government and municipal securities were deemed Level 2. Mortgage-backed Securities (MBS)/Commercial Mortgage-backed Securities (CMBS) and Asset-backed Securities (ABS): The pricing vendor evaluation methodology includes principally interest rate movements and new issue data. Evaluation of the tranches (non-volatile, volatile or credit sensitivity) is based on the pricing vendors’ interpretation of accepted modeling and pricing conventions. This information is then used to determine the cash flows for each tranche, benchmark yields, prepayment assumptions and to incorporate collateral performance. To evaluate MBS and CMBS volatility, an option adjusted spread model is used in combination with models that simulate interest rate paths to determine market price information. This process allows the pricing vendor to obtain evaluations of a broad universe of securities in a way that reflects changes in yield curve, index rates, implied volatility, mortgage rates and recent trade activity. MBS/CMBS and ABS with corroborated, observable inputs are classified as Level 2. All of our MBS/CMBS and ABS are deemed Level 2. Common Stock: Exchange traded equities have readily observable price levels and are classified as Level 1 (fair value based on quoted market prices). All of our common stock holdings are deemed Level 1. For the Level 2 securities, as described above, we periodically conduct a review to assess the reasonableness of the fair values provided by our pricing services. Our review consists of a two pronged approach. First, we compare prices provided by our pricing services to those provided by an additional source. Second, we obtain prices from securities brokers and compare them to the prices provided by our pricing services. In both comparisons, when discrepancies are found, we compare our prices to actual reported trade data for like securities. Based on this assessment, we determined that the fair values of our Level 2 securities provided by our pricing services are reasonable. For common stock, we receive prices from a nationally recognized pricing service. Prices are based on observable inputs in an active market and are therefore disclosed as Level 1. Based on this assessment, we determined that the fair values of our Level 1 securities provided by our pricing service are reasonable. 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 September 30, 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 $ — $ $ — $ U.S. agency — — Non-U.S. govt. & agency — — Agency MBS — — ABS/CMBS* — — Corporate — — Municipal — — Equity — — Total available-for-sale securities $ $ $ — $ *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 $ — $ $ — $ U.S. agency — — Non-U.S. govt. & agency — — Agency MBS — — ABS/CMBS* — — Corporate — — Municipal — — Equity — — Total available-for-sale securities $ $ $ — $ * 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 nine-month period ended September 30, 2015.

INCOME TAXES

INCOME TAXES	9 Months Ended
	Sep. 30, 2015
INCOME TAXES
INCOME TAXES	4. INCOME TAXES Our effective tax rate for the three and nine-month periods ended September 30, 2015 was 30.9 percent and 31.4 percent , respectively, compared to 31.6 percent and 31.5 percent for the same periods in 2014. Effective rates are dependent upon components of pretax earnings and the related tax effects. The effective rate was slightly lower for the three and nine-month periods ended September 30, 2015 due to a combination of minor tax adjustments. Income tax expense attributable to income from operations for the three and nine-month periods ended September 30, 2015 and 2014 differed from the amounts computed by applying the U.S. federal tax rate of 35 percent to pretax income as a result of the following: For the Three-Month Periods Ended September 30, For the Nine-Month Periods Ended September 30, 2015 2014 2015 2014 (in thousands) Amount % Amount % Amount % Amount % Provision for income taxes at the statutory rate of 35% $ % $ % $ % $ % Increase (reduction) in taxes resulting from: Tax exempt interest income % % % % Dividends received deduction % % % % ESOP dividends paid deduction % % % % Other items, net % % % % Total tax expense $ % $ % $ % $ %

STOCK BASED COMPENSATION

STOCK BASED COMPENSATION	9 Months Ended
	Sep. 30, 2015
STOCK BASED COMPENSATION
STOCK BASED COMPENSATION	5. STOCK BASED COMPENSATION Our RLI Corp. Omnibus Stock Plan (omnibus plan) was in place from 2005 to 2010. The omnibus plan provided for equity-based compensation, including stock options, up to a maximum of 3,000,000 shares of common stock (subject to adjustment for changes in our capitalization and other events). Between 2005 and 2010, we granted 2,458,059 stock options under this plan, including incentive stock options (ISOs), which were adjusted as part of the special dividends paid in 2014 and prior years. The omnibus plan was replaced in 2010. In 2010, our shareholders approved the RLI Corp. Long-Term Incentive Plan (2010 LTIP), which provides for equity-based compensation and replaced the omnibus plan. In conjunction with the adoption of the 2010 LTIP, effective May 6, 2010, options were no longer granted under the omnibus plan. The 2010 LTIP provided for equity-based compensation, including stock options, up to a maximum of 4,000,000 shares of common stock (subject to adjustment for changes in our capitalization and other events). Between 2010 and 2015, we granted 2,878,000 stock options under the 2010 LTIP, including 53,500 in the first quarter of 2015. The 2010 LTIP was replaced in the second quarter of 2015. During the second quarter of 2015, our shareholders approved the 2015 RLI Corp. Long-Term Incentive Plan (2015 LTIP), which provides for equity-based compensation and replaced the 2010 LTIP. In conjunction with the adoption of the 2015 LTIP, effective May 7, 2015, options were no longer granted under the 2010 LTIP. Awards under the 2015 LTIP may be in the form of restricted stock, stock options (non-qualified only), stock appreciation rights, performance units as well as other stock-based awards. Eligibility under the 2015 LTIP is limited to employees and directors of the company or any affiliate. The granting of awards under the 2015 LTIP is solely at the discretion of the board of directors. The maximum number of shares of common stock available for distribution under the 2015 LTIP is 4,000,000 shares (subject to adjustment for changes in our capitalization and other events). Thus far in 2015, we have granted 463,500 stock options under the 2015 LTIP. Under the 2015 LTIP, as under the 2010 LTIP and omnibus plan, we grant stock options for shares with an exercise price equal to the fair market value of the shares at the date of grant (subject to adjustments for changes in our capitalization, special dividends and other events as set forth in such plans). Options generally vest and become exercisable ratably over a five -year period and expire eight years after grant. For most participants, the requisite service period and vesting period will be the same. For participants who are retirement eligible, defined by the plan as those individuals whose age and years of service equals 75 , the requisite service period is deemed to be met and options are immediately expensed on the date of grant. For participants who will become retirement eligible during the vesting period, the requisite service period over which expense is recognized is the period between the grant date and the attainment of retirement eligibility. Shares issued upon option exercise are newly issued shares. The following tables summarize option activity for the periods ended September 30, 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 $ Options granted $ Options exercised $ $ Options canceled/forfeited $ Outstanding options at September 30, 2015 $ $ Exercisable options at September 30, 2015 $ $ Weighted Weighted Average Aggregate Number of Average Remaining Intrinsic Options Exercise Contractual Value Outstanding Price Life (in 000’s) Outstanding options at January 1, 2014 $ Options granted $ Options exercised $ $ Options canceled/forfeited $ Outstanding options at September 30, 2014 $ $ Exercisable options at September 30, 2014 $ $ 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, 517,000 stock options were granted with a weighted average exercise price of $50.09 and a weighted average fair value of $9.04 . We recognized $1.1 million of expense in the third quarter of 2015 and $3.0 million in the first nine months of 2015 related to options vesting. Since options granted under our 2010 LTIP and 2015 LTIP are non-qualified, we recorded a tax benefit of $0.4 million in the third quarter of 2015 and $1.1 million in the first nine months of 2015 related to this compensation expense. Total unrecognized compensation expense relating to outstanding and unvested options was $6.3 million, which will be recognized over the remainder of the vesting period. Comparatively, we recognized $0.9 million of expense in the third quarter of 2014 and $2.9 million of expense in the first nine months of 2014. We recorded a tax benefit of $0.3 million in the third quarter of 2014 and $1.0 million in the first nine months of 2014 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 September 30: 2015 2014 Weighted-average fair value of grants $ $ Risk-free interest rates % % Dividend yield % % Expected volatility % % Expected option life years years The risk-free rate was determined based on U.S. treasury yields that most closely approximated the option’s expected life. The dividend yield was calculated based on the average annualized ordinary dividends paid during the most recent five -year period. It excluded the special dividends paid in the fourth quarters of 2014 and prior years. The expected volatility was calculated based on the median of the rolling volatilities for the expected life of the options. The expected option life was determined based on historical exercise behavior and the assumption that all outstanding options will be exercised at the midpoint of the current date and remaining contractual term, adjusted for the demographics of the current year’s grant. During the first quarter of 2014, each outside director received $10,000 worth of restricted common shares from the 2010 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 201 4.

OPERATING SEGMENT INFORMATION

OPERATING SEGMENT INFORMATION	9 Months Ended
	Sep. 30, 2015
OPERATING SEGMENT INFORMATION
OPERATING SEGMENT INFORMATION	6. OPERATING SEGMENT INFORMATION Selected information by operating segment is presented in the table below. Additionally, the table reconciles segment totals to total earnings and total revenues. For the Three-Month Periods For the Nine-Month Periods REVENUES Ended September 30, Ended September 30, (in thousands) 2015 2014 2015 2014 Net premiums earned: Casualty $ $ $ $ Property Surety Segment totals before income taxes $ $ $ $ Net investment income Net realized gains Total consolidated revenue $ $ $ $ NET EARNINGS (in thousands) 2015 2014 2015 2014 Casualty $ $ $ $ Property Surety Net underwriting income $ $ $ $ Net investment income Net realized gains General corporate expense and interest on debt Equity in earnings of unconsolidated investees Total earnings before income taxes $ $ $ $ Income tax expense Total net earnings $ $ $ $ The following table further summarizes revenues by major product type within each operating segment: For the Three-Month Periods For the Nine-Month Periods NET PREMIUMS EARNED Ended September 30, Ended September 30, (in thousands) 2015 2014 2015 2014 Casualty Commercial and personal umbrella $ $ $ $ General liability Professional services Commercial transportation P&C package business Executive products Medical professional liability Other casualty Total $ $ $ $ Property Commercial property $ $ $ $ Marine Specialty personal Property reinsurance Crop reinsurance Other property Total $ $ $ $ Surety Miscellaneous $ $ $ $ Commercial Contract Oil and gas Total $ $ $ $ Grand Total $ $ $ $

ACQUISITION

ACQUISITION	9 Months Ended
	Sep. 30, 2015
ACQUISITIONS
ACQUISITIONS	7. ACQUISITION On February 5, 2014, we invested $5.3 million for a 20 percent equity ownership interest in Prime Holdings Insurance Services, Inc. (Prime). On March 4, 2015 we invested an additional $1.7 million, increasing our total equity ownership to 27 percent. Prime writes business through two Illinois domiciled insurance carriers, Prime Insurance Company, an excess and surplus lines company, and Prime Property and Casualty Insurance Inc., an admitted insurance company. 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 $0.2 million in the third quarter of 2015 and $0.9 million in the first nine months of 2015. Comparatively, our share of Prime’s earnings amounted to $0.1 million in the third quarter of 2014 and $0.4 million in the first nine months of 2014. 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 in the third quarter of 2015 and $9.7 million in the first nine months of 2015 related to this quota share agreement. Comparatively, we assumed gross premiums of $2.4 million in the third quarter of 2014 and $7.4 million in the first nine months of 2014.

SUMMARY OF SIGNIFICANT ACCOUN13

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	9 Months Ended
	Sep. 30, 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 September 30, 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 $ 72.0 million at September 30, 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 $30.2 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. Annual impairment testing was performed on each of these goodwill and indefinite-lived intangible assets during the second quarter of 2015. Based upon these reviews, none of the assets were impaired. In addition, as of September 30, 2015, there were no triggering events that occurred that would suggest further review was necessary. Definite-lived intangible assets related to the CBIC acquisition totaled $2.3 million, net of amortization, as of September 30, 2015. The remaining $15.6 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 $3.2 million relates to definite-lived intangible assets, net of amortization, as of September 30, 2015. For the second consecutive year, interim impairment testing was triggered on this goodwill asset during the third quarter as a result of actual premium production falling below anticipated levels. We used a quantitative analysis to determine the impact of the difference and concluded that the asset was not impaired. However, as a result of the further decline in premium, the margin of fair value over carrying value is smaller than in previous years. We continue to monitor the performance of the reporting unit and will reevaluate the assumptions used in our valuation model during the normal annual testing to be conducted in the fourth quarter. 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 third quarter of 2015 and $0.7 million for the nine-month period ended September 30, 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 September 30, 2015 Ended September 30, 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 $ $ $ $ Effect of Dilutive Securities Stock options - - Diluted EPS Income available to common shareholders $ $ $ $ For the Nine-Month Period For the Nine-Month Period Ended September 30, 2015 Ended September 30, 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 $ $ $ $ Effect of Dilutive Securities Stock options - - Diluted EPS Income available to common shareholders $ $ $ $
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. Unrealized losses for the first nine months of 2015 were $48.7 million , compared to unrealized gains of $25.3 million during the same period last year. Unrealized losses during the current year are attributable to the negative price performance of the equity portfolio as well as credit spreads moving wider throughout the corporate bond sector. In 2014, both fixed income and equity securities experienced positive price movements. 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 For the Nine-Month Periods Ended September 30, Ended September 30, Unrealized Gains/Losses on Available-for-Sale Securities 2015 2014 2015 2014 Beginning balance $ $ $ $ Other comprehensive earnings before reclassifications Amounts reclassified from accumulated other comprehensive earnings Net current-period other comprehensive earnings (loss) $ $ $ $ Ending balance $ $ $ $ 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 For the Nine-Month Component of Accumulated Periods Ended September 30, Periods Ended September 30, Affected line item in the Other Comprehensive Earnings 2015 2014 2015 2014 Statement of Earnings Unrealized gains and losses on available-for-sale securities $ $ $ $ Net realized investment gains - - - - Other-than-temporary impairment (OTTI) losses on investments $ $ $ $ Earnings before income taxes Income tax expense $ $ $ $ Net earnings

SUMMARY OF SIGNIFICANT ACCOUN14

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)	9 Months Ended
	Sep. 30, 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 September 30, 2015 Ended September 30, 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 $ $ $ $ Effect of Dilutive Securities Stock options - - Diluted EPS Income available to common shareholders $ $ $ $ For the Nine-Month Period For the Nine-Month Period Ended September 30, 2015 Ended September 30, 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 $ $ $ $ Effect of Dilutive Securities Stock options - - Diluted EPS Income available to common shareholders $ $ $ $
Schedule of changes in the balance of each component of accumulated other comprehensive earnings	(in thousands) For the Three-Month Periods For the Nine-Month Periods Ended September 30, Ended September 30, Unrealized Gains/Losses on Available-for-Sale Securities 2015 2014 2015 2014 Beginning balance $ $ $ $ Other comprehensive earnings before reclassifications Amounts reclassified from accumulated other comprehensive earnings Net current-period other comprehensive earnings (loss) $ $ $ $ Ending balance $ $ $ $
Schedule of effects of reclassifications out of accumulated other comprehensive earnings	Amount Reclassified from Accumulated Other (in thousands) Comprehensive Earnings For the Three-Month For the Nine-Month Component of Accumulated Periods Ended September 30, Periods Ended September 30, Affected line item in the Other Comprehensive Earnings 2015 2014 2015 2014 Statement of Earnings Unrealized gains and losses on available-for-sale securities $ $ $ $ Net realized investment gains - - - - Other-than-temporary impairment (OTTI) losses on investments $ $ $ $ Earnings before income taxes Income tax expense $ $ $ $ Net earnings

INVESTMENTS (Tables)

INVESTMENTS (Tables)	9 Months Ended
	Sep. 30, 2015
INVESTMENTS
Schedule of securities in an unrealized loss position segregated by type and length of time in an unrealized loss position	September 30, 2015 December 31, 2014 (in thousands) < 12 Mos. 12 Mos. & Greater Total < 12 Mos. 12 Mos. & Greater Total U.S. Government Fair value $ — $ — $ — $ $ — $ Cost or amortized cost — — — — Unrealized Loss $ — $ — $ — $ $ — $ U.S. Agency Fair value $ $ — $ $ — $ — $ — Cost or amortized cost — — — — Unrealized Loss $ $ — $ $ — $ — $ — Non-U.S. government Fair value $ $ — $ $ — $ — $ — Cost or amortized cost — — — — Unrealized Loss $ $ — $ $ — $ — $ — Agency MBS Fair value $ $ $ $ $ $ Cost or amortized cost Unrealized Loss $ $ $ $ $ $ ABS/CMBS* Fair value $ $ $ $ $ $ Cost or amortized cost Unrealized Loss $ $ $ $ $ $ Corporate Fair value $ $ $ $ $ $ Cost or amortized cost Unrealized Loss $ $ $ $ $ $ Municipal Fair value $ $ — $ $ $ $ Cost or amortized cost — Unrealized Loss $ $ — $ $ $ $ Subtotal, fixed income Fair value $ $ $ $ $ $ Cost or amortized cost Unrealized Loss $ $ $ $ $ $ Equity securities Fair value $ $ — $ $ $ — $ Cost or amortized cost — — Unrealized Loss $ $ — $ $ $ — $ Total Fair value $ $ $ $ $ $ Cost or amortized cost Unrealized Loss $ $ $ $ $ $ * 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 $ $ $ % 2 BBB Baa % 3 BB Ba % 4 B B % 5 CCC or lower Caa or lower % 6 — — — — Total $ $ $ %
Available for sale securities
INVESTMENTS
Schedule of amortized cost and fair value of available-for-sale securities	Available-for-sale (in thousands) 9/30/2015 Cost or Gross Gross Amortized Unrealized Unrealized Fair Asset Class Cost Gains Losses Value U.S. government $ $ $ - $ U.S. agency Non-U.S. govt. & agency - Agency MBS ABS/CMBS* Corporate Municipal Total Fixed Income $ $ $ $ Equity $ $ $ $ *Non-agency asset-backed and commercial mortgage-backed Available-for-sale (in thousands) 12/31/2014 Cost or Gross Gross Amortized Unrealized Unrealized Fair Asset Class Cost Gains Losses Value U.S. government $ $ $ $ U.S. agency - Non-U.S. govt. & agency - Agency MBS ABS/CMBS* Corporate Municipal Total Fixed Income $ $ $ $ Equity $ $ $ $ *Non-agency asset-backed and commercial mortgage-backed
Schedule of contractual maturity of securities	9/30/2015 Available-for-sale Amortized Fair (in thousands) Cost Value Due in one year or less $ $ Due after one year through five years Due after five years through 10 years Due after 10 years Mtge/ABS/CMBS* Total available-for-sale $ $ *Mortgage-backed, asset-backed and commercial mortgage-backed

FAIR VALUE MEASUREMENTS (Tables

FAIR VALUE MEASUREMENTS (Tables)	9 Months Ended
	Sep. 30, 2015
Accounting Changes and Error Corrections [Abstract]
Schedule of assets measured at fair value on recurring basis	As of September 30, 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 $ — $ $ — $ U.S. agency — — Non-U.S. govt. & agency — — Agency MBS — — ABS/CMBS* — — Corporate — — Municipal — — Equity — — Total available-for-sale securities $ $ $ — $ *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 $ — $ $ — $ U.S. agency — — Non-U.S. govt. & agency — — Agency MBS — — ABS/CMBS* — — Corporate — — Municipal — — Equity — — Total available-for-sale securities $ $ $ — $ * Non-agency asset-backed and commercial mortgage-backed

INCOME TAXES (Tables)

INCOME TAXES (Tables)	9 Months Ended
	Sep. 30, 2015
INCOME TAXES
Schedule of reconciliation of income tax expense attributable to income from operations with amounts computed by applying the U.S. federal tax rate to pretax income from continuing operations	For the Three-Month Periods Ended September 30, For the Nine-Month Periods Ended September 30, 2015 2014 2015 2014 (in thousands) Amount % Amount % Amount % Amount % Provision for income taxes at the statutory rate of 35% $ % $ % $ % $ % Increase (reduction) in taxes resulting from: Tax exempt interest income % % % % Dividends received deduction % % % % ESOP dividends paid deduction % % % % Other items, net % % % % Total tax expense $ % $ % $ % $ %

STOCK BASED COMPENSATION (Table

STOCK BASED COMPENSATION (Tables)	9 Months Ended
	Sep. 30, 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 $ Options granted $ Options exercised $ $ Options canceled/forfeited $ Outstanding options at September 30, 2015 $ $ Exercisable options at September 30, 2015 $ $ Weighted Weighted Average Aggregate Number of Average Remaining Intrinsic Options Exercise Contractual Value Outstanding Price Life (in 000’s) Outstanding options at January 1, 2014 $ Options granted $ Options exercised $ $ Options canceled/forfeited $ Outstanding options at September 30, 2014 $ $ Exercisable options at September 30, 2014 $ $
Schedule of stock option assumptions for fair value estimate	2015 2014 Weighted-average fair value of grants $ $ Risk-free interest rates % % Dividend yield % % Expected volatility % % Expected option life years years

OPERATING SEGMENT INFORMATION (

OPERATING SEGMENT INFORMATION (Tables)	9 Months Ended
	Sep. 30, 2015
OPERATING SEGMENT INFORMATION
Schedule of revenues and net earnings by segment	For the Three-Month Periods For the Nine-Month Periods REVENUES Ended September 30, Ended September 30, (in thousands) 2015 2014 2015 2014 Net premiums earned: Casualty $ $ $ $ Property Surety Segment totals before income taxes $ $ $ $ Net investment income Net realized gains Total consolidated revenue $ $ $ $ NET EARNINGS (in thousands) 2015 2014 2015 2014 Casualty $ $ $ $ Property Surety Net underwriting income $ $ $ $ Net investment income Net realized gains General corporate expense and interest on debt Equity in earnings of unconsolidated investees Total earnings before income taxes $ $ $ $ Income tax expense Total net earnings $ $ $ $
Schedule of net premiums earned by major product type	For the Three-Month Periods For the Nine-Month Periods NET PREMIUMS EARNED Ended September 30, Ended September 30, (in thousands) 2015 2014 2015 2014 Casualty Commercial and personal umbrella $ $ $ $ General liability Professional services Commercial transportation P&C package business Executive products Medical professional liability Other casualty Total $ $ $ $ Property Commercial property $ $ $ $ Marine Specialty personal Property reinsurance Crop reinsurance Other property Total $ $ $ $ Surety Miscellaneous $ $ $ $ Commercial Contract Oil and gas Total $ $ $ $ Grand Total $ $ $ $

SUMMARY OF SIGNIFICANT ACCOUN20

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
INTANGIBLE ASSETS
Goodwill and intangibles	$ 72,026		$ 72,026		$ 72,695
Basic EPS, Income (Numerator)
Income available to common shareholders	35,908	$ 33,254	103,691	$ 97,948
Diluted EPS, Income (Numerator)
Income available to common shareholders	$ 35,908	$ 33,254	$ 103,691	$ 97,948
Basic EPS, Weighted Average Shares (Denominator)
Number of shares outstanding	43,342	43,026	43,232	43,004
Effect of Dilutive Securities, Shares (Denominator)
Stock options (in shares)	811	686	799	688
Diluted EPS, Weighted Average Shares (Denominator)
Number of shares outstanding	44,153	43,712	44,031	43,692
Basic EPS, Per Share Amount
Basic net earnings per share (in dollars per share)	$ 0.83	$ 0.77	$ 2.40	$ 2.28
Diluted EPS, Per Share Amount
Diluted earnings per share (in dollars per share)	$ 0.81	$ 0.76	$ 2.35	$ 2.24
CBIC and Rockbridge
INTANGIBLE ASSETS
Amortization of intangible assets	$ 200		$ 700
Surety segment | Acquisitions prior to 2011
INTANGIBLE ASSETS
Goodwill and intangibles	26,200		26,200
Goodwill	25,600		25,600
Indefinite-Lived Intangible Assets (Excluding Goodwill)	600		600
Surety segment | Contractors Bonding and Insurance Company
INTANGIBLE ASSETS
Goodwill	15,100		15,100
Casualty and Surety segment | Contractors Bonding and Insurance Company
INTANGIBLE ASSETS
Goodwill and intangibles	30,200		30,200
Indefinite-Lived Intangible Assets (Excluding Goodwill)	7,500		7,500
Definite-lived intangible assets, net of amortization	2,300		2,300
Casualty segment | Contractors Bonding and Insurance Company
INTANGIBLE ASSETS
Goodwill	5,300		5,300
Casualty segment | Rockbridge
INTANGIBLE ASSETS
Goodwill and intangibles	15,600		15,600
Goodwill	12,400		12,400
Definite-lived intangible assets, net of amortization	$ 3,200		$ 3,200

SUMMARY OF SIGNIFICANT ACCOUN21

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Unrealized Gains and Losses (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Changes in the balance of each component of accumulated other comprehensive earnings
Tax rate used (as a percent)	35.00%	35.00%	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)	$ (16,136)	$ (12,353)	(48,663)	$ 25,318
Ending balance	122,720		122,720
Unrealized Gains and Losses on Available-for-Sale Securities
Changes in the balance of each component of accumulated other comprehensive earnings
Beginning balance	138,856	173,698	171,383	136,027
Other comprehensive earnings before reclassifications	(11,257)	(8,642)	(32,020)	40,032
Amounts reclassified from accumulated other comprehensive earnings	(4,879)	(3,711)	(16,643)	(14,714)
Net current-period other comprehensive earnings (loss)	(16,136)	(12,353)	(48,663)	25,318
Ending balance	$ 122,720	$ 161,345	$ 122,720	$ 161,345

SUMMARY OF SIGNIFICANT ACCOUN22

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Reclassification (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Amount Reclassified from Accumulated Other Comprehensive Earnings
Net realized investment gains	$ 7,534	$ 5,708	$ 25,622	$ 22,640
Earnings before income taxes	51,937	48,594	151,100	143,008
Income tax expense	(16,029)	(15,340)	(47,409)	(45,060)
Net earnings	35,908	33,254	103,691	97,948
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	7,507	5,709	25,604	22,637
Earnings before income taxes	7,507	5,709	25,604	22,637
Income tax expense	(2,628)	(1,998)	(8,961)	(7,923)
Net earnings	$ 4,879	$ 3,711	$ 16,643	$ 14,714

INVESTMENTS (Details)

INVESTMENTS (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Amortized Cost
Due in one year or less	$ 12,229
Due after one year through five years	286,581
Due after five years through 10 years	562,899
Due after 10 years	305,922
Total amoritzed cost	1,504,333
Fair Value
Due in one year or less	12,407
Due after one year through five years	292,120
Due after five years through 10 years	572,555
Due after 10 years	309,142
Total fair value	1,532,304	$ 1,495,087
Fair value measured on recurring basis
Available-for-sale
Fair Value	1,901,351	1,905,729
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	1,504,333	1,448,204
Gross Unrealized Gains	41,166	53,004
Gross Unrealized Losses	(13,195)	(6,121)
Fair Value	1,532,304	1,495,087
U.S. government
Available-for-sale
Available-for-sale Securities, Amortized Cost Basis, Total	32,708	33,668
Gross Unrealized Gains	328	131
Gross Unrealized Losses		(11)
Fair Value	33,036	33,788
U.S. Agency
Available-for-sale
Available-for-sale Securities, Amortized Cost Basis, Total	13,455	6,385
Gross Unrealized Gains	430	362
Gross Unrealized Losses	(18)
Fair Value	13,867	6,747
Non-U.S. govt. & agency
Available-for-sale
Available-for-sale Securities, Amortized Cost Basis, Total	5,042	9,862
Gross Unrealized Gains		803
Gross Unrealized Losses	(378)
Fair Value	4,664	10,665
ABS/CMBS
Available-for-sale
Available-for-sale Securities, Amortized Cost Basis, Total	83,203	133,894
Gross Unrealized Gains	1,778	1,821
Gross Unrealized Losses	(172)	(411)
Fair Value	84,809	135,304
Agency MBS
Available-for-sale
Available-for-sale Securities, Amortized Cost Basis, Total	253,499	256,443
Gross Unrealized Gains	8,312	9,401
Gross Unrealized Losses	(539)	(1,376)
Fair Value	261,272	264,468
Corporate
Available-for-sale
Available-for-sale Securities, Amortized Cost Basis, Total	599,808	543,183
Gross Unrealized Gains	13,704	23,697
Gross Unrealized Losses	(11,489)	(4,190)
Fair Value	602,023	562,690
Municipal
Available-for-sale
Available-for-sale Securities, Amortized Cost Basis, Total	516,618	464,769
Gross Unrealized Gains	16,614	16,789
Gross Unrealized Losses	(599)	(133)
Fair Value	532,633	481,425
Mtge/ABS/CMBS
Available-for-sale
Available-for-sale Securities, Amortized Cost Basis, Total	336,702
Fair Value	346,080
Equity securities
Available-for-sale
Available-for-sale Securities, Amortized Cost Basis, Total	206,546	193,535
Gross Unrealized Gains	165,428	218,105
Gross Unrealized Losses	(2,927)	(998)
Fair Value	$ 369,047	$ 410,642

INVESTMENTS Unrealized Losses (

INVESTMENTS Unrealized Losses (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Investment positions with unrealized losses
Unrealized losses relative to total invested assets (as a percent)	0.80%
Fair value
Less than 12 months	$ 363,749	$ 227,874
12 Months and Greater	37,741	106,657
Total Fair value	401,490	334,531
Cost or amortized Cost
Less than 12 months	375,883	233,338
12 months and greater	41,729	108,312
Total Cost or Amortized Cost	417,612	341,650
Unrealized Loss
Less than 12 months	(12,134)	(5,464)
12 Months and Greater	(3,988)	(1,655)
Total Unrealized Loss	(16,122)	(7,119)
Debt securities
Fair value
Less than 12 months	335,728	217,037
12 Months and Greater	37,741	106,657
Total Fair value	373,469	323,694
Cost or amortized Cost
Less than 12 months	344,935	221,503
12 months and greater	41,729	108,312
Total Cost or Amortized Cost	386,664	329,815
Unrealized Loss
Less than 12 months	(9,207)	(4,466)
12 Months and Greater	(3,988)	(1,655)
Total Unrealized Loss	$ (13,195)	(6,121)
Percent to Total	100.00%
Debt securities | NAIC Rating 1 | AAA/AA/A | Aaa/Aa/A
Fair value
Total Fair value	$ 228,112
Cost or amortized Cost
Total Cost or Amortized Cost	232,521
Unrealized Loss
Total Unrealized Loss	$ (4,409)
Percent to Total	33.40%
Debt securities | NAIC Rating 2 | BBB | Baa
Fair value
Total Fair value	$ 83,492
Cost or amortized Cost
Total Cost or Amortized Cost	88,387
Unrealized Loss
Total Unrealized Loss	$ (4,895)
Percent to Total	37.10%
Debt securities | NAIC Rating 3 | BB | Ba
Fair value
Total Fair value	$ 31,700
Cost or amortized Cost
Total Cost or Amortized Cost	33,320
Unrealized Loss
Total Unrealized Loss	$ (1,620)
Percent to Total	12.30%
Debt securities | NAIC Rating 4 | B
Fair value
Total Fair value	$ 29,677
Cost or amortized Cost
Total Cost or Amortized Cost	31,846
Unrealized Loss
Total Unrealized Loss	$ (2,169)
Percent to Total	16.40%
Debt securities | NAIC Rating 5 | CCC or lower
Fair value
Total Fair value	$ 488
Cost or amortized Cost
Total Cost or Amortized Cost	590
Unrealized Loss
Total Unrealized Loss	$ (102)
Percent to Total	0.80%
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)
U.S. Agency
Fair value
Less than 12 months	$ 2,073
Total Fair value	2,073
Cost or amortized Cost
Less than 12 months	2,091
Total Cost or Amortized Cost	2,091
Unrealized Loss
Less than 12 months	(18)
Total Unrealized Loss	(18)
Non-U.S. govt. & agency
Fair value
Less than 12 months	4,664
Total Fair value	4,664
Cost or amortized Cost
Less than 12 months	5,042
Total Cost or Amortized Cost	5,042
Unrealized Loss
Less than 12 months	(378)
Total Unrealized Loss	(378)
Agency MBS
Fair value
Less than 12 months	43,665	12,840
12 Months and Greater	19,294	61,534
Total Fair value	62,959	74,374
Cost or amortized Cost
Less than 12 months	43,841	12,947
12 months and greater	19,657	62,803
Total Cost or Amortized Cost	63,498	75,750
Unrealized Loss
Less than 12 months	(176)	(107)
12 Months and Greater	(363)	(1,269)
Total Unrealized Loss	(539)	(1,376)
ABS/CMBS
Fair value
Less than 12 months	18,525	63,782
12 Months and Greater	2,571	11,616
Total Fair value	21,096	75,398
Cost or amortized Cost
Less than 12 months	18,675	64,084
12 months and greater	2,593	11,725
Total Cost or Amortized Cost	21,268	75,809
Unrealized Loss
Less than 12 months	(150)	(302)
12 Months and Greater	(22)	(109)
Total Unrealized Loss	(172)	(411)
Corporate
Fair value
Less than 12 months	214,761	123,617
12 Months and Greater	15,876	14,488
Total Fair value	230,637	138,105
Cost or amortized Cost
Less than 12 months	222,647	127,634
12 months and greater	19,479	14,661
Total Cost or Amortized Cost	242,126	142,295
Unrealized Loss
Less than 12 months	(7,886)	(4,017)
12 Months and Greater	(3,603)	(173)
Total Unrealized Loss	(11,489)	(4,190)
Municipal
Fair value
Less than 12 months	52,040	12,382
12 Months and Greater		19,019
Total Fair value	52,040	31,401
Cost or amortized Cost
Less than 12 months	52,639	12,411
12 months and greater		19,123
Total Cost or Amortized Cost	52,639	31,534
Unrealized Loss
Less than 12 months	(599)	(29)
12 Months and Greater		(104)
Total Unrealized Loss	(599)	(133)
Equity securities
Fair value
Less than 12 months	28,021	10,837
Total Fair value	28,021	10,837
Cost or amortized Cost
Less than 12 months	30,948	11,835
Total Cost or Amortized Cost	30,948	11,835
Unrealized Loss
Less than 12 months	(2,927)	(998)
Total Unrealized Loss	$ (2,927)	$ (998)

INVESTMENTS Debt Securities and

INVESTMENTS Debt Securities and Common Stock (Details)	9 Months Ended
	Sep. 30, 2015USD ($)securityposition	Sep. 30, 2014USD ($)	Dec. 31, 2014USD ($)
Securities in unrealized loss positions
Unrealized Loss	$ 16,122,000		$ 7,119,000
Debt securities
Securities in unrealized loss positions
Number of unrealized loss positions | position	361
Number of securities in unrealized loss positions for 12 months or longer | security	42
Unrealized Loss	$ 13,200,000
Unrealized losses as percentage of fixed income portfolio cost basis	0.90%
Other-than-temporary impairment (OTTI) losses recognized in other comprehensive earnings	$ 0	$ 0
Common Stock
Securities in unrealized loss positions
Number of unrealized loss positions | position	10
Number of securities in unrealized loss positions for 12 months or longer | security	0
Unrealized Loss	$ 2,900,000
Other-than-temporary impairment (OTTI) losses recognized in other comprehensive earnings	$ 0	$ 0

INVESTMENTS Debt and Short-term

INVESTMENTS Debt and Short-term Investments (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2015	Dec. 31, 2014	Sep. 30, 2014	Dec. 31, 2013
Other invested assets
Other Investments	$ 10,873	$ 10,873	$ 11,597
Total tax benefit on investments in housing tax credit partnership	300	800
Investment in FHLBC	1,600	1,600	1,800
Cash and Short-term Investments
Cash	28,188	28,188	30,620	$ 77,037	$ 39,469
Short-term investments, at cost which approximates fair value	58,983	58,983	16,339
Investment In Low Income Housing Tax Credit Partnership Net Of Amortization Member
Other invested assets
Other Investments	$ 9,300	$ 9,300	$ 9,800

FAIR VALUE MEASUREMENTS (Detail

FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
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
Fair value measured on recurring basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	1,901,351	$ 1,905,729
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	369,047	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	1,532,304	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
U.S. government | Fair value measured on recurring basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	33,036	33,788
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	33,036	33,788
U.S. Agency | Fair value measured on recurring basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	13,867	6,747
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	13,867	6,747
Non-U.S. govt. & agency | Fair value measured on recurring basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	4,664	10,665
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	4,664	10,665
Agency MBS | Fair value measured on recurring basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	261,272	264,468
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	261,272	264,468
ABS/CMBS | Fair value measured on recurring basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	84,809	135,304
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	84,809	135,304
Corporate. | Fair value measured on recurring basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	602,023	562,690
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	602,023	562,690
Municipal | Fair value measured on recurring basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	532,633	481,425
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	532,633	481,425
Equity securities | Fair value measured on recurring basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	369,047	410,642
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	$ 369,047	$ 410,642

INCOME TAXES (Details)

INCOME TAXES (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Reconciliation of income tax expense reported to amount computed by applying the U.S. federal tax rate
Provision for income taxes at the statutory rate of 35%	$ 18,178	$ 17,008	$ 52,885	$ 50,053
Tax-exempt interest income	(1,082)	(1,033)	(3,098)	(3,115)
Dividends received deduction	(603)	(633)	(1,715)	(1,764)
ESOP dividends paid deduction	(234)	(218)	(693)	(639)
Other items, net	(230)	216	30	525
Total tax expense	$ 16,029	$ 15,340	$ 47,409	$ 45,060
Reconciliation of income tax expense rate to the U.S. federal tax rate
U.S. federal tax rate (as a percent)	35.00%	35.00%	35.00%	35.00%
Effective rate reduction due to tax exempt interest income (as a percent)	(2.10%)	(2.10%)	(2.00%)	(2.20%)
Effective rate reduction due to dividend received (as a percent)	(1.20%)	(1.30%)	(1.10%)	(1.20%)
Effective rate reduction due to dividend paid to ESOP (as a percent)	(0.40%)	(0.40%)	(0.50%)	(0.50%)
Effective rate reduction due to other items, net (as a percent)	(0.40%)	0.40%	(0.00%)	0.40%
Effective tax rates (as a percent)	30.90%	31.60%	31.40%	31.50%

STOCK BASED COMPENSATION (Detai

STOCK BASED COMPENSATION (Details) - USD ($)	3 Months Ended				5 Months Ended	9 Months Ended		60 Months Ended
	Sep. 30, 2015	Mar. 31, 2015	Sep. 30, 2014	Mar. 31, 2014	Sep. 30, 2015	Sep. 30, 2015	Sep. 30, 2014	May. 06, 2015	May. 05, 2010
Weighted Number of Options Outstanding
Outstanding options at the beginning of the period (in shares)		2,892,717		2,595,084		2,892,717	2,595,084
Options granted (in shares)						517,000	464,500
Options exercised (in shares)						(511,187)	(47,412)
Options canceled/forfeited (in shares)						(4,560)	(740)
Outstanding options at the end of the period (in shares)	2,893,970		3,011,432		2,893,970	2,893,970	3,011,432
Exercisable options at the end of the period (in shares)	1,197,470		1,351,312		1,197,470	1,197,470	1,351,312
Weighted Average Exercise Price
Outstanding options at the beginning of the period (in dollars per share)		$ 26.65		$ 26.04		$ 26.65	$ 26.04
Options granted (in dollars per share)						50.09	42.90
Options exercised (in dollars per share)						18.27	17.95
Options canceled/forfeited (in dollars per share)						31.87	16.51
Outstanding options at the end of the period (in dollars per share)	$ 32.31		$ 28.77		$ 32.31	32.31	28.77
Exercisable options at the end of the period (in dollars per share)	$ 23.89		$ 22.29		$ 23.89	$ 23.89	$ 22.29
Weighted Average Remaining Contractual Life
Weighted-average remaining contractual term of options outstanding						5 years 3 months 15 days	5 years 3 months
Weighted-average remaining contractual term of exercisable options						4 years 4 days	3 years 11 months 27 days
Aggregate Intrinsic Value
Options exercised (in dollars)						$ 17,845,000	$ 1,250,000
Outstanding options at the end of the period (in dollars)	$ 61,522,000		$ 43,850,000		$ 61,522,000	61,522,000	43,850,000
Exercisable options at the end of the period (in dollars)	35,497,000		28,382,000		35,497,000	$ 35,497,000	$ 28,382,000
Weighted-average fair value of grants (in dollars per share)						$ 9.04	$ 7.76
Stock-based compensation expenses (in dollars)	1,100,000		900,000			$ 3,000,000	$ 2,900,000
Income tax benefit from stock-based compensation (in dollars)	400,000		$ 300,000			1,100,000	$ 1,000,000
Unrecognized stock-based compensation expense (in dollars)	$ 6,300,000				$ 6,300,000	$ 6,300,000
Weighted average grant date assumptions and weighted average fair value
Weighted-average fair value of grants (in dollars per share)						$ 9.04	$ 7.76
Risk-free interest rates (as a percent)						1.53%	1.70%
Dividend yield (as a percent)						1.81%	1.94%
Expected volatility (as a percent)						22.89%	23.19%
Expected option life						5 years 2 months 16 days	5 years 2 months 1 day
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
Age and period of service of the participant to be eligible for retirement						75 years
Omnibus Stock Plan
Share-based Compensation Arrangement by Share-based Payment Award [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 (2010 LTIP)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares authorized for grant								4,000,000
Weighted Number of Options Outstanding
Options granted (in shares)		53,500						2,878,000
RLI Corp. Long-Term Incentive Plan (2010 LTIP) | Outside director
Weighted average grant date assumptions and weighted average fair value
Restricted shares issued per recipient (in dollars)				$ 10,000
RLI Corp. Long-Term Incentive Plan (2015 LITP)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares authorized for grant	4,000,000				4,000,000	4,000,000
Weighted Number of Options Outstanding
Options granted (in shares)					463,500
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 INFORMATION30

OPERATING SEGMENT INFORMATION (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
REVENUES
Net premiums earned	$ 179,448	$ 177,747	$ 520,790	$ 507,483
Net investment income	13,964	14,200	40,890	41,764
Net realized gains	7,534	5,708	25,622	22,640
Consolidated revenue	200,946	197,655	587,302	571,887
NET EARNINGS (LOSSES)
Net underwriting income	33,593	30,428	86,067	79,529
Net investment income	13,964	14,200	40,890	41,764
Net realized gains	7,534	5,708	25,622	22,640
General corporate expense and interest on debt	(3,815)	(4,657)	(12,520)	(13,129)
Equity in earnings of unconsolidated investees	661	2,915	11,041	12,204
Earnings before income taxes	51,937	48,594	151,100	143,008
Income tax expense	16,029	15,340	47,409	45,060
Net earnings	35,908	33,254	103,691	97,948
Casualty segment
REVENUES
Net premiums earned	105,160	96,181	305,842	281,518
NET EARNINGS (LOSSES)
Net underwriting income	13,651	13,786	38,124	36,331
Property segment
REVENUES
Net premiums earned	44,685	54,143	128,084	146,252
NET EARNINGS (LOSSES)
Net underwriting income	9,216	7,498	22,220	19,469
Surety segment
REVENUES
Net premiums earned	29,603	27,423	86,864	79,713
NET EARNINGS (LOSSES)
Net underwriting income	$ 10,726	$ 9,144	$ 25,723	$ 23,729

OPERATING SEGMENT INFORMATION M

OPERATING SEGMENT INFORMATION Major Products (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Revenue by major product
Net premiums earned	$ 179,448	$ 177,747	$ 520,790	$ 507,483
Casualty segment
Revenue by major product
Net premiums earned	105,160	96,181	305,842	281,518
Casualty segment | Commercial and personal umbrella
Revenue by major product
Net premiums earned	26,500	25,256	77,809	75,036
Casualty segment | General liability
Revenue by major product
Net premiums earned	20,146	20,095	60,725	60,550
Casualty segment | Commercial transportation
Revenue by major product
Net premiums earned	17,464	14,677	47,262	44,193
Casualty segment | Professional services
Revenue by major product
Net premiums earned	18,140	15,227	52,861	41,927
Casualty segment | P&C package business
Revenue by major product
Net premiums earned	10,257	8,969	29,815	25,747
Casualty segment | Executive products
Revenue by major product
Net premiums earned	4,459	4,760	13,745	14,165
Casualty segment | Medical professional liability
Revenue by major product
Net premiums earned	3,032	3,546	9,168	10,970
Casualty segment | Other casualty
Revenue by major product
Net premiums earned	5,162	3,651	14,457	8,930
Property segment
Revenue by major product
Net premiums earned	44,685	54,143	128,084	146,252
Property segment | Commercial property
Revenue by major product
Net premiums earned	18,546	20,188	57,498	60,675
Property segment | Marine
Revenue by major product
Net premiums earned	12,029	12,115	34,930	37,278
Property segment | Crop reinsurance
Revenue by major product
Net premiums earned	4,523	11,802	6,210	18,671
Property segment | Specialty Personal
Revenue by major product
Net premiums earned	6,535	6,947	19,982	19,764
Property segment | Property reinsurance
Revenue by major product
Net premiums earned	3,029	2,997	9,388	9,745
Property segment | Other property
Revenue by major product
Net premiums earned	23	94	76	119
Surety segment
Revenue by major product
Net premiums earned	29,603	27,423	86,864	79,713
Surety segment | Miscellaneous
Revenue by major product
Net premiums earned	10,659	9,868	31,316	28,948
Surety segment | Contract
Revenue by major product
Net premiums earned	7,472	6,879	21,091	19,896
Surety segment | Commercial surety product
Revenue by major product
Net premiums earned	7,546	6,521	22,039	18,968
Surety segment | Oil and Gas
Revenue by major product
Net premiums earned	$ 3,926	$ 4,155	$ 12,418	$ 11,901

ACQUISITION (Details)

ACQUISITION (Details) $ in Thousands	Mar. 04, 2015USD ($)	Feb. 05, 2014USD ($)	Sep. 30, 2015USD ($)	Sep. 30, 2014USD ($)	Sep. 30, 2015USD ($)subsidiary	Sep. 30, 2014USD ($)
Business acquisition
Amount of investment					$ 1,711	$ 5,301
Equity in earnings of unconsolidated investees			$ 661	$ 2,915	11,041	12,204
Prime Holdings Insurance Services, Inc. (Prime) [Member]
Business acquisition
Amount of investment	$ 1,700	$ 5,300
Equity ownership interest (as a percent)	27.00%	20.00%
Equity in earnings of unconsolidated investees			200	100	$ 900	400
Percentage of quota share reinsurance treaty, effective January 1, 2014					25.00%
Number of insurance subsidiaries | subsidiary					2
Reinsurance assumed			$ 3,000	$ 2,400	$ 9,700	$ 7,400