Executive Summary

RLI delivered another profitable quarter: combined ratio improved to 85.1 (vs. 89.6 YoY) with underwriting income of $60.5M, operating EPS of $0.83, and net EPS of $1.35; consolidated revenue was $509.3M .
Results beat Wall Street: operating EPS $0.83 vs. Primary EPS consensus $0.70* and revenue $509.3M vs. consensus $445.5M*, aided by benign cat activity and $13.7M favorable prior-year reserve development; net investment income rose 12% .
Property stayed highly profitable (60.2 combined ratio) on minimal cats and favorable reserve development; casualty grew premiums with a 98.2 combined ratio, while surety’s expense ratio ticked up due to tech and people investments .
Book value per share rose 26% YTD to $20.41 (including dividends), supported by a 3.0% total portfolio return in the quarter and strong operating cash flow ($179.2M) .
Stock narrative catalysts: sizable revenue/EPS beats vs. consensus*, improved combined ratio YoY, and continued reserve releases; offsets include competitive pressure and rate declines in E&S property and elevated severity in auto-exposed lines .
Values marked with * are retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well
- Property segment produced a 60.2 combined ratio with no hurricane losses and $5M favorable PYD (marine) vs. $37M cat losses in Q3’24; underwriting income rose to $50.4M .
- Investment income increased 12% to $41.3M; portfolio total return 3.0% for the quarter, underpinning book value per share up 26% from YE’24 .
- Management tone on discipline and resilience: “Our 85 combined ratio reflects disciplined underwriting … minimal catastrophe activity … investment income growth … contributed to a 26% increase in book value per share” — Craig Kliethermes, CEO .
What Went Wrong
- Top-line pressures from E&S property: gross premiums down 11% on rate and exposure declines; renewal wind rates down 11% in Q3 (13% YTD), competitive pressure from MGAs/admitted carriers .
- Surety expense ratio higher on tech/people investment and some commission pressure; management expects to continue investing, leveraging for future growth .
- Auto-exposed lines remain challenged: transportation premiums down 1% in the quarter, despite 15–16% rate increases across auto; some large accounts canceled midterm for lower-cost alternatives .

Financial Results

Consolidated P&L and Key Ratios

Metric	Q3 2024	Q1 2025	Q2 2025	Q3 2025
Consolidated Revenue ($M)	$470.0	$407.7	$499.8	$509.3
Net EPS (Diluted)	$1.03	$0.68	$1.34	$1.35
Operating EPS (Diluted)	$0.65	$0.92	$0.84	$0.83
Combined Ratio	89.6	82.3	84.5	85.1
Underwriting Income ($M)	$40.7	$70.5	$62.2	$60.5
Net Investment Income ($M)	$36.7	$36.7	$39.4	$41.3

Segment Performance (Q3)

Segment	Underwriting Income ($M) Q3’24	Underwriting Income ($M) Q3’25	Combined Ratio Q3’24	Combined Ratio Q3’25
Casualty	$2.6	$4.5	98.8	98.2
Property	$30.4	$50.4	77.2	60.2
Surety	$7.7	$5.6	78.8	85.0
Total	$40.7	$60.5	89.6	85.1

Selected KPIs

KPI	Q3 2024	Q2 2025	Q3 2025
Net Premiums Earned ($M)	$389.5	$401.9	$407.7
Favorable PYD (net, $M)	$18.1	$24.4	$13.7
Cat Losses (net, $M)	$(35.0)	$(9.0) net: $5.0 prior cats, $(14.0) 2025	$—
Net Cash from Ops ($M)	$219.4	$174.7	$179.2
Book Value/Share ($)	$—	$18.89	$20.41
Dividend/Share ($)	$0.15	$0.16	$0.16

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Quantitative financial guidance	FY/Q4 outlook	Not provided	Not provided	Maintained no formal guidance
Ordinary dividend	Quarterly	$0.16 (Q2’25)	$0.16 (paid Sep 19, 2025)	Maintained

Management did not issue explicit revenue, margin, or EPS guidance. Commentary points to continued underwriting discipline amid competitive property conditions and ongoing investment in technology and talent .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2 2025)	Current Period (Q3 2025)	Trend
E&S Property market	Softening conditions; wind rates down 13% in Q2; exposure down ~10% entering season; competition from MGAs/admitted carriers	Wind renewal rates down 11% in Q3 (13% YTD); premium down 11%; selective underwriting; capacity influx late in season	Continued softening; competitive pressure persists
Casualty auto severity	Elevated severity; double-digit rate needs; transportation managed via selection and rate; umbrella actions (higher attachments, geography)	Auto liability rate +16%; some large accounts canceled midterm; continued selectivity and loss control focus	Persistent severity; discipline maintained
Personal Umbrella	34% growth with rate increases; raising required underlying limits	Premium +24%; 17% rate increase; added higher attachment points in 7 more states; early margin benefits expected	Pricing/actions intensify to manage severity
Hawaii Homeowners	+37% Q1; market dislocation post-Maui supports growth	+33% Q3; additional ~12% rate filing effective; steady attritional loss ratio	Ongoing profitable growth
Reinsurance & expenses	Added limits in surety; changes increased expense ratio; property reinsurance mix impacts expense ratio	Expense ratio elevated in surety on tech/people; continued investment; property benefited from absent cat losses	Investment-driven expense elevation continues
Regulatory/tort reform	Discussed Florida benefits; early stages in GA/LA	Reinforced early benefits in FL; continued monitoring	Gradual, supportive
Technology/AI	Noted process and digital tools in surety	Active focus on generative AI to automate workflows and support underwriters/claims	Expanding adoption

Management Commentary

“Our 85 combined ratio reflects disciplined underwriting and consistent execution … Favorable reserve development and minimal catastrophe activity … investment income growth and solid portfolio returns contributed to a 26% increase in book value per share since year-end 2024.” — Craig Kliethermes, CEO .
“Property continued its strong performance, posting a 60 combined ratio in the quarter … casualty posted a 98 combined ratio … surety’s expense ratio rose reflecting higher acquisition costs and increased investments in technology and people.” — Todd Bryant, CFO .
“We remain selective [in E&S property]. Our renewal rates for wind are down 11% in the quarter, but remain around two and a half times higher than prior to 2019 … The hurricane season is not over yet, our exposure is down almost 10% for the year.” — Jen Klobnak, COO .

Q&A Highlights

Personal Umbrella: Raised attachment points (e.g., from $250k to $500k) across several large states; 17% rate increase in Q3 driven by new filings (e.g., Florida effective this quarter), with early margin improvement signs .
Property Conditions: Market remains tough with increased capacity and loosening terms; RLI prioritizes terms/conditions and adequate rate; reinsurance renewals (1/1) could influence competitiveness .
Surety Expenses: Higher expense ratio largely from technology and people investments; some commission pressure; expectation to leverage investments for top-line over time .
Transportation: Elevated auto severity persists; 15–16% rate increases across portfolio; some large accounts canceled midterm for cheaper alternatives; focus on loss control and selection .
Wind Rate Trend: Wind renewal rate decrease 11% in Q3 vs. 13% in Q2; 13% YTD .

Estimates Context

Metric	Q3 2025 Consensus	Q3 2025 Actual
Primary/Normalized EPS (Diluted)	$0.70* (8 est.)	$0.83
Revenue ($M)	$445.5* (2 est.)	$509.3

EPS and revenue both beat consensus*.
Values marked with * are retrieved from S&P Global.

Key Takeaways for Investors

Strong beat-and-raise narrative on results: Operating EPS and revenue outperformed consensus*, underpinned by no cat losses, favorable PYD, and higher investment income .
Property profitability remains exceptional despite top-line headwinds; continued discipline and selective underwriting are likely to preserve margins even as rates ease .
Casualty remains a tale of two books: umbrella growth and pricing actions supportive; transportation/auto severity still elevated, requiring ongoing rate and selection .
Surety continues to post good underwriting but with higher expense ratio as RLI invests in digital capabilities; longer-term operating leverage a watch item .
Capital generation remains robust: 26% YTD book value per share growth and solid operating cash flow support ongoing dividends and balance-sheet flexibility .
Near-term trading lens: continued reserve releases, benign cat environment, and investment income momentum are supportive; monitor property pricing competition and auto severity for potential margin pressure .

Values marked with * are retrieved from S&P Global.

RLI CORP (RLI)·Q3 2025 Earnings Summary