RLI Corp.

What they do

RLI Corp. underwrites select property, casualty and surety products through three insurance subsidiaries collectively known as RLI Insurance Group: RLI Insurance Company, Mt. Hawley Insurance Company, and Contractors Bonding and Insurance Company. RLI Ins. writes multiple lines on an admitted basis nationwide, Mt. Hawley writes excess and surplus lines on a non-admitted basis, and CBIC writes admitted lines in all 50 states and the District of Columbia. Products are distributed through wholesale and retail brokers, independent agents and carrier partners, with limited direct and managing general agent business.

Revenue drivers

• Casualty segment — Commercial excess, personal umbrella, general liability, transportation and management liability coverages; the segment where second quarter 2026 gross premium growth was concentrated, though its combined ratio was 99.3 versus 96.5 a year earlier.
• Property segment — Commercial fire, hurricane, earthquake, difference in conditions and marine coverages plus homeowners' in Hawaii; the largest contributor to second quarter underwriting income at $53.5 million on a 56.8 combined ratio.
• Surety segment — Small to medium-sized contract surety payment and performance bonds, plus commercial, license and permit, notary and court bonds; produced $4.7 million of second quarter underwriting income on an 87.2 combined ratio.
• Investment portfolio — Net investment income of $46.0 million in second quarter 2026, up 17% year over year; RLI also reports net realized gains and net unrealized gains on equity securities as components of pretax earnings.

Recent performance

Second quarter 2026 net earnings were $168.0 million ($1.82 per diluted share) versus $124.3 million ($1.34) in the prior-year quarter. Operating earnings were $76.9 million ($0.83) compared with $76.2 million ($0.82). Underwriting income was $59.9 million on an 85.6 combined ratio, versus $62.2 million on 84.5, with the quarter including $35.1 million of favorable prior-year reserve development. Gross premiums written rose 3% and net investment income rose 17%; book value per share reached $19.09, up 11% from year-end 2025 inclusive of dividends and repurchases.

Strategy

RLI describes its focus as niche markets and developing unique products tailored to customer needs, underwritten for profit in all market conditions. Management points to 30 consecutive years of underwriting profitability and an average 87.9 combined ratio over that period as evidence of the approach, and cites three return sources: underwriting income, net investment income and long-term equity portfolio appreciation. In the second quarter of 2026 the company paid a $2.00 per share special dividend plus a $0.18 regular quarterly dividend (a 12.5% increase), authorized a $250.0 million share repurchase program, and repurchased 234,973 shares for $12.0 million. The company markets through brokers, agents and carrier partners rather than a large direct sales force.

Risks

• Producer concentration — In 2025, 49% of gross premiums written came through ten producer entities, and no other entity exceeded 2%, so losing business from any of them could materially reduce premiums.
• Reserve estimation uncertainty — Casualty claims may take years to settle, and the company states actual liabilities may differ from recorded reserves, producing adverse or favorable earnings effects; second quarter 2026 results included $35.1 million of favorable development.
• Catastrophe exposure — The property segment is exposed to windstorms in coastal regions and earthquakes primarily on the West Coast, with results varying by peril and mitigated through policy limits, reinsurance and modeling.
• Cyclical pricing and loss costs — Results are subject to competitive pressure on rates, rising loss costs including inflation and legal system abuse driving higher jury verdicts, and changes in reinsurance capacity.

Outlook

Management characterized the second quarter as another period of premium growth and profitability, attributing the 3% gross premium increase to the casualty segment and strong margins in property and surety to the 86 combined ratio. The company returned capital through a $2.00 special dividend and a $250.0 million repurchase authorization, with $238.0 million of remaining capacity as of June 30, 2026. No specific forward financial guidance is provided in the excerpts; RLI discloses that its 2026 Form 10-K risk factors govern its forward-looking statements.