RLI Corp. (RLI)

Get RLI Alerts
*Delayed - data as of Apr. 29, 2016  -  Find a broker to begin trading RLI now
Exchange: NYSE
Industry: Finance
Community Rating:
Symbol List Views
FlashQuotes InfoQuotes
Stock Details
Summary Quote Real-Time Quote After Hours Quote Pre-market Quote Historical Quote Option Chain
Basic Chart Interactive Chart
Company Headlines Press Releases Market Stream
Analyst Research Guru Analysis Stock Report Competitors Stock Consultant Stock Comparison
Call Transcripts Annual Report Income Statement Revenue/EPS SEC Filings Short Interest Dividend History
Ownership Summary Institutional Holdings Insiders
(SEC Form 4)
 Save Stocks


Q1 2013 Earnings Call

April 18, 2013 11:00 am ET


Aaron H. Jacoby - Vice President of Corporate Development

Thomas L. Brown - Chief Financial Officer, Principal Accounting Officer, Vice President and Treasurer

Michael J. Stone - Director, Member of Finance & Investment Committee, Member of Strategy Committee and President of Rli Insurance Company

Jonathan E. Michael - Chairman, Chief Executive Officer and President


Randy Binner - FBR Capital Markets & Co., Research Division

Raymond Iardella - Macquarie Research

Meyer Shields - Keefe, Bruyette, & Woods, Inc., Research Division

Scott G. Heleniak - RBC Capital Markets, LLC, Research Division

John Thomas

Kevin Shields



Good morning, and welcome, ladies and gentlemen, to the RLI Corp. First Quarter Earnings Teleconference. At this time, I would like to inform you that this conference is being recorded. [Operator Instructions] Before we get started, let me remind everyone that through the course of the teleconference, RLI management may make comments that reflect their intentions, beliefs and expectations for the future. As always, these forward-looking statements are subject to certain risk factors, which could cause actual results to differ materially. These risk factors are listed in the company's various SEC filings, including the Annual Form 10-K, which should be reviewed carefully. The company has filed a Form 8-K with the Securities and Exchange Commission that contains a press release announcing first quarter results. RLI management may make reference during the call to operating earnings and earnings per share from operations, which are non-GAAP measures of financial results. RLI's operating earnings and earnings per share from operations consist of net earnings after the elimination of after-tax realized investment gains or losses. RLI's management believes this measure is useful in gauging core operating performance across reporting periods but may not be comparable to other companies' definitions of operating earnings. The Form 10-K contains reconciliations between operating earnings and net earnings. The Form 8-K and press release are available at the company's website at www.rlicorp.com. At the request of the company, we will open the conference up for questions and answers following the presentation. I will now turn the conference over to RLI's Vice President, Corporate Development, Mr. Aaron Jacoby. Please go ahead, sir.

Aaron H. Jacoby

Thank you. Good morning to everyone. Welcome to RLI's Earnings Call for the First Quarter of 2013. Joining me on today's call are Jon Michael, Chairman and CEO; Mike Stone, President and Chief Operating Officer; and Tom Brown, Vice President and Chief Financial Officer. I'm going to turn the call over to Tom first to give some brief opening comments on the quarter's financial results. Then Mike will talk about our operations and market conditions. Next, we'll open the call to questions, and John will finish up with some closing comments. Tom?

Thomas L. Brown

Thanks, Aaron, and good morning. From our perspective, we saw this as another solid quarter. Gross premiums was up 10% over last year. Continuing the segment trends from last year, Casualty was the biggest driver, up 23%, as a result of new product initiatives, as well as certain products achieving both rate and exposure growth. The Property segment was flat, while Surety declined slightly as our underwriters remained diligent in light of tough economic conditions. Net written premium is up 12%. That's 2 points higher than the gross premium growth rate and is largely a result of a new Casualty reinsurance treaty put in place 1 month [ph] that allows us to retain more of the attractive business we write as pricing continues to advance.

Turning to profitability. The combined ratio was a very strong 86.2. Included in this result is $10.8 million of favorable development, mostly from the Casualty segment and from accident years 2008 to 2011. As a result of the higher premium and lower combined ratios, underwriting income advanced 33% versus last year. Regarding investments, it was a great quarter from a total return perspective, with the overall portfolio advancing 2.5% on the strength of our equity portfolio, which was up 11.5%. Investment income continued to trend down due to low reinvestment rates. At the end of the quarter, the fixed income portfolio stood at a consistent 4.9 duration and a 3.7% book yield. Not to be left out, Maui Jim did its part, contributing 19% earnings growth over the last year. The combination of underwriting and investment results drove operating earnings per share of $1.04 per share, up from $0.96 per share last year. The additional contribution from realized and unrealized investment gains drove excellent growth in book value per share of 4.6% since last year, year end. In summary, a positive start to 2013. And now I'd like to turn it over to Mike Stone for further discussion.

Michael J. Stone

Thanks, Tom. Good morning, everybody. Again, just to reiterate, a good underwriting quarter. Another sub-90 combined ratio quarter at 86. Good gross written premium growth, 10% gross and 12% net, as Tom indicated.

I'll try to give a little market color. Rates are moving up modestly, Casualty, some 5%-plus in certain products. Property, 2%. So just nominally, though growing much more rate in our Marine business, and Surety is essentially flat.

Casualty business. Our gross written premium is up 23%. Some products, gross written premium, up significantly more, and rates up nicely. For example, our Commercial umbrella business, premiums up 36%, rates up some 17%, as we're finding pockets of opportunity, allowing us to write business that other markets are walking away from.

Read the rest of this transcript for free on seekingalpha.com