RLI (NYSE:RLI) executives told investors the company finished 2025 with what CEO Craig Kliethermes described as a strong year, highlighted by underwriting profitability for the 30th consecutive year, solid book value growth, and improved fourth-quarter results driven by underwriting performance, limited storm losses, and higher investment income.
Full-year underwriting results and book value growth
Kliethermes said RLI generated $264 million of underwriting income in 2025 on an 84 combined ratio and grew book value per share by 33% inclusive of dividends. He emphasized that premium growth was “modest” in a competitive environment and reiterated that RLI prioritizes quality and profitability over rapid expansion.
Fourth-quarter earnings: higher underwriting income and investment income
For the fourth quarter, Diefenthaler reported operating earnings of $0.94 per share, up from $0.52 a year earlier. He attributed the year-over-year improvement primarily to stronger underwriting, minimal storm activity, and higher investment income.
RLI generated $71 million of underwriting income in the quarter on an 82.6 combined ratio, compared with $22 million and a 94.4 combined ratio in the prior-year quarter.
On a GAAP basis, net earnings were $0.99 per share for the quarter and $4.37 for the year, which Diefenthaler said was a 17% increase over full-year 2024.
Operating earnings definition updated; Prime Holdings impact discussed
Diefenthaler highlighted a change to RLI’s definition of operating earnings. Operating earnings now excludes equity and earnings of unconsolidated investees and related taxes, and prior periods were recast for comparability. He said unconsolidated investees currently only include RLI’s minority investment in Prime Holdings and that the change is intended to better reflect core operations where RLI has operational control.
He noted that GAAP net earnings now include earnings of unconsolidated investees from Prime. Diefenthaler said fourth-quarter net earnings reflected Prime’s “core operating results” based on RLI’s minority ownership and included a reduction to Prime’s value on RLI’s balance sheet to $53 million.
Segment performance: property strength, casualty mixed, surety steady
Premium trends: Diefenthaler said premium was down 2% in the fourth quarter and up 1% for the full year, reflecting competitive conditions that required “heightened discipline” in some lines while other products found opportunities.
- Property: Fourth-quarter property premium declined 11%. Underwriting results were strong, supported by $17 million of favorable loss emergence on prior-year catastrophes, partially offset by $4 million of storm activity. Property’s combined ratio was 49.2 in Q4 and 57.2 for the year.
- Casualty: Casualty premium increased 2% in Q4 and 7% for the year, with Diefenthaler citing strong contributions from personal umbrella. Casualty results included $4 million of favorable prior-year loss development, with just under $2 million tied to prior-year catastrophe activity. Jen Klobnak, COO, said casualty’s Q4 combined ratio was 99.6.
- Surety: Surety premium was flat in the period and slightly up year-to-date. Diefenthaler said the segment benefited from favorable prior-year loss emergence that improved the quarterly loss ratio. Klobnak reported surety produced a 80 combined ratio in Q4.
Expenses: Diefenthaler said the fourth-quarter expense ratio rose to 39.3 from 37.6 a year ago, driven by higher bonus and profit-sharing expenses and increased business-level spending tied to investments in people and technology.
Market conditions, reinsurance renewals, and underwriting discipline
Klobnak described a competitive property market, particularly in E&S property. She said E&S property premium fell 18%, with competition from carriers and MGAs, and noted rate declines across catastrophe-exposed lines, including hurricane rates down 15% and earthquake rates down 12%. She said RLI was selectively flexing to retain high-quality accounts, while maintaining returns on retained business that exceed long-term targets.
In Hawaii homeowners, Klobnak said fourth-quarter premium grew 5% (and 26% for the year), helped by rate increases and “a couple of book rollovers” assumed following the Maui wildfires. Marine premium rose 2%, and she said the company pulled back in ocean cargo due to competitiveness while inland marine grew through talent additions and product adjacencies.
During Q&A, management addressed casualty trends, noting prior-year actions related to auto exposures and continued caution. Klobnak cited a notable reduction in new auto-related claim counts, including transportation new claim counts down 24% in 2025.
On reinsurance, Klobnak said the January 1 renewal environment was a buyer’s market for property. RLI secured 15%–20% rate decreases on its catastrophe program, purchased $150 million less catastrophe limit for 2026, and maintained its $50 million attachment point. She said casualty reinsurance rates were down around 5%, and the company achieved similar terms and conditions with some broadening of coverage in property treaties.
Kliethermes also discussed transportation pricing, stating the company expects to continue pursuing double-digit increases—“probably 10%–15%”—to keep up with elevated severity trends, and would shrink if it cannot get rates needed to cover trend.
In closing remarks, Kliethermes said he remains confident in RLI’s approach and thanked retiring CFO Todd Bryant for 31 years of service.
About RLI (NYSE:RLI)
RLI Corporation (NYSE:RLI) is a specialty property and casualty insurance company focused on underwriting niche risks for businesses and individuals. Headquartered in Peoria, Illinois, the company operates through a network of independent agents and brokers, offering customized coverage solutions. RLI’s approach emphasizes disciplined underwriting, targeted product development and strong customer service to maintain profitability and long-term growth.
Founded in 1965 as Replacement Lens, Inc, RLI initially provided insurance for contact lens manufacturers before shifting its focus to specialty insurance in the 1980s.
