On October 23, 2023, RLI Corp (RLI, Financial) released its Q3 2023 earnings report. The company reported net earnings of $13.5 million ($0.29 per share), compared to $439.9 million ($9.61 per share) for the third quarter of 2022. The significant drop in net earnings was largely due to a one-time gain from the sale of RLI’s investment in Maui Jim, Inc. in 2022.
Financial Performance and Challenges
Despite the impact of the Hawaiian wildfires, RLI Corp's diversified portfolio delivered underwriting profitability and an 11% increase in gross premiums written. The company's investment income supported $0.61 per share of operating income, while book value per share increased to $28.47. Operating earnings for the third quarter of 2023 were $28.3 million ($0.61 per share), compared to $23.0 million ($0.50 per share) for the same period in 2022.
Income Statement Highlights
RLI Corp achieved $4.2 million of underwriting income in the third quarter of 2023 on a 98.7 combined ratio, compared to $8.8 million on a 97.0 combined ratio in 2022. The company's net investment income for the quarter increased 50.3% to $32.0 million, compared to the same period in 2022. However, RLI’s comprehensive loss was $43.3 million for the quarter (-$0.94 per share), compared to comprehensive earnings of $358.6 million ($7.84 per share) for the same quarter in 2022.
Balance Sheet and Cash Flow Statement Highlights
As of September 30, 2023, RLI Corp's total investments and cash stood at $3,455,270, a 5.6% increase from $3,272,301 at the end of 2022. The company's total assets increased by 6.6% to $5,083,526 from $4,767,068. Net cash flow provided by operations was $85,030, a decrease of 24.2% from $112,241 in the same period in 2022.
Company's Commentary
“We have been working diligently to help our policyholders recover from the devastating Hawaiian wildfires that occurred in the quarter,” said RLI Corp. President & CEO Craig Kliethermes. “This event contributed 17 points to our combined ratio. Despite this impact, our diversified portfolio delivered underwriting profitability and an 11% increase in gross premiums written. Growth in investment income supported $0.61 per share of operating income, while book value per share increased to $28.47. Recent catastrophes reinforce RLI’s purpose to protect and serve policyholders in times of need. I would like to thank our associate owners, and especially our claim and Hawaii-based teams, for providing unparalleled service to our insureds and agents.”
Looking Forward
RLI Corp continues to focus on its core business of providing deep underwriting expertise and superior service to commercial and personal lines customers nationwide. The company's strong balance sheet, disciplined underwriting approach, and commitment to serving its policyholders position it well for future growth.
