RLI - Earnings call transcript Q3 2021

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Operator

Good day and welcome to the RLI Third Quarter Earnings Teleconference. This call is being recorded. It is now my pleasure to turn the conference over to Mr. Aaron Diefenthaler. Sir, please begin.

Aaron Diefenthaler

Chelsea. you, Thank welcome XXXX. and third earnings quarter Good to for call morning RLI's

Joining and Chief Michael, President Jon us are; today Chairman Operating and and Officer; CEO; Todd Officer. Bryant, Financial Chief Kliethermes, Craig

Craig our close will to Todd questions the Todd? on by the additional things As with portfolio. thoughts. will conditions We'll usual, with and kick follow market call will some - walking final and off through Jon financials. product current open comments then

Todd Bryant

varying core year-to-date of Yesterday has line in growth not in relatively posted by we combined million catastrophes unrealized the were year's quarter, invested Jim and quarter X% continued Prime base. by our quarter $X.XX for been but Realized everyone. and have quarter, Earnings third advanced quarter while securities market be $XXX gains notably to Aaron XX.X% equity loss quarter year-to-date, quarterly and the quarter's benefit of asset changes additive and volatility million morning, Thanks, flow, results, as the positively and Ida, a year basis. $XXX and for earnings ratio gains the continue amounts to flat in for prior to impacted up earnings. income were reported per ratio in and a From Maui, on benefits were in operating the favorable while cash All investments, reserves XX.X%. the losses strong on our results operating top good excluding Hurricane as underwriting stands in, X% solid at were hurricanes, The combined well share. earnings. negatively the impacted from XX% impacted we experienced most

comparisons or at net $XX.XX, share pushed calls, inclusive dividends. more and large year-to-date we level, this year which up in Craig in favorable the earnings, XXXX. significant talk value per all end, a combined the the three year's perspective, share From events lines. majority all favorable points the both with from million losses million bonus million and periods preannounced were policies number Net our by As you three on XX.X% impact comparable product our quarter is a underwriting per totaled reserves will business. $X.XX $XX.X about Casualty ago, Aggregate perspective, package ratio. range tax continue to related periods impacts net book mentioned $XX ratio but of from $XX quarter's quarterly of experienced way investment market XX in within to prices advantage were see and can losses. results conditions as development. are quarter's could to to reported. both underwriting segment million spread was combined the have of Hurricane that areas property added a and across totaled in in $XX in equity of of of a experienced segments segments loss XX% prior to XX.X% an emergency take reinsurance. impacted favorable income From of a and year million a of high elevated our minute, most of $X led of hurricane in our of compared premium the net prior Casualty movements growth impact

reductions but certain leverage measures, premium declines XX.X% part ratio on did to as in Moving to bonus certain are are to also of reflective improve increase in by points in expense corporate and expenses, expenses. our due quarterly X.X net The general the decreased earned expenses.

the year, putting all our environments. course money the comparable strategy to but which income, a Maui, recently but the allocation saw the primary Operating in back respectively. yields and of been to have months yields flat the the been Craig. the and exposure, million call all, $X.X year. March. Jim turned I'll focus it portfolio. good positive XXXX, we but toward million investments, And was nine in nearly earnings There to Turning up as seen the uplift in little work very on slightly quarter continues to and return inched quarter with a over Apart shifts declines markets' market $X.X in highs of first remained income with total Prime few and quarter. capital offsetting a contributing strong late the All remains period from have in price modest - subdued, that, Overall flow cash shift few were a the for the turn the there invest in in over we investment support have growth from XX-year

Craig Kliethermes

And before maybe we she try forward-looking to at forgot start, read statements and would think if to ask back go I want I to - beginning. maybe do I maybe the Chelsea we the that

Todd Bryant

I forward-look, do didn't any Craig.

be as either, okay. don't So as to long we're going you

Craig Kliethermes

and make have implied that those read. assuming comments I'll been my

Todd Bryant

- Yeah

Craig Kliethermes

Thank good and Aaron So. everyone. you, and morning, Todd

for As our factoring for report XX customers growing underwriting year-to-date. Ida At still After Todd top and impacted able a XX% through XX% and the - portfolio sub the growth in exposure, quarter good quarter line XX% combined the light Hurricane year-to-date. more and result. catastrophes our very are events, mentioned same than these quarter our in that points to time, reporting smaller of a ratio profit and rate of we were and we

some most in the although We tapering there increases across of continue see portfolio to spots. rate is

ratios. new renewal of our appetite. business business generally retention We business a is at flow The discerning are - with we're underwriting good that maintaining and meets stickier, higher

labor We and as are inflation. supply derived chain well monitoring as from shortages impacts the

teams coverage and sharing in advantage identifying increase information pricing disruption. diligently costs are our underwriting any the any claim loss resulting to by of risks, adequately talented we working taking mitigate and Our businesses, provide across market tailored

the able Now XX% rate driven to overall be Casualty, were of we portion segment. at increase for management We achieve for In this across Casualty segment by our much quarter, coverages. and products, our reported excess is to some good growth which liability XX% combined major to the and an in ratio specific an all rate in comments year-to-date. more level. widespread from X% products continues quarter liability the Growth of particularly a commercial portfolio and feel the XX%

with the being in for rate line jury more Despite previous in the space, climb wheels' to to bounce business find trucking increasingly levels Our be counts rates but Claim and by top competitive continue public we to to Transportation decreased the and more continue growth class to Overall, are increased as Transportation it's the still scheduled. rates auto, back trials shortages. are quarter. but base bookings continues in still moderate be challenged up driver overall size. increases

We grown most quarter State along general the kept triaging our claims Ida for zones Overall hurricanes realized conditions helping inflation into was economic through grew X% segment XX% and excess growth. expected rates will in reported consecutive we one States Metro mitigate in reported property we customers day in remained products have peak have intense and remain XX% New the United top claims. combined the superior line segment wind quarter. of lines rate in of driven strike back very both with business. vigilant surplus for of year-to-date, our training All quarter. In segment exposures this the the major and recorded increase. The one combined get products three surety, for quarter. Hurricane About and for is All and the a exposure. the teams our of work markets wind inflation unprofitable a it market area XXX% in ground, one, Surety our up Despite driver reported From the ratio and and growth and the damaging XX% the assessing have for cat history. that Overall on the property, contract, as and XX% our ratio top in commercial Orleans' losses we the XXX% of challenges double-digits our the Louisiana In product of been a this profitably. the line talent, of competitive. eighth event have investment is was segment for by in of quarter social to the our results. had

visiting make are supporting we and help it more producers continue us. business to as grow There back market with and contractors in are do person our are this capabilities win and easy We the that our in to invest construction in they producers opportunities business.

quarter with it and had solid labor We technology profitable clients Overall, will our and claim from a differentiator. the expand front chain We existing on producers continue supply to growth. added quarter with despite risk in writings quiet is invest another and a the issues. where

risk. the flex are commensurate at experts underwriting permit where pricing rates that our ready to to market disruption prowess with are Our and us underwriting participate

to supply we disruption. always, with chain As inflation associated are uncertainty alert and the

best, to continue We on the will do we basics. focus do what

insured valuation away accounts, diligently underwrite will We of business. property adequate assess and exposures, quality walk from evolving underpriced require

are helping up I open in stewards We questions. now and customers and for value to all to also of times thank want risk of need. reputation. our insured's great our capital, to of and good RLI delivering of our results our for associates our like it stakeholders but I'd for especially

Operator

before may and course the reflect remind me intentions, we that beliefs get make the the management everyone that sir. you, And teleconference, comments with for the Thank let RLI session, started please future. through of their Q&A expectations

reviewed Commission XXXX, actual RLI cause subject make the to to session release come Johnson. the Form various and quarter in measures to filed earnings Our which factors earnings this measures for materially. filings, be results. results second are which may RLI's and operating definitions operating contains gains XX-K to are time. to management earnings Risk gauging The of losses the earnings in [Operator including XXth, at Please announcing and during financial statements realized should forward-looking report XX-Q Form will after these press comparable the SEC tax core the X-K now as Instructions] the of question-and-answer differ across period per in but with these carefully. June and reporting operating gains are begin from always, supplemented has of Exchange on or securities. Form Factors will non-GAAP equity and question other losses be of per after Securities the as which may not quarterly management Cullen could performance net from in certain beliefs share reference refer operations The ending results. first useful uncertainties company earnings. the after RLI's from company's on described As share call annual that earnings the operations a consist or unrealized periods, elimination tax operating companies

Cullen Johnson

a Holdings anything taking earnings Is in jump question. Thanks quarter-over-quarter large Prime in for Hey, acceleration? good there drove morning. particular of that my quarter. relatively looks It that like this

Todd Bryant

of outside I through mean, just continued bit not like say would earned and being more I Todd. just revenue with is quite a seeing this our Cullen us realized they've premium, grown growth. you're growth, revenue. through

that really growth, anything. So isn't no, outside of there

Cullen Johnson

then you leverage to Okay, balance thanks. kind as ratios That's of And know, helpful. declined. have gradually you grow sheet, continue the

know, here. you all capital think just think the the of the is $XXX or part I'm senior that going XXXX of we curious You I could about maturity a you your as structure notes. approach not forward? huge consideration leverage how story But million share

Todd Bryant

we're it's something perspective, we from a standpoint capital have. you're as because Todd. as low grown much we Cullen, have right from Certainly that - leverage

still and talk to we've know, we about is have room increase the some as to be we something it's So There certainly and conservative move to, - been you make decisions talking through we look leverage there. we'll XXXX. to tended we something about

Cullen Johnson

thank my all questions. you. are Those Great,

Operator

Thank you.

Our next Schmitt. from Jeff question comes

Jeff Schmitt

or you growth that Hi, you guess your E&S discuss for riders standard of much business Could seeing the general there? good from excess lines? would in you books are kick liability that But morning. market into are coming and more I is mainly Casualty liability. be seeing how what

Craig Kliethermes

other even faster. a faster, Jeff, I our is not is they're maybe products rest lot growing maybe all at obviously at little it's they - bit the growing the about than formal a though the to E&S rate. the pace than the Craig. property this Casualty little in rate products mean, there I paced little little business regulated I E&S products, less less a so, products, Well definition but slower I of than mean, same a rates but Casualty the faster pace. E&S Casualty about not specialty aren't of little that are the continue climb portfolio at the a guess, a there. property business growing is probably

it underwriters take our trying advantage So, so. you taking have of - to that know

Jeff Schmitt

ratio. the And then expense acquisition looking Yep, okay. just at

historically, right XX% driving should you was forward? you think how run if back, know go just it that's kind last a the year about XX% that business that it's we know, mix of level? that? I XX% think year-to-date, changing Is You XX%. going mean, I or Is rate really

Todd Bryant

the of Well, right it you're some yes is that. about next changing in year,

terms side that as think you half of of is operation and you office our - house can of not the a but that's If is too, imagine. home the as in operating overall if acquisition expenses of people divisional lot our and in

to going should or we're to premium, people we So leverage bit better you've bit. seen earned a continue a grow that as

year. from improvement of I think year better ratio, the full we which know a totality last a another points down basis point seen roughly if you've this some way I in expense at is a couple year, year you and right the look were think you full at it looking

better, that the of is. products a that's you you're of as and there are things well some a can it's right, where know, leverage mix reflective So bit but we bit opportunity

Jeff Schmitt

right. Right,

thank you. Okay,

Operator

Thank you.

from question Shields. Our next will come Meyer

Meyer Shields

Thanks.

On have a that and if side, rising Construction have does shortage the combination any losses? Surety impact a Surety inflation, for we of material's worker

Craig Kliethermes

of mean, Yeah principal the I yes. any in the least principal can construction cause Meyer, - to at Obviously project potentially the the this is put Craig. claim. in delay

However, typically they work opportunity our that. way have out - to of we

also that thing to that offsets very it's replacement to find other a do The work. the difficult contractor

think just a be fact some shorty way. lot of a of contractor correctly, continue of had, lot the I that of a want There it's with a the bit shortage, So a as to times there to is the think they well matter understanding done delay. labor is just of construction more little I they opposed doing done

gather the project so workers. with would opposed they us unskilled So workers skilled finish as to

extra a the to working associated a the like with lot things pass cost that ways of lot So the project. do of out have and contracts completing there's on

times person So on the the cost increased project. of is the passed lot materials for of paying to a that's

Todd Bryant

I if look think, - to you Meyer,

Meyer Shields

Yeah -

Todd Bryant

We're probably the underlying Surety a side. standpoint so back you from go or on loss booking past a half ratio if an little bit a again elevated, look and year and from the over

last Craig call that. COVID year - that things I whether So uncertainty year some you to referring recognition think of there's there's it and was of this the

Meyer Shields

Is comments way good drivers of then mentioned I Okay. excluding for. I think, COVID? drivers are That's Yeah, compared a there perfect. what Craig say a looking of how to in now your guess I was And shortage you XXXX? assessing in apples-to-apples Transportation. let's So more

Craig Kliethermes

how shortage. - are? asking? How say more what of that they how much a Is To shorter you're much

Meyer Shields

Really driver's is quality - in other the words,

Craig Kliethermes

- Yeah

Meyer Shields

to they drivers, I overall group worse of mean, a - Used than be

Craig Kliethermes

continue obviously don't be we're get mean, I to the for public population an I to see position know big an very professional in population isn't wheel the target probably us. general we're the going we're good for that's that drivers drivers. into to about day assess mean, the Yeah to general letting the a I other I automobiles, mean XX-year-olds think of the to that picky. and I be a able of trucks behind involving. don't article we ensure truck. the the I mean that doesn't market buses that's did looking

but they certainly So, this choices certainly of various the reasons to to people would say road the more back maybe vehicles. than lifestyle earlier little there's would choosing given shortage work to a the created in I you to would expect has regards overall fact and know, retire the just on large because wanting - I fewer go for and people that risk

Meyer Shields

Okay, need what I perfect. That's know. to

Operator

you. thank Right,

will Scott question next come from Heleniak. Our

Scott Heleniak

morning. Hi, good

you terms you you to your want know in could see talked touch any helpful. also growth pretty know recently think the mix just more there X% short-term? counter continuing change business significant And by in or on growth cat good pretty XXXX? property is more the wanted you you know, that any you which less there But of would increases are you're if about there property so. geography this more opportunity seeing and or to to first be exposed just written then rate premium Just kind just detail on is of touch You

Craig Kliethermes

is Craig. mean seeing growth this across growth double-digit we're the rates. I Scott, a portfolio,

to costing think we the are to of it's E&S the side realize where house in not more getting the the house, but that particularly side and the - mean, mean as quake is are house, I of particularly hurricane on trails seeing raid more certainly these felt. I we're our like the well southeast, everybody side. much on the on on being the So of the seeing the know probably opportunity what seen you've buildings, as that in we hit side where where side southeast impact hurricane I as you replace quake catastrophes the getting inflationary the it starting the on it's We're there's

island Homeowners is our and Hawaii business, within of exposure - that it as hurricane cat double-digit mean, there. is cat we've familiar on be to what are you just both that's and would going to and E&S and higher But is expect, some know rate grew islands. as to rate know, And, people but growing cat I there But exposure not that maybe the that I the continue and marine remember growth most You book that exposure they some had not are rate side. at rates. clear hurricane, is so it's easier too exposed, with the our still on get seeing we it's in exposed. see know big that although you growth businesses probably books. the hurricane to we're as exposed

the because - think expecting growth to portfolio property of across the we're I So continued see

Scott Heleniak

Sure.

more feel normal that exposure like - is want of kind that are rates you're something measured pace? or the you or that doing opportunity cat it just little a given there's don't take a the than so where you something hurricane, like And to on is southeast at just

Craig Kliethermes

Yeah, to we we get rate I - can currently but Scott can continue mean, there. and get can if premiums, there, get we're if if which think continue adequately grow at we adequate to rate we

probably an that's so there to fortunately, down gone cost to - know, given more regards that You the bar the opportunity know, given, there, we're able certainly obviously, down price. get we think But up reconstruction that's in has of the evolving it non-Florida and price when you I we'd to Florida. we southeast Florida is allow I say, rates now if there in room like But is mean, mean more to. right than opportunity down I us the the grow have if in

Scott Heleniak

Okay, you Craig that of tapering yeah lines any are that specific there lines some call better comments then you your areas. rates that's helpful. on few there mentioned thought? And in that? a could Is you specific holding you than is And in any up out

Craig Kliethermes

mentioned I than is we Yeah, increases more mostly I the have start to thought way. by you're know, which little I see - fall. increases, Casualty digit starting mid which management this up were I they business businesses, quarter but now getting wheels hold D&O they're excess single double-digit you to you access In mean like excess at were lot know, mid still based a the and increases. going our rates to been for to a in mean or would liability the then the seem stuff, of least space, E&S contractors business, commercial And of

So I've seen that's falls. where it really where

places which They a going so and X% never write, the limits, right X%, where is you there much. now. X% or maybe were Casualty with maybe business other lower point the up up smaller rates that we that and Some of went know, than lower

moderation. we're in about to So that's what talking regards

Scott Heleniak

know handy? money portfolio little you going spread potential. was Yeah where Todd, you don't and are a that a three in wondering, then versus yield? incremental yield that's it years up was not obviously It's the know is lastly you bit new the I you I ago, treasuries What know, existing XX-year What's bit. mentioned two, but your you what seeing marketplace if of mean have now? Okay. yield I little

Aaron Diefenthaler

low Scott for upper the in Xs Aaron. probably the low We're the Xs portfolio Yeah, - versus in up - the it's today. in what's

Scott Heleniak

still right to Okay, go ways - still the to narrow gap.

So, okay.

Aaron Diefenthaler

Yeah in gap rise yields. like continued in the a rise to - with close we'd

down, we'll higher as in being but take mentioned So prices before that at able of bond going terms rates. trade invest to we

Scott Heleniak

operating Craig flow. cash has the to portfolio. Aaron for asked the wait and underwriters keep throwing

Aaron Diefenthaler

help. It's big a help. been a It's been

Scott Heleniak

you thanks lot. hope I right, a keep doing All Yeah that.

Craig Kliethermes

Thank you.

Aaron Diefenthaler

Thank you.

Operator

you. Thank

Our next question comes from Inglis. Jamie

Jamie Inglis

views it's good book folks. climate you Hey, What business? query got know, a impact change, years? geography And does over lines an that going do will And Craig climate three, from - about. led everyone's is something of you of have know, you and morning, I've on about forward? RLI's four, you do [technical think you change to what what business it about - last about you view I thoughts to five whatever the talking your lead been difficulty] do what your your think

Craig Kliethermes

of dying wait obviously our mean are So the change that been year, watchful we're - measure impact it's question. impact. us the I I've But climate for very very every I to difficult policies mean, to our of renewable no, obviously, for policies

are and climate result severe I like change, as are be and hurricanes know mean, that's And not in certainly really if costs what we know, can't storms you get we on every to I'm to ensure to watchful. a situation scientist, you quantify got you but events you those reprice we know, a have obviously and into the location. factored continue our I Fortunately so impact comment to it year of know, a accounts where

Jamie Inglis

That's all I have. thanks. Okay,

Operator

are Thank further you. There no questions.

back would turn Jon to the conference I So Mr. Michael. like to

Jon Michael

analysts' mid - these still satisfactory very excellent help during yet we a and catastrophes quarter quarter, hurricanes What get ratio, post of you. and are had We're excellent growth like in customers great business able this, are the XXs able expectations. business an back in. combined other Thank the to and the we to beat from our a

you we'll that, with So next again to quarter. talk

you all for that. and will we'll Some of joining. it Thank leave at us

Operator

for nice you ID do access may wish parties and an XXXX-XXX-XXXX Ladies call, with and a concludes day. today. This replay All for our to so you all have dialing you number XXX-XXXX. by Thank for now the may disconnect. conference if this of participating gentlemen,

RLI (RLI) 21 Oct 212021 Q3 Earnings call transcript