SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )

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Check the appropriate box:
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/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
RLI CORP.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
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(LOGO)

RLI CORP.
9025 North Lindbergh Drive
Peoria, Illinois 61615

March 26, 1996

Dear Shareholder:

Please consider this letter your personal invitation to attend the 1996 RLI
Corp. Annual Shareholders Meeting. It will be held at 9025 North Lindbergh
Drive, Peoria, Illinois, 61615, the Company's principal office, on May 2, 1996
at 2:00 P.M.

Matters scheduled for consideration during the meeting include the nomination
of three Directors, consideration of an amendment to the Company's Articles
of Incorporation to increase the number of authorized shares of Common Stock,
and selection of the Company's independent accounting firm. Following the
custom of past meetings, there will be a report to shareholders on the
progress of the Company during 1995.

Even if you do not plan to attend, it is important that you date, sign and
return the enclosed proxy card in the envelope provided for your convenience.
Your vote is vital no matter how many shares you own. If you do attend the
Annual Meeting and desire to vote in person, you may do so even though you have
previously sent in a proxy.

Thank you for your interest in your Company and confidence in our future.

Sincerely,

Gerald D. Stephens, CPCU
President

(LOGO)

RLI CORP.
9025 North Lindbergh Drive
Peoria Illinois 61615

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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

MAY 2, 1996

-------------------------------------------------------

To the Shareholders of RLI Corp.:

NOTICE IS HEREBY GIVEN that the Annual Meeting of the
Shareholders of RLI Corp. (the "Company") will be held at 9025
North Lindbergh Drive, Peoria, Illinois, 61615, on Thursday, May
2, 1996, at 2:00 P.M., Central Daylight Time, to:

1. Elect three (3) directors for a three-year term
expiring in 1999 or until their successors are elected
and qualified;

2. Consider and act upon a proposal to amend the Company's
Articles of Incorporation to increase the number of
authorized shares of Common Stock from 12 million shares to
50 million shares;

3. Consider and act upon a proposal to appoint KPMG
Peat Marwick LLP as independent public accountants of
the Company for the current year; and

4. Transact such other business as may properly be
brought before the meeting.

Only holders of Common Stock of the Company, of record at
the close of business on March 4, 1996, are entitled to notice
of and to vote at the Annual Meeting.

By Order of the Board of Directors

Camille J. Hensey
Secretary
Peoria, Illinois

March , 1996

It is important, regardless of the number of shares you
hold, that you personally be present or be represented by proxy
at the Annual Meeting. Accordingly, whether or not you plan to
attend the Annual Meeting, it is requested you promptly sign and
date the enclosed proxy and return it in the envelope provided
that requires no postage if mailed in the United States. If you
attend the Annual Meeting, your proxy may be withdrawn upon
request.

-------------------------------------------------------

RLI CORP.

PROXY STATEMENT

FOR ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD MAY 2, 1996

-------------------------------------------------------

GENERAL INFORMATION

This Proxy Statement is furnished to the shareholders of RLI Corp. (the
"Company") in connection with the solicitation by the Board of Directors of the
Company, of proxies to be used at the Annual Meeting of its Shareholders to be
held at 2:00 P.M., Central Daylight Time, on Thursday, May 2, 1996, at 9025
North Lindbergh Drive, Peoria, Illinois, 61615, and at any adjournments of the
Meeting.

PROXY SOLICITATION. The Company will bear the cost of solicitation of proxies.
In addition to the use of the mail, proxies may be solicited personally or by
telephone or telefax, by officers or regular employees of the Company. No
additional compensation will be paid to such persons for their services. The
Company will

reimburse banks, brokerage firms, investment advisors and other custodians,
nominees, fiduciaries and service bureaus for their reasonable out-of-pocket
expenses for forwarding soliciting material to the beneficial owners of the
stock and obtaining their proxies or voting instructions.

VOTING. Each proxy will be voted in accordance with the shareholder's
specifications thereon. If there are no such specifications, it will be voted
in favor of the election of directors, and in accordance with the Board of
Directors' recommendations on other proposals. All proxies delivered pursuant
to this solicitation are revocable at any time at the option of the shareholder
either by giving written notice to the Secretary of the Company or delivering a
proxy bearing a later date or by voting in person at the Annual Meeting. All
shares represented by valid, unrevoked proxies will be voted at the Annual
Meeting.

MAILING. This Proxy Statement and enclosed Proxy are first being mailed to
shareholders entitled to notice of and to vote at the Annual Meeting on or
about March 26, 1996.

SHAREHOLDER PROPOSALS. To be included in the Board of Directors' proxy
statement for the 1997 Annual Meeting of the Shareholders, a

shareholder proposal must be received by the Company on or before December 1,
1996. Proposals should be directed to the attention of the Secretary at 9025
North Lindbergh Drive, Peoria, Illinois, 61615.

SHAREHOLDERS ENTITLED TO VOTE. At the close of business on March 4, 1996, the
record date for the determination of shareholders entitled to vote at the
Annual Meeting, the Company had 7,935,776 shares of Common Stock outstanding
and entitled to vote. Common share ownership entitles the holder to one vote
per share upon each matter to be voted at the Annual Meeting.

SHARE OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The only persons known to the Company who beneficially own more than
five percent of the Company's Common Stock as of December 31, 1995, are as
follows:

Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership of Class
- -------------------------------- -------------------- --------

Franklin Resources, Inc. 617,961 7.9%
777 Mariners Island Boulevard
P.O. Box 7777
San Mateo, California 94403-7777
(1)

Sanford C. Bernstein & Co., Inc. 415,119 5.3%
One State Street Plaza
New York, New York 10004
(2)

FMR Corp. 500,000 6.4%
82 Devonshire Street
Boston, Massachusetts 02109
(3)

RLI Corp. 1,410,290 18.0%
Employee Stock Ownership Plan &
Trust ("ESOP")
c/o Bank One
124 Southwest Adams Street
Peoria, IL 61649 (4)

Gerald D. Stephens 641,663 8.2%
493 East High Point Dr.
Peoria, IL 61614
(5)

(1) The Company has obtained the information with respect to
Franklin Resources, Inc. ("Franklin"), Charles B. Johnson and
Rupert H. Johnson, Jr. from their filing under Section 13G of the
Securities and Exchange Act of 1934, which filing indicates
Franklin and Messrs. Johnson have sole voting power with respect
to 573,275 shares, shared voting power with respect to 22,123
shares, no voting power with respect to 22,563 shares and shared
dispositive power with respect to 617,961 shares. Messrs.
Johnson are the principal shareholders of Franklin.

(2) The Company has obtained the information with respect to
Sanford C. Bernstein & Co., Inc. from its filing under Section
13G

of the Securities and Exchange Act of 1934. Such filing
indicates that Sanford C. Bernstein & Co., Inc. has sole voting
power with respect to 303,475 shares, shared voting power with
respect to 6,875 shares, no voting power with respect to 104,769
shares and sole dispositive power with respect to 415,119 shares.

(3) The Company has obtained the information with respect to FMR Corp.
("FMR"), Edward C. Johnson 3d and Abigail P. Johnson from its filing under
Section 13G of the Securities and Exchange Act of 1934. Such filing
indicates that FMR, Mr. Johnson and Ms. Johnson have sole dispositive power
with respect to 500,000 shares. Neither FMR nor Mr. Johnson, Chairman of
FMR, has the sole power to vote or direct the voting of the shares owned
directly by the Fidelity Funds, which power resides with the Funds' Boards of
Trustees. Fidelity carries out the voting of the shares under written
guidelines established by the Funds' Boards of Trustees. Fidelity is a
wholly-owned subsidiary of FMR and an investment adviser registered under
Section 203 of the Investment Advisers Act of 1940 to various investment
companies. One investment company, Fidelity Low-Priced Stock Fund, is the
owner of the shares listed. Mr. Johnson, Ms. Johnson and members of their
family may be deemed to be a controlling group of FMR.

(4) Each Employee Stock Ownership Plan participant or beneficiary may
direct the ESOP trustee as to the manner in which the shares allocated to
each under the ESOP are to be voted. The ESOP Administrative Committee
("Committee"), comprised of disinterested members of the Board of Directors,
may direct the ESOP trustee as to the manner in which unallocated shares are
to be voted. The Committee has sole investment power as to all allocated and
unallocated shares, except as to those shares which are the subject of a
participant's diversification election. During 1995, none of the executive
officers were eligible to elect to diversify any shares owned by the ESOP.

(5) Includes 200,764 shares allocated to Mr. Stephens under the ESOP;
22,610 shares allocated under the RLI Corp. Key Employee Excess Benefit Plan
("Plan") over which Mr. Stephens has no voting or investment power; 28,143
shares owned of record by Mr. Stephens' spouse; 6,562 shares held in
custodian accounts for the benefit of Mr. Stephens' grandchildren, over which
he has the sole voting and investment power; and 1,295 shares in the H. O.
Stephens Trust for the benefit of Mr. Stephens' mother, over which Mr.
Stephens, as trustee, has the sole voting and investment power. Mr. Stephens
disclaims any beneficial interest in these shares except for the ESOP shares
detailed in above and the Plan shares.

SHARE OWNERSHIP OF MANAGEMENT

The following information is furnished as to the beneficial
ownership of the shares of the Company's Common Stock by each
current director, nominees for director, named executive
officers, and directors and executive officers of the Company as
a group as of December 31, 1995:

Amount and
Name of Individual or Nature of Percent
Number of Persons in Beneficial of
Group Ownership (1) Class
- -------------------- ------------- ---------

Bernard J. Daenzer (2) 99,849 1.3%

Michael W. Dalton (3) (8) 25,923 *

Joseph E. Dondanville (8) 13,047 *

Richard J. Haayen (9) 2,723 *

William R. Keane (4) (9) 69,512 *

Gerald I. Lenrow (5) (9) 5,189 *

John S. McGuinness (6) 3,124 *

Jonathan E. Michael (8) 24,494 *

Edwin S. Overman (9) 17,808 *

Gerald D. Stephens (7) (8) 641,663 8.2%

Edward F. Sutkowski (9) 65,243 *

Gregory J. Tiemeier (8) 23,796 *

Robert O. Viets (9) 3,588 *

Directors and executive
officers as a Group
(16 persons) (8) 1,009,006 12.85%

*Less than 1% of Class.

(1) Unless otherwise noted, each person has sole voting power
and sole investment power with respect to the shares reported.

(2) Includes 32,668 shares of record by Mr. Daenzer's
spouse, and 22,163 shares held in a trust for the benefit of Mr.
Daenzer's adult children and grandchildren of which a bank and
Mr. Daenzer's spouse act as co-trustees, as to which Mr. Daenzer
disclaims any beneficial interest.

(3) Includes 187 shares held in a trust for the benefit of Mr.
Dalton's spouse and her siblings in which Mrs. Dalton acts as
trustee, as to which Mr. Dalton disclaims any beneficial
interest.

(4) Includes 27,428 shares by Mr. Keane's spouse, Evelyn
Corral, an honorary Vice President of the Company, as to which
Mr. Keane claims beneficial interest.

(5) Includes 125 shares held by Mr. Lenrow's spouse in a
custodian account for the benefit of their minor daughter, as to
which Mr. Lenrow disclaims any beneficial interest.

(7) Includes 200,764 shares allocated to Mr. Stephens under the
ESOP; 22,610 shares allocated under the RLI Corp. Key Employee
Excess Benefit Plan over which Mr. Stephens has no voting or
investment power; 28,143 shares of record by Mr. Stephens'
spouse; 6,562 shares held in custodian accounts for the benefit
of Mr. Stephens' grandchildren, over which Mr. Stephens has the
sole voting and investment power; and, as trustee of 1,295 shares
in the H.O. Stephens Trust in which Mr. Stephens' mother is
entitled to the income and principal. Mr. Stephens, as trustee
under the H.O. Stephens Trust, has the sole voting and investment
power of the shares in such Trust. Mr. Stephens disclaims any
beneficial interest in all shares except for those allocated to
him under the ESOP and the Plan.

(8) Includes shares allocated to the executive officers under
the ESOP with respect to which such officers have sole voting
power and no investment power, except during the period which any
such

executive officer is eligible to elect to diversify a
percentage, not to exceed 50%, of such officer's ESOP benefit.
As of December 31, 1995, the following shares were allocated
under the ESOP: Mr. Stephens 200,764 shares; Mr. Dalton 25,736
shares; Mr. Michael 24,494 shares; Mr. Tiemeier 23,163 shares;
and Mr. Dondanville 13,029 shares.

(9) Includes shares held by a bank trustee under an irrevocable
trust established by the Company pursuant to the Company's
Director Deferred Compensation Plan for the benefit of the
following: Mr. Haayen 2,473 shares; Mr. Keane 36,392 shares; Mr.
Lenrow 5,064 shares; Dr. Overman 17,808 shares; Mr. Sutkowski
19,223 shares; and, Mr. Viets 2,963 shares. Each participating
director has no voting or investment power with respect to such
shares.

As required by the Securities and Exchange Commission rules under
Section 16 of the Securities Exchange Act of 1934, the Company notes that
during 1995 Dr. McGuiness did not file a Form 4 reflecting the ownership of
2,187 shares owned by two of his emancipated children who reside with Dr. and
Mrs. McGuiness. Dr. McGuiness has since filed a Form 5 reflecting such
ownership and disclaims any beneficial ownership with respect to such shares.

The information with respect to beneficial ownership of
Common Stock of the Company is based on information furnished to
the Company by each individual included in the table.

ELECTION OF DIRECTORS

NOMINEES. At the Annual Meeting, three directors are to be
elected, each to hold office for a three-year term or until a
successor is elected and qualified. Messrs. William R. Keane,
Gerald I. Lenrow and Edwin S. Overman are Class III directors.
They were elected by the shareholders in 1993 for three-year
terms expiring in 1996.

VOTING OF PROXIES. Unless otherwise instructed, it is intended
the shares represented by the enclosed Proxy will be voted for
the election of the three nominees named above. The affirmative
vote of a majority of the shares present in person or represented
by Proxy at the Annual Meeting and entitled to vote is required
for the election of directors. Votes will be tabulated by an
Inspector of Election appointed at the Annual Meeting.
Abstentions and broker non-votes have no effect on determinations
of majority except to the extent that they affect the total votes
received by any particular candidate.

SUBSTITUTE NOMINEES. The Board of Directors has no reason to
believe that any nominee will be unable to serve if elected. In
the event that any nominee shall become unavailable for election,
it is intended that such shares will be voted for the election of
a substitute nominee selected by the persons named in the
enclosed

Proxy unless the Board should determine to reduce the
number of directors pursuant to the Company's By-Laws.

DIRECTOR AND NOMINEE INFORMATION. The following includes certain
information with respect to the current directors and nominees to
the Board of Directors furnished to the Company by such
individuals:

DIRECTOR PRINCIPAL
NAME AGE SINCE OCCUPATION

William R. Keane 79 1966 Former Vice President, Contacts,
(to be elected for a term Inc.
(contact lens laboratory)
of three years expiring in 1999) in Chicago, IL until retirement
in 1983.

PICTURE

Gerald I. Lenrow 68 1993 Consultant to General
(to be elected for a term of Reinsurance Corporation since
three years expiring in 1999) 1996. Former partner in the
international accounting firm
of Coopers & Lybrand LLP until
1990, following which he
served as their consultant
until joining General
Reinsurance Corporation.
PICTURE

Edwin S. Overman 73 1987 President Emeritus of the
(to be elected for a term of Insurance Institute of America
, three years expiring in 1999) a national educational organization
in Malvern, PA, since his retirement as
President of the Institute in 1987.

PICTURE

Certain information concerning the remaining directors, whose terms expire
either in 1997 or 1998, is set forth as follows based upon information
furnished to the Company by such individuals:

Bernard J. Daenzer 80 1972 Owner of Daenzer Associates,
(term expiring in 1997) Key Largo, FL, an insurance
consulting services firm since
PICTURE 1980. Formerly President and
Chairman of Wohlreich and
Anderson Insurance Companies
and the Howden Swan Insurance
Agencies until his retirement
in 1980.

Richard J. Haayen (2) 71 1993 Chairman and CEO of Allstate
(term expiring in 1997) Insurance Company in Northbrook,
IL until his retirement in 1989.
PICTURE Currently Executive-In-Residence
at Southern Methodist University
in Dallas, TX.

John S. McGuinness 73 1983 President of John S. McGuinness
(term expiring in 1998) Associates in Scotch Plains, NJ,
consultants in actuarial science
and management, since 1964.
PICTURE

Gerald D. Stephens 63 1965 Mr. Stephens founded the
(term expiring in 1998) Company in 1965 and has been
President since 1972.

PICTURE

Robert O. Viets (1) 52 1993 President and CEO since 1988
(term expiring in 1998) of Cilcorp, Inc., a holding
company in Peoria, IL, whose
PICTURE principal business subsidiary
is Central Illinois Light Company
("CILCO"). Mr. Viets joined CILCO
in 1973 and held various managerial
and officer positions until his
promotion to President and CEO.

Edward F. Sutkowski (3) 57 1975 President of the law firm of
(term expiring in 1997) Sutkowski & Washkuhn Ltd. in
Peoria, IL since 1965.
PICTURE

(1) Mr. Haayen is a director of Paragon Group, Inc. in Dallas,
Texas, whose securities are registered pursuant to Section 12 or
subject to the requirements of Section 15(d) of the Securities
and Exchange Act of 1934.

(2) Mr. Sutkowski is associated with the law firm of Sutkowski &
Washkuhn Ltd. which has provided legal services to the Company
prior to and during 1995. It is expected that the Company's
relationship with Sutkowski & Washkuhn Ltd. will continue in the
future.

(3) Mr. Viets is a director of Cilcorp Inc. in Peoria, Illinois,
whose securities are registered pursuant to Section 12 or subject
to the requirements of Section 15(d) of the Securities and
Exchange Act of 1934.

AUDIT COMMITTEE

The Company's Audit Committee, comprised of outside
directors Messrs. Haayen, Keane, Lenrow, McGuinness, and Viets,
met two times

in 1995 to consider an outside audit firm and to
discuss the planning of the Company's annual outside audit and
its results. The Audit Committee also monitored the Company's
management of its exposures to risk of financial loss, assessed
the auditors' performance, reviewed the adequacy of the Company's
internal controls, and the extent and scope of audit coverage,
monitored selected financial reports, and made audit and auditor
engagement recommendations to the Board of Directors.

EXECUTIVE RESOURCES COMMITTEE

The Company's Executive Resources Committee, comprised of
outside directors Messrs. Daenzer, Haayen, Lenrow, McGuinness,
Overman and Sutkowski, met one time in 1995 to review and
recommend the compensation of the executive officers and other
officers of the Company. The Committee also evaluated executive
performance, executive back-up plans, examined the officer
development program, and was responsible for searching, enlisting
and maintaining a file of prospective new Board members and
potential executive officers. The Committee administers the
Incentive Stock Option Plan through a subcommittee comprised of
disinterested outside directors Messrs. Haayen, Daenzer, Keane,
McGuinness, Overman and Viets .

NOMINATING COMMITTEE

The Company does not have a standing nominating committee.

BOARD MEETINGS AND COMPENSATION

MEETINGS. During the year 1995, five meetings of the Board of
Directors were held. No director attended fewer than 75% of the
aggregate number of meetings of the Board and Board committees on
which he served.

DIRECTOR COMPENSATION. All directors of the Company (other than
officers of the Company) are compensated at the rate of $11,000
per year, entitled to a Company performance bonus, paid $925 for
each Board meeting attended, $925 for each Committee of the Board
attended, $925 for each Committee of the Board chaired,
reimbursed for actual travel and related expenses incurred, and
provided a travel accident policy funded by the Company. The
Company performance bonus is equal to $1,250 for each percent, or
fraction thereof, of the excess of the Company's return on the
Company's beginning Shareholders' Equity over the average
industry return, not to exceed $12,500.

DIRECTOR DEFERRED COMPENSATION. Prior to the beginning of each
fiscal year, an outside director may elect to defer the
compensation otherwise payable to him during the succeeding
fiscal year pursuant to the RLI Corp. Director Deferred
Compensation Plan. Under the Plan, the Company must transfer to
a bank trustee under an irrevocable trust established by the
Company, such number of shares as are equal to the compensation
deferred at the close of the referent fiscal year. When the
amount of the Company performance bonus is determined, the
Company must likewise transfer such number of shares as are equal
to the performance bonus deferred. In general, Plan benefits are
distributable beginning when the director's status terminates.
Effective June 18, 1993, the Plan superseded the Company's prior
unfunded non-qualified deferred compensation plan for the benefit
of the directors.

EXECUTIVE RESOURCES COMMITTEE REPORT

The following report by the Executive Resources Committee is
required by the rules of the Securities and Exchange Commission
to be included in this Proxy Statement and shall not be
considered incorporated by reference in other filings by the
Company with the Securities and Exchange Commission.

GENERAL. The Executive Resources Committee determines the base
and incentive compensation of the executive officers. The
incentive compensation is designed to attract, retain and
motivate high quality executives and reward the executive
officers for Company profitability and the enhancement of
shareholder values. It is influenced heavily by the Company's
profitability. The Committee is of the opinion that the total
compensation payable is comparable to that provided by the
Company's competitors.

An executive officer's base compensation is computed by
reference to industry compensation studies; it relates to both
annual and long-term performance objectives established by the
Committee. A significant portion of an executive officer's
compensation is at risk. For example, in the case of Mr.
Stephens, his bonus, if any, is computed largely with reference
to the Company's pre-tax profits, but in no event may it exceed
40% of his base compensation.

COMPENSATION POLICIES FOR OTHER EXECUTIVE OFFICERS. The
compensation programs for the other executive officers are the
same as those available for the President except
for the Company's Key Employee Excess Benefit Plan in favor of
Mr. Stephens. See: Footnote (3) under Summary Compensation
Table.

Executive officer compensation is based on officer
responsibility, the profitability of the officer's segment of the
Company, productivity, budgetary compliance, and an in depth
individual officer evaluation.

MEMBERS OF THE EXECUTIVE RESOURCES COMMITTEE

Edwin S. Overman, Chairman
Bernard J. Daenzer
Richard J. Haayen
Gerald I. Lenrow
John S. McGuinness
Edward F. Sutkowski

EXECUTIVE OFFICERS

The following information is provided as to each current
executive officer of the Company:

Executive
Position Term of Officer
Name and Age with Company Office Since
- ------------------ --------------- --------- ----------

Gerald D. Stephens President One Year 1965
Age 63 and Director

Jonathan E. Michael Executive Vice One Year 1985
Age 42 (1) President; President,
Chief Operating Officer
of RLI Insurance
Company and Mt. Hawley
Insurance Company, the
Company's wholly-owned
insurance subsidiaries

Joseph E. Dondanville Vice President, One Year 1992
Age 39 (2) Chief Financial
Officer

Mary Beth Nebel Vice President One Year 1994
Age 39 (3) and General
Counsel

Camille J. Hensey Corporate One Year 1987
Age 54 Secretary

Gregory J. Tiemeier Assistant Secretary; One Year 1992
Age 38 (4) Senior Vice President
and Assistant Secretary
of RLI Insurance Company
and Mt. Hawley Insurance
Company, the Company's
wholly-owned insurance
subsidiaries

Michael W. Dalton President, Chief One Year 1993
Age 42 (5) Operating Officer of
RLI Vision Corp.

the Company's wholly-owned
ophthalmic subsidiary

Timothy J. Krueger Treasurer and Chief One Year 1995
Age 32 (6) Investment Officer

(1) Mr. Michael has been Executive Vice President since 1992. He was
promoted from Executive Vice President to President and Chief Operating
Officer of the Company's wholly-owned insurance subsidiaries, RLI Insurance

Company and Mt. Hawley Insurance Company, in 1994. Prior to his promotion
to Executive Vice President of the Company and its subsidiaries in 1992,
Mr. Michael served as Vice President, Chief Financial Officer since 1985.

(2) Mr. Dondanville was elected Vice President, Chief Financial Officer in
1992. Prior to his promotion to Vice President, Chief Financial Officer,
Mr. Dondanville served as Controller since 1985.

(3) Ms. Nebel was promoted to Vice President and General Counsel in 1994.
Ms. Nebel joined the Company in 1988 as Assistant General Counsel.

(4) Mr. Tiemeier was promoted to Senior Vice President of the Company's
wholly-owned insurance subsidiaries, RLI Insurance Company and Mt. Hawley
Insurance Company, in 1994 and was appointed Assistant Secretary on January
31, 1995. Prior to his promotion to Senior Vice President, Mr. Tiemeier had
been Vice President of Management Information Services since 1992 and
previously. Mr. Tiemeier has held various managerial positions since he
joined the Company in 1979.

(5) Mr. Dalton joined the Company in 1977 as an Ophthalmic Field Sales
Representative. He has held various managerial positions, including
President of the Company's Canadian operations, until his promotion to Vice

President of RLI Vision Corp., in 1990. He was promoted from Vice
President to President, Chief Operating Officer of RLI Vision Corp., in
1994.

(6) Mr. Krueger joined the Company in October, 1992 as Chief Accountant.
He was promoted to Controller in July, 1994 and Treasurer and Chief Investment
Officer in March, 1995. Prior to his joining the Company, Mr. Krueger held
various positions at KPMG Peat Marwick LLP from 1986, including Supervising
Senior and Audit Manager.

EXECUTIVE COMPENSATION

The aggregate cash compensation earned from the Company and
its subsidiaries during the 1995 fiscal year is expressed below
for the Company's chief executive officer and four most highly-
compensated executive officers:

SUMMARY COMPENSATION TABLE

Long Term
Compensation
------------
Annual Compensation SECURITIES
NAME and PRINCIPAL ------------------- UNDERLYING ALL OTHER
POSITION YEAR SALARY ($) BONUS ($)(1) OPTIONS (#)(2) COMPENSATION($)(3)
- ------------------------ ----- ----------- ------------ -------------- ------------------

Gerald D. Stephens 1995 405,744 0 27,375 67,334
President 1994 376,640 0 - 3,837
1993 351,680 143,808 - 74,698

Jonathan E. Michael 1995 239,719 0 5,375 24,130
Executive Vice President 1994 216,250 0 - 1,187
1993 185,263 73,850 - 30,000

Michael W. Dalton 1995 124,512 0 0 22
President, Chief Operating 1994 112,791 23,000 - 1,132
Officer, RLI Vision Corp. 1993 102,631 30,355 - 16,767

Joseph E. Dondanville 1995 124,271 0 2,250 19,991
Vice President, Chief 1994 111,163 0 - 1,093
Financial Officer 1993 96,206 26,964 - 19,247

Gregory J. Tiemeier 1995 127,667 0 2,625 20,537
Senior Vice President, 1994 117,448 0 - 1,172
RLI Insurance Company 1993 102,570 30,665 - 21,506
and Mt. Hawley Insurance
Company

(1) Represents compensation accrued during fiscal year 1995 and paid in 1996
pursuant to the Company's Executive Achievement Target Salary Plan.
None of the named executive officers received a bonus in respect of
the 1995 fiscal year.
(2) Twenty percent of each option grant becomes exercisable one year after
the date of the grant and each year thereafter in 20% increments. Such
options lapse at the end of ten (10) years after award. These numbers
have been adjusted to reflect the 5-for-4 stock split which was paid in
the form of a stock dividend in June, 1995.
(3) Represents the value of Company contributions to the ESOP on behalf of
the named executive officers. Effective January 1, 1995, the Company
amended the ESOP to exclude any employee of RLI Vision Corp. from
participating in the ESOP; however, the future service of any
participant will continue to be considered for vesting purposes. In
December of 1994, the Board of Directors determined not to cause the
Company to make a contribution to the ESOP in respect of 1994 given the
financial results of the Company. The amounts represent the value of
participant forfeitures allocated to such executive officer under the
ESOP. In the case of Mr. Stephens, the amount includes shares allocated
to him under the Company's Key Employee Excess Benefit Plan: 600 shares
plus 4,522 shares pursuant to the 5-for-4 stock split in respect of
1995; 1,914 shares in respect of 1994; and, 1,930 shares in respect of
1993. Benefits are distributable to Mr. Stephens when his employment
terminates. Under the Plan, the Company must transfer to the trustee
under an irrevocable trust maintained by the Company for the benefit of
Mr. Stephens, such number of shares as are equal to the excess of (a)
the contribution allocable to him under the ESOP determined without
regard to any limitation on

compensation imposed by the Internal Revenue Code, over (b) the
contribution actually allocable to him under the ESOP determined
with regard to any limitation on compensation imposed by the
Internal Revenue Code. The value of each share transferred is
equal to the per share closing price as of the close of the last
business day of the referent fiscal year. The total value of his
Plan benefit was $617,480 as of December 31, 1995. Effective June
26, 1993, the Plan superseded the Company's prior plan established
for the benefit of Mr. Stephens.

OPTION GRANTS IN LAST FISCAL YEAR

The following table shows information regarding grants of stock
options made to the named executive officers under RLI's Incentive Stock
Option Plan during the fiscal year ended December 31, 1995. The amounts
shown for each of the named executive officers as potential realizable values
are based on arbitrarily assumed annualized rates of stock price appreciation
of five percent and ten percent over the full ten-year term of the options,
which would result in stock prices of approximately $33.56 and $53.43,
respectively. The amounts shown as potential realizable values for all
shareholders represents the corresponding increases in the market value of
7,850,882 outstanding shares of RLI Common Stock held by all shareholders as
of January 31, 1996, which would total approximately $263,438,146 and
$419,481,219, respectively. No gain to the optionees is possible without an
increase in stock price which will benefit all shareholders proportionately.
These

potential realizable values are based solely on arbitrarily assumed rates of
appreciation required by applicable Securities and Exchange Commission
regulations. Actual gains, if any, on option exercises and common
stockholdings are dependent on the future performance of RLI Corp. Common
Stock. There can be no assurance that the potential realizable values shown
in this table will be achieved.

OPTION GRANTS IN LAST FISCAL YEAR

POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK
INDIVIDUAL GRANTS PRICE APPRECIATION FOR OPTION TERM
------------------------------------------------------ ----------------------------------
NUMBER OF % OF TOTAL IF STOCK AT IF STOCK AT
SECURITIES OPTIONS $33.56 $53.43
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES OR BASE
GRANTED IN FISCAL PRICE EXPIRATION
NAME (#)(1) YEAR(2) ($/SH)(3) DATE 5%(4) 10%(4)
- -------------------------------------------------------------------------------------------------------------------

ALL SHAREHOLDERS'
STOCK APPRECIATION $263,438,146 $419,481,219

Gerald D. Stephens 27,375 42.03% $20.60 05/11/05 $ 918,574 $ 1,462,676
Gregory J. Tiemeier 2,625 4.03% $20.60 05/11/05 $ 88,082 $ 140,257
Joseph E. Dondanville 2,250 3.45% $20.60 05/11/05 $ 75,499 $ 120,220
Michael W. Dalton 0 0.0%
Jonathan E. Michael 5,375 8.25% $20.60 05/11/05 $ 180,359 $ 287,192
- --------------------------------------------------------------------------------------------------------------------

(1) Twenty percent of each option grant becomes exercisable one
year after the date of the grant and each year thereafter in
20% increments. Such options lapse at the end of ten years
after award. These numbers have been adjusted for the 5-
for-4 stock split which was paid in the form of a stock
dividend in June, 1995.

(2) The Company granted options representing 65,125 shares to
employees during 1995.

(3) The exercise price has been adjusted for the 5-for-4 stock
split which was paid in the form of a stock dividend in
June, 1995.

(4) The dollaramounts under these columns are the result of calculations
at the 5% and 10% rates dictated by the Securities and Exchange
Commission when the "Potential Realizable Value" alternative is used.
These are not intended to be a forecast of the Company's stock price.

PENSION PLAN

The table below illustrates the estimated annual benefits
(based on a straight life annuity at age 65, but in no event less
than 120 monthly payments) payable under the Company's pension
plan for specified compensation and service levels assuming
normal retirement on July 1, 1996, at age 65 after selected years
of service:

AVERAGE ANNUAL ESTIMATED ANNUAL PENSION BENEFIT UPON RETIREMENT AT
COMPENSATION JULY 1, 1996 WITH YEARS OF SERVICE INDICATED
- -------------- ----------------------------------------------------------
15 YRS. 20 YRS. 25 YRS. 30 YRS. 35 YRS.
-------- -------- -------- -------- ---------

$100,000 $ 20,338 $ 27,117 $ 33,896 $ 40,675 $ 47,455
125,000 26,000 34,667 43,334 52,000 60,667
150,000* 31,663 42,217 52,771 63,325 73,880

*Generally, a participant's annual benefit payable beginning at his social
security retirement age (determined on the basis of his year of birth) must
not exceed the lesser of $90,000 (as adjusted for cost-of-living increases--
$120,000 for 1995) or 100% of his average compensation for his high three
years. In addition, effective beginning in 1994, the Internal Revenue Code
reduced the level of a participant's compensation which may be considered in
determining benefits under all types of tax qualified plans from the 1993
level of $235,840 to $150,000. In applying the $150,000 limit, the Plan must
freeze benefits for any participant whose benefit is based on compensation in
excess of $150,000 as of December 31, 1993. The frozen benefit may be
adjusted for increases in compensation after 1993, but adjustments are not
permitted unless the participant's updated compensation exceeds the
compensation that determined the participant's

frozen benefit. Based upon the foregoing, a participant's annual benefit
is limited to $74,453 unless such participant's earned benefit was greater
than $74,453 as of December 31, 1993.

Mr. Stephens' current compensation covered by the Plan is
$150,000 with 29 years of pension plan participation; Mr.
Michael's current covered compensation is $150,000 with 12 years
of pension plan participation; Mr. Dondanville's current covered
compensation is $124,271 with 11 years of pension plan
participation; Mr. Dalton's current covered compensation is $0
with 16 years of pension plan participation; and Mr. Tiemeier's
current covered compensation is $127,667 with 14 years of pension
plan participation.

Effective January 1, 1995, the Company amended the pension
plan to exclude any employee of RLI Vision Corp. from
participating in the plan; however, the future service of any
participant will continue to be considered for vesting purposes
and related purposes.

COMMON STOCK PERFORMANCE CHART

A line graph comparing the percentage change in the
cumulative total shareholder return, including the reinvestment
of dividends, on the Company's Common Stock with a cumulative
total return of the S & P Composite 500 Stock Index and the S & P
Property and Casualty

Index for the period beginning December 31,
1990 through December 31, 1995 has been omitted from this
electronic filing. The table below contains the data used to
create the omitted line graph:

TOTAL RETURN
COMPARISON OF FIVE YEAR CUMULATIVE
RLI, S&P 500, S&P P/C INS INDEX

Compounded Total Return
RLI - 19.61%
S&P 500 - 16.49%
S&P P/C Ins - 12.92%

Assumes $100 invested on December 31, 1990
RLI, S&P 500 Index, and S&P P/C Ins Index
Total Return assumes reinvestment of dividends

Measurement Period S&P 500 S&P P/C Ins
(Fiscal Year Covered) RLI Corp. Index Index
- ----------------------- --------- ------- ------------

Measurement Pt-12/31/90 $100 $100 $100

FYE 12/31/91 117 130 116
FYE 12/31/92 181 140 141
FYE 12/31/93 198 155 134
FYE 12/31/94 157 157 138
FYE 12/31/95 245 214 184

There can be no assurance that the Company's stock
performance will continue into the future with the same or
similar trends. The Company will neither make nor endorse any
predictions as to future stock performance.

The foregoing Stock Price Performance Graph shall not be
deemed incorporated by reference by any general statement

incorporating by reference this proxy statement into any filing
under the Securities Act of 1933 or the Securities Exchange Act
of 1934, except to the extent that the Company specifically
incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.

PROPOSAL TO AMEND THE COMPANY'S ARTICLES OF INCORPORATION TO
INCREASE THE SHARES OF COMMON STOCK AUTHORIZED TO BE ISSUED

The Board of Directors has approved, and submits for authorization
and approval of shareholders, a proposal to amend the Company's Articles of
Incorporation to increase the number of shares of authorized Common Stock,
$1.00 par value per share, from 12,000,000 shares to 50,000,000 shares (the
"Amendment"). The Company has no present plan to issue any shares to be
authorized pursuant to the Amendment. The text of the proposed Amendment of
the first paragraph of Article Four is as follows:

"The aggregate number of shares which the Corporation is
authorized to issue is fifty million (50,000,000) shares of
Common Stock with a par value of one dollar ($1.00) per
share."

As of February 15, 1996, 7,935,776 shares of the Company's Common
Stock were outstanding and 517,673 shares were held in treasury.
As of the same date, 3,019,232 shares were reserved for issuance

pursuant to the right to convert under the Company's 1993
Convertible Debenture Offering and the 1995 Stock Option Plan.
Consequently, as of February 15, 1996, there were approximately
527,319 authorized shares of Common Stock that were not issued or
reserved for other purposes. The proposed additional 38,000,000
shares would be a part of the existing class of Common Stock and,
if and when issued, would have the same rights and privileges as
the shares of Common Stock presently issued and outstanding. The
holders of Common Stock of the Company are not entitled to
preemptive rights or cumulative voting.

The Board of Directors and management believe that the increase
in the number of authorized but unissued shares is necessary to
provide flexibility to meet future requirements for the issuance
of Common Stock pursuant to the conversion rights of the RLI
Corp. Debenture Plan, existing or future stock options, possible
stock splits or stock dividends, and acquisitions or mergers,
pursuant to approval by the Board of Directors should they
determine the issuance is in the best interest of the Company.

The affirmative vote of the holders of at least two-thirds (2/3)
of the outstanding shares of Common Stock of the Company is
required for adoption of this Amendment. If this proposed
Amendment is adopted by the shareholders, the Company intends to
promptly effect

the amendment by filing an appropriate amendment
to its Articles of Incorporation with the State of Illinois.

THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "IN
FAVOR OF" THE PROPOSED AMENDMENT TO THE COMPANY'S ARTICLES OF
INCORPORATION INCREASING THE NUMBER OF AUTHORIZED SHARES OF
COMMON STOCK.

RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS

The Board of Directors, upon the recommendation of the Audit
Committee, has selected KPMG Peat Marwick LLP ("KPMG"), the
Company's independent public accountants since 1983, to serve as
the independent public accountants of the Company for the current
fiscal year if their selection is approved by the shareholders.
In view of the difficulty and expense involved in changing
auditors on short notice, if KPMG is not approved by the
shareholders, it is contemplated the appointment for the fiscal
year 1996 will be permitted to stand unless the Board finds other
compelling reasons for making a change. Disapproval of KPMG by
the shareholders will be considered an indication to the Board to
select other auditors for the following year.

Representatives of KPMG are expected to be present at the
Annual Meeting with the opportunity to make a statement, if they

desire, and their representatives are expected to be available to
respond to appropriate questions from the shareholders.

OTHER BUSINESS

The Board of Directors knows of no other business to be
presented at the Annual Meeting; however, if any other matters do
come before the Meeting, it is intended that the persons named in
the proxy will vote in accordance with their best judgment.

It is important that proxies be returned promptly so that
the presence of a quorum may be assured well in advance of the
Annual Meeting, thus avoiding the expense of follow-up
solicitations. Accordingly, even if you expect to attend the
Annual Meeting, you are requested to date, execute and return the
enclosed proxy in the stamped, self-addressed envelope provided.

If you attend the meeting in person, your proxy will be
returned to you on request.

By Order of the Board of Directors

Camille J. Hensey
Secretary
Peoria, Illinois

March 26, 1996

APPENDIX "A"

Page 1 of 2

(LOGO) PROXY BALLOT

RLI CORP.
9025 North Lindbergh Drive
Peoria, Illinois 61615

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints Gerald D. Stephens, John S.
McGuinness and William R. Keane as Proxies, each with the power
to appoint his substitute, and hereby authorizes them, or any one
or more of them, to represent and to vote, as designated below,
the shares of Common Stock of RLI Corp. held of record by the
undersigned on March 4, 1996, at the Annual Meeting of
Shareholders to be held on May 2, 1996 or any adjournments
thereof.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSALS:

1. ELECTION OF CLASS III DIRECTORS
(mark one)

FOR ALL NOMINEES LISTED BELOW / /
(except as marked to the contrary below)

WITHHOLD AUTHORITY / /
to vote for all nominees listed below

(INSTRUCTION: To withhold authority to vote for any individual
nominee, write that nominee's name on the space provided below)

- -----------------------------------------------------------------------
NOMINEES: WILLIAM R. KEANE, GERALD I. LENROW AND EDWIN S. OVERMAN

2. Approve an amendment to the Company's Articles of
Incorporation to Increase the Authorized Shares of Common
Stock:

/ / FOR / / AGAINST / / ABSTAIN

3. APPROVE THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE
INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY:

/ / FOR / / AGAINST / / ABSTAIN

(PLEASE DO NOT FOLD - DATE AND SIGN REVERSE SIDE)

Page 2

4. In their discretion, the Proxies are authorized to vote upon
such other business as may properly come before the meeting.

This Proxy, when properly executed, will be voted in the
manner directed herein by the undersigned shareholder.

IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED "FOR"
PROPOSALS 1, 2 and 3.

DATED:_______________________________ , 1996

____________________________________________
Signature

____________________________________________
Signature if held jointly

Please sign exactly as your name appears hereon. Joint
owners should each sign personally. Corporate officers,
executors, administrators, trustees, etc., should so
indicate when signing.

PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.