RLI Insurance Q4’22 conference call

RLI Insurance Company hosted its Q4 2022 earnings call on Jan 26, 2023. The highlights:

  • Posted 84.4% combined ratio marking its 27th consecutive year of underwriting profitability
  • Quarter’s combined ratio was 82.1% compared to 80.7% a year ago – loss ratio increased 2.6 points due to higher weather-related losses
  • Gross premiums written increased 16%
  • Investment income advanced ~60% in the quarter and closed the year up 25%
  • Paid $116 million in taxes on the gain from the sale of Maui Jim, American sunglasses manufacturer based in Peoria, Illinois
  • Underwriters been able to grow almost all of the products within RLI portfolio, but there are a few pockets where it faces “stiff competition”
  • On the property market – seen additional improvement in price, terms and conditions
  • Property segment led RLI’s top and bottom line for the quarter – premium grew by 40%, while underwriting profit increased 61%
  • Premium in E&S property book grew by 54%, including material rate increases for all coverages
  • Hurricane rate increase was 29% for the quarter – accelerating throughout 2022
  • On marine group – premium up 17%, including a 6% rate change for the quarter
  • Marine is now a consistent contributor to RLI’s bottom line – it “experienced very little loss activity in the quarter, and their growth over time has helped rightsize their expense ratio”
  • Hawaii Homeowners products grew premium by 17% due to local underwriters efforts
  • Overall, property segment is at 62% combined ratio for the quarter
  • Surety segment – premium up 5% in the quarter
  • The casualty segment’s premium grew by 4% in the quarter
  • The public D&O market is under pressure – exited accounts with unreasonable changes in terms and conditions and provided a 9% rate decrease on renewals
  • Exit from cyber liability and reps and warranties business also affected the quarter-over-quarter premium comparison
  • RLI is also cutting back on Energy Casualty – wrote almost $14 million of excess energy liability business in the 2022 that will be run off throughout 2023
  • Transportation business unit grew 13% in the fourth quarter although we are seeing a lot of competition in the truck market – rates increased 8% in the quarter, driven by public and specialty commercial auto, which are experiencing more stable market conditions
  • Personal umbrella – up 16% – this market continues to be disruptive as many of RLI competitors for standalone umbrella have significantly reduced their appetite or left the space altogether
  • Not one word on “technology”