Jamie Inglis

Jamie Inglis asked about the significant swing in reserve development for 2024 and prior CAT events, questioning if it was normal or unusual.

Answer

Aaron Diefenthaler (CFO) explained that the swing was not unusual, attributing it to having more comfort around actual losses from sizable storms like Helene, Beryl, and Milton from the previous year. He noted that RLI tightens expectations a year out from such events and prudently takes down IBNR after examining claim activity, outstanding claims, and litigation for various storms over several years.

Jamie Inglis asked about the significant swing in reserve development for 2024 and prior CAT events, inquiring if it was a normal adjustment or something specific and unusual.

Answer

Aaron Diefenthaler (CFO) explained that the reserve development was not unusual, reflecting increased comfort around actual losses from sizable storms like Helene, Beryl, and Milton from the previous year. He noted that after a year or more, RLI had more clarity on claim activity and litigation, leading to a prudent reduction of IBNR across various storms.

Jamie Inglis followed up on the rising acquisition costs within the expense ratio, asking if it's a retail, wholesale, product line, or geographic phenomenon. He also questioned how RLI maintains its competitive advantage in the increasingly crowded and competitive surety business.

Answer

Craig Kliethermes, President and CEO, and Todd Bryant, Chief Financial Officer, explained that rising acquisition costs are influenced by smaller risks like transactional surety and personal umbrella, which carry slightly higher commission rates. They also reiterated that ongoing investments in technology and people contribute to these costs, with the ultimate goal of generating more profitable premium. Jen Klobnak, Chief Operating Officer, highlighted RLI's competitive advantages in surety: for transactional surety, it's technology and producer servicing; for account-level business, it's experienced, available, and problem-solving underwriters who build strong relationships. Craig Kliethermes emphasized the authenticity and genuineness of RLI's people, fostering deep relationships with producers.

Jamie Inglis from PhiloSmith asked about the drivers behind rising acquisition costs, seeking to understand if it's a retail, wholesale, product line, or geographical phenomenon. He also inquired about RLI's competitive advantage in the surety business, especially given new entrants perceiving it as an 'easy' market.

Answer

Todd Bryant, Chief Financial Officer, attributed rising acquisition costs to pressure from smaller risks like transactional surety and personal umbrella, which have slightly higher commission rates, and to broader investments in technology and people. Jen Klobnak, Chief Operating Officer, highlighted RLI's competitive advantages in surety as technology and producer servicing for transactional surety, and for contract/commercial surety, experienced, dynamic, and highly available problem-solving people focused on service and relationships. Craig Kliethermes, President and CEO, added that RLI's authentic and genuine people build strong relationships, which is a significant differentiator.