<PAGE>
FOR IMMEDIATE RELEASE CONTACT: MICHAEL A. PRICE
(309) 693-5880
[email protected]
www.rlicorp.com
RLI REPORTS PROFITS, GROWTH FOR FOURTH QUARTER AND YEAR
PEORIA, ILLINOIS, JANUARY 10, 2001 -- RLI Corp. (NYSE: RLI) -RLI Corp.
today reported fourth quarter net operating earnings of $6.3 million ($.63 per
diluted share), a 15% per-share decline over the $7.4 million ($.74 per share)
result from the same quarter last year. Year-end operating earnings stood at
$26.8 million ($2.70 per share), 3% less per-share than last year's $28.5
million ($2.79 per share) level.
Net comprehensive earnings, which include after-tax unrealized gains
from the investment portfolio, posted a 51% per-share improvement for the
quarter, to $15.7 million ($1.58 per share). For the year, net comprehensive
earnings stood at $42.0 million ($4.23 per share), besting last year's $20.9
million ($2.04 per share) mark by 101%. These results were driven by positive
investment results.
Year-end shareholders' equity was a company record $326.7 million, an
11.5% increase from 2000's mark of $293.1 million. For the year, the company
repurchased 71,272 shares of RLI common stock at a cost of $2.1 million and paid
dividends of $5.7 million. Year-end assets of $1.3 billion were also a company
record.
Gross premiums written rose by 23% for the quarter, the company's 11th
consecutive quarter of top-line growth. For the year, RLI premiums grew by 29%,
with all business segments reporting double-digit volume increases. Surety
premiums grew by 41%, property by 29% and casualty by 27%.
UNDERWRITING RESULTS MIXED FOR QUARTER, PROFITABLE FOR YEAR
RLI reported pretax underwriting profits in every quarter of 2000,
ending the year with a fourth quarter underwriting gain of $2.8 million on a
95.3 net GAAP combined ratio. This compares to a fourth quarter 1999
underwriting profit of $4.1 million on a 92.0 combined ratio. For the year,
RLI's combined ratio stood at 94.8, with underwriting gains totaling $12.1
million. These results compare to last year's 91.2 combined ratio and
underwriting profits of $17.1 million
"Although the 2000 combined ratios were higher," said RLI Corp.
President Jonathan E. Michael, "our underwriters continue to post profitable
results and outperform industry averages. The surety segment was especially
strong in premium volume and underwriting performance for the year. Casualty
postings in both of these key categories also improved.
"It was a difficult year for our short-term property business, however.
Results were affected by increased reinsurance costs and several significant
losses in certain areas of our diversified property book. Our underwriters are
taking appropriate actions where necessary and improved pricing and terms bode
well for this segment."
-- more --
<PAGE>
January 10, 2001
RLI Corp. News Release
Page 2 of 6
Net premiums written for the quarter were $57.2 million, up 18% from
the same period last year. Segment totals for 2000: property net written premium
was $72.7 million, up 42% over 1999; surety recorded $41.2 million, a 33%
improvement; and casualty finished at $147.0 million, up 1%. Net investment
income rose for both the quarter and the year due to increased cash flow. The
quarter's $7.6 million result represented a 10% improvement; the company's $29.0
million posting as of December 31, 2000 reflected a 12% gain.
EQUITY PORTFOLIO SPURS COMPREHENSIVE EARNINGS GROWTH
The year's increase in net comprehensive earnings, which include
after-tax unrealized gains from the investment portfolio, was driven by the
performance of the company's equity portfolio. In a difficult investment
climate, this portfolio generated a total return of 4.8% for the quarter and
9.8% for the year, significantly outperforming the relevant indices, most of
which posted negative returns for the same period. Since March 1, the RLI equity
portfolio actually returned 22.3%, versus a comparative S&P 500 Index return of
-2.5%. Since 1997, the continued performance of our equity portfolio has
generated 50% more in cumulative comprehensive earnings than reported net
diluted earnings.
<TABLE>
<CAPTION>
DILUTED DILUTED
EPS COMPREHENSIVE EPS
------- -----------------
<S> <C> <C>
1997 2.66 5.76
1998 2.65 4.87
1999 3.08 2.04
2000 2.89 4.23
------ ----
$11.28 $16.90
</TABLE>
OTHER QUARTERLY NEWS
In December, the board promoted RLI founder Gerald D. Stephens, CPCU,
from president and chief executive officer to chairman of the board. At the same
time, Jonathan E. Michael was promoted from RLI Corp. executive vice president
to the position of RLI Corp. president and CEO. Both promotions were effective
January 1, 2001.
The board declared a cash dividend of $.15 per share payable January
12, 2001, to the company's shareholders of record as of December 29, 2000. This
is the 98th consecutive dividend to be paid by RLI since cash dividends began in
1976, and will bring the cumulative return to shareholders to more than $60
million.
RLI also announced the appointment of Richard H. Blum to its board of
directors, effective November 15. Blum is a senior advisor to Marsh & McLennan
Companies, Inc., and a director of Marsh & McLennan Securities Corporation. He
retired as vice chairman of J&H Marsh & McLennan, where he was responsible for
insurance company and client relationships and capital markets activities.
At 3:15 p.m. CDT today, January 10, RLI management will hold a
conference call to discuss quarterly and year-end results with insurance
industry analysts. Interested parties may listen to the discussion through the
Internet at RLI's web site, WWW.RLICORP.COM, or through the webcast provider
WWW.STREETEVENTS.COM.
-- more --
<PAGE>
January 10, 2001
RLI Corp. News Release
Page 3 of 6
FORWARD-LOOKING STATEMENTS
Except for historical information, this news release may include
forward-looking statements (within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934) which are
subject to certain risk factors that could cause actual results to differ
materially. Various risk factors that could affect future results are listed in
the company's filings with the Securities Exchange Commission, including the
Form 10-K for the year ended December 31, 1999.
RLI Corp., through its subsidiaries RLI Insurance Company, Mt. Hawley
Insurance Company, Underwriters Indemnity Company and Planet Indemnity Company,
underwrites selected property and casualty insurance products. For additional
information, contact Treasurer Michael A. Price at (309) 693-5880 or at
[email protected].
###
<PAGE>
January 10, 2001
RLI Corp. News Release
Page 4 of 6
RLI CORP.
2000 FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
2000 1999 % CHANGE 2000 1999 % CHANGE
-------- ------- -------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
SUMMARIZED INCOME STATEMENT DATA:
Net premiums earned $ 59,522 $50,821 17.1% $ 231,603 $ 195,274 18.6%
Net investment income 7,563 6,850 10.4% 29,046 26,015 11.7%
Net realized investment gains (loss) 2,330 (56) 4260.7% 2,847 4,467 -36.3%
-------- ------- ------- --------- --------- ------
Consolidated revenue 69,415 57,615 20.5% 263,496 225,756 16.7%
Loss and settlement expenses 30,249 26,253 15.2% 124,586 96,457 29.2%
Policy acquisition costs 21,220 17,614 20.5% 76,454 66,552 14.9%
Other insurance expenses 5,255 2,877 82.7% 18,479 15,130 22.1%
Interest expense on debt 1,381 1,199 15.2% 5,275 4,104 28.5%
General corporate expenses (1) 1,352 (293) 561.4% 3,388 2,091 62.0%
-------- ------- ------- --------- --------- ------
Total expenses 59,457 47,650 24.8% 228,182 184,334 23.8%
Equity in earnings of
unconsolidated investee 217 185 17.3% 2,979 1,613 84.7%
-------- ------- ------- --------- --------- ------
Earnings before income taxes 10,175 10,150 0.2% 38,293 43,035 -11.0%
Income tax expense 2,364 2,769 -14.6% 9,600 11,584 -17.1%
-------- ------- ------- --------- --------- ------
Net earnings $ 7,811 $ 7,381 5.8% $ 28,693 $ 31,451 -8.8%
======== ======= ======= ========= ========= ======
Other comprehensive earnings (loss), net of tax 7,921 3,007 163.4% 13,349 (10,571) 226.3%
-------- ------- ------- --------- --------- ------
Comprehensive earnings $ 15,732 $10,388 51.4% $ 42,042 $ 20,880 101.4%
======== ======= ======= ========= ========= ======
Net operating earnings (excluding
realized gains (loss) ) $ 6,297 $ 7,417 -15.1% $ 26,842 $ 28,547 -6.0%
======== ======= ======= ========= ========= ======
RETURN ON EQUITY:
Net earnings (12 months trailing) 9.3% 10.7%
========= =========
Comprehensive earnings (12 months trailing) 13.6% 7.1%
========= =========
PER SHARE DATA
DILUTED:
Weighted average shares outstanding (in 000's) 9,982 10,018 9,945 10,222
EPS from operations $ 0.63 $ 0.74 -14.9% $ 2.70 $ 2.79 -3.2%
Realized gains (loss), net of tax 0.15 0.00 0.0% 0.19 0.29 -34.5%
-------- ------- ------- --------- --------- ------
Net earnings per share 0.78 0.74 5.4% 2.89 $ 3.08 -6.2%
======== ======= ======= ========= ========= ======
Comprehensive earnings per share $ 1.58 $ 1.04 51.9% $ 4.23 $ 2.04 107.4%
======== ======= ======= ========= ========= ======
Cash dividends per share $ 0.15 $ 0.14 7.1% $ 0.59 $ 0.55 7.3%
</TABLE>
(1) General corporate expenses for the fourth quarter of 1999 were lower due to
a reduction in the accrual of executive bonuses of approximately $1.0
million. Executive bonuses are based on the Company's total return on
capital which is predicated on comprehensive earnings.
<PAGE>
January 10, 2001
RLI Corp. News Release
Page 5 of 6
RLI CORP.
2000 FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED DECEMBER 31, TWELVE MONTHS ENDED DECEMBER 31,
2000 1999 % CHANGE 2000 1999 % CHANGE
----------- ------- ----------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE INCOME STATEMENT DATA:
(Diluted basis)
Underwriting income $ 0.18 $ 0.27 -33.3% $ 0.79 $ 1.09 -27.5%
Net investment income 0.62 0.52 19.2% 2.28 1.99 14.6%
General corporate expenses (0.09) 0.02 -550.0% (0.22) (0.13) -69.2%
Interest expense on debt (0.09) (0.08) -12.5% (0.34) (0.26) -30.8%
Equity in earnings of
unconsolidated investee 0.01 0.01 0.0% 0.19 0.10 90.0%
----------- ------- ----------- --------- --------- ------
Net operating earnings 0.63 0.74 -14.9% 2.70 2.79 -3.2%
=========== ======= =========== ========= ========= ======
Net realized investment gains (loss) 0.15 0.00 0.0% 0.19 0.29 -34.5%
----------- ------- ----------- --------- --------- ------
Net earnings 0.78 0.74 5.4% 2.89 3.08 -6.2%
=========== ======= =========== ========= ========= ======
Other comprehensive earnings (loss) 0.80 0.30 166.7% 1.34 (1.04) 228.8%
----------- ------- ----------- --------- --------- ------
Comprehensive earnings $ 1.58 $ 1.04 51.9% $ 4.23 $ 2.04 107.4%
=========== ======= =========== ========= ========= ======
TOTAL GROSS SALES
Gross premium written $ 104,293 84,881 22.9% $ 437,867 $ 339,575 28.9%
Net investment income 7,563 6,850 10.4% 29,046 26,015 11.7%
Net realized investment gains (loss) 2,330 (56) 4260.7% 2,847 4,467 -36.3%
----------- ------- ----------- --------- --------- ------
TOTAL $ 114,186 $91,675 24.6% $ 469,760 $ 370,057 26.9%
=========== ======= =========== ========= ========= ======
DECEMBER 31, PER DECEMBER 31, PER
2000 SHARE 1999 SHARE % CHANGE
------------ ------- --------- ------- --------
SUMMARIZED BALANCE SHEET DATA:
Fixed income and short-term investments $ 449,917 $ 45.89 $ 406,605 $ 41.18 10.7%
(amortized cost - $446,971)
Equity securities 306,194 31.23 284,639 28.83 7.6%
----------- ------- ----------- --------- ---------
Total investments 756,111 77.12 691,244 70.01 9.4%
Premiums and reinsurance balances recoverable 398,641 359,733 10.8%
Deferred acquisition costs 43,287 34,358 26.0%
Other assets 83,025 85,028 -2.4%
----------- ----------- ---------
Total assets 1,281,064 1,170,363 9.5%
=========== =========== =========
Unpaid losses and settlement expenses 539,750 520,494 3.7%
Unearned premiums 211,802 167,044 26.8%
Short-term debt 78,763 78,397 0.5%
Other liabilities 124,095 111,359 11.4%
----------- ----------- ---------
Total liabilities 954,410 877,294 8.8%
Shareholders' equity 326,654 $ 33.32 293,069 $ 29.68 11.5%
----------- ----------- ---------
Total liabilities & shareholders' equity $ 1,281,064 $ 1,170,363 9.5%
=========== =========== =========
Common shares outstanding (in 000's) 9,804 9,873
Closing stock price per share $ 44.69 $ 34.00 31.4%
</TABLE>
<PAGE>
January 10, 2001
RLI Corp. News Release
Page 6 of 6
RLI CORP.
2000 FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share amounts)
UNDERWRITING SEGMENT DATA
(in thousands)
<TABLE>
<CAPTION>
GAAP GAAP GAAP GAAP
PROPERTY RATIOS SURETY RATIOS CASUALTY RATIOS TOTAL RATIOS
-------- ------ ------- ------ --------- ------ ---------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
THREE MONTHS ENDED DECEMBER 31,
2000
Gross premium written $ 37,911 $ 8,856 $ 57,526 $ 104,293
Net premium written 15,202 8,269 33,712 57,183
Net premium earned 15,834 9,797 33,891 59,522
Net loss & settlement expenses 11,217 70.8% 2,161 22.1% 16,871 49.8% 30,249 50.8%
Net operating expenses 6,779 42.8% 6,915 70.6% 12,781 37.7% 26,475 44.5%
-------- ------ ------- ----- --------- ----- --------- -----
Underwriting income(loss) $ (2,162) 113.6% $ 721 92.7% $ 4,239 87.5% $ 2,798 95.3%
1999
Gross premium written $ 30,681 $ 7,376 $ 46,824 $ 84,881
Net premium written 11,085 6,747 30,734 48,566
Net premium earned 13,488 6,334 30,999 50,821
Net loss & settlement expenses 4,686 34.7% 1,275 20.1% 20,292 65.5% 26,253 51.7%
Net operating expenses 4,701 34.9% 4,466 70.5% 11,325 36.5% 20,492 40.3%
-------- ------ ------- ----- --------- ----- --------- -----
Underwriting income(loss) $ 4,101 69.6% $ 593 90.6% $ (618) 102.0% $ 4,076 92.0%
UNDERWRITING SEGMENT DATA
(in thousands)
GAAP GAAP GAAP GAAP
PROPERTY RATIOS SURETY(1) RATIOS CASUALTY(1) RATIOS TOTAL RATIOS
-------- ------ --------- ------ ----------- ------ ---------- ------
TWELVE MONTHS ENDED DECEMBER 31,
2000
Gross premium written $160,508 $43,421 $ 233,938 $ 437,867
Net premium written 72,685 41,166 147,002 260,853
Net premium earned 60,063 34,739 136,801 231,603
Net loss & settlement expenses 32,247 53.7% 8,298 23.9% 84,041 61.4% 124,586 53.8%
Net operating expenses 22,826 38.0% 22,808 65.7% 49,299 36.0% 94,933 41.0%
-------- ------ ------- ----- --------- ----- --------- -----
Underwriting income(loss) $ 4,990 91.7% $ 3,633 89.6% $ 3,461 97.4% $ 12,084 94.8%
1999
Gross premium written $124,818 $30,904 $ 183,853 $ 339,575
Net premium written 51,126 30,887 145,611 227,624
Net premium earned 51,390 25,412 118,472 195,274
Net loss & settlement expenses 15,755 30.7% 4,966 19.5% 75,737 63.9% 96,458 49.4%
Net operating expenses 18,571 36.1% 18,047 71.0% 45,064 38.0% 81,682 41.8%
-------- ------ ------- ----- --------- ----- --------- -----
Underwriting income(loss) $ 17,064 66.8% $ 2,399 90.5% $ (2,329) 101.9% $ 17,134 91.2%
</TABLE>
(1) Net written premium in 1999 included $20.0 million ($18.0 million of
Casualty and $2.0 million of Surety) of returned ceded unearned premium
related to the implementation of the combined casualty reinsurance
treaty.
