RLI’s Profit Growth Reversed

The Tip Desk · October 21, 2026 · 3 min read

The specialty insurer’s third-quarter net earnings fell 35% to $81.0 million, while operating earnings increased.

RLI Corp. (RLI), a specialty property, casualty and surety insurer, reported a third-quarter profit decline that reversed the year-over-year growth of the preceding quarter. Unrealized equity gains turned to losses, while operating earnings increased. Net earnings were $0.88 a share, compared with $1.35 a share a year earlier.

Unrealized losses on equity securities totaled $3.3 million, against a $42.0 million gain a year earlier. Realized investment gains also declined. Consolidated revenue, which included those investment results, fell 6.3% to $477.0 million despite growth in earned premiums and investment income.

The investment weakness extended beyond the income statement. RLI reported a comprehensive loss of $36.8 million, compared with comprehensive earnings of $152.3 million a year earlier. The company said the latest result included after-tax unrealized fixed-income losses caused by rising interest rates. Its investment portfolio’s total return was negative 2.0% for the quarter.

Operating earnings rose 4.6% to $79.3 million, or $0.86 a share. That measure excluded realized investment gains and losses, unrealized equity gains and losses, and earnings of unconsolidated investees. RLI had recast prior-period operating results to reflect its exclusion of investee earnings. Net investment income increased 13% to $46.7 million, although that growth rate slowed from 17% in the second quarter.

Underwriting profit declined to $58.8 million from $60.5 million a year earlier. The combined ratio worsened to 86.2 from 85.1; the measure expressed insurance losses and expenses relative to earned premiums. Gross premiums written increased 2%, which Chief Executive Craig Kliethermes attributed principally to casualty. That growth slowed from 3% in each of the first two quarters.

Favorable changes in estimates for prior years’ losses added $20.1 million to quarterly underwriting income, compared with $13.7 million a year earlier. That support was smaller than the $35.1 million contribution in the second quarter, even though total underwriting profit remained close to its preceding-quarter level.

Casualty, the segment leading premium growth, produced just $1.0 million of underwriting income. Its combined ratio deteriorated through the year, reaching 99.6 in the third quarter after 99.3 in the second and 97.1 in the first. The latest ratio left the segment close to underwriting break-even, with losses and expenses nearly matching earned premiums.

Property supplied most of RLI’s underwriting profit, contributing $50.5 million, essentially unchanged from a year earlier. Its combined ratio was 60.1. Surety contributed another $7.3 million and recorded a combined ratio of 79.8, improving from 85.0 a year earlier. All three segments remained profitable on an underwriting basis.

Book value stood at $18.49 a share at September 30, down from $19.35 at year-end. Separately, RLI reported a 10% increase in book value from year-end inclusive of dividends and share repurchases. The company had paid a $2.00-a-share special dividend in June.

RLI maintained its regular quarterly dividend at $0.18 a share and spent $6.3 million repurchasing stock during the third quarter. Its repurchase program retained $231.7 million of unused capacity at September 30.