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RLI combined ratio improves 4.4 points to 88% in Q4

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RLI continued its record of strong underwriting profitability in the fourth quarter, as its combined ratio improved 4.4 points to 88%, with favorable reserve development and profitable casualty underwriting helping to mitigate the impact of cat losses.

The specialty insurer produced an operating profit of $34mn in Q4, compared with $28.6mn in Q4 2019.

RLI made an underwriting profit of $27mn during the quarter, as operating earnings per share improved to $0.75, above an analyst consensus of $0.65 per share.

The carrier’s combined ratio was flattered by 10.9 percentage points of favorable reserve development during the quarter, mainly due to improvements in previously booked casualty losses.

RLI expanded its gross written premiums by 9.8% to $301mn, driven by an expansion in property underwriting over Q4.

RLI boosted gross property premium written by 14.5% to $74mn, as the carrier benefited from hardening rates in the excess and surplus lines (E&S) market. Casualty gross written premiums grew 9.2% to $196mn during the period.

The carrier will hold its fourth-quarter earnings call at 11:00 ET on Thursday.

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Underwriting: RLI’s combined ratio improved by 4.4 points to 88%, driven by a 10.7-point improvement in the casualty division, which posted a combined ratio of 85.1%. In property underwriting, RLI’s combined ratio deteriorated 8 points to 98.6%, following nat cat losses.

Catastrophes: For the full year of 2020, RLI disclosed $45.1mn in catastrophe losses, as the company’s third quarter $40mn in cat losses exceeded its claims total from hurricanes Harvey, Irma, and Maria in 2017.

Investments: RLI’s net investment income declined by 6.3% to $16.7mn

Book value: RLI’s book value per share increased 3.1% in the quarter to $25.16mn.

Commentary: “We will continue to position RLI for long-term growth through sustained financial strength, underwriting discipline and customer focus,” said RLI chairman and CEO Jonathan Michael.

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