Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2024 | Apr. 16, 2024 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Mar. 31, 2024 | |
Entity File Number | 001-09463 | |
Entity Registrant Name | RLI Corp | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 37-0889946 | |
Entity Address, Address Line One | 9025 North Lindbergh Drive, | |
Entity Address, City or Town | Peoria, | |
Entity Address, State or Province | IL | |
Entity Address, Postal Zip Code | 61615 | |
City Area Code | 309 | |
Local Phone Number | 692-1000 | |
Title of 12(b) Security | Common Stock $0.01 par value | |
Trading Symbol | RLI | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 45,709,881 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2024 | |
Document Fiscal Period Focus | Q1 | |
Entity Central Index Key | 0000084246 | |
Amendment Flag | false |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Earnings and Comprehensive Earnings - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Income Statement [Abstract] | ||
Net premiums earned | $ 360,676 | $ 307,723 |
Net investment income | 32,847 | 27,084 |
Net realized gains | 5,994 | 14,620 |
Net unrealized gains on equity securities | 45,314 | 15,496 |
Consolidated revenue | 444,831 | 364,923 |
Losses and settlement expenses | 143,824 | 114,488 |
Policy acquisition costs | 110,454 | 101,444 |
Insurance operating expenses | 28,703 | 23,901 |
Interest expense on debt | 1,618 | 2,008 |
General corporate expenses | 5,010 | 4,214 |
Total expenses | 289,609 | 246,055 |
Equity in earnings of unconsolidated investees | 4,769 | 3,923 |
Earnings before income taxes | 159,991 | 122,791 |
Income tax expense | 32,091 | 23,980 |
Net earnings | 127,900 | 98,811 |
Other comprehensive earnings (loss), net of tax | (12,671) | 37,707 |
Comprehensive earnings | $ 115,229 | $ 136,518 |
Basic net earnings per share | $ 2.80 | $ 2.17 |
Diluted net earnings per share | $ 2.77 | $ 2.15 |
Weighted average number of common shares outstanding: | ||
Basic | 45,684 | 45,530 |
Diluted | 46,163 | 46,035 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
ASSETS | ||
Available-for-sale, at fair value (amortized cost of $3,082,273 and allowance for credit losses of $237 at 3/31/24) (amortized cost of $3,054,391 and allowance for credit losses of $306 at 12/31/23) | $ 2,863,321 | $ 2,855,849 |
Equity securities, at fair value (cost - $362,527 at 3/31/24 and $354,022 at 12/31/23) | 643,367 | 590,041 |
Short-term investments, at cost which approximates fair value | 147,186 | 134,923 |
Other invested assets | 59,273 | 59,081 |
Cash | 44,557 | 36,424 |
Total investments and cash | 3,757,704 | 3,676,318 |
Accrued investment income | 25,353 | 24,062 |
Premiums and reinsurance balances receivable, net of allowances for uncollectible amounts of $21,699 at 3/31/24 and $21,438 at 12/31/23 | 230,537 | 221,206 |
Ceded unearned premium | 107,822 | 112,257 |
Reinsurance balances recoverable on unpaid losses and settlement expenses, net of allowances for uncollectible amounts of $11,085 at 3/31/24 and $10,608 at 12/31/23 | 814,676 | 757,349 |
Deferred policy acquisition costs | 152,924 | 146,566 |
Property and equipment, at cost, net of accumulated depreciation of $75,558 at 3/31/24 and $74,279 at 12/31/23 | 46,536 | 46,715 |
Investment in unconsolidated investees | 66,134 | 56,966 |
Goodwill and intangibles | 53,562 | 53,562 |
Income taxes-deferred | 10,700 | 15,872 |
Other assets | 72,461 | 69,348 |
TOTAL ASSETS | 5,338,409 | 5,180,221 |
Liabilities | ||
Unpaid losses and settlement expenses | 2,532,190 | 2,446,025 |
Unearned premiums | 904,848 | 892,326 |
Reinsurance balances payable | 35,157 | 71,507 |
Funds held | 106,430 | 101,446 |
Income taxes-current | 25,455 | 3,757 |
Debt | 100,000 | 100,000 |
Accrued expenses | 68,216 | 108,880 |
Other liabilities | 45,361 | 42,766 |
TOTAL LIABILITIES | 3,817,657 | 3,766,707 |
Shareholders' Equity | ||
Common stock ($0.01 par value) (Shares authorized - 200,000,000) (68,640,095 shares issued, 45,709,881 shares outstanding at 3/31/24) (68,570,261 shares issued, 45,640,047 shares outstanding at 12/31/23) | 687 | 686 |
Paid-in capital | 366,701 | 362,345 |
Accumulated other comprehensive earnings (loss) | (178,974) | (166,303) |
Retained earnings | 1,725,337 | 1,609,785 |
Deferred compensation | 12,749 | 13,539 |
Treasury shares, at cost (22,930,214 shares at 3/31/24 and 12/31/23) | (405,748) | (406,538) |
TOTAL SHAREHOLDERS' EQUITY | 1,520,752 | 1,413,514 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 5,338,409 | $ 5,180,221 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Statement Of Financial Position [Abstract] | ||
Available-for-sale, amortized cost | $ 3,082,273 | $ 3,054,391 |
Available-for-sale, allowance for credit losses | 237 | 306 |
Equity securities, cost | 362,527 | 354,022 |
Premiums and reinsurance balances receivable, allowances for uncollectible amounts | 21,699 | 21,438 |
Reinsurance balances recoverable on unpaid losses and settlement expenses, allowances for uncollectible amounts | 11,085 | 10,608 |
Property and equipment, accumulated depreciation | $ 75,558 | $ 74,279 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
Common stock, shares issued (in shares) | 68,640,095 | 68,570,261 |
Common stock, shares outstanding (in shares) | 45,709,881 | 45,640,047 |
Treasury stock, shares (in shares) | 22,930,214 | 22,930,214 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands | Common stock | Paid-in Capital | Accumulated Other Comprehensive Earnings (Loss) | Retained Earnings Cumulative Effect, Period of Adoption, Adjustment | Retained Earnings | Deferred Compensation | Treasury Stock at Cost | Cumulative Effect, Period of Adoption, Adjustment | Total |
Shareholders' Equity Attributable to Parent, Beginning Balance at Dec. 31, 2022 | $ 684 | $ 352,391 | $ (229,076) | $ (951) | $ 1,446,341 | $ 12,015 | $ (405,014) | $ (951) | $ 1,177,341 |
Shares, Outstanding, Beginning Balance at Dec. 31, 2022 | 45,469,752 | ||||||||
Increase Decrease In Shareholders Equity Roll Forward | |||||||||
Net Income (Loss) | 98,811 | 98,811 | |||||||
Other comprehensive earnings (loss), net of tax | 37,707 | 37,707 | |||||||
Deferred compensation | 249 | (249) | |||||||
Share-based compensation | $ 1 | 2,863 | 2,864 | ||||||
Share-based compensation (in shares) | 84,944 | ||||||||
Dividends and dividend equivalents | (11,851) | (11,851) | |||||||
Shareholders' Equity Attributable to Parent, Ending Balance at Mar. 31, 2023 | $ 685 | 355,254 | (191,369) | 1,532,350 | 12,264 | (405,263) | 1,303,921 | ||
Shares, Outstanding, Ending Balance at Mar. 31, 2023 | 45,554,696 | ||||||||
Shareholders' Equity Attributable to Parent, Beginning Balance at Dec. 31, 2023 | $ 686 | 362,345 | (166,303) | 1,609,785 | 13,539 | (406,538) | 1,413,514 | ||
Shares, Outstanding, Beginning Balance at Dec. 31, 2023 | 45,640,047 | ||||||||
Increase Decrease In Shareholders Equity Roll Forward | |||||||||
Net Income (Loss) | 127,900 | 127,900 | |||||||
Other comprehensive earnings (loss), net of tax | (12,671) | (12,671) | |||||||
Deferred compensation | (790) | 790 | |||||||
Share-based compensation | $ 1 | 4,356 | 4,357 | ||||||
Share-based compensation (in shares) | 69,834 | ||||||||
Dividends and dividend equivalents | (12,348) | (12,348) | |||||||
Shareholders' Equity Attributable to Parent, Ending Balance at Mar. 31, 2024 | $ 687 | $ 366,701 | $ (178,974) | $ 1,725,337 | $ 12,749 | $ (405,748) | $ 1,520,752 | ||
Shares, Outstanding, Ending Balance at Mar. 31, 2024 | 45,709,881 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Shareholders' Equity (Parenthetical) - $ / shares | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Statement Of Shareholders Equity [Abstract] | ||
Cash dividends paid per common share | $ 0.27 | $ 0.26 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Statement Of Cash Flows [Abstract] | ||
Net cash provided by operating activities | $ 70,946 | $ 69,219 |
Purchase of: | ||
Fixed income securities, available-for-sale | (120,109) | (180,040) |
Equity securities | (17,302) | (6,395) |
Property and equipment | (1,089) | (1,277) |
Other | (2,664) | (1,392) |
Proceeds from sale of: | ||
Fixed income securities - available-for-sale | 11,819 | 3,064 |
Equity securities | 15,910 | 3,501 |
Equity method investee | 14,134 | |
Other | 1,350 | 271 |
Proceeds from call or maturity of: | ||
Fixed income securities - available-for-sale | 71,284 | 190,303 |
Net proceeds from sale (purchase) of short-term investments | (12,263) | (79,973) |
Net cash used in investing activities | (53,064) | (57,804) |
Cash Flows from Financing Activities | ||
Cash dividends paid | (12,337) | (11,839) |
Proceeds from stock option exercises | 2,588 | 375 |
Net cash used in financing activities | (9,749) | (11,464) |
Net increase (decrease) in cash | 8,133 | (49) |
Cash at the beginning of the period | 36,424 | 22,818 |
Cash at March 31 | $ 44,557 | $ 22,769 |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Summary of Significant Accounting Policies | NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION AND 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 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 2023 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, 2024 and the results of operations of RLI Corp. (the Company) 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 applicable in 2024 materially impact our financial statements. C. PROSPECTIVE ACCOUNTING STANDARDS 2023-07—Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures The guidance in ASU 2023-07 was designed to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Although the Company continues to evaluate the impact of adopting this new accounting standard, the amendments are disclosure-related and should not have a material impact on our financial statements. 2023-09—Income Taxes (Topic 740): Improvements to Income Tax Disclosures The guidance in ASU 2023-09 was designed to increase transparency about income tax information through improvements to the rate reconciliation and disclosure of income taxes paid. This ASU is effective for fiscal years beginning after December 15, 2024. Although the Company continues to evaluate the impact of adopting this new accounting standard, the amendments are disclosure-related and should not have a material impact on our financial statements. D. REINSURANCE Ceded unearned premiums and reinsurance balances recoverable on unpaid losses and settlement expenses are reported separately as an asset, rather than being netted with the related liability, since reinsurance does not relieve the Company of our liability to policyholders. Such balances are subject to the credit risk associated with the individual reinsurer. We continually monitor the financial condition of our reinsurers and actively follow up on any past due or disputed amounts. As part of our monitoring efforts, we review reinsurers’ annual financial statements and Securities and Exchange Commission filings for those that are publicly traded. We also review insurance industry developments that may impact the financial condition of our reinsurers. We analyze the credit risk associated with our reinsurance balances recoverable by monitoring the AM Best and Standard & Poor’s (S&P) ratings of our reinsurers. In addition, we subject our reinsurance balances recoverable to detailed recoverability tests, including a segment-based analysis using the average default rating percentage by S&P rating, which assists the Company in assessing the sufficiency of its allowance. Additionally, we perform an in-depth reinsurer financial condition analysis prior to the renewal of our reinsurance placements. Our policy is to charge to earnings, in the form of an allowance, an estimate of unrecoverable amounts from reinsurers. This allowance is reviewed on an ongoing basis to ensure that the amount makes a reasonable provision for reinsurance balances that we may be unable to recover. Once regulatory action (such as receivership, finding of insolvency, order of conservation or order of liquidation) is taken against a reinsurer, the paid and unpaid recoverable balances for the reinsurer are specifically identified and written off through use of our allowance for estimated unrecoverable amounts from reinsurers. When we write-off such a balance, it is done in full. We then re-evaluate the overall allowance and determine whether the balance is sufficient and, if needed, an additional allowance is recognized. The allowances for uncollectible amounts on paid and unpaid reinsurance balances recoverable were $16 million and $11 million, respectively, at March 31, 2024 and December 31, 2023. Changes in the allowances were due to changes in the amount of reinsurance balances outstanding, the composition of reinsurers from whom the balances were recoverable and their associated S&P default ratings. No write-offs were applied to the allowances in the first three months of 2024 and less than $1 million was recovered. E. INTANGIBLE ASSETS The composition of goodwill and intangible assets at March 31, 2024 and December 31, 2023 is detailed in the following table: March 31, December 31, (in thousands) 2024 2023 Goodwill Surety $ 40,816 $ 40,816 Casualty 5,246 5,246 Total goodwill $ 46,062 $ 46,062 Indefinite-lived intangibles 7,500 7,500 Total goodwill and intangibles $ 53,562 $ 53,562 Annual impairment assessments were performed on our goodwill and state insurance license indefinite-lived intangible assets during the second quarter of 2023. Based upon these reviews, none of the assets were impaired. In addition, there were no triggering events as of March 31, 2024 that would suggest an updated impairment test would be needed for our goodwill and intangible assets. F. EARNINGS PER SHARE Basic earnings per share (EPS) is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the dilution that could occur if securities or other contracts to issue common stock or common stock equivalents were exercised or converted into common stock. When inclusion of these items increases the earnings per share or reduces the loss per share, the effect on earnings is anti-dilutive. Under these circumstances, the diluted net earnings or net loss per share is computed excluding these items. The following represents a reconciliation of the numerator and denominator of the basic and diluted EPS computations contained in the unaudited condensed consolidated interim financial statements: For the Three Months For the Three Months Ended March 31, 2024 Ended March 31, 2023 Income Shares Per Share Income Shares Per Share (in thousands, except per share data) (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount Basic EPS Earnings available to common shareholders $ 127,900 45,684 $ 2.80 $ 98,811 45,530 $ 2.17 Effect of Dilutive Securities Stock options and restricted stock units — 479 — 505 Diluted EPS Earnings available to common shareholders $ 127,900 46,163 $ 2.77 $ 98,811 46,035 $ 2.15 Anti-dilutive securities excluded from diluted EPS — — G. COMPREHENSIVE EARNINGS Our comprehensive earnings include net earnings plus after-tax unrealized gains and losses on our available-for-sale fixed income portfolio. In reporting the components of comprehensive earnings, we used the federal statutory tax rate of 21 percent. Other comprehensive earnings (loss), as shown in the consolidated statements of earnings and comprehensive earnings, is net of tax benefit of $3 million for the first quarter of 2024, compared to $10 million of tax expense for the same period in 2023. Unrealized losses, net of tax, recognized in other comprehensive earnings (loss) were $13 million for the first three months of 2024, compared to $38 million of unrealized gains, net of tax, during the same period last year. The unrealized losses in the first quarter of 2024 were attributable to an increase in interest rates, which decreased the fair value of securities held in the fixed income portfolio, compared to declining interest rates during the first quarter of 2023, which increased the fair value of fixed income securities. The following table illustrates the changes in the balance of each component of accumulated other comprehensive earnings (loss) for each period presented in the unaudited condensed consolidated interim financial statements: (in thousands) For the Three Months Ended March 31, Unrealized Gains/Losses on Available-for-Sale Securities 2024 2023 Beginning balance $ (166,303) $ (229,076) Other comprehensive earnings (loss) before reclassifications (13,275) 36,254 Amounts reclassified from accumulated other comprehensive earnings 604 1,453 Net current-period other comprehensive earnings (loss) $ (12,671) $ 37,707 Ending balance $ (178,974) $ (191,369) Balance of securities for which an allowance for credit losses has been recognized in net earnings $ 904 $ 1,841 Credit losses on or the sale of an available-for-sale security results in amounts being reclassified from accumulated other comprehensive earnings (loss) to current period net earnings. The effects of reclassifications out of accumulated other comprehensive earnings (loss) by the respective line items of net earnings are presented in the following table: Amount Reclassified from Accumulated Other (in thousands) Comprehensive Earnings (Loss) For the Three Months Component of Accumulated Ended March 31, Affected line item in the Other Comprehensive Earnings (Loss) 2024 2023 Statement of Earnings Unrealized gains and losses on available-for-sale securities $ (834) $ (1,713) Net realized gains (losses) 70 (126) Credit gains (losses) presented within net realized gains $ (764) $ (1,839) Earnings (loss) before income taxes 160 386 Income tax (expense) benefit $ (604) $ (1,453) Net earnings (loss) H. FAIR VALUE MEASUREMENTS Fair value is defined as the price in the principal market that would be received for an asset to facilitate an orderly transaction between market participants on the measurement date. We determined the fair value of certain financial instruments based on their underlying characteristics and relevant transactions in the marketplace. We maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The following are the levels of the fair value hierarchy and a brief description of the type of valuation inputs that are used to establish each level. Financial assets are classified based upon the lowest level of significant input that is used to determine fair value. Level 1 Level 2 Level 3 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: Mortgage-backed Securities (MBS)/Commercial Mortgage-backed Securities (CMBS) and Asset-backed Securities (ABS): Regulation D Private Placement Securities: For all of our fixed income securities classified as Level 2, we periodically conduct a review to assess the reasonableness of the fair values provided by our pricing services. Our review consists of a two-pronged approach. First, we compare prices provided by our pricing services to those provided by an additional source. In some cases, we obtain prices from securities brokers and compare them to the prices provided by our pricing services. If discrepancies are found in our comparisons, we compare our prices to actual reported trade data for like securities. No changes to the fair values supplied by our pricing services have occurred as a result of our reviews. Based on these assessments, we have determined that the fair values of our Level 2 fixed income securities provided by our pricing services are reasonable. Equity Securities: Due to the relatively short-term nature of cash, short-term investments, accounts receivable and accounts payable, their carrying amounts are reasonable estimates of fair value. Our investments in private funds, classified as other invested assets, are measured using the investments’ net asset value per share and are not categorized within the fair value hierarchy. |
Investments
Investments | 3 Months Ended |
Mar. 31, 2024 | |
Investments Debt And Equity Securities [Abstract] | |
Investments | 2. INVESTMENTS Our investments are primarily composed of fixed income debt securities and common stock equity securities. We carry our equity securities at fair value and categorize all of our debt securities as available-for-sale, which are carried at fair value. Realized gains and losses on disposition of investments are based on the specific identification of the investments sold on the settlement date. The following is a summary of the disposition of fixed income and equity securities for the three-month periods ended March 31, 2024 and 2023: Sales Proceeds Gross Realized Net Realized (in thousands) From Sales Gains Losses Gain (Loss) 2024 Fixed income securities - available-for-sale $ 11,819 $ 289 $ (793) $ (504) Equity securities 15,910 7,234 (121) 7,113 2023 Fixed income securities - available-for-sale $ 3,790 $ 35 $ (82) $ (47) Equity securities 3,501 2,417 (101) 2,316 Calls/Maturities Gross Realized Net Realized (in thousands) Proceeds Gains Losses Gain (Loss) 2024 Fixed income securities - available-for-sale $ 72,423 $ 33 $ (157) $ (124) 2023 Fixed income securities - available-for-sale $ 190,305 $ 35 $ (40) $ (5) FAIR VALUE MEASUREMENTS Assets measured at fair value on a recurring basis as of March 31, 2024 and December 31, 2023 are summarized below: As of March 31, 2024 Quoted Prices in Significant Other Significant Active Markets for Observable Unobservable Identical Assets Inputs Inputs (in thousands) (Level 1) (Level 2) (Level 3) Total Fixed income securities - available-for-sale U.S. government $ — $ 329,559 $ — $ 329,559 U.S. agency — 58,455 — 58,455 Non-U.S. government & agency — 3,844 — 3,844 Agency MBS — 414,428 — 414,428 ABS/CMBS/MBS* — 289,476 — 289,476 Corporate — 1,158,487 62,560 1,221,047 Municipal — 546,512 — 546,512 Total fixed income securities - available-for-sale $ — $ 2,800,761 $ 62,560 $ 2,863,321 Equity securities 641,758 — 1,609 643,367 Total $ 641,758 $ 2,800,761 $ 64,169 $ 3,506,688 * Non-agency asset-backed, commercial mortgage-backed and mortgage-backed securities As of December 31, 2023 Quoted Prices in Significant Other Significant Active Markets for Observable Unobservable Identical Assets Inputs Inputs (in thousands) (Level 1) (Level 2) (Level 3) Total Fixed income securities - available-for-sale U.S. government $ — $ 308,031 $ — $ 308,031 U.S. agency — 59,826 — 59,826 Non-U.S. government & agency — 3,882 — 3,882 Agency MBS — 425,285 — 425,285 ABS/CMBS/MBS* — 281,182 — 281,182 Corporate — 1,164,548 60,471 1,225,019 Municipal — 552,624 — 552,624 Total fixed income securities - available-for-sale $ — $ 2,795,378 $ 60,471 $ 2,855,849 Equity securities 588,416 — 1,625 590,041 Total $ 588,416 $ 2,795,378 $ 62,096 $ 3,445,890 * Non-agency asset-backed, commercial mortgage-backed and mortgage-backed securities The following table summarizes changes in the balance of securities whose fair value was measured using significant unobservable inputs (Level 3). (in thousands) Level 3 Securities Balance as of January 1, 2024 $ 62,096 Net realized and unrealized gains (losses) Included in other comprehensive earnings (loss) (271) Purchases 2,735 Sales / Calls / Maturities (391) Balance as of March 31, 2024 $ 64,169 Change in unrealized gains (losses) during the period for Level 3 assets held at period-end - included in other comprehensive earnings (loss) $ (271) The amortized cost and fair value of available-for-sale fixed income securities by contractual maturity as of March 31, 2024 were as follows: March 31, 2024 (in thousands) Amortized Cost Fair Value Due in one year or less $ 188,801 $ 186,550 Due after one year through five years 875,943 843,536 Due after five years through 10 years 696,813 669,310 Due after 10 years 548,944 460,021 ABS/CMBS/MBS* 771,772 703,904 Total available-for-sale $ 3,082,273 $ 2,863,321 * Asset-backed, commercial mortgage-backed and mortgage-backed securities The amortized cost and fair value of available-for-sale securities at March 31, 2024 and December 31, 2023 are presented in the tables below. Amortized cost does not include the $24 million and $23 million of accrued interest receivable as of March 31, 2024 and December 31, 2023, respectively. March 31, 2024 Cost or Allowance Gross Gross Amortized for Credit Unrealized Unrealized Fair (in thousands) Cost Losses Gains Losses Value U.S. government $ 337,014 $ — $ 388 $ (7,843) $ 329,559 U.S. agency 59,956 — 444 (1,945) 58,455 Non-U.S. government & agency 4,800 — — (956) 3,844 Agency MBS 456,358 — 1,208 (43,138) 414,428 ABS/CMBS/MBS* 315,414 (2) 970 (26,906) 289,476 Corporate 1,277,258 (235) 4,732 (60,708) 1,221,047 Municipal 631,473 — 1,413 (86,374) 546,512 Total Fixed Income $ 3,082,273 $ (237) $ 9,155 $ (227,870) $ 2,863,321 December 31, 2023 Cost or Allowance Gross Gross Amortized for Credit Unrealized Unrealized Fair (in thousands) Cost Losses Gains Losses Value U.S. government $ 312,632 $ — $ 1,257 $ (5,858) $ 308,031 U.S. agency 60,763 — 652 (1,589) 59,826 Non-U.S. government & agency 4,800 — — (918) 3,882 Agency MBS 460,551 — 2,636 (37,902) 425,285 ABS/CMBS/MBS* 308,458 (3) 611 (27,884) 281,182 Corporate 1,273,187 (303) 8,766 (56,631) 1,225,019 Municipal 634,000 — 2,238 (83,614) 552,624 Total Fixed Income $ 3,054,391 $ (306) $ 16,160 $ (214,396) $ 2,855,849 * Non-agency asset-backed, commercial mortgage-backed and mortgage-backed securities Allowance for Credit Losses and Unrealized Losses on Fixed Income Securities A reversable allowance for credit losses is recognized on available-for-sale fixed income securities. Several criteria are reviewed to determine if securities in the fixed income portfolio should be included in the allowance for expected credit loss evaluation, including: ● Changes in technology that may impair the earnings potential of the investment, ● The discontinuance of a segment of business that may affect future earnings potential, ● Reduction of or non-payment of interest and/or principal, ● Specific concerns related to the issuer’s industry or geographic area of operation, ● Significant or recurring operating losses, poor cash flows and/or deteriorating liquidity ratios and ● Downgrades in credit quality by a major rating agency. If changes in interest rates and credit spreads do not reasonably explain the unrealized loss for an available-for-sale security, or if any of the criteria above indicate a potential credit loss, the security is subjected to a discounted cash flow analysis. Inputs into the discounted cash flow analysis include prepayment assumptions for structured securities, default rates and recoverability rates based on credit rating. The allowance for any security is limited to the amount that the security’s fair value is below amortized cost. As of March 31, 2024, the discounted cash flow analysis resulted in an allowance for credit losses on 11 securities. The following table presents changes in the allowance for expected credit losses on available-for-sale securities: Three Months Ended March 31, (in thousands) 2024 2023 Beginning balance $ 306 $ 339 Increase to allowance from securities for which credit losses were not previously recorded 12 54 Reduction from securities sold during the period (67) — Net increase (decrease) from securities that had an allowance at the beginning of the period (14) 72 Balance as of March 31, $ 237 $ 465 We recognized $2 million of losses on securities for which we no longer had the intent to hold until recovery during the first three months of 2023. No such losses were recognized during the first three months of 2024. As of March 31, 2024, in addition to the securities included in the allowance for credit losses, the fixed income portfolio contained 1,336 securities with an unrealized loss position for which an allowance for credit losses had not been recorded. The $228 million in associated unrealized losses represents 7 percent of the fixed income portfolio’s cost basis and 6 percent of total invested assets. Isolated to these securities, unrealized losses increased slightly through the first three months of 2024, as interest rates increased during the period. Of the total 1,336 securities, 1,135 have been in an unrealized loss position for 12 consecutive months or longer. The following table illustrates the total value of fixed income securities that were in an unrealized loss position as of March 31, 2024 and December 31, 2023 after factoring in the allowance for credit losses. All fixed income securities continue to pay the expected coupon payments and we believe we will recover the amortized cost basis of available-for-sale securities that remain in an unrealized loss position. March 31, 2024 December 31, 2023 (in thousands) < 12 Mos. 12 Mos. & Greater Total < 12 Mos. 12 Mos. & Greater Total U.S. government Fair value $ 78,413 $ 203,962 $ 282,375 $ 37,718 $ 204,556 $ 242,274 Amortized cost 79,565 210,653 290,218 37,950 210,182 248,132 Unrealized loss $ (1,152) $ (6,691) $ (7,843) $ (232) $ (5,626) $ (5,858) U.S. agency Fair value $ 15,822 $ 28,854 $ 44,676 $ 8,736 $ 29,632 $ 38,368 Amortized cost 15,995 30,626 46,621 8,790 31,167 39,957 Unrealized loss $ (173) $ (1,772) $ (1,945) $ (54) $ (1,535) $ (1,589) Non-U.S. government Fair value $ — $ 3,844 $ 3,844 $ — $ 3,882 $ 3,882 Amortized cost — 4,800 4,800 — 4,800 4,800 Unrealized Loss $ — $ (956) $ (956) $ — $ (918) $ (918) Agency MBS Fair value $ 55,007 $ 288,704 $ 343,711 $ 61,196 $ 275,707 $ 336,903 Amortized cost 56,100 330,749 386,849 61,714 313,091 374,805 Unrealized loss $ (1,093) $ (42,045) $ (43,138) $ (518) $ (37,384) $ (37,902) ABS/CMBS/MBS* Fair value $ 25,663 $ 182,583 $ 208,246 $ 12,240 $ 211,436 $ 223,676 Amortized cost 25,831 209,321 235,152 12,367 239,193 251,560 Unrealized loss $ (168) $ (26,738) $ (26,906) $ (127) $ (27,757) $ (27,884) Corporate Fair value $ 185,542 $ 795,631 $ 981,173 $ 67,402 $ 822,731 $ 890,133 Amortized cost 188,580 853,301 1,041,881 68,345 878,419 946,764 Unrealized loss $ (3,038) $ (57,670) $ (60,708) $ (943) $ (55,688) $ (56,631) Municipal Fair value $ 74,207 $ 418,819 $ 493,026 $ 61,218 $ 391,361 $ 452,579 Amortized cost 75,247 504,153 579,400 61,697 474,496 536,193 Unrealized loss $ (1,040) $ (85,334) $ (86,374) $ (479) $ (83,135) $ (83,614) Total fixed income Fair value $ 434,654 $ 1,922,397 $ 2,357,051 $ 248,510 $ 1,939,305 $ 2,187,815 Amortized cost 441,318 2,143,603 2,584,921 250,863 2,151,348 2,402,211 Unrealized loss $ (6,664) $ (221,206) $ (227,870) $ (2,353) $ (212,043) $ (214,396) * Non-agency asset-backed, commercial mortgage-backed and mortgage-backed securities The following table shows the composition of the fixed income securities in unrealized loss positions, after factoring in the allowance for credit losses, at March 31, 2024 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 $ 2,137,898 $ 1,941,077 $ (196,821) 86.4 % 2 BBB Baa 397,220 369,097 (28,123) 12.3 % 3 BB Ba 31,428 29,952 (1,476) 0.7 % 4 B B 14,826 14,073 (753) 0.3 % 5 CCC Caa 2,730 2,421 (309) 0.1 % 6 CC or lower Ca or lower 819 431 (388) 0.2 % Total $ 2,584,921 $ 2,357,051 $ (227,870) 100.0 % Other Invested Assets We had $59 million of other invested assets at March 31, 2024, compared to $59 million at December 31, 2023. Other invested assets include investments in low income housing tax credit partnerships (LIHTC) and historic tax credit partnerships (HTC), membership in the Federal Home Loan Bank of Chicago (FHLBC), and investments in private funds. Our LIHTC and HTC investments are carried at amortized cost and our investment in FHLBC stock is carried at cost. Due to the nature of the LIHTC, HTC and our membership in the FHLBC, their carrying amounts approximate fair value. The private funds are carried at fair value, using each investment’s net asset value. Our LIHTC interests had a balance of $9 million at March 31, 2024, compared to $10 million on December 31, 2023. Our LIHTC interests recognized amortization of $1 million as a component of income tax expense and a total tax benefit of $1 million during the first quarter of 2024 and 2023. Our unfunded commitment for our LIHTC investments was less than $1 million at March 31, 2024 and will be paid out in installments through 2035. Our HTC investment had a balance of $12 million at March 31, 2024, compared to $13 million at December 31, 2023. Our HTC investment recognized $1 million of amortization as a component of income tax expense and a total tax benefit of $1 million during the first quarter of 2024 and 2023. As of March 31, 2024, $57 million of investments Our investments in private funds totaled $27 million as of March 31, 2024, down from $28 million as of December 31, 2023, and had $4 million of associated unfunded commitments at March 31, 2024. Our interest in private funds is generally restricted from being transferred or otherwise redeemed without prior consent by the respective entities, and the timed dissolution of the partnerships would trigger redemption. Investments in Unconsolidated Investees We had $66 million of investments in unconsolidated investees at March 31, 2024, compared to $57 million at December 31, 2023. At March 31, 2024, our investment in Prime Holdings Insurance Services, Inc. (Prime) was $66 million and other investments in unconsolidated investees totaled less than $1 million. Cash and Short-Term Investments Cash consists of uninvested balances in bank accounts. Short-term investments consist of investments with original maturities of 90 days or less, primarily AAA-rated government money market funds. Short-term investments are carried at cost. We had a cash and short-term investment balance of $45 million and $147 million, respectively, at March 31, 2024, compared to $36 million and $135 million, respectively, at December 31, 2023. |
Historical Loss And LAE Develop
Historical Loss And LAE Development | 3 Months Ended |
Mar. 31, 2024 | |
Historical Loss And L A E Development Disclosure [Abstract] | |
Historical Loss And LAE Development | 3. HISTORICAL LOSS AND LAE DEVELOPMENT The following table is a reconciliation of our unpaid losses and settlement expenses (LAE) for the first three months of 2024 and 2023: For the Three Months Ended March 31, (in thousands) 2024 2023 Unpaid losses and LAE at beginning of year Gross $ 2,446,025 $ 2,315,637 Ceded (757,349) (740,089) Net $ 1,688,676 $ 1,575,548 Increase (decrease) in incurred losses and LAE Current accident year $ 186,217 $ 166,270 Prior accident years (42,393) (51,782) Total incurred $ 143,824 $ 114,488 Loss and LAE payments for claims incurred Current accident year $ (12,975) $ (7,983) Prior accident years (102,011) (95,905) Total paid $ (114,986) $ (103,888) Net unpaid losses and LAE at March 31, $ 1,717,514 $ 1,586,148 Unpaid losses and LAE at March 31, Gross $ 2,532,190 $ 2,286,063 Ceded (814,676) (699,915) Net $ 1,717,514 $ 1,586,148 For the first three months of 2024, incurred losses and LAE included $42 million of favorable development on prior years’ loss reserves, largely from accident years 2016 through 2019 and 2023. Marine, commercial property, personal umbrella, general liability, executive products, transportation and surety were drivers of the favorable development. No products experienced significant adverse development. For the first three months of 2023, incurred losses and LAE included $52 million of favorable development on prior years’ loss reserves, largely from accident years 2016 and 2018 through 2022. Marine, general liability, professional services, commercial excess, executive products, personal umbrella, surety and commercial property were drivers of the favorable development. No products experienced significant adverse development. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2024 | |
Income Tax Disclosure | |
Income Taxes | 4. INCOME TAXES Our effective tax rate for the three months ended March 31, 2024 was 20.1 percent, compared to 19.5 percent for the same period in 2023. Effective rates are dependent upon components of pretax earnings and the related tax effects. The effective tax rate was higher for the three-month period in 2024, as higher pretax income decreased the percentage impact of tax-favored adjustments. Income tax expense attributable to income from operations for the three-month period ended March 31, 2024 and 2023 differed from the amounts computed by applying the U.S. federal tax rate of 21 percent to pretax income by the items detailed in the below table. In interim periods, income taxes are adjusted to reflect the effective tax rate we anticipate for the year, with adjustments flowing through the other items, net line. For the Three Months Ended March 31, 2024 2023 (in thousands) Amount % Amount % Provision for income taxes at the statutory rate of 21% $ 33,598 21.0 % $ 25,786 21.0 % Increase (reduction) in taxes resulting from: Excess tax benefit on share-based compensation (1,874) (1.2) % (1,990) (1.6) % Tax exempt interest income (260) (0.2) % (283) (0.2) % Dividends received deduction (235) (0.1) % (224) (0.2) % Tax credit (768) (0.5) % (513) (0.4) % ESOP dividends paid deduction (138) (0.1) % (137) (0.1) % Nondeductible expenses 713 0.4 % 601 0.5 % Other items, net 1,055 0.8 % 740 0.5 % Total tax expense $ 32,091 20.1 % $ 23,980 19.5 % We have recorded our deferred tax assets and liabilities using the statutory federal tax rate of 21 percent. We believe it is more likely than not that all deferred tax assets will be recovered, given the carry back availability as well as the result of future operations, which we believe will generate sufficient taxable income to realize the deferred tax asset. |
Stock Based Compensation
Stock Based Compensation | 3 Months Ended |
Mar. 31, 2024 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Stock Based Compensation | 5. STOCK BASED COMPENSATION Our RLI Corp. Long-Term Incentive Plan (2015 LTIP) was in place from 2015 to 2023. The 2015 LTIP provided for equity-based compensation, including stock options and restricted stock units, up to a maximum of 4,000,000 shares of common stock (subject to adjustment for changes in our capitalization and other events). Between 2015 and 2023, we granted 3,291,388 awards under the 2015 LTIP. The 2015 LTIP was replaced in 2023. In 2023, our shareholders approved the 2023 RLI Corp. Long-Term Incentive Plan (2023, LTIP), which provides for equity-based compensation. In conjunction with the adoption of the 2023 LTIP, effective May 4, 2023, awards are no longer granted under the 2015 LTIP. Awards under the 2023 LTIP may be in the form of restricted stock, restricted stock units, stock options (incentive or non-qualified), stock appreciation rights, performance units as well as other stock-based awards. Eligibility under the 2023 LTIP is limited to employees, directors, consultants and independent contractors of the Company or any affiliate. The granting of awards under the 2023 LTIP is solely at the discretion of the Human Capital and Compensation Committee of the board of directors or its delegate. The maximum number of shares of common stock available for distribution under the 2023 LTIP is 4,004,891 shares (subject to adjustment for changes in our capitalization and other events). Since the plan’s approval in 2023, we have granted 224,013 awards under the 2023 LTIP, including 28,475 thus far in 2024. Compensation expense is based on the probable number of awards expected to vest. The total compensation expense related to equity awards was $1.8 million in the three-month period ended March 31, 2024, compared to $2.5 million for the same period in 2023. The total income tax benefit was $0.3 million for the three-month period ended March 31, 2024, compared to $0.4 million for the same period in 2023. Total unrecognized compensation expense relating to outstanding and unvested awards was $5 million, which will be recognized over the weighted average vesting period of 2.63 years. Stock Options Under the 2023 LTIP, as under the 2015 LTIP, 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 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 or greater, 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 three-month period ended March 31, 2024: Weighted Aggregate Weighted Average Intrinsic Average Remaining Value Options Exercise Price Contractual Life (in 000’s) Outstanding options at January 1, 2024 1,641,710 $ 92.62 Options granted 27,875 135.94 Options exercised (93,470) 64.52 Options canceled/forfeited (1,365) 109.50 Outstanding options at March 31, 2024 1,574,750 $ 95.04 4.58 $ 84,145 Exercisable options at March 31, 2024 819,591 $ 80.95 3.44 $ 55,335 The intrinsic value of options exercised, which is the difference between the fair value and the exercise price, was $8 million and $11 million during the first three months of 2024 and 2023, respectively. 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: 2024 2023 Weighted-average fair value of grants $ 30.60 $ 27.04 Risk-free interest rates 4.62 % 4.22 % Dividend yield 2.24 % 2.54 % Expected volatility 23.05 % 22.93 % Expected option life 5.08 years 5.01 years The risk-free rate was determined based on U.S. treasury yields that most closely approximated the options’ expected life. The dividend yield was determined based on the average annualized quarterly dividends paid during the most recent five-year period and incorporated a consideration for special dividends paid in recent history. The expected volatility was calculated based on the median of the rolling volatilities for the expected life of the options. The expected option life was determined based on historical exercise behavior and the assumption that all outstanding options will be exercised at the midpoint of the current date and remaining contractual term, adjusted for the demographics of the current year’s grant. Restricted Stock Units In addition to stock options, restricted stock units (RSUs) are granted with a value equal to the closing stock price of the Company’s stock on the dates the units are granted. For employees, these units generally have a three-year cliff vesting, but have an accelerated vesting feature for participants who are retirement eligible, defined by the plan as those individuals whose age and years of service equals 75 or greater. For directors, these units vest on the earlier of one year from the date of grant or the next annual shareholders meeting. In addition, the RSUs have dividend participation, which accrue as additional units and are settled with granted stock units at the end of the vesting period. Weighted Average Grant Date RSUs Fair Value Nonvested at January 1, 2024 45,093 $ 125.16 Granted 600 142.08 Reinvested 85 145.36 Forfeited (128) 124.07 Nonvested at March 31, 2024 45,650 $ 125.43 |
Operating Segment Information
Operating Segment Information | 3 Months Ended |
Mar. 31, 2024 | |
Segment Reporting [Abstract] | |
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 Months Revenues Ended March 31, (in thousands) 2024 2023 Casualty $ 198,276 $ 186,031 Property 129,411 88,767 Surety 32,989 32,925 Net premiums earned $ 360,676 $ 307,723 Net investment income 32,847 27,084 Net realized gains 5,994 14,620 Net unrealized gains on equity securities 45,314 15,496 Total consolidated revenue $ 444,831 $ 364,923 Net Earnings (in thousands) 2024 2023 Casualty $ 13,674 $ 31,831 Property 57,716 28,383 Surety 6,305 7,676 Net underwriting income $ 77,695 $ 67,890 Net investment income 32,847 27,084 Net realized gains 5,994 14,620 Net unrealized gains on equity securities 45,314 15,496 General corporate expense and interest on debt (6,628) (6,222) Equity in earnings of unconsolidated investees 4,769 3,923 Earnings before income taxes $ 159,991 $ 122,791 Income tax expense 32,091 23,980 Net earnings $ 127,900 $ 98,811 The following table further summarizes revenues by major product type within each operating segment: For the Three Months Net Premiums Earned Ended March 31, (in thousands) 2024 2023 Casualty Commercial excess and personal umbrella $ 80,035 $ 67,582 Commercial transportation 27,301 25,232 General liability 25,412 25,900 Professional services 25,085 24,357 Small commercial 18,337 17,941 Executive products 5,915 6,353 Other casualty 16,191 18,666 Total $ 198,276 $ 186,031 Property Commercial property $ 87,605 $ 49,262 Marine 32,568 30,636 Other property 9,238 8,869 Total $ 129,411 $ 88,767 Surety Transactional $ 12,108 $ 12,047 Commercial 10,625 12,418 Contract 10,256 8,460 Total $ 32,989 $ 32,925 Grand Total $ 360,676 $ 307,723 |
Leases
Leases | 3 Months Ended |
Mar. 31, 2024 | |
Leases [Abstract] | |
Leases | 7. LEASES Right-of-use (ROU) assets are included in the other assets line item and lease liabilities are included in the other liabilities line item of the consolidated balance sheet. We determine if a contract contains a lease at inception and recognize operating lease ROU assets and operating lease liabilities based on the present value of the future minimum lease payments at the commencement date. As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. Lease agreements may include options to extend or terminate. The options are exercised at our discretion and are included in operating lease liabilities if it is reasonably certain the option will be exercised. Lease agreements have lease and non-lease components, which are accounted for as a single lease component. Operating lease costs for future minimum lease payments are recognized on a straight-line basis over the lease terms. Variable lease costs are expensed in the period in which the obligations are incurred. Sublease income is recognized on a straight-line basis over the sublease term. The Company’s operating lease obligations are for branch office facilities. The components of lease expense and other lease information as of and during the three-month periods ended March 31, 2024 and 2023 were as follows: For the Three Months Ended March 31, (in thousands) 2024 2023 Operating lease cost $ 1,181 $ 1,269 Variable lease cost 269 438 Sublease income (42) (139) Total lease cost $ 1,408 $ 1,568 Cash paid for amounts included in measurement of lease liabilities Operating cash outflows from operating leases $ 1,063 $ 1,398 ROU assets obtained in exchange for new operating lease liabilities $ 3,456 $ 41 Reduction to ROU assets resulting from reduction to lease liabilities $ — $ 200 (in thousands) March 31, 2024 December 31, 2023 Operating lease ROU assets $ 16,083 $ 13,666 Operating lease liabilities $ 17,415 $ 14,880 Weighted-average remaining lease term - operating leases 6.16 years 6.08 years Weighted-average discount rate - operating leases 3.48 % 3.21 % Future minimum lease payments under non-cancellable leases as of March 31, 2024 were as follows: (in thousands) March 31, 2024 2024 $ 3,248 2025 4,048 2026 3,256 2027 2,135 2028 1,544 2029 1,450 Thereafter 4,199 Total future minimum lease payments $ 19,880 Less imputed interest (2,465) Total operating lease liability $ 17,415 |
Acquisitions and Dispositions
Acquisitions and Dispositions | 3 Months Ended |
Mar. 31, 2024 | |
Business Combination and Asset Acquisition [Abstract] | |
Acquisitions and Dispositions | 8. ACQUISITONS AND DISPOSTIONS On September 30, 2022, RLI Corp. completed the sale of its equity method investment in Maui Jim, Inc. to Kering Eyewear. During the first quarter of 2023, the payout of the working capital escrow resulted in the recognition of a $14 million gain that was recorded in the net realized gain line item of the statement of earnings. |
Basis of Presentation and Sum_2
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
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 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 2023 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, 2024 and the results of operations of RLI Corp. (the Company) 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. |
Adopted Accounting Standards | B. ADOPTED ACCOUNTING STANDARDS No new accounting standards applicable in 2024 materially impact our financial statements. |
Prospective Accounting Standards | C. PROSPECTIVE ACCOUNTING STANDARDS 2023-07—Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures The guidance in ASU 2023-07 was designed to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Although the Company continues to evaluate the impact of adopting this new accounting standard, the amendments are disclosure-related and should not have a material impact on our financial statements. 2023-09—Income Taxes (Topic 740): Improvements to Income Tax Disclosures The guidance in ASU 2023-09 was designed to increase transparency about income tax information through improvements to the rate reconciliation and disclosure of income taxes paid. This ASU is effective for fiscal years beginning after December 15, 2024. Although the Company continues to evaluate the impact of adopting this new accounting standard, the amendments are disclosure-related and should not have a material impact on our financial statements. |
Reinsurance | D. REINSURANCE Ceded unearned premiums and reinsurance balances recoverable on unpaid losses and settlement expenses are reported separately as an asset, rather than being netted with the related liability, since reinsurance does not relieve the Company of our liability to policyholders. Such balances are subject to the credit risk associated with the individual reinsurer. We continually monitor the financial condition of our reinsurers and actively follow up on any past due or disputed amounts. As part of our monitoring efforts, we review reinsurers’ annual financial statements and Securities and Exchange Commission filings for those that are publicly traded. We also review insurance industry developments that may impact the financial condition of our reinsurers. We analyze the credit risk associated with our reinsurance balances recoverable by monitoring the AM Best and Standard & Poor’s (S&P) ratings of our reinsurers. In addition, we subject our reinsurance balances recoverable to detailed recoverability tests, including a segment-based analysis using the average default rating percentage by S&P rating, which assists the Company in assessing the sufficiency of its allowance. Additionally, we perform an in-depth reinsurer financial condition analysis prior to the renewal of our reinsurance placements. Our policy is to charge to earnings, in the form of an allowance, an estimate of unrecoverable amounts from reinsurers. This allowance is reviewed on an ongoing basis to ensure that the amount makes a reasonable provision for reinsurance balances that we may be unable to recover. Once regulatory action (such as receivership, finding of insolvency, order of conservation or order of liquidation) is taken against a reinsurer, the paid and unpaid recoverable balances for the reinsurer are specifically identified and written off through use of our allowance for estimated unrecoverable amounts from reinsurers. When we write-off such a balance, it is done in full. We then re-evaluate the overall allowance and determine whether the balance is sufficient and, if needed, an additional allowance is recognized. The allowances for uncollectible amounts on paid and unpaid reinsurance balances recoverable were $16 million and $11 million, respectively, at March 31, 2024 and December 31, 2023. Changes in the allowances were due to changes in the amount of reinsurance balances outstanding, the composition of reinsurers from whom the balances were recoverable and their associated S&P default ratings. No write-offs were applied to the allowances in the first three months of 2024 and less than $1 million was recovered. |
Intangible Assets | E. INTANGIBLE ASSETS The composition of goodwill and intangible assets at March 31, 2024 and December 31, 2023 is detailed in the following table: March 31, December 31, (in thousands) 2024 2023 Goodwill Surety $ 40,816 $ 40,816 Casualty 5,246 5,246 Total goodwill $ 46,062 $ 46,062 Indefinite-lived intangibles 7,500 7,500 Total goodwill and intangibles $ 53,562 $ 53,562 Annual impairment assessments were performed on our goodwill and state insurance license indefinite-lived intangible assets during the second quarter of 2023. Based upon these reviews, none of the assets were impaired. In addition, there were no triggering events as of March 31, 2024 that would suggest an updated impairment test would be needed for our goodwill and intangible assets. |
Earnings Per Share | F. EARNINGS PER SHARE Basic earnings per share (EPS) is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the dilution that could occur if securities or other contracts to issue common stock or common stock equivalents were exercised or converted into common stock. When inclusion of these items increases the earnings per share or reduces the loss per share, the effect on earnings is anti-dilutive. Under these circumstances, the diluted net earnings or net loss per share is computed excluding these items. The following represents a reconciliation of the numerator and denominator of the basic and diluted EPS computations contained in the unaudited condensed consolidated interim financial statements: For the Three Months For the Three Months Ended March 31, 2024 Ended March 31, 2023 Income Shares Per Share Income Shares Per Share (in thousands, except per share data) (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount Basic EPS Earnings available to common shareholders $ 127,900 45,684 $ 2.80 $ 98,811 45,530 $ 2.17 Effect of Dilutive Securities Stock options and restricted stock units — 479 — 505 Diluted EPS Earnings available to common shareholders $ 127,900 46,163 $ 2.77 $ 98,811 46,035 $ 2.15 Anti-dilutive securities excluded from diluted EPS — — |
Comprehensive Earnings | G. COMPREHENSIVE EARNINGS Our comprehensive earnings include net earnings plus after-tax unrealized gains and losses on our available-for-sale fixed income portfolio. In reporting the components of comprehensive earnings, we used the federal statutory tax rate of 21 percent. Other comprehensive earnings (loss), as shown in the consolidated statements of earnings and comprehensive earnings, is net of tax benefit of $3 million for the first quarter of 2024, compared to $10 million of tax expense for the same period in 2023. Unrealized losses, net of tax, recognized in other comprehensive earnings (loss) were $13 million for the first three months of 2024, compared to $38 million of unrealized gains, net of tax, during the same period last year. The unrealized losses in the first quarter of 2024 were attributable to an increase in interest rates, which decreased the fair value of securities held in the fixed income portfolio, compared to declining interest rates during the first quarter of 2023, which increased the fair value of fixed income securities. The following table illustrates the changes in the balance of each component of accumulated other comprehensive earnings (loss) for each period presented in the unaudited condensed consolidated interim financial statements: (in thousands) For the Three Months Ended March 31, Unrealized Gains/Losses on Available-for-Sale Securities 2024 2023 Beginning balance $ (166,303) $ (229,076) Other comprehensive earnings (loss) before reclassifications (13,275) 36,254 Amounts reclassified from accumulated other comprehensive earnings 604 1,453 Net current-period other comprehensive earnings (loss) $ (12,671) $ 37,707 Ending balance $ (178,974) $ (191,369) Balance of securities for which an allowance for credit losses has been recognized in net earnings $ 904 $ 1,841 Credit losses on or the sale of an available-for-sale security results in amounts being reclassified from accumulated other comprehensive earnings (loss) to current period net earnings. The effects of reclassifications out of accumulated other comprehensive earnings (loss) by the respective line items of net earnings are presented in the following table: Amount Reclassified from Accumulated Other (in thousands) Comprehensive Earnings (Loss) For the Three Months Component of Accumulated Ended March 31, Affected line item in the Other Comprehensive Earnings (Loss) 2024 2023 Statement of Earnings Unrealized gains and losses on available-for-sale securities $ (834) $ (1,713) Net realized gains (losses) 70 (126) Credit gains (losses) presented within net realized gains $ (764) $ (1,839) Earnings (loss) before income taxes 160 386 Income tax (expense) benefit $ (604) $ (1,453) Net earnings (loss) |
Fair Value Measurements | H. FAIR VALUE MEASUREMENTS Fair value is defined as the price in the principal market that would be received for an asset to facilitate an orderly transaction between market participants on the measurement date. We determined the fair value of certain financial instruments based on their underlying characteristics and relevant transactions in the marketplace. We maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The following are the levels of the fair value hierarchy and a brief description of the type of valuation inputs that are used to establish each level. Financial assets are classified based upon the lowest level of significant input that is used to determine fair value. Level 1 Level 2 Level 3 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: Mortgage-backed Securities (MBS)/Commercial Mortgage-backed Securities (CMBS) and Asset-backed Securities (ABS): Regulation D Private Placement Securities: For all of our fixed income securities classified as Level 2, we periodically conduct a review to assess the reasonableness of the fair values provided by our pricing services. Our review consists of a two-pronged approach. First, we compare prices provided by our pricing services to those provided by an additional source. In some cases, we obtain prices from securities brokers and compare them to the prices provided by our pricing services. If discrepancies are found in our comparisons, we compare our prices to actual reported trade data for like securities. No changes to the fair values supplied by our pricing services have occurred as a result of our reviews. Based on these assessments, we have determined that the fair values of our Level 2 fixed income securities provided by our pricing services are reasonable. Equity Securities: Due to the relatively short-term nature of cash, short-term investments, accounts receivable and accounts payable, their carrying amounts are reasonable estimates of fair value. Our investments in private funds, classified as other invested assets, are measured using the investments’ net asset value per share and are not categorized within the fair value hierarchy. |
Basis of Presentation and Sum_3
Basis of Presentation and Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Schedule of Goodwill and Intangible Assets | March 31, December 31, (in thousands) 2024 2023 Goodwill Surety $ 40,816 $ 40,816 Casualty 5,246 5,246 Total goodwill $ 46,062 $ 46,062 Indefinite-lived intangibles 7,500 7,500 Total goodwill and intangibles $ 53,562 $ 53,562 |
Schedule of Reconciliation of Numerator and Denominator of the Basic and Diluted Earnings Per Share Computations | For the Three Months For the Three Months Ended March 31, 2024 Ended March 31, 2023 Income Shares Per Share Income Shares Per Share (in thousands, except per share data) (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount Basic EPS Earnings available to common shareholders $ 127,900 45,684 $ 2.80 $ 98,811 45,530 $ 2.17 Effect of Dilutive Securities Stock options and restricted stock units — 479 — 505 Diluted EPS Earnings available to common shareholders $ 127,900 46,163 $ 2.77 $ 98,811 46,035 $ 2.15 Anti-dilutive securities excluded from diluted EPS — — |
Schedule of Changes in the Balance of Each Component of Accumulated Other Comprehensive Earnings (Loss) | (in thousands) For the Three Months Ended March 31, Unrealized Gains/Losses on Available-for-Sale Securities 2024 2023 Beginning balance $ (166,303) $ (229,076) Other comprehensive earnings (loss) before reclassifications (13,275) 36,254 Amounts reclassified from accumulated other comprehensive earnings 604 1,453 Net current-period other comprehensive earnings (loss) $ (12,671) $ 37,707 Ending balance $ (178,974) $ (191,369) Balance of securities for which an allowance for credit losses has been recognized in net earnings $ 904 $ 1,841 |
Schedule of Effects of Reclassifications out of Accumulated Other Comprehensive Earnings (Loss) | Amount Reclassified from Accumulated Other (in thousands) Comprehensive Earnings (Loss) For the Three Months Component of Accumulated Ended March 31, Affected line item in the Other Comprehensive Earnings (Loss) 2024 2023 Statement of Earnings Unrealized gains and losses on available-for-sale securities $ (834) $ (1,713) Net realized gains (losses) 70 (126) Credit gains (losses) presented within net realized gains $ (764) $ (1,839) Earnings (loss) before income taxes 160 386 Income tax (expense) benefit $ (604) $ (1,453) Net earnings (loss) |
Investments (Tables)
Investments (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Investments Debt And Equity Securities [Abstract] | |
Schedule of Disposition of Fixed Income and Equity Securities | Sales Proceeds Gross Realized Net Realized (in thousands) From Sales Gains Losses Gain (Loss) 2024 Fixed income securities - available-for-sale $ 11,819 $ 289 $ (793) $ (504) Equity securities 15,910 7,234 (121) 7,113 2023 Fixed income securities - available-for-sale $ 3,790 $ 35 $ (82) $ (47) Equity securities 3,501 2,417 (101) 2,316 Calls/Maturities Gross Realized Net Realized (in thousands) Proceeds Gains Losses Gain (Loss) 2024 Fixed income securities - available-for-sale $ 72,423 $ 33 $ (157) $ (124) 2023 Fixed income securities - available-for-sale $ 190,305 $ 35 $ (40) $ (5) |
Fair Value, Assets Measured on Recurring Basis | As of March 31, 2024 Quoted Prices in Significant Other Significant Active Markets for Observable Unobservable Identical Assets Inputs Inputs (in thousands) (Level 1) (Level 2) (Level 3) Total Fixed income securities - available-for-sale U.S. government $ — $ 329,559 $ — $ 329,559 U.S. agency — 58,455 — 58,455 Non-U.S. government & agency — 3,844 — 3,844 Agency MBS — 414,428 — 414,428 ABS/CMBS/MBS* — 289,476 — 289,476 Corporate — 1,158,487 62,560 1,221,047 Municipal — 546,512 — 546,512 Total fixed income securities - available-for-sale $ — $ 2,800,761 $ 62,560 $ 2,863,321 Equity securities 641,758 — 1,609 643,367 Total $ 641,758 $ 2,800,761 $ 64,169 $ 3,506,688 * Non-agency asset-backed, commercial mortgage-backed and mortgage-backed securities As of December 31, 2023 Quoted Prices in Significant Other Significant Active Markets for Observable Unobservable Identical Assets Inputs Inputs (in thousands) (Level 1) (Level 2) (Level 3) Total Fixed income securities - available-for-sale U.S. government $ — $ 308,031 $ — $ 308,031 U.S. agency — 59,826 — 59,826 Non-U.S. government & agency — 3,882 — 3,882 Agency MBS — 425,285 — 425,285 ABS/CMBS/MBS* — 281,182 — 281,182 Corporate — 1,164,548 60,471 1,225,019 Municipal — 552,624 — 552,624 Total fixed income securities - available-for-sale $ — $ 2,795,378 $ 60,471 $ 2,855,849 Equity securities 588,416 — 1,625 590,041 Total $ 588,416 $ 2,795,378 $ 62,096 $ 3,445,890 * Non-agency asset-backed, commercial mortgage-backed and mortgage-backed securities |
Summary of Changes in Balance of Level 3 Securities | (in thousands) Level 3 Securities Balance as of January 1, 2024 $ 62,096 Net realized and unrealized gains (losses) Included in other comprehensive earnings (loss) (271) Purchases 2,735 Sales / Calls / Maturities (391) Balance as of March 31, 2024 $ 64,169 Change in unrealized gains (losses) during the period for Level 3 assets held at period-end - included in other comprehensive earnings (loss) $ (271) |
Schedule of Contractual Maturity of Securities | March 31, 2024 (in thousands) Amortized Cost Fair Value Due in one year or less $ 188,801 $ 186,550 Due after one year through five years 875,943 843,536 Due after five years through 10 years 696,813 669,310 Due after 10 years 548,944 460,021 ABS/CMBS/MBS* 771,772 703,904 Total available-for-sale $ 3,082,273 $ 2,863,321 * Asset-backed, commercial mortgage-backed and mortgage-backed securities |
Schedule of Amortized Cost and Fair Value of Available-for-sale Securities | March 31, 2024 Cost or Allowance Gross Gross Amortized for Credit Unrealized Unrealized Fair (in thousands) Cost Losses Gains Losses Value U.S. government $ 337,014 $ — $ 388 $ (7,843) $ 329,559 U.S. agency 59,956 — 444 (1,945) 58,455 Non-U.S. government & agency 4,800 — — (956) 3,844 Agency MBS 456,358 — 1,208 (43,138) 414,428 ABS/CMBS/MBS* 315,414 (2) 970 (26,906) 289,476 Corporate 1,277,258 (235) 4,732 (60,708) 1,221,047 Municipal 631,473 — 1,413 (86,374) 546,512 Total Fixed Income $ 3,082,273 $ (237) $ 9,155 $ (227,870) $ 2,863,321 December 31, 2023 Cost or Allowance Gross Gross Amortized for Credit Unrealized Unrealized Fair (in thousands) Cost Losses Gains Losses Value U.S. government $ 312,632 $ — $ 1,257 $ (5,858) $ 308,031 U.S. agency 60,763 — 652 (1,589) 59,826 Non-U.S. government & agency 4,800 — — (918) 3,882 Agency MBS 460,551 — 2,636 (37,902) 425,285 ABS/CMBS/MBS* 308,458 (3) 611 (27,884) 281,182 Corporate 1,273,187 (303) 8,766 (56,631) 1,225,019 Municipal 634,000 — 2,238 (83,614) 552,624 Total Fixed Income $ 3,054,391 $ (306) $ 16,160 $ (214,396) $ 2,855,849 * Non-agency asset-backed, commercial mortgage-backed and mortgage-backed securities |
Schedule of Debt Securities Available-for-sale Allowance for Credit Loss | Three Months Ended March 31, (in thousands) 2024 2023 Beginning balance $ 306 $ 339 Increase to allowance from securities for which credit losses were not previously recorded 12 54 Reduction from securities sold during the period (67) — Net increase (decrease) from securities that had an allowance at the beginning of the period (14) 72 Balance as of March 31, $ 237 $ 465 |
Schedule of Securities in an Unrealized Loss Position Segregated by Type and Length of Time in an Unrealized Loss Position | March 31, 2024 December 31, 2023 (in thousands) < 12 Mos. 12 Mos. & Greater Total < 12 Mos. 12 Mos. & Greater Total U.S. government Fair value $ 78,413 $ 203,962 $ 282,375 $ 37,718 $ 204,556 $ 242,274 Amortized cost 79,565 210,653 290,218 37,950 210,182 248,132 Unrealized loss $ (1,152) $ (6,691) $ (7,843) $ (232) $ (5,626) $ (5,858) U.S. agency Fair value $ 15,822 $ 28,854 $ 44,676 $ 8,736 $ 29,632 $ 38,368 Amortized cost 15,995 30,626 46,621 8,790 31,167 39,957 Unrealized loss $ (173) $ (1,772) $ (1,945) $ (54) $ (1,535) $ (1,589) Non-U.S. government Fair value $ — $ 3,844 $ 3,844 $ — $ 3,882 $ 3,882 Amortized cost — 4,800 4,800 — 4,800 4,800 Unrealized Loss $ — $ (956) $ (956) $ — $ (918) $ (918) Agency MBS Fair value $ 55,007 $ 288,704 $ 343,711 $ 61,196 $ 275,707 $ 336,903 Amortized cost 56,100 330,749 386,849 61,714 313,091 374,805 Unrealized loss $ (1,093) $ (42,045) $ (43,138) $ (518) $ (37,384) $ (37,902) ABS/CMBS/MBS* Fair value $ 25,663 $ 182,583 $ 208,246 $ 12,240 $ 211,436 $ 223,676 Amortized cost 25,831 209,321 235,152 12,367 239,193 251,560 Unrealized loss $ (168) $ (26,738) $ (26,906) $ (127) $ (27,757) $ (27,884) Corporate Fair value $ 185,542 $ 795,631 $ 981,173 $ 67,402 $ 822,731 $ 890,133 Amortized cost 188,580 853,301 1,041,881 68,345 878,419 946,764 Unrealized loss $ (3,038) $ (57,670) $ (60,708) $ (943) $ (55,688) $ (56,631) Municipal Fair value $ 74,207 $ 418,819 $ 493,026 $ 61,218 $ 391,361 $ 452,579 Amortized cost 75,247 504,153 579,400 61,697 474,496 536,193 Unrealized loss $ (1,040) $ (85,334) $ (86,374) $ (479) $ (83,135) $ (83,614) Total fixed income Fair value $ 434,654 $ 1,922,397 $ 2,357,051 $ 248,510 $ 1,939,305 $ 2,187,815 Amortized cost 441,318 2,143,603 2,584,921 250,863 2,151,348 2,402,211 Unrealized loss $ (6,664) $ (221,206) $ (227,870) $ (2,353) $ (212,043) $ (214,396) * Non-agency asset-backed, commercial mortgage-backed and mortgage-backed securities |
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 $ 2,137,898 $ 1,941,077 $ (196,821) 86.4 % 2 BBB Baa 397,220 369,097 (28,123) 12.3 % 3 BB Ba 31,428 29,952 (1,476) 0.7 % 4 B B 14,826 14,073 (753) 0.3 % 5 CCC Caa 2,730 2,421 (309) 0.1 % 6 CC or lower Ca or lower 819 431 (388) 0.2 % Total $ 2,584,921 $ 2,357,051 $ (227,870) 100.0 % |
Historical Loss And LAE Devel_2
Historical Loss And LAE Development (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Historical Loss And L A E Development Disclosure [Abstract] | |
Schedule of Reconciliation of Unpaid Losses and Settlement Expenses (LAE) | For the Three Months Ended March 31, (in thousands) 2024 2023 Unpaid losses and LAE at beginning of year Gross $ 2,446,025 $ 2,315,637 Ceded (757,349) (740,089) Net $ 1,688,676 $ 1,575,548 Increase (decrease) in incurred losses and LAE Current accident year $ 186,217 $ 166,270 Prior accident years (42,393) (51,782) Total incurred $ 143,824 $ 114,488 Loss and LAE payments for claims incurred Current accident year $ (12,975) $ (7,983) Prior accident years (102,011) (95,905) Total paid $ (114,986) $ (103,888) Net unpaid losses and LAE at March 31, $ 1,717,514 $ 1,586,148 Unpaid losses and LAE at March 31, Gross $ 2,532,190 $ 2,286,063 Ceded (814,676) (699,915) Net $ 1,717,514 $ 1,586,148 |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Income Tax Disclosure | |
Schedule of Reconciliation of Income Tax Expense Attributable to Income from Operations with Amounts Computed by Applying U.S. Federal Tax Rate to Pretax Income from Continuing Operations | For the Three Months Ended March 31, 2024 2023 (in thousands) Amount % Amount % Provision for income taxes at the statutory rate of 21% $ 33,598 21.0 % $ 25,786 21.0 % Increase (reduction) in taxes resulting from: Excess tax benefit on share-based compensation (1,874) (1.2) % (1,990) (1.6) % Tax exempt interest income (260) (0.2) % (283) (0.2) % Dividends received deduction (235) (0.1) % (224) (0.2) % Tax credit (768) (0.5) % (513) (0.4) % ESOP dividends paid deduction (138) (0.1) % (137) (0.1) % Nondeductible expenses 713 0.4 % 601 0.5 % Other items, net 1,055 0.8 % 740 0.5 % Total tax expense $ 32,091 20.1 % $ 23,980 19.5 % |
Stock Based Compensation (Table
Stock Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Summary of Option Activity | Weighted Aggregate Weighted Average Intrinsic Average Remaining Value Options Exercise Price Contractual Life (in 000’s) Outstanding options at January 1, 2024 1,641,710 $ 92.62 Options granted 27,875 135.94 Options exercised (93,470) 64.52 Options canceled/forfeited (1,365) 109.50 Outstanding options at March 31, 2024 1,574,750 $ 95.04 4.58 $ 84,145 Exercisable options at March 31, 2024 819,591 $ 80.95 3.44 $ 55,335 |
Summary of Weighted Average Grant-date Assumptions and Weighted Average Fair Values | 2024 2023 Weighted-average fair value of grants $ 30.60 $ 27.04 Risk-free interest rates 4.62 % 4.22 % Dividend yield 2.24 % 2.54 % Expected volatility 23.05 % 22.93 % Expected option life 5.08 years 5.01 years |
Schedule of Restricted Stock Units Activity | Weighted Average Grant Date RSUs Fair Value Nonvested at January 1, 2024 45,093 $ 125.16 Granted 600 142.08 Reinvested 85 145.36 Forfeited (128) 124.07 Nonvested at March 31, 2024 45,650 $ 125.43 |
Operating Segment Information (
Operating Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Segment Reporting [Abstract] | |
Summary of Selected Information by Operating Segment | For the Three Months Revenues Ended March 31, (in thousands) 2024 2023 Casualty $ 198,276 $ 186,031 Property 129,411 88,767 Surety 32,989 32,925 Net premiums earned $ 360,676 $ 307,723 Net investment income 32,847 27,084 Net realized gains 5,994 14,620 Net unrealized gains on equity securities 45,314 15,496 Total consolidated revenue $ 444,831 $ 364,923 Net Earnings (in thousands) 2024 2023 Casualty $ 13,674 $ 31,831 Property 57,716 28,383 Surety 6,305 7,676 Net underwriting income $ 77,695 $ 67,890 Net investment income 32,847 27,084 Net realized gains 5,994 14,620 Net unrealized gains on equity securities 45,314 15,496 General corporate expense and interest on debt (6,628) (6,222) Equity in earnings of unconsolidated investees 4,769 3,923 Earnings before income taxes $ 159,991 $ 122,791 Income tax expense 32,091 23,980 Net earnings $ 127,900 $ 98,811 |
Summary of Revenue by Major Product Type | For the Three Months Net Premiums Earned Ended March 31, (in thousands) 2024 2023 Casualty Commercial excess and personal umbrella $ 80,035 $ 67,582 Commercial transportation 27,301 25,232 General liability 25,412 25,900 Professional services 25,085 24,357 Small commercial 18,337 17,941 Executive products 5,915 6,353 Other casualty 16,191 18,666 Total $ 198,276 $ 186,031 Property Commercial property $ 87,605 $ 49,262 Marine 32,568 30,636 Other property 9,238 8,869 Total $ 129,411 $ 88,767 Surety Transactional $ 12,108 $ 12,047 Commercial 10,625 12,418 Contract 10,256 8,460 Total $ 32,989 $ 32,925 Grand Total $ 360,676 $ 307,723 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Leases [Abstract] | |
Schedule of Components of Lease Expense and Other lease Information | For the Three Months Ended March 31, (in thousands) 2024 2023 Operating lease cost $ 1,181 $ 1,269 Variable lease cost 269 438 Sublease income (42) (139) Total lease cost $ 1,408 $ 1,568 Cash paid for amounts included in measurement of lease liabilities Operating cash outflows from operating leases $ 1,063 $ 1,398 ROU assets obtained in exchange for new operating lease liabilities $ 3,456 $ 41 Reduction to ROU assets resulting from reduction to lease liabilities $ — $ 200 (in thousands) March 31, 2024 December 31, 2023 Operating lease ROU assets $ 16,083 $ 13,666 Operating lease liabilities $ 17,415 $ 14,880 Weighted-average remaining lease term - operating leases 6.16 years 6.08 years Weighted-average discount rate - operating leases 3.48 % 3.21 % |
Schedule of Future Minimum Lease Payments under Non-cancellable Leases | (in thousands) March 31, 2024 2024 $ 3,248 2025 4,048 2026 3,256 2027 2,135 2028 1,544 2029 1,450 Thereafter 4,199 Total future minimum lease payments $ 19,880 Less imputed interest (2,465) Total operating lease liability $ 17,415 |
Basis of Presentation and Sum_4
Basis of Presentation and Summary of Significant Accounting Policies - Reinsurance - Additional Information (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Dec. 31, 2023 | |
Reinsurance | ||
Amount of allowance for uncollectible amounts on paid recoverables | $ 16,000,000 | $ 16,000,000 |
Reinsurance balances recoverable on unpaid losses and settlement expenses, allowances for uncollectible amounts | 11,085,000 | $ 10,608,000 |
Financing receivable, allowance for credit Loss, write-off | 0 | |
Maximum | ||
Reinsurance | ||
Financing receivable, allowance for credit loss, recovery | $ 1,000,000 |
Basis of Presentation and Sum_5
Basis of Presentation and Summary of Significant Accounting Policies - Goodwill and Intangible Assets (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Dec. 31, 2023 | |
Business Acquisition | ||
Goodwill | $ 46,062,000 | $ 46,062,000 |
Indefinite-lived intangibles | 7,500,000 | 7,500,000 |
Total goodwill and intangibles | 53,562,000 | 53,562,000 |
Goodwill and intangible asset impairment | 0 | |
Surety | ||
Business Acquisition | ||
Goodwill | 40,816,000 | 40,816,000 |
Casualty | ||
Business Acquisition | ||
Goodwill | $ 5,246,000 | $ 5,246,000 |
Summary of Significant Accounti
Summary of Significant Accounting Policies - Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Basic EPS, Income (Numerator) | ||
Income available to common shareholders | $ 127,900 | $ 98,811 |
Diluted EPS, Income (Numerator) | ||
Income available to common shareholders | $ 127,900 | $ 98,811 |
Basic EPS, Weighted Average Shares (Denominator) | ||
Number of shares outstanding | 45,684 | 45,530 |
Effect of Dilutive Securities, Shares (Denominator) | ||
Stock options and restricted stock units | 479 | 505 |
Diluted EPS, Weighted Average Shares (Denominator) | ||
Number of shares outstanding | 46,163 | 46,035 |
Basic EPS, Per Share Amount | ||
Basic net earnings per share (in dollars per share) | $ 2.80 | $ 2.17 |
Diluted EPS, Per Share Amount | ||
Diluted earnings per share (in dollars per share) | $ 2.77 | $ 2.15 |
Basis of Presentation and Sum_6
Basis of Presentation and Summary of Significant Accounting Policies - Comprehensive Earnings (Loss) - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
COMPREHENSIVE EARNINGS (LOSS) | ||
Tax rate used (as a percent) | 21% | 21% |
Other comprehensive earnings (loss), tax (benefit) | $ (3,000) | $ 10,000 |
Other comprehensive earnings (loss), net of tax | $ (12,671) | $ 37,707 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies - Changes in the Balance of Each Component of Accumulated Other Comprehensive Earnings (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Changes in the balance of each component of accumulated other comprehensive earnings (loss) | ||
Beginning balance | $ (166,303) | |
Other comprehensive earnings (loss) | (12,671) | $ 37,707 |
Ending balance | (178,974) | |
Unrealized Gains and Losses on Available-for-Sale Securities | ||
Changes in the balance of each component of accumulated other comprehensive earnings (loss) | ||
Beginning balance | (166,303) | (229,076) |
Other comprehensive earnings (loss) before reclassifications | (13,275) | 36,254 |
Amounts reclassified from accumulated other comprehensive earnings | 604 | 1,453 |
Other comprehensive earnings (loss) | (12,671) | 37,707 |
Ending balance | (178,974) | (191,369) |
Balance of securities for which an allowance for credit losses has been recognized in net earnings | $ 904 | $ 1,841 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies - Effects of Reclassifications out of Accumulated Other Comprehensive Earnings (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Reclassification Adjustment Out of Accumulated Other Comprehensive Income (Loss) | ||
Earnings before income taxes | $ 159,991 | $ 122,791 |
Income tax (expense) benefit | (32,091) | (23,980) |
Net earnings | 127,900 | 98,811 |
Unrealized Gains and Losses on Available-for-Sale Securities | Reclassification out of Accumulated Other Comprehensive Income | ||
Reclassification Adjustment Out of Accumulated Other Comprehensive Income (Loss) | ||
Net realized gains (losses) - Available-for-sale | (834) | (1,713) |
Credit gains (losses) presented within net realized gains | 70 | (126) |
Earnings before income taxes | (764) | (1,839) |
Income tax (expense) benefit | 160 | 386 |
Net earnings | $ (604) | $ (1,453) |
Investments - Disposition of Fi
Investments - Disposition of Fixed Income and Equity Securities (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Summary of the disposition of fixed income and equity securities | ||
Fixed income securities - available-for-sale | $ 11,819 | $ 3,064 |
Fixed income securities - available-for-sale | 71,284 | 190,303 |
Net Realized Gain (Loss) - Fixed income securities - available-for-sale | 0 | (2,000) |
SALES | ||
Summary of the disposition of fixed income and equity securities | ||
Fixed income securities - available-for-sale | 11,819 | 3,790 |
Gross Realized Gains - Fixed income securities - available-for-sale | 289 | 35 |
Gross Realized Losses - Fixed income securities - available-for-sale | (793) | (82) |
Net Realized Gain (Loss) - Fixed income securities - available-for-sale | (504) | (47) |
Proceeds from Sales - Equity securities | 15,910 | 3,501 |
Gross Realized Gains - Equity securities | 7,234 | 2,417 |
Gross Realized Losses - Equity securities | (121) | (101) |
Net Realized Gain (Loss) - Equity securities | 7,113 | 2,316 |
Calls And Maturities Of Marketable Securities | ||
Summary of the disposition of fixed income and equity securities | ||
Fixed income securities - available-for-sale | 72,423 | 190,305 |
Gross Realized Gains - Fixed income securities - available-for-sale | 33 | 35 |
Gross Realized Losses - Fixed income securities - available-for-sale | (157) | (40) |
Net Realized Gain (Loss) - Fixed income securities - available-for-sale | $ (124) | $ (5) |
Investments - Assets Measured a
Investments - Assets Measured at Fair Value (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Assets measured at Fair Value | ||
Available-for-sale fixed income | $ 2,863,321 | $ 2,855,849 |
Equity securities | 643,367 | 590,041 |
U.S. government | ||
Assets measured at Fair Value | ||
Available-for-sale fixed income | 329,559 | 308,031 |
U.S. Agency | ||
Assets measured at Fair Value | ||
Available-for-sale fixed income | 58,455 | 59,826 |
Non-U.S. government & agency | ||
Assets measured at Fair Value | ||
Available-for-sale fixed income | 3,844 | 3,882 |
Agency MBS | ||
Assets measured at Fair Value | ||
Available-for-sale fixed income | 414,428 | 425,285 |
ABS/CMBS/MBS | ||
Assets measured at Fair Value | ||
Available-for-sale fixed income | 289,476 | 281,182 |
Corporate Debt | ||
Assets measured at Fair Value | ||
Available-for-sale fixed income | 1,221,047 | 1,225,019 |
Municipal | ||
Assets measured at Fair Value | ||
Available-for-sale fixed income | 546,512 | 552,624 |
Fair Value Measured on Recurring Basis | ||
Assets measured at Fair Value | ||
Available-for-sale fixed income | 2,863,321 | 2,855,849 |
Equity securities | 643,367 | 590,041 |
Total assets at fair value | 3,506,688 | 3,445,890 |
Fair Value Measured on Recurring Basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Assets measured at Fair Value | ||
Equity securities | 641,758 | 588,416 |
Total assets at fair value | 641,758 | 588,416 |
Fair Value Measured on Recurring Basis | Significant Other Observable Inputs (Level 2) | ||
Assets measured at Fair Value | ||
Available-for-sale fixed income | 2,800,761 | 2,795,378 |
Total assets at fair value | 2,800,761 | 2,795,378 |
Fair Value Measured on Recurring Basis | Significant Unobservable Inputs (Level 3) | ||
Assets measured at Fair Value | ||
Available-for-sale fixed income | 62,560 | 60,471 |
Equity securities | 1,609 | 1,625 |
Total assets at fair value | 64,169 | 62,096 |
Fair Value Measured on Recurring Basis | U.S. government | ||
Assets measured at Fair Value | ||
Available-for-sale fixed income | 329,559 | 308,031 |
Fair Value Measured on Recurring Basis | U.S. government | Significant Other Observable Inputs (Level 2) | ||
Assets measured at Fair Value | ||
Available-for-sale fixed income | 329,559 | 308,031 |
Fair Value Measured on Recurring Basis | U.S. Agency | ||
Assets measured at Fair Value | ||
Available-for-sale fixed income | 58,455 | 59,826 |
Fair Value Measured on Recurring Basis | U.S. Agency | Significant Other Observable Inputs (Level 2) | ||
Assets measured at Fair Value | ||
Available-for-sale fixed income | 58,455 | 59,826 |
Fair Value Measured on Recurring Basis | Non-U.S. government & agency | ||
Assets measured at Fair Value | ||
Available-for-sale fixed income | 3,844 | 3,882 |
Fair Value Measured on Recurring Basis | Non-U.S. government & agency | Significant Other Observable Inputs (Level 2) | ||
Assets measured at Fair Value | ||
Available-for-sale fixed income | 3,844 | 3,882 |
Fair Value Measured on Recurring Basis | Agency MBS | ||
Assets measured at Fair Value | ||
Available-for-sale fixed income | 414,428 | 425,285 |
Fair Value Measured on Recurring Basis | Agency MBS | Significant Other Observable Inputs (Level 2) | ||
Assets measured at Fair Value | ||
Available-for-sale fixed income | 414,428 | 425,285 |
Fair Value Measured on Recurring Basis | ABS/CMBS/MBS | ||
Assets measured at Fair Value | ||
Available-for-sale fixed income | 289,476 | 281,182 |
Fair Value Measured on Recurring Basis | ABS/CMBS/MBS | Significant Other Observable Inputs (Level 2) | ||
Assets measured at Fair Value | ||
Available-for-sale fixed income | 289,476 | 281,182 |
Fair Value Measured on Recurring Basis | Corporate Debt | ||
Assets measured at Fair Value | ||
Available-for-sale fixed income | 1,221,047 | 1,225,019 |
Fair Value Measured on Recurring Basis | Corporate Debt | Significant Other Observable Inputs (Level 2) | ||
Assets measured at Fair Value | ||
Available-for-sale fixed income | 1,158,487 | 1,164,548 |
Fair Value Measured on Recurring Basis | Corporate Debt | Significant Unobservable Inputs (Level 3) | ||
Assets measured at Fair Value | ||
Available-for-sale fixed income | 62,560 | 60,471 |
Fair Value Measured on Recurring Basis | Municipal | ||
Assets measured at Fair Value | ||
Available-for-sale fixed income | 546,512 | 552,624 |
Fair Value Measured on Recurring Basis | Municipal | Significant Other Observable Inputs (Level 2) | ||
Assets measured at Fair Value | ||
Available-for-sale fixed income | $ 546,512 | $ 552,624 |
Investments - Changes in Balanc
Investments - Changes in Balance of Level 3 Securities (Details) - Significant Unobservable Inputs (Level 3) $ in Thousands | 3 Months Ended |
Mar. 31, 2024 USD ($) | |
Summary of changes in Level 3 securities | |
Beginning balance | $ 62,096 |
Included in other comprehensive earnings (loss) | (271) |
Purchases | 2,735 |
Sales / Calls / Maturities | (391) |
Ending balance | 64,169 |
Change in unrealized gains (losses) during the period for Level 3 assets held at period-end - OCI | $ (271) |
Investments - Amortized Cost an
Investments - Amortized Cost and Fair Value of Available-for-sale Fixed Income Securities (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Amortized Cost | ||
Due in one year or less | $ 188,801 | |
Due after one year through five years | 875,943 | |
Due after five years through 10 years | 696,813 | |
Due after 10 years | 548,944 | |
ABS/CMBS/MBS | 771,772 | |
Total available-for-sale | 3,082,273 | $ 3,054,391 |
Fair Value | ||
Due in one year or less | 186,550 | |
Due after one year through five years | 843,536 | |
Due after five years through 10 years | 669,310 | |
Due after 10 years | 460,021 | |
ABS/CMBS/MBS | 703,904 | |
Total available-for-sale | $ 2,863,321 | $ 2,855,849 |
Investments - Additional Inform
Investments - Additional Information (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2024 USD ($) security | Mar. 31, 2023 USD ($) | Dec. 31, 2023 USD ($) | |
Investments | |||
Accrued investment income | $ | $ 25,353 | $ 24,062 | |
Number of debt securities for which there is an allowance for credit losses | security | 11 | ||
Losses on fixed income securities | $ | $ 0 | $ 2,000 | |
Number of debt securities in an unrealized loss position for which an allowance for credit losses has not been recorded | security | 1,336 | ||
Unrealized loss | $ | $ 227,870 | 214,396 | |
Unrealized losses as percentage of fixed income portfolio cost basis | 7% | ||
Unrealized losses relative to total invested assets (as a percent) | 6% | ||
Number of unrealized loss positions | security | 1,336 | ||
Number of securities in unrealized loss positions for 12 months or longer | security | 1,135 | ||
Fixed Income Securities | |||
Investments | |||
Accrued investment income | $ | $ 24,000 | $ 23,000 |
Investments - Amortized Cost _2
Investments - Amortized Cost and Fair Value of Available-for-sale Securities (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 | Mar. 31, 2023 | Dec. 31, 2022 |
Available For Sale Securities | ||||
Cost or Amortized Cost | $ 3,082,273 | $ 3,054,391 | ||
Allowance for Credit Losses | (237) | (306) | $ (465) | $ (339) |
Gross Unrealized Gains | 9,155 | 16,160 | ||
Gross Unrealized Losses | (227,870) | (214,396) | ||
Fair Value | 2,863,321 | 2,855,849 | ||
U.S. government | ||||
Available For Sale Securities | ||||
Cost or Amortized Cost | 337,014 | 312,632 | ||
Gross Unrealized Gains | 388 | 1,257 | ||
Gross Unrealized Losses | (7,843) | (5,858) | ||
Fair Value | 329,559 | 308,031 | ||
U.S. Agency | ||||
Available For Sale Securities | ||||
Cost or Amortized Cost | 59,956 | 60,763 | ||
Gross Unrealized Gains | 444 | 652 | ||
Gross Unrealized Losses | (1,945) | (1,589) | ||
Fair Value | 58,455 | 59,826 | ||
Non-U.S. government & agency | ||||
Available For Sale Securities | ||||
Cost or Amortized Cost | 4,800 | 4,800 | ||
Gross Unrealized Losses | (956) | (918) | ||
Fair Value | 3,844 | 3,882 | ||
Agency MBS | ||||
Available For Sale Securities | ||||
Cost or Amortized Cost | 456,358 | 460,551 | ||
Gross Unrealized Gains | 1,208 | 2,636 | ||
Gross Unrealized Losses | (43,138) | (37,902) | ||
Fair Value | 414,428 | 425,285 | ||
ABS/CMBS/MBS | ||||
Available For Sale Securities | ||||
Cost or Amortized Cost | 315,414 | 308,458 | ||
Allowance for Credit Losses | (2) | (3) | ||
Gross Unrealized Gains | 970 | 611 | ||
Gross Unrealized Losses | (26,906) | (27,884) | ||
Fair Value | 289,476 | 281,182 | ||
Corporate Debt | ||||
Available For Sale Securities | ||||
Cost or Amortized Cost | 1,277,258 | 1,273,187 | ||
Allowance for Credit Losses | (235) | (303) | ||
Gross Unrealized Gains | 4,732 | 8,766 | ||
Gross Unrealized Losses | (60,708) | (56,631) | ||
Fair Value | 1,221,047 | 1,225,019 | ||
Municipal | ||||
Available For Sale Securities | ||||
Cost or Amortized Cost | 631,473 | 634,000 | ||
Gross Unrealized Gains | 1,413 | 2,238 | ||
Gross Unrealized Losses | (86,374) | (83,614) | ||
Fair Value | $ 546,512 | $ 552,624 |
Investments - Debt Securities A
Investments - Debt Securities Available-for-sale Allowance for Credit Loss (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Investments Debt And Equity Securities [Abstract] | ||
Beginning balance | $ 306 | $ 339 |
Increase to allowance from securities for which credit losses were not previously recorded | 12 | 54 |
Reduction from securities sold during the period | (67) | |
Net increase (decrease) from securities that had an allowance at the beginning of the period | (14) | 72 |
Ending balance | $ 237 | $ 465 |
Investments - Securities in an
Investments - Securities in an Unrealized Loss Position Segregated by Type and Length of Time in an Unrealized Loss Position (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Fair value | ||
Less than 12 months | $ 434,654 | $ 248,510 |
12 months and greater | 1,922,397 | 1,939,305 |
Total Fair Value | 2,357,051 | 2,187,815 |
Amortized Cost | ||
Amortized cost, less than 12 months | 441,318 | 250,863 |
12 months and greater | 2,143,603 | 2,151,348 |
Total Cost or Amortized Cost | 2,584,921 | 2,402,211 |
Unrealized Loss | ||
Less than 12 months | (6,664) | (2,353) |
12 months and greater | (221,206) | (212,043) |
Total Unrealized Loss | (227,870) | (214,396) |
U.S. government | ||
Fair value | ||
Less than 12 months | 78,413 | 37,718 |
12 months and greater | 203,962 | 204,556 |
Total Fair Value | 282,375 | 242,274 |
Amortized Cost | ||
Amortized cost, less than 12 months | 79,565 | 37,950 |
12 months and greater | 210,653 | 210,182 |
Total Cost or Amortized Cost | 290,218 | 248,132 |
Unrealized Loss | ||
Less than 12 months | (1,152) | (232) |
12 months and greater | (6,691) | (5,626) |
Total Unrealized Loss | (7,843) | (5,858) |
U.S. Agency | ||
Fair value | ||
Less than 12 months | 15,822 | 8,736 |
12 months and greater | 28,854 | 29,632 |
Total Fair Value | 44,676 | 38,368 |
Amortized Cost | ||
Amortized cost, less than 12 months | 15,995 | 8,790 |
12 months and greater | 30,626 | 31,167 |
Total Cost or Amortized Cost | 46,621 | 39,957 |
Unrealized Loss | ||
Less than 12 months | (173) | (54) |
12 months and greater | (1,772) | (1,535) |
Total Unrealized Loss | (1,945) | (1,589) |
Non-U.S. government & agency | ||
Fair value | ||
12 months and greater | 3,844 | 3,882 |
Total Fair Value | 3,844 | 3,882 |
Amortized Cost | ||
12 months and greater | 4,800 | 4,800 |
Total Cost or Amortized Cost | 4,800 | 4,800 |
Unrealized Loss | ||
12 months and greater | (956) | (918) |
Total Unrealized Loss | (956) | (918) |
Agency MBS | ||
Fair value | ||
Less than 12 months | 55,007 | 61,196 |
12 months and greater | 288,704 | 275,707 |
Total Fair Value | 343,711 | 336,903 |
Amortized Cost | ||
Amortized cost, less than 12 months | 56,100 | 61,714 |
12 months and greater | 330,749 | 313,091 |
Total Cost or Amortized Cost | 386,849 | 374,805 |
Unrealized Loss | ||
Less than 12 months | (1,093) | (518) |
12 months and greater | (42,045) | (37,384) |
Total Unrealized Loss | (43,138) | (37,902) |
ABS/CMBS/MBS | ||
Fair value | ||
Less than 12 months | 25,663 | 12,240 |
12 months and greater | 182,583 | 211,436 |
Total Fair Value | 208,246 | 223,676 |
Amortized Cost | ||
Amortized cost, less than 12 months | 25,831 | 12,367 |
12 months and greater | 209,321 | 239,193 |
Total Cost or Amortized Cost | 235,152 | 251,560 |
Unrealized Loss | ||
Less than 12 months | (168) | (127) |
12 months and greater | (26,738) | (27,757) |
Total Unrealized Loss | (26,906) | (27,884) |
Corporate Debt | ||
Fair value | ||
Less than 12 months | 185,542 | 67,402 |
12 months and greater | 795,631 | 822,731 |
Total Fair Value | 981,173 | 890,133 |
Amortized Cost | ||
Amortized cost, less than 12 months | 188,580 | 68,345 |
12 months and greater | 853,301 | 878,419 |
Total Cost or Amortized Cost | 1,041,881 | 946,764 |
Unrealized Loss | ||
Less than 12 months | (3,038) | (943) |
12 months and greater | (57,670) | (55,688) |
Total Unrealized Loss | (60,708) | (56,631) |
Municipal | ||
Fair value | ||
Less than 12 months | 74,207 | 61,218 |
12 months and greater | 418,819 | 391,361 |
Total Fair Value | 493,026 | 452,579 |
Amortized Cost | ||
Amortized cost, less than 12 months | 75,247 | 61,697 |
12 months and greater | 504,153 | 474,496 |
Total Cost or Amortized Cost | 579,400 | 536,193 |
Unrealized Loss | ||
Less than 12 months | (1,040) | (479) |
12 months and greater | (85,334) | (83,135) |
Total Unrealized Loss | $ (86,374) | $ (83,614) |
Investments - Unrealized Losses
Investments - Unrealized Losses (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Cost or amortized Cost | ||
Total Cost or Amortized Cost | $ 2,584,921 | $ 2,402,211 |
Fair value | ||
Total Fair Value | 2,357,051 | 2,187,815 |
Unrealized Loss | ||
Total Unrealized Loss | $ (227,870) | $ (214,396) |
Percent to Total | 100% | |
NAIC Rating 1 | AAA/AA/A | Aaa/Aa/A | ||
Cost or amortized Cost | ||
Total Cost or Amortized Cost | $ 2,137,898 | |
Fair value | ||
Total Fair Value | 1,941,077 | |
Unrealized Loss | ||
Total Unrealized Loss | $ (196,821) | |
Percent to Total | 86.40% | |
NAIC Rating 2 | BBB | Baa | ||
Cost or amortized Cost | ||
Total Cost or Amortized Cost | $ 397,220 | |
Fair value | ||
Total Fair Value | 369,097 | |
Unrealized Loss | ||
Total Unrealized Loss | $ (28,123) | |
Percent to Total | 12.30% | |
NAIC Rating 3 | BB | Ba | ||
Cost or amortized Cost | ||
Total Cost or Amortized Cost | $ 31,428 | |
Fair value | ||
Total Fair Value | 29,952 | |
Unrealized Loss | ||
Total Unrealized Loss | $ (1,476) | |
Percent to Total | 0.70% | |
NAIC Rating 4 | B | B | ||
Cost or amortized Cost | ||
Total Cost or Amortized Cost | $ 14,826 | |
Fair value | ||
Total Fair Value | 14,073 | |
Unrealized Loss | ||
Total Unrealized Loss | $ (753) | |
Percent to Total | 0.30% | |
NAIC Rating 5 | CCC | Caa | ||
Cost or amortized Cost | ||
Total Cost or Amortized Cost | $ 2,730 | |
Fair value | ||
Total Fair Value | 2,421 | |
Unrealized Loss | ||
Total Unrealized Loss | $ (309) | |
Percent to Total | 0.10% | |
NAIC Rating 6 | CC Or Lower | Ca or lower | ||
Cost or amortized Cost | ||
Total Cost or Amortized Cost | $ 819 | |
Fair value | ||
Total Fair Value | 431 | |
Unrealized Loss | ||
Total Unrealized Loss | $ (388) | |
Percent to Total | 0.20% |
Investments - Debt and Short-te
Investments - Debt and Short-term Investments (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
Investments | |||
Other investments | $ 59,273 | $ 59,081 | |
Investment in unconsolidated investees | 66,134 | 56,966 | |
Cash and Short-term Investments | |||
Cash | 44,557 | 36,424 | |
Short-term investments | 147,186 | 134,923 | |
Other Unconsolidated Investees | Maximum | |||
Investments | |||
Investment in unconsolidated investees | 1,000 | ||
Prime Holdings Insurance Services, Inc. (Prime) | |||
Investments | |||
Investment in unconsolidated investees | 66,000 | ||
FHLBC | |||
Investments | |||
Investments pledged as collateral | $ 57,000 | ||
Investment in federal home loan bank stock | us-gaap:AssetPledgedAsCollateralMember | ||
Federal home loan bank borrowings fair value disclosure | $ 50,000 | ||
Investment In Low Income Housing Tax Credit Partnerships (LIHTC) | |||
Investments | |||
Other investments | 9,000 | 10,000 | |
Amortization on low income housing investments | 1,000 | $ 1,000 | |
Total tax benefit on investments in tax credit partnership | 1,000 | 1,000 | |
Investment In Low Income Housing Tax Credit Partnerships (LIHTC) | Maximum | |||
Investments | |||
Qualified affordable housing project investments, unfunded commitment | 1,000 | ||
Historic tax credit partnerships (HTC) | |||
Investments | |||
Other investments | 12,000 | 13,000 | |
Amortization on qualifying equity investments | 1,000 | 1,000 | |
Total tax benefit on investments in tax credit partnership | 1,000 | $ 1,000 | |
Investment in Private Funds | |||
Investments | |||
Other investments | 27,000 | $ 28,000 | |
Fair value investments entities that calculate net asset value per share, unfunded commitments | $ 4,000 |
Historical Loss and LAE Devel_3
Historical Loss and LAE Development - Reconciliation of Unpaid Losses and Settlement Expenses (LAE) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Unpaid losses and LAE at beginning of year | ||
Gross | $ 2,446,025 | $ 2,315,637 |
Ceded | (757,349) | (740,089) |
Net | 1,688,676 | 1,575,548 |
Increase (decrease) in incurred losses and LAE | ||
Current accident year | 186,217 | 166,270 |
Prior accident years | (42,393) | (51,782) |
Total incurred | 143,824 | 114,488 |
Loss and LAE payments for claims incurred | ||
Current accident year | (12,975) | (7,983) |
Prior accident years | (102,011) | (95,905) |
Total paid | (114,986) | (103,888) |
Net unpaid losses and LAE at March 31 | 1,717,514 | 1,586,148 |
Unpaid losses and LAE at March 31 | ||
Gross | 2,532,190 | 2,286,063 |
Ceded | (814,676) | (699,915) |
Net unpaid losses and LAE at March 31 | $ 1,717,514 | $ 1,586,148 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Income Tax Disclosure | ||
Effective income tax rate reconciliation, percent, total | 20.10% | 19.50% |
U.S. federal tax rate | 21% | 21% |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Income Tax Expense (Benefit) Attributable to Income from Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Reconciliation of income tax expense reported to amount computed by applying the U.S. federal tax rate | ||
Provision for income taxes at the statutory federal rate | $ 33,598 | $ 25,786 |
Increase (reduction) in taxes resulting from: | ||
Excess tax benefit on share-based compensation | (1,874) | (1,990) |
Tax exempt interest income | (260) | (283) |
Dividends received deduction | (235) | (224) |
Tax credit | (768) | (513) |
ESOP dividends paid deduction | (138) | (137) |
Nondeductible expenses | 713 | 601 |
Other items, net | 1,055 | 740 |
Income tax expense | $ 32,091 | $ 23,980 |
Reconciliation of income tax expense rate to the U.S. federal tax rate | ||
Tax rate used (as a percent) | 21% | 21% |
Excess tax benefit on share-based compensation (as a percent) | (1.20%) | (1.60%) |
Effective rate reduction due to tax exempt interest income (as a percent) | (0.20%) | (0.20%) |
Effective rate reduction due to dividend received (as a percent) | (0.10%) | (0.20%) |
Effective rate reduction due to tax credit (as a percent) | (0.50%) | (0.40%) |
Effective rate reduction due to dividend paid to ESOP (as a percent) | (0.10%) | (0.10%) |
Effective rate reduction due to nondeductible expenses (as a percent) | 0.40% | 0.50% |
Effective rate reduction due to other items, net (as a percent) | 0.80% | 0.50% |
Total tax expense | 20.10% | 19.50% |
Stock Based Compensation - Stoc
Stock Based Compensation - Stock Plans - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 11 Months Ended | 96 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | May 03, 2023 | May 04, 2023 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Options granted (in shares) | 27,875 | ||||
Intrinsic value of options | $ 8 | $ 11 | |||
RLI Corp. Long-Term Incentive Plans | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Stock-based compensation expenses | 1.8 | 2.5 | |||
Income tax benefit from stock-based compensation | 0.3 | $ 0.4 | |||
Unrecognized stock-based compensation expense | $ 5 | $ 5 | |||
Stock-based compensation expenses, recognition period | 2 years 7 months 17 days | ||||
RLI Corp. Long-Term Incentive Plans | Employee Stock Option | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Award vesting period | 5 years | ||||
Term of options | 8 years | ||||
RLI Corp. Long-Term Incentive Plans | Employee Stock Option | Minimum | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Age and period of service of the participant to be eligible for retirement | 75 years | ||||
RLI Corp. Long-Term Incentive Plan (2015 LTIP) | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Shares authorized for grant | 4,000,000 | ||||
Options granted (in shares) | 3,291,388 | ||||
RLI Corp. Long-Term Incentive Plan (2023 LTIP) | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Shares authorized for grant | 4,004,891 | ||||
Options granted (in shares) | 28,475 | 224,013 |
Stock Based Compensation - Summ
Stock Based Compensation - Summary of Option Activity (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 USD ($) $ / shares shares | Mar. 31, 2023 USD ($) | |
Weighted Number of Options Outstanding | ||
Outstanding options, Beginning Balance | shares | 1,641,710 | |
Options granted (in shares) | shares | 27,875 | |
Options exercised | shares | (93,470) | |
Options canceled/forfeited | shares | (1,365) | |
Outstanding options, Ending Balance | shares | 1,574,750 | |
Exercisable options, Ending Balance | shares | 819,591 | |
Weighted Average Exercise Price | ||
Weighted Average Exercise Price, Outstanding options, Beginning Balance | $ / shares | $ 92.62 | |
Weighted Average Exercise Price, Options granted | $ / shares | 135.94 | |
Weighted Average Exercise Price, Options exercised | $ / shares | 64.52 | |
Weighted Average Exercise Price, Options canceled/forfeited | $ / shares | 109.50 | |
Weighted Average Exercise Price, Outstanding options, Ending Balance | $ / shares | 95.04 | |
Weighted Average Exercise Price, Exercisable options | $ / shares | $ 80.95 | |
Weighted Average Remaining Contractual Life | ||
Weighted Average Remaining Contractual Life, Outstanding options | 4 years 6 months 29 days | |
Weighted Average Remaining Contractual Life, Exercisable options | 3 years 5 months 8 days | |
Aggregate Intrinsic Value, Options exercised | $ | $ 8,000 | $ 11,000 |
Aggregate Intrinsic Value, Outstanding options | $ | 84,145 | |
Aggregate Intrinsic Value, Exercisable options | $ | $ 55,335 |
Stock Based Compensation - Su_2
Stock Based Compensation - Summary of Weighted Average Grant-date Assumptions and Weighted Average Fair Values (Details) - $ / shares | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Weighted average grant date assumptions and weighted average fair value | ||
Weighted-average fair value of grants | $ 30.60 | $ 27.04 |
Risk-free interest rates | 4.62% | 4.22% |
Dividend yield | 2.24% | 2.54% |
Expected volatility | 23.05% | 22.93% |
Expected option life | 5 years 29 days | 5 years 3 days |
Stock Based Compensation - Rest
Stock Based Compensation - Restricted Stock Units - Additional Information (Details) - Restricted Stock Units (RSUs) | 3 Months Ended |
Mar. 31, 2024 | |
Minimum | |
Share Based Compensation | |
Age and period of service of the participant to be eligible for retirement | 75 years |
Employees | |
Share Based Compensation | |
Award vesting period | 3 years |
Directors | |
Share Based Compensation | |
Award vesting period | 1 year |
Stock Based Compensation - Sche
Stock Based Compensation - Schedule of Restricted Stock Units Activity (Details) | 3 Months Ended |
Mar. 31, 2024 $ / shares shares | |
Number of RSUs | |
RSUs Nonvested, Beginning Balance | shares | 45,093 |
RSUs Granted | shares | 600 |
RSUs Reinvested | shares | 85 |
RSUs Forfeited | shares | (128) |
RSUs Nonvested, Ending Balance | shares | 45,650 |
Weighted Average Grant Date Fair Value | |
Weighted Average Grant Date Fair Value, Nonvested, Beginning Balance | $ / shares | $ 125.16 |
Weighted Average Grant Date Fair Value, Granted | $ / shares | 142.08 |
Weighted Average Grant Date Fair Value, Reinvested | $ / shares | 145.36 |
Weighted Average Grant Date Fair Value, Forfeited | $ / shares | 124.07 |
Weighted Average Grant Date Fair Value, Nonvested, Ending Balance | $ / shares | $ 125.43 |
Operating Segment Information -
Operating Segment Information - Summary by Operating Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Revenues | ||
Net premiums earned | $ 360,676 | $ 307,723 |
Net investment income | 32,847 | 27,084 |
Net realized gains | 5,994 | 14,620 |
Net unrealized gains on equity securities | 45,314 | 15,496 |
Consolidated revenue | 444,831 | 364,923 |
Net Earnings | ||
Net underwriting income | 77,695 | 67,890 |
Net investment income | 32,847 | 27,084 |
Net realized gains | 5,994 | 14,620 |
Net unrealized gains on equity securities | 45,314 | 15,496 |
General corporate expense and interest on debt | (6,628) | (6,222) |
Equity in earnings of unconsolidated investees | 4,769 | 3,923 |
Earnings before income taxes | 159,991 | 122,791 |
Income tax expense | 32,091 | 23,980 |
Net earnings | 127,900 | 98,811 |
Casualty Segment | ||
Revenues | ||
Net premiums earned | 198,276 | 186,031 |
Net Earnings | ||
Net underwriting income | 13,674 | 31,831 |
Property Segment | ||
Revenues | ||
Net premiums earned | 129,411 | 88,767 |
Net Earnings | ||
Net underwriting income | 57,716 | 28,383 |
Surety Segment | ||
Revenues | ||
Net premiums earned | 32,989 | 32,925 |
Net Earnings | ||
Net underwriting income | $ 6,305 | $ 7,676 |
Operating Segment Information_2
Operating Segment Information - Summary of Revenue by Major Product Type (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Segment Reporting | ||
Net premiums earned | $ 360,676 | $ 307,723 |
Casualty Segment | ||
Segment Reporting | ||
Net premiums earned | 198,276 | 186,031 |
Casualty Segment | Commercial excess and personal umbrella | ||
Segment Reporting | ||
Net premiums earned | 80,035 | 67,582 |
Casualty Segment | Commercial transportation | ||
Segment Reporting | ||
Net premiums earned | 27,301 | 25,232 |
Casualty Segment | General liability | ||
Segment Reporting | ||
Net premiums earned | 25,412 | 25,900 |
Casualty Segment | Professional services | ||
Segment Reporting | ||
Net premiums earned | 25,085 | 24,357 |
Casualty Segment | Small commercial | ||
Segment Reporting | ||
Net premiums earned | 18,337 | 17,941 |
Casualty Segment | Executive products | ||
Segment Reporting | ||
Net premiums earned | 5,915 | 6,353 |
Casualty Segment | Other casualty | ||
Segment Reporting | ||
Net premiums earned | 16,191 | 18,666 |
Property Segment | ||
Segment Reporting | ||
Net premiums earned | 129,411 | 88,767 |
Property Segment | Commercial property | ||
Segment Reporting | ||
Net premiums earned | 87,605 | 49,262 |
Property Segment | Marine | ||
Segment Reporting | ||
Net premiums earned | 32,568 | 30,636 |
Property Segment | Other property | ||
Segment Reporting | ||
Net premiums earned | 9,238 | 8,869 |
Surety Segment | ||
Segment Reporting | ||
Net premiums earned | 32,989 | 32,925 |
Surety Segment | Transactional | ||
Segment Reporting | ||
Net premiums earned | 12,108 | 12,047 |
Surety Segment | Commercial | ||
Segment Reporting | ||
Net premiums earned | 10,625 | 12,418 |
Surety Segment | Contract | ||
Segment Reporting | ||
Net premiums earned | $ 10,256 | $ 8,460 |
Leases - Schedule of Components
Leases - Schedule of Components of Lease Expense and Other lease Information (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
Leases [Abstract] | |||
Operating lease cost | $ 1,181 | $ 1,269 | |
Variable lease cost | 269 | 438 | |
Sublease income | (42) | (139) | |
Total lease cost | 1,408 | 1,568 | |
Cash paid for amounts included in measurement of lease liabilities | |||
Operating cash outflows from operating leases | 1,063 | 1,398 | |
ROU assets obtained in exchange for new operating lease liabilities | 3,456 | 41 | |
Reduction to ROU assets resulting from reduction to lease liabilities | $ 200 | ||
Operating lease ROU assets | $ 16,083 | $ 13,666 | |
Operating Lease, Right-of-Use Asset, Statement of Financial Position | Other assets | Other assets | |
Operating lease liabilities | $ 17,415 | $ 14,880 | |
Operating Lease, Liability, Statement of Financial Position | Other liabilities | Other liabilities | |
Weighted-average remaining lease term - operating leases | 6 years 1 month 28 days | 6 years 29 days | |
Weighted-average discount rate - operating leases | 3.48% | 3.21% |
Leases - Schedule of Future Min
Leases - Schedule of Future Minimum Lease Payments under Non-cancellable Leases (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Future minimum lease payments under non-cancellable leases | ||
2024 | $ 3,248 | |
2025 | 4,048 | |
2026 | 3,256 | |
2027 | 2,135 | |
2028 | 1,544 | |
2029 | 1,450 | |
Thereafter | 4,199 | |
Total future minimum lease payments | 19,880 | |
Less imputed interest | (2,465) | |
Operating lease liabilities | $ 17,415 | $ 14,880 |
Acquisitions and Dispositions (
Acquisitions and Dispositions (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Dispositions | |
Cash proceeds from sale | $ 14,134 |
Maui Jim Inc. | Net Realized Gains | |
Dispositions | |
Recognized gain on sale | $ 14,000 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Pay vs Performance Disclosure | ||
Net Income (Loss) | $ 127,900 | $ 98,811 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Mar. 31, 2024 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |