Schedule II -Condensed Financial Information of Registrant (Parent Company)

12 Months Ended

Dec. 31, 2022

Condensed Financial Information Of Parent Company Only Disclosure [Abstract]

Schedule II -Condensed Financial Information of Registrant (Parent Company)

RLI CORP. AND SUBSIDIARIES

SCHEDULE II—CONDENSED FINANCIAL INFORMATION OF REGISTRANT

(PARENT COMPANY)

CONDENSED BALANCE SHEETS

December 31,

(in thousands, except share data)	2022		2021
ASSETS
Cash	$	1,051	$	1,433
Short-term investments, at cost which approximates fair value		2,229		—
Accounts receivable, affiliates		1,572		848
Investments in subsidiaries		1,084,055		1,197,997
Investments in unconsolidated investee		—		113,052
Fixed income:
Available-for-sale, at fair value		237,282		86,483
(amortized cost of $250,904 and allowance for credit losses of $0 in 2022)
(amortized cost of $84,823 and allowance for credit losses of $0 in 2021)
Property and equipment, at cost, net of accumulated depreciation of $1,340 in 2022 and $1,697 in 2021		1,410		1,711
Income taxes receivable - current		—		211
Income taxes - deferred		3,204		—
Other assets		3,840		2,907
TOTAL ASSETS	$	1,334,643	$	1,404,642
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES
Income taxes payable - current	$	1,823	$	—
Income taxes - deferred		—		21,067
Current portion of long-term debt		149,863		—
Long-term debt		—		149,676
Interest payable, long-term debt		2,153		2,153
Other liabilities		3,463		2,385
TOTAL LIABILITIES	$	157,302	$	175,281
SHAREHOLDERS' EQUITY
Common stock ($0.01 par value)
(Shares authorized - 200,000,000)
(68,399,966 shares issued and 45,469,752 shares outstanding in 2022)
(68,219,551 shares issued and 45,289,337 shares outstanding in 2021)	$	684	$	682
Paid-in capital		352,391		343,742
Accumulated other comprehensive earnings		(229,076)		49,826
Retained earnings		1,446,341		1,228,110
Deferred compensation		12,015		9,642
Treasury stock, at cost (22,930,214 shares in 2022 and 2021)		(405,014)		(402,641)
TOTAL SHAREHOLDERS’ EQUITY	$	1,177,341	$	1,229,361
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,334,643	$	1,404,642

See Notes to Consolidated Financial Statements. See also the accompanying reports of independent registered public accounting firms starting on page 91 of this report.

RLI CORP. AND SUBSIDIARIES

SCHEDULE II—CONDENSED FINANCIAL INFORMATION OF REGISTRANT

(PARENT COMPANY)—(continued)

CONDENSED STATEMENTS OF EARNINGS AND COMPREHENSIVE EARNINGS

Years ended December 31,

(in thousands)	2022		2021		2020
Net investment income	$	6,245	$	2,102	$	1,412
Net realized gains (losses)		570,888		(625)		501
Equity in earnings of unconsolidated investee		372		22,786		10,368
Selling, general and administrative expenses		(12,900)		(13,330)		(10,265)
Interest expense on debt		(7,622)		(7,616)		(7,603)
Earnings (loss) before income taxes	$	556,983	$	3,317	$	(5,587)
Income tax expense (benefit)		108,699		(1,585)		(2,885)
Net earnings (loss) before equity in net earnings of subsidiaries	$	448,284	$	4,902	$	(2,702)
Equity in net earnings of subsidiaries		135,127		274,452		159,793
Net earnings	$	583,411	$	279,354	$	157,091
Other comprehensive earnings (loss), net of tax
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during the period	$	(12,188)	$	(1,996)	$	994
Less: reclassification adjustment for (gains) losses included in net earnings		115		500		(390)
Other comprehensive earnings (loss) - parent only	$	(12,073)	$	(1,496)	$	604
Equity in other comprehensive earnings (loss) of subsidiaries/investees		(266,829)		(57,392)		55,615
Other comprehensive earnings (loss)	$	(278,902)	$	(58,888)	$	56,219
Comprehensive earnings	$	304,509	$	220,466	$	213,310

See Notes to Consolidated Financial Statements. See also the accompanying reports of independent registered public accounting firms starting on page 91 of this report.

RLI CORP. AND SUBSIDIARIES

SCHEDULE II—CONDENSED FINANCIAL INFORMATION OF REGISTRANT

(PARENT COMPANY)—(continued)

CONDENSED STATEMENTS OF CASH FLOWS

Years ended December 31,

(in thousands)	2022		2021		2020
Cash flows from operating activities
Earnings (loss) before equity in net earnings of subsidiaries	$	448,284	$	4,902	$	(2,702)
Adjustments to reconcile net losses to net cash provided by (used in) operating activities:
Net realized (gains) losses		(570,888)		625		(501)
Depreciation		64		68		67
Other items, net		1,403		3,966		2,270
Change in:
Affiliate balances receivable/payable		(724)		(3,404)		1,246
Federal income taxes		(19,484)		5,901		1,399
Changes in investment in unconsolidated investee:
Undistributed earnings		(372)		(22,786)		(10,368)
Net cash used in operating activities	$	(141,717)	$	(10,728)	$	(8,589)
Cash flows from investing activities
Purchase of:
Fixed income, available-for-sale	$	(1,356,177)	$	(33,373)	$	(24,950)
Other		(1,420)		(2,904)		(346)
Sale of:
Fixed income, available-for-sale		1,373		5,306		3,767
Equity method investee		686,566		—		—
Other		221		1,245		—
Property and equipment		298		—		—
Call or maturity of:
Fixed income, available-for-sale		1,192,050		2,878		3,492
Net purchase of short-term investments		(2,229)		—		—
Cash dividends received-subsidiaries		13,000		180,000		110,000
Net cash provided by investing activities	$	533,682	$	153,152	$	91,963
Cash flows from financing activities
Proceeds from stock option exercises	$	(465)	$	1,838	$	8,648
Cash dividends paid		(397,323)		(147,422)		(95,793)
Other		5,441		4,212		3,802
Net cash used in financing activities	$	(392,347)	$	(141,372)	$	(83,343)
Net increase (decrease) in cash	$	(382)	$	1,052	$	31
Cash at beginning of year		1,433		381		350
Cash at end of year	$	1,051	$	1,433	$	381

Interest paid on outstanding debt amounted to $7.3 million for 2022, 2021 and 2020, respectively. See Notes to Consolidated Financial Statements. See also the accompanying reports of independent registered public accounting firms starting on page 91 of this report.