RLI posts $25.8 million profit: Results bring insurer's year-to-date earnings to $76.9 million

PEORIA, Oct 20, 2009 (Journal Star - McClatchy-Tribune Information Services via COMTEX) -- RLI | Quote | Chart | News | PowerRating -- With new products starting to pay off and its investments becoming strong again, RLI Corp. reported Monday it had an operating profit of $25.8 million in the third quarter.

That profit, which equated to $1.18 a share, helped the Peoria-based specialty insurance company to a profit of $76.9 million, or $3.53 a share, for the first nine months of the year.

"This outstanding result was driven by solid underwriting, favorable loss trends and positive investment returns," said Jonathan E. Michael, president and CEO, in a prepared statement. "Our strong balance sheet and disciplined approach to business continue to serve us well."

RLI officials will have a conference call with industry analysts at 10 a.m. Tuesday. Those interested may listen in on the call by accessing www.rlicorp.com.

The profits to date come despite the fact RLI has been hampered by the volatility of the stock market. That volatility caused the company to post a loss during the first quarter.

But the investment portfolio began regaining strength the last two quarters and while still down from 2008, are again profitable for RLI.

In the third quarter, investment income was $16.3 million, compared with 19.8 million a year earlier. Investment income was $50.5 million for the first nine months, compared with $58.7 million through three quarters of 2008, the company said in its report.

"The capital markets have generally strengthened the last few months," said John Robison, RLI treasurer and chief investment officer. "We were always optimistic they would."

The third-quarter profit topped that of the third quarter in 2008 -- $24.3 million, or $1.12 a share.

But the first-quarter results kept profits lower for the year-to-date. Through three quarters of 2008, operating profit was $80.8 million, or $3.69 a share.

However, the company continued to show strength in underwriting income, reporting $23 million in the third quarter compared with $15.2 million in the same period last year. Its combined ratio -- the amount of claims divided by earned premiums -- was 81.3 in the third quarter, compared with 88.3 a year ago.

Michael Stone, RLI president and chief operating officer, said the company also was helped by the fact new products introduced in the last 18 months or so are starting to help the bottom line.

Those include insurance for product design and architectural firms, cyber liability and some reinsurance.

"The insurance market continues to be difficult in this economy and rates are still soft, which means less opportunity for growth. But we are seeing positive signs in the products we've added," he said.

Other highlights from the RLI report include:

--RLI paid a third-quarter cash dividend of 27 cents a share on Oct. 15. RLI has now paid and increased dividends in each of the last 34 years. Cumulatively, the company has paid, including this most recent payment, $190 million in dividends over the last 133 consecutive quarters.

--RLI's $200 million stock repurchase program, which was approved in 2007 but suspended in the third quarter of 2008, was reinstated with $37.8 million remaining capacity.

--RLI was named one of the insurance industry's top-performing companies by the Ward's 50 Top P&C Performers group -- one of only five property and casualty insurers recognized for 19 straight years since the group was formed.

Paul Gordon can be reached at 686-3288 or pgordon@pjstar.com

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