What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-04-25 compared with 2024-10-23 · 144 added, 165 removed, 482 unchanged (39% of the section changed)

3 unchanged sentences

For the Three Months

For the Nine Months

Ended September 30,

Ended March 31,

(in thousands, except per share data)

14 unchanged sentences

Other comprehensive earnings (loss), net of tax

Comprehensive earnings (loss)

Comprehensive earnings

Basic net earnings per share

4 unchanged sentences

Condensed Consolidated Balance Sheets

September 30,

(in thousands, except share and per share data)

22 unchanged sentences

Income taxes-current

Income taxes-deferred

Accrued expenses

20 unchanged sentences

Balance, January 1, 2024

Cumulative-effect adjustment from ASU 2023-02

Other comprehensive earnings (loss), net of tax

3 unchanged sentences

Balance, March 31, 2024

Other comprehensive earnings (loss), net of tax

Deferred compensation

Share-based compensation

Dividends and dividend equivalents ($ 0.27 per share)

Balance, June 30, 2023

Other comprehensive earnings (loss), net of tax

Deferred compensation

Share-based compensation

Dividends and dividend equivalents ($ 0.27 per share)

Balance, September 30, 2023

Comprehensive

7 unchanged sentences

Balance, March 31, 2025

Other comprehensive earnings (loss), net of tax

Deferred compensation

Share-based compensation

Dividends and dividend equivalents ($ 0.29 per share)

Balance, June 30, 2024

Other comprehensive earnings (loss), net of tax

Deferred compensation

Share-based compensation

Dividends and dividend equivalents ($ 0.29 per share)

Balance, September 30, 2024

See accompanying notes to the unaudited condensed consolidated financial statements.

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

For the Nine Months

Ended September 30,

For the Three Months

Ended March 31,

(in thousands)

7 unchanged sentences

Equity securities

Equity method investments

Proceeds from call or maturity of:

3 unchanged sentences

Cash Flows from Financing Activities

Proceeds from issuance of debt

Payment of debt

Cash dividends paid

3 unchanged sentences

Cash at the beginning of the period

Cash at September 30,

Cash at March 31,

See accompanying notes to the unaudited condensed consolidated financial statements.

9 unchanged sentences

These estimates are inherently subject to change and actual results could differ significantly from these estimates.

On January 15, 2025, RLI Corp.

effected a two -for-one split of its common stock and a proportionate increase in the number of authorized shares.

All share and per share information throughout this report has been retroactively adjusted to reflect the stock split.

The shares of common stock retain a par value of $ 0.01 per share.

ADOPTED ACCOUNTING STANDARDS

1 unchanged sentence

PROSPECTIVE ACCOUNTING STANDARDS

2023-07—Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures

The guidance in ASU 2023-07 was designed to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Although the Company continues to evaluate the impact of adopting this new accounting standard, the amendments are disclosure-related and should not have a material impact on our financial statements.

2023-09—Income Taxes (Topic 740):

Improvements to Income Tax Disclosures

The guidance in ASU 2023-09 was designed to increase transparency about income tax information through improvements to the rate reconciliation and disclosure of income taxes paid.

The guidance in ASU 2023-09 is designed to increase transparency about income tax information through improvements to the tax rate reconciliation and disclosure of income taxes paid, disaggregated by federal, state and foreign jurisdictions.

This ASU is effective for fiscal years beginning after December 15, 2024.

2024-03—Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses

The guidance in ASU 2024-03 requires disaggregation of certain expenses into specified categories in the notes to the financial statements.

Each relevant expense caption on the face of the statement of earnings that includes specific expenses, such as employee compensation, depreciation and intangible asset amortization, are required to be separately disclosed in a tabular presentation.

Additionally, a separate total of selling expenses is required to be disclosed, along with a definition of what is included in selling expenses.

This ASU is effective for fiscal years beginning after December 15, 2026 and interim periods beginning after December 15, 2027.

Ceded unearned premiums and reinsurance balances recoverable on unpaid losses and settlement expenses are reported separately as an asset, rather than being netted with the related liability, since reinsurance does not relieve the Company of our liability to policyholders.

1 unchanged sentence

We continually monitor the financial condition of our reinsurers and actively follow up on any past due or disputed amounts.

As part of our monitoring efforts, we review reinsurers’ annual financial statements and Securities and Exchange Commission filings for those that are publicly traded.

As part of our monitoring efforts, we review reinsurers’ annual financial statements and Securities and Exchange Commission filings for

those that are publicly traded.

We also review insurance industry developments that may impact the financial condition of our reinsurers.

4 unchanged sentences

This allowance is reviewed on an ongoing basis to ensure that the amount makes a reasonable provision for reinsurance balances that we may be unable to recover.

Once regulatory action (such as receivership, finding of insolvency, order of

conservation or order of liquidation) is taken against a reinsurer, the paid and unpaid recoverable balances for the reinsurer are specifically identified and written off through the use of our allowance for estimated unrecoverable amounts from reinsurers.

Once regulatory action (such as receivership, finding of insolvency, order of conservation or order of liquidation) is taken against a reinsurer, the paid and unpaid recoverable balances for the reinsurer are specifically identified and written off through the use of our allowance for estimated unrecoverable amounts from reinsurers.

When we write-off such a balance, it is done in full.

We then re-evaluate the overall allowance and determine whether the balance is sufficient and, if needed, an additional allowance is recognized.

The allowances for uncollectible amounts on paid and unpaid reinsurance balances recoverable were $ 16 million and $ 10 million, respectively, at September 30, 2024.

At December 31, 2023, the amounts were $ 16 million and $ 11 million, respectively.

The allowances for uncollectible amounts on paid and unpaid reinsurance balances recoverable were $ 17 million and $ 10 million, respectively, at March 31, 2025 and December 31, 2024.

Changes in the allowances were due to changes in the amount of reinsurance balances outstanding, the composition of reinsurers from whom the balances were recoverable and their associated S&P default ratings.

No write-offs were applied to the allowances in the first nine months of 2024 and less than $ 1 million was recovered.

No write-offs were applied to the allowances in the first three months of 2025 and less than $ 1 million was recovered.

INTANGIBLE ASSETS

The composition of goodwill and intangible assets at September 30, 2024 and December 31, 2023 is detailed in the following table:

September 30,

The composition of goodwill and intangible assets at March 31, 2025 and December 31, 2024 is detailed in the following table:

(in thousands)

4 unchanged sentences

Based upon these reviews, none of the assets were impaired.

In addition, there were no triggering events as of September 30, 2024 that would suggest an updated impairment test would be needed for our goodwill and intangible assets.

In addition, there were no triggering events as of March 31, 2025 that would suggest an updated impairment test would be needed for our goodwill and intangible assets.

EARNINGS PER SHARE

6 unchanged sentences

For the Three Months

Ended September 30, 2024

Ended September 30, 2023

(in thousands, except per share data)

(Denominator)

Earnings available to common shareholders

Effect of Dilutive Securities

Stock options and restricted stock units

Earnings available to common shareholders

Anti-dilutive securities excluded from diluted EPS

For the Nine Months

Ended September 30, 2024

Ended September 30, 2023

Ended March 31, 2025

Ended March 31, 2024

(in thousands, except per share data)

9 unchanged sentences

In reporting the components of comprehensive earnings, we used the federal statutory tax rate of 21 percent.

Other comprehensive earnings (loss), as shown in the consolidated statements of earnings and comprehensive earnings, is net of tax expense of $ 21 million for the third quarter of 2024, compared to $ 15 million of tax benefit for the same period in 2023.

For the nine-month period ended September 30, 2024, other comprehensive earnings (loss) is net of tax expense of $ 16 million, compared to $ 10 million of tax benefit for the same period in 2023.

Unrealized gains, net of tax, recognized in other comprehensive earnings (loss) were $ 60 million for the first nine months of 2024, compared to $ 39 million of unrealized losses, net of tax, during the same period last year.

Other comprehensive earnings (loss), as shown in the consolidated statements of earnings and comprehensive earnings, is net of tax expense of $ 8 million for the first quarter of 2025, compared to $ 3 million of tax benefit for the same period in 2024.

Unrealized gains, net of tax, recognized in other comprehensive earnings (loss) were $ 30 million for the first three months of 2025.

Comparatively, $ 13 million of unrealized losses, net of tax, were recognized in other comprehensive earnings (loss) in the first three months of 2024.

The unrealized gains in 2025 were attributable to a decrease in interest rates, which increased the fair value of securities held in the fixed income portfolio.

3 unchanged sentences

For the Three Months

For the Nine Months

Ended September 30,

Ended March 31,

Unrealized Gains (Losses) on Available-for-Sale Securities

11 unchanged sentences

For the Three Months

For the Nine Months

Component of Accumulated

Ended September 30,

Ended March 31,

Affected line item in the

36 unchanged sentences

All Regulation D privately-placed bonds are classified as corporate securities and deemed Level 3.

The pricing vendor evaluation methodology for these securities includes a combination of

observable and unobservable inputs.

The pricing vendor evaluation methodology for these securities includes a combination of observable and unobservable inputs.

Observable inputs include public corporate spread matrices classified by sector, rating and average life, as well as investment and non-investment grade matrices created from fixed income indices.

10 unchanged sentences

Equity Securities:

As of September 30, 2024, nearly all of our equity holdings were traded on an exchange.

As of March 31, 2025, nearly all of our equity holdings were traded on an exchange.

Exchange traded equities have readily observable price levels and are classified as Level 1 (fair value based on quoted market prices).

6 unchanged sentences

Realized gains and losses on disposition of investments are based on the specific identification of the investments sold on the settlement date.

The following is a summary of the disposition of fixed income and equity securities for the nine-month periods ended September 30, 2024 and 2023:

The following is a summary of the disposition of fixed income and equity securities for the three-month periods ended March 31, 2025 and 2024:

Gross Realized

10 unchanged sentences

FAIR VALUE MEASUREMENTS

Assets measured at fair value on a recurring basis as of September 30, 2024 and December 31, 2023 are summarized below:

As of September 30, 2024

Assets measured at fair value on a recurring basis as of March 31, 2025 and December 31, 2024 are summarized below:

As of March 31, 2025

Quoted Prices in

8 unchanged sentences

Equity securities

Non-agency asset-backed, commercial mortgage-backed and mortgage-backed securities

As of December 31, 2024

17 unchanged sentences

Sales / Calls / Maturities

Balance as of September 30, 2024

Balance as of March 31, 2025

Change in unrealized gains (losses) during the period for Level 3 assets held at period-end - included in other comprehensive earnings (loss)

The amortized cost and fair value of available-for-sale fixed income securities by contractual maturity as of September 30, 2024 were as follows:

September 30, 2024

The amortized cost and fair value of available-for-sale fixed income securities by contractual maturity as of March 31, 2025 were as follows:

March 31, 2025

(in thousands)

7 unchanged sentences

Asset-backed, commercial mortgage-backed and mortgage-backed securities

The amortized cost and fair value of available-for-sale securities at September 30, 2024 and December 31, 2023 are presented in the tables below.

Amortized cost does not include the $ 26 million and $ 23 million of accrued interest receivable as of September 30, 2024 and December 31, 2023, respectively.

September 30, 2024

The amortized cost and fair value of available-for-sale securities at March 31, 2025 and December 31, 2024 are presented in the tables below.

Amortized cost does not include the $ 27 million of accrued interest receivable as of March 31, 2025 and December 31, 2024.

March 31, 2025

(in thousands)

9 unchanged sentences

Allowance for Credit Losses and Unrealized Losses on Fixed Income Securities

A reversable allowance for credit losses is recognized on available-for-sale fixed income securities.

A reversable allowance for credit losses is recognized on available-for-sale fixed income securities, if applicable.

Several criteria are reviewed to determine if securities in the fixed income portfolio should be included in the allowance for expected credit loss evaluation, including:

8 unchanged sentences

The allowance for any security is limited to the amount that the security’s fair value is below amortized cost.

As of September 30, 2024, the discounted cash flow analysis resulted in an allowance for credit losses on 11 securities.

As of March 31, 2025, the discounted cash flow analysis resulted in an allowance for credit losses on 9 securities.

The following table presents changes in the allowance for expected credit losses on available-for-sale securities:

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands)

3 unchanged sentences

Net increase (decrease) from securities that had an allowance at the beginning of the period

Balance as of September 30,

We recognized $ 2 million of losses on securities for which we no longer had the intent to hold until recovery during the first nine months of 2023.

No such losses were recognized during the first nine months of 2024.

As of September 30, 2024, in addition to the securities included in the allowance for credit losses, the fixed income portfolio contained 1,134 securities with an unrealized loss position for which an allowance for credit losses had not been recorded.

Balance as of March 31,

We recognized no losses on securities for which we no longer had the intent to hold until recovery during the first three months of 2025 and 2024.

As of March 31, 2025, in addition to the securities included in the allowance for credit losses, the fixed income portfolio contained 1,378 securities with an unrealized loss position for which an allowance for credit losses had not been recorded.

The $ 190 million in associated unrealized losses represents 5 percent of the fixed income portfolio’s cost basis and 5 percent of total invested assets.

Isolated to these securities, unrealized losses decreased through the first nine months of 2024, as interest rates fell after the Federal Reserve cut rates in September.

Isolated to these securities, unrealized losses decreased through the first three months of 2025, as bonds rallied on falling interest rates.

Of the total 1,378 securities, 982 have been in an unrealized loss position for 12 consecutive months or longer.

The following table illustrates the total value of fixed income securities that were in an unrealized loss position as of September 30, 2024 and December 31, 2023 after factoring in the allowance for credit losses.

The following table illustrates the total value of fixed income securities that were in an unrealized loss position as of March 31, 2025 and December 31, 2024 after factoring in the allowance for credit losses.

All fixed income securities continue to pay the expected coupon payments and we believe we will recover the amortized cost basis of available-for-sale securities that remain in an unrealized loss position.

September 30, 2024

March 31, 2025

December 31, 2024

19 unchanged sentences

Non-agency asset-backed, commercial mortgage-backed and mortgage-backed securities

The following table shows the composition of the fixed income securities in unrealized loss positions, after factoring in the allowance for credit losses, at September 30, 2024 by the National Association of Insurance Commissioners (NAIC) rating and the generally equivalent Standard & Poor’s (S&P) and Moody’s ratings.

The following table shows the composition of the fixed income securities in unrealized loss positions, after factoring in the allowance for credit losses, at March 31, 2025 by the National Association of Insurance Commissioners (NAIC) rating and the generally equivalent Standard & Poor’s (S&P) and Moody’s ratings.

The vast majority of the securities are rated by S&P and/or Moody’s.

1 unchanged sentence

Other Invested Assets

We had $ 54 million of other invested assets at September 30, 2024, compared to $ 59 million at December 31, 2023.

We had $ 60 million of other invested assets at March 31, 2025, compared to $ 58 million at December 31, 2024.

Other invested assets include investments in low-income housing tax credit partnerships (LIHTC) and historic tax credit partnerships (HTC), membership in the Federal Home Loan Bank of Chicago (FHLBC), and investments in private funds.

LIHTC and HTC investments are carried at amortized cost and our investment in FHLBC stock is carried at cost.

Our LIHTC and

HTC investments are carried at amortized cost and our investment in FHLBC stock is carried at cost.

Due to the nature of the LIHTC, HTC and our membership in the FHLBC, their carrying amounts approximate fair value.

The private funds are carried at fair value, using each investment’s net asset value.

Our LIHTC interests had a balance of $ 8 million at September 30, 2024, compared to $ 10 million on December 31, 2023.

Our LIHTC interests recognized amortization of $ 1 million as a component of income tax expense and a total tax benefit of $ 1 million during the third quarter of 2024 and 2023.

For the nine-months ended September 30, 2024, our LIHTC interests recognized amortization of $ 2 million and a total tax benefit of $ 2 million, compared to $ 2 million of amortization and $ 2 million of tax benefit for the same period in 2023.

Our unfunded commitment for our LIHTC investments was less than $ 1 million at September 30, 2024 and will be paid out in installments through 2035.

Our HTC investment had a balance of $ 9 million at September 30, 2024, compared to $ 13 million at December 31, 2023.

Our HTC investment recognized $ 1 million of amortization as a component of income tax expense and a total tax benefit of $ 2 million during the third quarter of 2024, compared to $ 1 million of amortization and $ 1 million of tax benefit for the same period in 2023.

For the nine-months ended September 30, 2024 and 2023, our HTC investment recognized amortization of $ 3 million and a total tax benefit of $ 4 million.

As of September 30, 2024, $ 57 million of investments were pledged as collateral with the FHLBC to ensure timely access to the secured lending facility that ownership of FHLBC stock provides.

As of September 30, 2024, $ 50 million of borrowings were outstanding with the FHLBC.

Our investments in private funds totaled $ 25 million as of September 30, 2024, down from $ 28 million as of December 31, 2023, and had $ 4 million of associated unfunded commitments at September 30, 2024.

Our LIHTC interests increased to $ 11 million at March 31, 2025, compared to $ 7 million at December 31, 2024, as additional investments were made.

Our LIHTC interests recognized amortization of $ 1 million as a component of income tax expense and a total tax benefit of $ 1 million during the first quarter of 2025 and 2024.

Our unfunded commitment for our LIHTC investments was $ 5 million at March 31, 2025 and will be paid out in installments through 2039.

Our HTC investment had a balance of $ 14 million at March 31, 2025, compared to $ 15 million at December 31, 2024.

Our HTC investment recognized $ 1 million of amortization as a component of income tax expense and a total tax benefit of $ 1 million during the first quarter of 2025 and 2024.

Our unfunded commitment for our HTC investments was $ 4 million at March 31, 2025 and will be paid out in installments through 2027.

At March 31, 2025, $ 56 million of investments were pledged as collateral with the FHLBC to ensure timely access to the secured lending facility that ownership of FHLBC stock provides.

At March 31, 2025, $ 50 million of borrowings were outstanding with the FHLBC.

Our investments in private funds totaled $ 21 million at March 31, 2025, down from $ 24 million at December 31, 2024, and had $ 4 million of associated unfunded commitments at March 31, 2025.

Our interest in private funds is generally restricted from being transferred or otherwise redeemed without prior consent by the respective entities, and the timed dissolution of the partnerships would trigger redemption.

Investments in Unconsolidated Investees

We had $ 65 million of investments in unconsolidated investees at September 30, 2024, compared to $ 57 million at December 31, 2023.

At September 30, 2024, our investment in Prime Holdings Insurance Services, Inc.

We had $ 57 million of investments in unconsolidated investees at March 31, 2025, compared to $ 56 million at December 31, 2024.

At March 31, 2025, our investment in Prime Holdings Insurance Services, Inc.

(Prime) was $ 56 million and other investments in unconsolidated investees totaled less than $ 1 million.

We received dividends of $ 3 million from Prime in 2024, while no dividends were received from Prime in 2023.

Cash and Short-Term Investments

2 unchanged sentences

Short-term investments are carried at cost.

We had a cash and short-term investment balance of $ 61 million and $ 203 million, respectively, at September 30, 2024, compared to $ 36 million and $ 135 million, respectively, at December 31, 2023.

We had a cash and short-term investment balance of $ 27 million and $ 117 million, respectively, at March 31, 2025, compared to $ 40 million and $ 75 million, respectively, at December 31, 2024.

HISTORICAL LOSS AND LAE DEVELOPMENT

The following table is a reconciliation of our unpaid losses and settlement expenses (LAE) for the first nine months of 2024 and 2023:

For the Nine Months

Ended September 30,

The following table is a reconciliation of our unpaid losses and settlement expenses (LAE) for the first three months of 2025 and 2024:

For the Three Months

Ended March 31,

(in thousands)

7 unchanged sentences

Prior accident years

Net unpaid losses and LAE at September 30,

Unpaid losses and LAE at September 30,

For the first nine months of 2024, incurred losses and LAE included $ 85 million of favorable development on prior years’ loss reserves, largely from accident years 2016, 2017, 2019, 2020, 2022 and 2023.

Marine, surety, commercial property, commercial excess, general liability, professional services, executive products and personal umbrella were drivers of the favorable development.

No products experienced significant adverse development.

For the first nine months of 2023, incurred losses and LAE included $ 94 million of favorable development on prior years’ loss reserves, largely from accident years 2016 through 2018 and 2020 through 2022.

Commercial excess, executive products, general liability, professional services, personal umbrella, surety and commercial property were drivers of the favorable development.

Net unpaid losses and LAE at March 31,

Unpaid losses and LAE at March 31,

For the first three months of 2025, incurred losses and LAE included $ 31 million of favorable development on prior years’ loss reserves, largely from accident years 2019 through 2022 and 2024.

Marine, surety, commercial property, commercial excess, general liability and our mortgage reinsurance program were drivers of the favorable development.

Personal umbrella and commercial transportation had adverse development related to auto exposures, but no products experienced significant adverse development.

For the first three months of 2024, incurred losses and LAE included $ 42 million of favorable development on prior years’ loss reserves, largely from accident years 2016 through 2019 and 2023.

Marine, commercial property, personal umbrella, general liability, executive products, transportation and surety were drivers of the favorable development.

No products experienced significant adverse development.

Our effective tax rate for the three and nine months ended September 30, 2024 was 18.7 percent and 19.8 percent, respectively, compared to 9.9 percent and 18.7 percent, respectively, for the same periods in 2023.

Our effective tax rate for the three months ended March 31, 2025 was 19.6 percent, compared to 20.1 percent for the same period in 2024.

Effective rates are dependent upon components of pretax earnings and the related tax effects.

The effective tax rate was higher for the three and nine-month periods in 2024 due to higher levels of pretax income, which decreased the percentage impact of tax-favored adjustments.

Income tax expense attributable to income from operations for the three and nine-month periods ended September 30, 2024 and 2023 differed from the amounts computed by applying the U.S.

The effective tax rate was lower for the three-month period in 2025 due to lower levels of pretax income, which increased the percentage impact of tax-favored adjustments.

Income tax expense attributable to income from operations for the three-month period ended March 31, 2025 and 2024 differed from the amounts computed by applying the U.S.

federal tax rate of 21 percent to pretax income by the items detailed in the table below.

In interim periods, income taxes are adjusted to reflect the effective tax rate we anticipate for the year, with adjustments flowing through the other items, net line.

For the Three Months Ended September 30,

For the Nine Months Ended September 30, 2024

For the Three Months Ended March 31,

(in thousands)

25 unchanged sentences

Compensation expense is based on the probable number of awards expected to vest.

The total compensation expense related to equity awards was $ 2 million and $ 6 million in the three and nine-month periods ended September 30, 2024, respectively, compared to $ 2 million and $ 7 million, respectively, for the same periods in 2023.

The total income tax benefit was less than $ 1 million and $ 1 million for the three and nine-month periods ended September 30, 2024 and 2023.

The total compensation expense related to equity awards was $ 2 million in the three-month periods ended March 31, 2025 and 2024.

The total income tax benefit was less than $ 1 million for the three-month period ended March 31, 2025 and 2024.

Total unrecognized compensation expense relating to outstanding and unvested awards was $ 6 million, which will be recognized over the weighted average vesting period of 2.55 years.

6 unchanged sentences

Shares issued upon option exercise are newly issued shares.

The following tables summarize option activity for the nine-month period ended September 30, 2024:

The following tables summarize option activity for the three-month period ended March 31, 2025:

Exercise Price

4 unchanged sentences

Options canceled/forfeited

Outstanding options at September 30, 2024

Exercisable options at September 30, 2024

The intrinsic value of options exercised, which is the difference between the fair value and the exercise price, was $ 19 million and $ 17 million during the first nine months of 2024 and 2023, respectively.

The fair value of options was estimated using a Black-Scholes based option pricing model with the following weighted average grant-date assumptions and weighted average fair values as of September 30:

Outstanding options at March 31, 2025

Exercisable options at March 31, 2025

The intrinsic value of options exercised, which is the difference between the fair value and the exercise price, was $ 2 million and $ 8 million during the first three months of 2025 and 2024, respectively.

The fair value of options was estimated using a Black-Scholes based option pricing model with the following weighted average grant-date assumptions and weighted average fair values as of March 31:

Weighted-average fair value of grants

13 unchanged sentences

In addition, the RSUs have dividend participation, which accrue as additional units and are settled with granted stock units at the end of the vesting period.

The total fair value of restricted stock units that vested was $ 2 million and $ 3 million during the first nine months of 2024 and 2023, respectively.

Nonvested at January 1, 2025

Nonvested at September 30, 2024

Nonvested at March 31, 2025

OPERATING SEGMENT INFORMATION

Selected information by operating segment is presented in the table below.

Additionally, the table reconciles segment totals to total earnings and total revenues.

For the Three Months

For the Nine Months

Ended September 30,

The Company’s chief operating decision maker (CODM) is the chief executive officer.

The Company’s CODM assesses the segments’ performance by using earnings before income taxes (underwriting income) and the combined ratio.

Underwriting income and combined ratio are analyzed at the segment level and influence how resources are allocated.

Decisions are made based on what is likely to provide the best long-term return to the Company.

Amortization of deferred acquisition costs represents the recognition of commission and premium taxes over the life of insurance polices, in proportion to premium revenue recognized.

The other policy acquisition costs line item includes other expenses associated with underwriting, but that cannot be specifically associated with the successful acquisition of a policy, including, but not limited to, employment costs for underwriters and underwriting support as well as costs for policy acquisition systems.

Insurance operating expenses reflect allocated costs from various support departments, such as corporate technology, accounting, human resources and facilities, among others.

Net investment income consists of the interest and dividend income streams from our investments in fixed income and equity securities.

Interest expense represents the cost of debt and lines of credit.

General corporate expenses include director and shareholder relation costs and other compensation-related expenses incurred for the benefit of the corporation, but not attributable to the operations of our insurance segments.

Investee earnings primarily represents our 23 percent share in earnings of Prime Holdings Insurance Services, Inc., a privately held insurance company which specializes in hard-to-place risks.

Assets, and the revenues and expenses associated with investing and financing activities, are not managed at the segment level and therefore are not allocated to segments.

All segment revenues are from external customers and all long-lived assets are held domestically.

We have no material foreign operations or customer concentrations and have no intersegment revenues.

The following tables present our operating results by segment, as evaluated by the CODM.

For the Three Months Ended March 31, 2025

(in thousands)

3 unchanged sentences

Net unrealized gains (losses) on equity securities

Total consolidated revenue

Consolidated revenue

Losses and settlement expenses

Amortization of deferred acquisition costs

Other policy acquisition costs

Insurance operating expenses

Segment earnings before income taxes

Reconciliation of earnings before income taxes

Segment earnings before income taxes

Net investment income

Net realized gains

Net unrealized gains (losses) on equity securities

Interest expense on debt

General corporate expenses

Equity in earnings of unconsolidated investees

Earnings before income taxes

Depreciation and amortization expense

For the Three Months Ended March 31, 2024

(in thousands)

Net underwriting income

Net premiums earned

Net investment income

1 unchanged sentence

Net unrealized gains (losses) on equity securities

General corporate expense and interest on debt

Consolidated revenue

Losses and settlement expenses

Amortization of deferred acquisition costs

Other policy acquisition costs

Insurance operating expenses

Segment earnings before income taxes

Reconciliation of earnings before income taxes

Segment earnings before income taxes

Net investment income

Net realized gains

Net unrealized gains (losses) on equity securities

Interest expense on debt

General corporate expenses

Equity in earnings of unconsolidated investees

Earnings before income taxes

Income tax expense

Depreciation and amortization expense

The following table further summarizes revenues by major product type within each operating segment:

For the Three Months

For the Nine Months

Net Premiums Earned

Ended September 30,

Ended March 31,

(in thousands)

19 unchanged sentences

The Company’s operating lease obligations are for branch office facilities.

The components of lease expense and other lease information as of and during the three and nine-month periods ended September 30, 2024 and 2023 were as follows:

The components of lease expense and other lease-related information, as of and during the three-month period ended March 31, 2025 and 2024, were as follows:

For the Three Months

For the Nine Months

Ended September 30,

Ended March 31,

(in thousands)

6 unchanged sentences

ROU assets obtained in exchange for new operating lease liabilities

Reduction to ROU assets resulting from reduction to lease liabilities

(in thousands)

September 30, 2024

March 31, 2025

December 31, 2024

3 unchanged sentences

Weighted-average discount rate - operating leases

Future minimum lease payments under non-cancellable leases as of September 30, 2024 were as follows:

Future minimum lease payments under non-cancellable leases as of March 31, 2025 were as follows:

(in thousands)

September 30, 2024

March 31, 2025

Total future minimum lease payments

1 unchanged sentence

Total operating lease liability

ACQUISITONS AND DISPOSTIONS

On September 30, 2022, RLI Corp.

completed the sale of its equity method investment in Maui Jim, Inc.

to Kering Eyewear.

During the first quarter of 2023, the payout of the working capital escrow resulted in the recognition of a $ 14 million gain that was recorded in the net realized gain line item of the statement of earnings.

Subsequent Events

In early October 2024, Hurricane Milton made landfall in Florida as a Category 3 storm.

We currently estimate that losses for Hurricane Milton, net of any reinsurance benefits, will be between $ 45 million and $ 55 million.

Our estimates are subject to change and losses from the event will be reflected in our fourth quarter 2024 results.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements