RLI's casualty segment posts $1 million underwriting income on $8.2 million reserve release

RLI Corp.'s casualty segment wrote $330.9 million of gross premium in the third quarter and produced $1 million of underwriting income at a 99.6 combined ratio. The $1 million was supported by $8.2 million of favorable development from prior accident years, Insurance Business America reported. The reserve credits exceeded the segment's reported underwriting income in each of the last three quarters, leaving the current accident year below zero before the releases in all three.

Favorable prior-year development is shrinking: $14.5 million in the first quarter, $13 million in the second and $8.2 million in the third. The casualty combined ratio rose each quarter — 97.1, then 99.3, then 99.6 — leaving the nine-month figure at 98.7. RLI does not publish an ex-development combined ratio, so the underlying casualty margin is not disclosed; the arithmetic from the three quarterly releases is the evidence available.

Group underwriting income was $58.8 million at an 86.2 combined ratio, with net investment income up 13% and gross premiums written up 2%. Property earned $50.4 million of underwriting income at a 60.1 combined ratio, nearly identical to 60.2 a year earlier; surety improved to 79.8 from 85.0. CEO Craig Kliethermes called the quarter "consistent, disciplined execution."

Casualty gross premiums written rose 8% over the first nine months, while current-accident-year casualty underwriting was below zero before reserve releases in the past three quarters, IBA reported. RLI has posted underwriting profits for 30 consecutive years and is rated A++ by AM Best.