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RLI Posts Increase in 2Q Profits

Posted on 21 Jul 2011

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RLI Corp. reported second quarter 2011 operating earnings of $40.8 million ($1.91 per share), compared to $32.2 million ($1.52 per share) for the same period in 2010. For the six months ended June 30, 2011, operating earnings were $64.4 million ($3.02 per share) compared to $52.2 million ($2.45 per share) for the same period in 2010.

“The excellent second quarter results are a testament to the acumen of our underwriters, which is a hallmark of our organization,” said RLI Corp. Chairman and CEO Jonathan E. Michael.

“While conditions in the surplus lines space remain challenging, our premiums written advanced in the quarter and through the first half of the year due to growth from newer product initiatives and the addition of CBIC. Integration efforts related to the CBIC acquisition are underway and are going smoothly.”

“We remain well-positioned to continue to navigate all market conditions. Our capital position is strong and we have great people and products in place,” said Michael.

Second quarter underwriting results

RLI achieved $45.8 million of underwriting income in the second quarter of 2011 on a 65.0 combined ratio, compared to $30.8 million of underwriting income on a 74.7 combined ratio in the same quarter for 2010.

RLI reported year-to-date underwriting income of $64.8 million representing a 73.8 combined ratio through June 30, 2011, versus $43.5 million of underwriting income representing an 81.7 combined ratio for the same period last year.

Other income

In the second quarter, investment income was $15.2 million compared to $16.8 million for the same period in 2010. The decline in investment income was driven by the close of the CBIC acquisition, as RLI sold bonds to fund the purchase and acquired  relatively lower yielding bonds with higher credit quality and shorter duration characteristics. For the six-month period ended June 30, 2011, investment income was $31.5 million versus $33.4 million for the same period in 2010. The investment portfolio’s total return for the quarter was 2.0%; the bond portfolio return was 2.3% and the equity portfolio return was 0.4%. Through six months, the investment portfolio’s total return was 3.7% with the bond portfolio returning 3.1% and equities returning 6.1%.

Comprehensive earnings, which include after-tax unrealized gains/losses from the investment portfolio, were $50.1 million for the quarter ($2.35 per share) versus $23.2 million ($1.09 per share) over the comparable period in 2010. Year-to-date comprehensive earnings were $81.9 million ($3.84 per share), compared to $56.7 million ($2.66 per share) for the same period last year.

During the quarter, equity in earnings of Maui Jim, Inc. was $3.9 million compared to $3.4 million from the same period last year. For the six month period, earnings were $6.5 million versus $5.7 million in 2010.