-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VGR6aGpUun8bLjCm0i0the8IRSxngJGv7jkOs4Z11e5pa0IxIr5J6syrczUGarck M0xOyT28RmA2sHFookXbXA== 0000912057-01-001950.txt : 20010123 0000912057-01-001950.hdr.sgml : 20010123 ACCESSION NUMBER: 0000912057-01-001950 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20010110 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20010118 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RLI CORP CENTRAL INDEX KEY: 0000084246 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 370889946 STATE OF INCORPORATION: IL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-09463 FILM NUMBER: 1510752 BUSINESS ADDRESS: STREET 1: 9025 N LINDBERGH DR CITY: PEORIA STATE: IL ZIP: 61615 BUSINESS PHONE: 3096921000 8-K 1 a2035122z8-k.txt 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 JANUARY 18, 2001 (JANUARY 10, 2001) Date of Report (Date of earliest event reported) RLI Corp. (Exact name of Registrant as specified in its charter) ILLINOIS 0-6612 37-0889946 (State or other jurisdiction (Commission File Number) (IRS Employer of incorporation) Identification Number) 9025 N. Lindbergh Drive Peoria, IL 61615 (Address of principal executive offices) (309) 692-1000 (Registrant's telephone number, including area code) ITEM 5. OTHER EVENTS Fourth Quarter and Year-End Earnings Announced On January 10, 2001 the Company released its earnings for the fourth quarter and year-end 2000. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. EXHIBITS. 99.1 Press Release dated January 10, 2001. -2- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. RLI Corp. Date: January 18, 2001 By: /s/ Michael A. Price ------------------------------- Name: Michael A. Price Title: Treasurer -3- EX-99.1 2 a2035122zex-99_1.txt PRESS RELEASE FOR IMMEDIATE RELEASE CONTACT: MICHAEL A. PRICE (309) 693-5880 Mike_Price@rlicorp.com 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 -- 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.
DILUTED DILUTED EPS COMPREHENSIVE EPS ------- ----------------- 1997 2.66 5.76 1998 2.65 4.87 1999 3.08 2.04 2000 2.89 4.23 ------ ---- $11.28 $16.90
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 -- 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 MIKE_PRICE@RLICORP.COM. ### January 10, 2001 RLI Corp. News Release Page 4 of 6 RLI CORP. 2000 FINANCIAL HIGHLIGHTS (Dollars in thousands, except per share amounts)
THREE MONTHS ENDED TWELVE MONTHS ENDED DECEMBER 31, DECEMBER 31, 2000 1999 % CHANGE 2000 1999 % CHANGE -------- ------- -------- --------- --------- -------- 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%
(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. January 10, 2001 RLI Corp. News Release Page 5 of 6 RLI CORP. 2000 FINANCIAL HIGHLIGHTS (Dollars in thousands, except per share amounts)
THREE MONTHS ENDED DECEMBER 31, TWELVE MONTHS ENDED DECEMBER 31, 2000 1999 % CHANGE 2000 1999 % CHANGE ----------- ------- ----------- --------- --------- -------- 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%
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)
GAAP GAAP GAAP GAAP PROPERTY RATIOS SURETY RATIOS CASUALTY RATIOS TOTAL RATIOS -------- ------ ------- ------ --------- ------ ---------- ------ 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%
(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. -----END PRIVACY-ENHANCED MESSAGE-----