10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2023

or

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from                 to

Commission File Number:       001-09463

RLI Corp.

(Exact name of registrant as specified in its charter)

Delaware	37-0889946
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)
9025 North Lindbergh Drive, Peoria, IL	61615
(Address of principal executive offices)	(Zip Code)

(309) 692-1000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock $0.01 par value	RLI	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒    No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☒    No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒	Accelerated filer ☐	Non-accelerated filer ☐	Smaller reporting company ☐
			Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐   No ☒

APPLICABLE ONLY TO CORPORATE ISSUERS:

As of July 17, 2023, the number of shares outstanding of the registrant’s Common Stock was 45,596,196.

Table of Contents

		Page
Part I - Financial Information		3
Item 1.	Financial Statements	3
	Condensed Consolidated Statements of Earnings and Comprehensive Earnings for the Three and Six-Month Periods Ended June 30, 2023 and 2022 (unaudited)	3
	Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022 (unaudited)	4
	Condensed Consolidated Statements of Shareholders’ Equity for the Three and Six-Month Periods Ended June 30, 2023 and 2022 (unaudited)	5
	Condensed Consolidated Statements of Cash Flows for the Six-Month Periods Ended June 30, 2023 and 2022 (unaudited)	6
	Notes to Unaudited Condensed Consolidated Interim Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	34
Item 4.	Controls and Procedures	34
Part II - Other Information		35
Item 1.	Legal Proceedings	35
Item 1a.	Risk Factors	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 3.	Defaults upon Senior Securities	35
Item 4.	Mine Safety Disclosures	35
Item 5.	Other Information	35
Item 6.	Exhibits	35
Signatures		36

PART I - FINANCIAL INFORMATION

Item 1.Financial Statements

RLI Corp. and Subsidiaries

Condensed Consolidated Statements of Earnings and Comprehensive Earnings

(Unaudited)

	For the Three Months				For the Six Months
	Ended June 30,				Ended June 30,
(in thousands, except per share data)	2023		2022		2023		2022
Net premiums earned	$	322,280	$	282,810	$	630,003	$	551,962
Net investment income		28,788		18,472		55,872		36,355
Net realized gains		5,580		12,804		20,200		18,392
Net unrealized gains (losses) on equity securities		25,214		(100,994)		40,710		(128,804)
Consolidated revenue	$	381,862	$	213,092	$	746,785	$	477,905
Losses and settlement expenses		153,943		117,914		268,431		223,438
Policy acquisition costs		102,626		89,615		204,070		174,902
Insurance operating expenses		24,510		19,325		48,411		38,188
Interest expense on debt		2,047		2,011		4,055		4,021
General corporate expenses		4,219		2,435		8,433		5,798
Total expenses	$	287,345	$	231,300	$	533,400	$	446,347
Equity in earnings of unconsolidated investees		1,514		11,654		5,437		20,413
Earnings (loss) before income taxes	$	96,031	$	(6,554)	$	218,822	$	51,971
Income tax expense (benefit)		18,379		(4,315)		42,359		6,287
Net earnings (loss)	$	77,652	$	(2,239)	$	176,463	$	45,684
Other comprehensive earnings (loss), net of tax		(19,721)		(97,563)		17,986		(213,144)
Comprehensive earnings (loss)	$	57,931	$	(99,802)	$	194,449	$	(167,460)
Basic net earnings (loss) per share	$	1.70	$	(0.05)	$	3.87	$	1.01
Diluted net earnings (loss) per share	$	1.69	$	(0.05)	$	3.83	$	1.00
Weighted average number of common shares outstanding:
Basic		45,591		45,354		45,560		45,330
Diluted		46,044		45,354		46,045		45,748

See accompanying notes to the unaudited condensed consolidated interim financial statements.

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RLI Corp. and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited)

	June 30,		December 31,
(in thousands, except share and per share data)	2023		2022
ASSETS
Investments and cash:
Fixed income:
Available-for-sale, at fair value	$	2,689,100	$	2,666,950
(amortized cost of $2,946,920 and allowance for credit losses of $434 at 6/30/23)
(amortized cost of $2,945,273 and allowance for credit losses of $339 at 12/31/22)
Equity securities, at fair value (cost - $340,184 at 6/30/23 and $328,019 at 12/31/22)		552,566		498,382
Short-term investments, at cost which approximates fair value		271,296		36,229
Other invested assets		60,907		47,922
Cash		16,707		22,818
Total investments and cash	$	3,590,576	$	3,272,301
Accrued investment income		22,525		21,259
Premiums and reinsurance balances receivable, net of allowances for uncollectible amounts of $18,768 at 6/30/23 and $18,696 at 12/31/22		229,471		189,501
Ceded unearned premium		112,353		138,457
Reinsurance balances recoverable on unpaid losses and settlement expenses, net of allowances for uncollectible amounts of $10,251 at 6/30/23 and $11,250 at 12/31/22		720,858		740,089
Deferred policy acquisition costs		148,336		127,859
Property and equipment, at cost, net of accumulated depreciation of $72,404 at 6/30/23 and $68,633 at 12/31/22		48,358		49,573
Investment in unconsolidated investees		55,250		58,275
Goodwill and intangibles		53,562		53,562
Income taxes-deferred		29,864		40,269
Other assets		54,693		75,923
TOTAL ASSETS	$	5,065,846	$	4,767,068
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Unpaid losses and settlement expenses	$	2,361,577	$	2,315,637
Unearned premiums		891,103		785,085
Reinsurance balances payable		35,931		61,100
Funds held		102,429		101,144
Income taxes-current		5,326		—
Current portion of long-term debt		199,956		199,863
Accrued expenses		70,220		94,869
Other liabilities		47,392		32,029
TOTAL LIABILITIES	$	3,713,934	$	3,589,727
Shareholders’ Equity
Common stock ($0.01 par value)
(Shares authorized - 200,000,000)
(68,526,410 shares issued, 45,596,196 shares outstanding at 6/30/23)
(68,399,966 shares issued, 45,469,752 shares outstanding at 12/31/22)	$	685	$	684
Paid-in capital		357,656		352,391
Accumulated other comprehensive earnings (loss)		(211,090)		(229,076)
Retained earnings		1,597,660		1,446,341
Deferred compensation		12,507		12,015
Less: Treasury shares, at cost (22,930,214 shares at 6/30/23 and 12/31/22)		(405,506)		(405,014)
TOTAL SHAREHOLDERS’ EQUITY	$	1,351,912	$	1,177,341
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	5,065,846	$	4,767,068

See accompanying notes to the unaudited condensed consolidated interim financial statements.

4

RLI Corp. and Subsidiaries

Condensed Consolidated Statements of Shareholders’ Equity

(Unaudited)

									Accumulated
									Other
			Total						Comprehensive						Treasury
	Common		Shareholders’		Common		Paid-in		Earnings		Retained		Deferred		Shares
(in thousands, except share and per share data)	Shares		Equity		Stock		Capital		(Loss)		Earnings		Compensation		at Cost
Balance, January 1, 2022		45,289,337	$	1,229,361	$	682	$	343,742	$	49,826	$	1,228,110	$	9,642	$	(402,641)
Net earnings (loss)		—		47,923		—		—		—		47,923		—		—
Other comprehensive earnings (loss), net of tax		—		(115,581)		—		—		(115,581)		—		—		—
Deferred compensation		—		—		—		—		—		—		(973)		973
Share-based compensation		26,605		3,049		—		3,049		—		—		—		—
Dividends and dividend equivalents ($0.25 per share)		—		(11,330)		—		—		—		(11,330)		—		—
Balance, March 31, 2022		45,315,942	$	1,153,422	$	682	$	346,791	$	(65,755)	$	1,264,703	$	8,669	$	(401,668)
Net earnings (loss)		—		(2,239)		—		—		—		(2,239)		—		—
Other comprehensive earnings (loss), net of tax		—		(97,563)		—		—		(97,563)		—		—		—
Deferred compensation		—		—		—		—		—		—		276		(276)
Share-based compensation		52,862		2,371		1		2,370		—		—		—		—
Dividends and dividend equivalents ($0.26 per share)		—		(11,803)		—		—		—		(11,803)		—		—
Balance, June 30, 2022		45,368,804	$	1,044,188	$	683	$	349,161	$	(163,318)	$	1,250,661	$	8,945	$	(401,944)
									Accumulated
									Other
			Total						Comprehensive						Treasury
	Common		Shareholders’		Common		Paid-in		Earnings		Retained		Deferred		Shares
(in thousands, except share and per share data)	Shares		Equity		Stock		Capital		(Loss)		Earnings		Compensation		at Cost
Balance, January 1, 2023		45,469,752	$	1,177,341	$	684	$	352,391	$	(229,076)	$	1,446,341	$	12,015	$	(405,014)
Cumulative-effect adjustment from ASU 2023-02		—		(951)		—		—		—		(951)		—		—
Net earnings (loss)		—		98,811		—		—		—		98,811		—		—
Other comprehensive earnings (loss), net of tax		—		37,707		—		—		37,707		—		—		—
Deferred compensation		—		—		—		—		—		—		249		(249)
Share-based compensation		84,944		2,864		1		2,863		—		—		—		—
Dividends and dividend equivalents ($0.26 per share)		—		(11,851)		—		—		—		(11,851)		—		—
Balance, March 31, 2023		45,554,696	$	1,303,921	$	685	$	355,254	$	(191,369)	$	1,532,350	$	12,264	$	(405,263)
Net earnings (loss)		—		77,652		—		—		—		77,652		—		—
Other comprehensive earnings (loss), net of tax		—		(19,721)		—		—		(19,721)		—		—		—
Deferred compensation		—		—		—		—		—		—		243		(243)
Share-based compensation		41,500		2,402		—		2,402		—		—		—		—
Dividends and dividend equivalents ($0.27 per share)		—		(12,342)		—		—		—		(12,342)		—		—
Balance, June 30, 2023		45,596,196	$	1,351,912	$	685	$	357,656	$	(211,090)	$	1,597,660	$	12,507	$	(405,506)

See accompanying notes to the unaudited condensed consolidated interim financial statements.

5

RLI Corp. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	For the Six Months
	Ended June 30,
(in thousands)	2023		2022
Net cash provided by operating activities	$	243,595	$	170,645
Cash Flows from Investing Activities
Purchase of:
Fixed income securities, available-for-sale	$	(365,976)	$	(292,056)
Equity securities		(25,454)		(36,605)
Property and equipment		(2,790)		(3,024)
Other		(2,669)		(6,326)
Proceeds from sale of:
Fixed income securities, available-for-sale		19,490		20,892
Equity securities		22,029		53,525
Equity method investments		14,134		—
Other		473		1,172
Proceeds from call or maturity of:
Fixed income securities, available-for-sale		349,714		137,476
Net proceeds from sale (purchase) of short-term investments		(235,067)		—
Net cash used in investing activities	$	(226,116)	$	(124,946)
Cash Flows from Financing Activities
Cash dividends paid	$	(24,172)	$	(23,115)
Proceeds from stock option exercises		582		1,656
Net cash used in financing activities	$	(23,590)	$	(21,459)
Net increase in cash	$	(6,111)	$	24,240
Cash at the beginning of the period		22,818		88,804
Cash at June 30,	$	16,707	$	113,044

See accompanying notes to the unaudited condensed consolidated interim financial statements.

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. BASIS OF PRESENTATION

The unaudited condensed consolidated interim financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (GAAP) for interim financial reporting and with the instructions to Form 10-Q and Regulation S-X. Accordingly, they do not include all the disclosures required by GAAP for complete financial statements. As such, these unaudited condensed consolidated interim financial statements should be read in conjunction with our 2022 Annual Report on Form 10-K. Management believes that the disclosures are adequate to make the information presented not misleading, and all normal and recurring adjustments necessary to present fairly the financial position at June 30, 2023 and the results of operations of RLI Corp. (the Company) and subsidiaries for all periods presented have been made. The results of operations for any interim period are not necessarily indicative of the operating results for a full year. Certain reclassifications were made to 2022 to conform to the classifications used in the current year.

The preparation of the unaudited condensed consolidated interim financial statements requires management to make estimates and assumptions relating to the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated interim financial statements and the reported amounts of revenue and expenses during the period. These estimates are inherently subject to change and actual results could differ significantly from these estimates.

B. ADOPTED ACCOUNTING STANDARDS

2023-02—Investments – Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Method

The amendments in this ASU permit the use of the proportional amortization method for investments in tax credits if certain conditions are met. Under the proportional amortization method, the initial cost of an investment is amortized in proportion to the amount of tax credits and other tax benefits received, with the amortization and tax credits presented as a component of income tax expense. Under previous guidance, equity investments in tax credit structures, other than qualified affordable housing projects, were accounted for using the equity method of accounting, which required the presentation of income, gains and losses, and tax credits in their respective line items of the statement of earnings. This ASU allows entities to make an accounting policy election on an individual tax credit program basis for all equity investments whose primary purpose is receiving income tax credits or other income tax benefits. When the proportional amortization method is selected, this amendment also requires a liability be recognized for delayed equity contributions that are unconditional or for contingent contributions when the contingent event becomes probable.

We adopted ASU 2023-02 on January 1, 2023 using a modified-retrospective approach. Through 2022, our investment in historic tax credit partnerships was presented in the balance sheet as an investment in unconsolidated investee. On January 1, 2023, the $11 million investment was moved to the other invested assets line item, an unfunded commitment for the investment was recognized by establishing a $7 million liability and increasing other invested assets, and the asset and retained earnings were reduced by $1 million to reflect the difference between applying the equity method and the proportional method since the investment was entered into. While the amortization of the investment will be presented in income tax expense going forward, rather than in equity in earnings of unconsolidated investees, the impact to net earnings will not have a material impact on our financial statements.

C. PROSPECTIVE ACCOUNTING STANDARDS

There are no prospective accounting standards which would have a material impact on our financial statements as of June 30, 2023.

D. REINSURANCE

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. Such balances are subject to the credit risk associated with the individual reinsurer. We continually monitor the financial condition of our reinsurers and actively follow up on any past due or disputed amounts. As part of our

7

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. We analyze the credit risk associated with our reinsurance balances recoverable by monitoring the AM Best and Standard & Poor’s (S&P) ratings of our reinsurers. In addition, we subject our reinsurance recoverables to detailed recoverability tests, including a segment-based analysis using the average default rating percentage by S&P rating, which assists the Company in assessing the sufficiency of its allowance. Additionally, we perform an in-depth reinsurer financial condition analysis prior to the renewal of each of our reinsurance placements.

Our policy is to charge to earnings, in the form of an allowance, an estimate of unrecoverable amounts from reinsurers. 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 recoverables for the reinsurer are specifically identified and written off through 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 recoverables were $16.2 million and $10.3 million, respectively, at June 30, 2023. At December 31, 2022, the amounts were $16.1 million and $11.3 million, respectively. 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 or recoveries were applied to the allowances in the first six months of 2023. We have no receivables with a due date that extends beyond one year that are not included in our allowance for uncollectible amounts.

E. INTANGIBLE ASSETS

The composition of goodwill and intangible assets at June 30, 2023 and December 31, 2022 is detailed in the following table:

	June 30,		December 31,
(in thousands)	2023		2022
Goodwill
Surety	$	40,816	$	40,816
Casualty		5,246		5,246
Total goodwill	$	46,062	$	46,062
Indefinite-lived intangibles		7,500		7,500
Total goodwill and intangibles	$	53,562	$	53,562

Annual impairment assessments were performed on our goodwill and state insurance license indefinite-lived intangible assets during the second quarter of 2023. Based upon these reviews, none of the assets were impaired. In addition, there were no triggering events as of June 30, 2023 that would suggest an updated impairment test would be needed for our goodwill and intangible assets.

F. EARNINGS PER SHARE

Basic earnings per share (EPS) is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the dilution that could occur if securities or other contracts to issue common stock or common stock equivalents were exercised or converted into common stock. When inclusion of these items increases the earnings per share or reduces the loss per share, the effect on earnings is anti-dilutive. Under these circumstances, the diluted net earnings or net loss per share is computed excluding these items. The following represents a reconciliation of the numerator and denominator of the basic and diluted EPS computations contained in the unaudited condensed consolidated interim financial statements:

8

	For the Three Months						For the Three Months
	Ended June 30, 2023						Ended June 30, 2022
	Income		Shares		Per Share		Income		Shares		Per Share
(in thousands, except per share data)	(Numerator)		(Denominator)		Amount		(Numerator)		(Denominator)		Amount
Basic EPS
Earnings available to common shareholders	$	77,652		45,591	$	1.70	$	(2,239)		45,354	$	(0.05)
Effect of Dilutive Securities
Stock options and restricted stock units		—		453				—		—
Diluted EPS
Earnings available to common shareholders	$	77,652		46,044	$	1.69	$	(2,239)		45,354	$	(0.05)
Anti-dilutive securities excluded from diluted EPS				118						736
	For the Six Months						For the Six Months
	Ended June 30, 2023						Ended June 30, 2022
	Income		Shares		Per Share		Income		Shares		Per Share
(in thousands, except per share data)	(Numerator)		(Denominator)		Amount		(Numerator)		(Denominator)		Amount
Basic EPS
Earnings available to common shareholders	$	176,463		45,560	$	3.87	$	45,684		45,330	$	1.01
Effect of Dilutive Securities
Stock options and restricted stock units		—		485				—		418
Diluted EPS
Earnings available to common shareholders	$	176,463		46,045	$	3.83	$	45,684		45,748	$	1.00
Anti-dilutive securities excluded from diluted EPS				118						436

G. COMPREHENSIVE EARNINGS

Our comprehensive earnings include net earnings plus after-tax unrealized gains and losses on our available-for-sale fixed income portfolio. 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 benefit of $5 million for the second quarter of 2023, compared to $26 million of tax benefit for the same period in 2022. For the six-month period ended June 30, 2023, other comprehensive earnings (loss) is net of tax expense of $5 million, compared to $57 million of tax benefit for the same period in 2022.

Unrealized gains, net of tax, recognized in other comprehensive earnings (loss) were $18 million for the first six months of 2023, compared to $213 million of unrealized losses, net of tax, during the same period last year. The unrealized gains in 2023 were attributable to a decline in interest rates, which increased the fair value of securities held in the fixed income portfolio, compared to rising interest rates during 2022, which decreased the fair value of fixed income securities.

The following table illustrates the changes in the balance of each component of accumulated other comprehensive earnings (loss) for each period presented in the unaudited condensed consolidated interim financial statements:

(in thousands)	For the Three Months				For the Six Months
	Ended June 30,				Ended June 30,
Unrealized Gains/Losses on Available-for-Sale Securities	2023		2022		2023		2022
Beginning balance	$	(191,369)	$	(65,755)	$	(229,076)	$	49,826
Other comprehensive earnings (loss) before reclassifications		(20,347)		(97,894)		15,908		(213,636)
Amounts reclassified from accumulated other comprehensive earnings		626		331		2,078		492
Net current-period other comprehensive earnings (loss)	$	(19,721)	$	(97,563)	$	17,986	$	(213,144)
Ending balance	$	(211,090)	$	(163,318)	$	(211,090)	$	(163,318)
Balance of securities for which an allowance for credit losses has been recognized in net earnings					$	1,053	$	1,083

Credit losses on or the sale of an available-for-sale security results in amounts being reclassified from accumulated other comprehensive earnings (loss) to current period net earnings. The effects of reclassifications out of accumulated other comprehensive earnings (loss) by the respective line items of net earnings are presented in the following table:

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	Amount Reclassified from Accumulated Other
(in thousands)	Comprehensive Earnings (Loss)
	For the Three Months				For the Six Months
Component of Accumulated	Ended June 30,				Ended June 30,				Affected line item in the
Other Comprehensive Earnings (Loss)	2023		2022		2023		2022		Statement of Earnings
Unrealized gains and losses on available-for-sale securities	$	(824)	$	(722)	$	(2,536)	$	(772)	Net realized gains (losses)
		31		303		(95)		149	Credit gains presented within net realized gains
	$	(793)	$	(419)	$	(2,631)	$	(623)	Earnings (loss) before income taxes
		167		88		553		131	Income tax (expense) benefit
	$	(626)	$	(331)	$	(2,078)	$	(492)	Net earnings (loss)

H. FAIR VALUE MEASUREMENTS

Fair value is defined as the price in the principal market that would be received for an asset to facilitate an orderly transaction between market participants on the measurement date. We determined the fair value of certain financial instruments based on their underlying characteristics and relevant transactions in the marketplace. We maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The following are the levels of the fair value hierarchy and a brief description of the type of valuation inputs that are used to establish each level. Financial assets are classified based upon the lowest level of significant input that is used to determine fair value.

Level 1 is applied to valuations based on readily available, unadjusted quoted prices in active markets for identical assets.

Level 2 is applied to valuations based upon quoted prices for similar assets in active markets, quoted prices for identical or similar assets in inactive markets; or valuations based on models where the significant inputs are observable (e.g. interest rates, yield curves, prepayment speeds, default rates, loss severities) or can be corroborated by observable market data.

Level 3 is applied to valuations that are derived from techniques in which one or more of the significant inputs are unobservable.

As a part of management’s process to determine fair value, we utilize widely recognized, third-party pricing sources to determine our fair values. We have obtained an understanding of the third-party pricing sources’ valuation methodologies and inputs. The following is a description of the valuation techniques used for financial assets that are measured at fair value, including the general classification of such assets pursuant to the fair value hierarchy.

Corporate, Agencies, Government and Municipal Bonds: The pricing vendor employs a multi-dimensional model which uses standard inputs including (listed in approximate order of priority for use) benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, market bids/offers and other reference data. The pricing vendor also monitors market indicators, as well as industry and economic events. All bonds valued using these techniques are classified as Level 2. All corporate, agency, government and municipal securities are deemed Level 2.

Mortgage-backed Securities (MBS)/Commercial Mortgage-backed Securities (CMBS) and Asset-backed Securities (ABS): The pricing vendor evaluation methodology primarily includes interest rate movements and new issue data. Evaluation of the tranches (non-volatile, volatile or credit sensitivity) is based on the pricing vendors’ interpretation of accepted modeling and pricing conventions. This information is then used to determine the cash flows for each tranche, benchmark yields, pre-payment assumptions and to incorporate collateral performance. To evaluate MBS and CMBS volatility, an option adjusted spread model is used in combination with models that simulate interest rate paths to determine market price information. This process allows the pricing vendor to obtain evaluations of a broad universe of securities in a way that reflects changes in yield curve, index rates, implied volatility, mortgage rates and recent trade activity. MBS/CMBS and ABS with corroborated, observable inputs are classified as Level 2. All of our MBS/CMBS and ABS are deemed Level 2.

Regulation D Private Placement Securities: 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

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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. Unobservable inputs include a liquidity spread premium calculated based on public corporate spread and private corporate spread matrices. The quantitative detail of the liquidity spread premium is neither provided nor reasonably available to the Company. An increase to the credit spread assumptions would result in a lower fair value.

For all of our fixed income securities classified as Level 2, we periodically conduct a review to assess the reasonableness of the fair values provided by our pricing services. Our review consists of a two-pronged approach. First, we compare prices provided by our pricing services to those provided by an additional source. In some cases, we obtain prices from securities brokers and compare them to the prices provided by our pricing services. If discrepancies are found in our comparisons, we compare our prices to actual reported trade data for like securities. No changes to the fair values supplied by our pricing services have occurred as a result of our reviews. Based on these assessments, we have determined that the fair values of our Level 2 fixed income securities provided by our pricing services are reasonable.

Equity Securities: As of June 30, 2023, 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). Pricing for the equity securities not traded on an exchange is provided by a third-party pricing source using observable inputs and are classified as Level 2. Pricing for equity securities not traded on an exchange rely on one or more unobservable inputs and are classified as Level 3.

Due to the relatively short-term nature of cash, short-term investments, accounts receivable and accounts payable, their carrying amounts are reasonable estimates of fair value. Our investments in private funds, classified as other invested assets, are measured using the investments’ net asset value per share and are not categorized within the fair value hierarchy.

I. RISKS AND UNCERTAINTIES

Certain risks and uncertainties are inherent in our day-to-day operations. Adverse changes in the economy, including inflation; rising interest rates; volatile equity markets; and ongoing supply chain disruptions, could lower demand for our insurance products, result in increased levels of loss costs that we could not anticipate at the time we priced our coverages, or negatively impact our investment results, all of which could have an adverse effect on the profitability of our operations.

Catastrophe Exposures

Our catastrophe reinsurance treaty renewed on January 1, 2023. We purchased limits of $700 million in excess of $25 million first-dollar retention for earthquakes in California, $700 million in excess of $50 million first-dollar retention for earthquakes outside of California and $600 million in excess of $50 million first-dollar retention for all other perils, including wind. These amounts are subject to certain co-participations by the Company on losses in excess of the first-dollar retentions. On June 1, 2023, we purchased $150 million of additional catastrophe reinsurance protection on top of the previously described coverage. This increases the limits to $850 million in excess of $25 million first-dollar retention for earthquakes in California, $850 million in excess of $50 million first-dollar retention for earthquakes outside of California and $750 million in excess of $50 million first-dollar retention for all other perils, including wind, all of which are still subject to certain co-participations in excess of the retentions.

2. INVESTMENTS

Our investments are primarily composed of fixed income debt securities and common stock equity securities. We carry our equity securities at fair value and categorize all of our debt securities as available-for-sale, which are carried at fair value.

Realized gains and losses on disposition of investments are based on 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 six-month periods ended June 30, 2023 and 2022:

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Sales	Proceeds		Gross Realized				Net Realized
(in thousands)	From Sales		Gains		Losses		Gain (Loss)
2023
Fixed income securities - available-for-sale	$	20,729	$	99	$	(910)	$	(811)
Equity securities		22,029		8,841		(101)		8,740
2022
Fixed income securities - available-for-sale	$	19,390	$	215	$	(432)	$	(217)
Equity securities		53,525		19,244		(15)		19,229
Calls/Maturities			Gross Realized				Net Realized
(in thousands)	Proceeds		Gains		Losses		Gain (Loss)
2023
Fixed income securities - available-for-sale	$	349,734	$	37	$	(43)	$	(6)
2022
Fixed income securities - available-for-sale	$	137,499	$	76	$	(55)	$	21

FAIR VALUE MEASUREMENTS

Assets measured at fair value on a recurring basis as of June 30, 2023 and December 31, 2022 are summarized below:

	As of June 30, 2023
	Quoted Prices in		Significant Other		Significant
	Active Markets for		Observable		Unobservable
	Identical Assets		Inputs		Inputs
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Total
Fixed income securities - available-for-sale
U.S. government	$	—	$	315,976	$	—	$	315,976
U.S. agency		—		43,719		—		43,719
Non-U.S. government & agency		—		3,960		—		3,960
Agency MBS		—		372,030		—		372,030
ABS/CMBS/MBS*		—		252,330		—		252,330
Corporate		—		1,095,038		52,466		1,147,504
Municipal		—		553,581		—		553,581
Total fixed income securities - available-for-sale	$	—	$	2,636,634	$	52,466	$	2,689,100
Equity securities		550,986		—		1,580		552,566
Total	$	550,986	$	2,636,634	$	54,046	$	3,241,666

	As of December 31, 2022
	Quoted Prices in		Significant Other		Significant
	Active Markets for		Observable		Unobservable
	Identical Assets		Inputs		Inputs
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Total
Fixed income securities - available-for-sale
U.S. government	$	—	$	454,021	$	—	$	454,021
U.S. agency		—		73,063		—		73,063
Non-U.S. government & agency		—		5,847		—		5,847
Agency MBS		—		331,806		—		331,806
ABS/CMBS/MBS*		—		240,736		—		240,736
Corporate		—		980,676		53,654		1,034,330
Municipal		—		527,147		—		527,147
Total fixed income securities - available-for-sale	$	—	$	2,613,296	$	53,654	$	2,666,950
Equity securities		496,731		39		1,612		498,382
Total	$	496,731	$	2,613,335	$	55,266	$	3,165,332

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

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The following table summarizes changes in the balance of securities whose fair value was measured using significant unobservable inputs (Level 3).

(in thousands)	Level 3 Securities
Balance as of January 1, 2023	$	55,266
Net realized and unrealized gains (losses)
Included in other comprehensive earnings (loss)		551
Sales / Calls / Maturities		(1,771)
Balance as of June 30, 2023	$	54,046
Change in unrealized gains (losses) during the period for Level 3 assets held at period-end - included in other comprehensive earnings (loss)	$	551

The amortized cost and fair value of available-for-sale fixed income securities by contractual maturity as of June 30, 2023 were as follows:

	June 30, 2023
(in thousands)	Amortized Cost		Fair Value
Due in one year or less	$	195,245	$	193,554
Due after one year through five years		910,005		861,351
Due after five years through 10 years		567,327		529,864
Due after 10 years		573,985		479,971
ABS/CMBS/MBS*		700,358		624,360
Total available-for-sale	$	2,946,920	$	2,689,100

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

The amortized cost and fair value of available-for-sale securities at June 30, 2023 and December 31, 2022 are presented in the tables below. Amortized cost does not include the $22 million and $20 million of accrued interest receivable as of June 30, 2023 and December 31, 2022, respectively.

	June 30, 2023
	Cost or		Allowance		Gross		Gross
	Amortized		for Credit		Unrealized		Unrealized		Fair
(in thousands)	Cost		Losses		Gains		Losses		Value
U.S. government	$	325,893	$	—	$	—	$	(9,917)	$	315,976
U.S. agency		45,937		—		—		(2,218)		43,719
Non-U.S. government & agency		4,799		—		—		(839)		3,960
Agency MBS		414,503		—		206		(42,679)		372,030
ABS/CMBS/MBS*		285,855		(5)		78		(33,598)		252,330
Corporate		1,227,628		(429)		1,872		(81,567)		1,147,504
Municipal		642,305		—		1,397		(90,121)		553,581
Total Fixed Income	$	2,946,920	$	(434)	$	3,553	$	(260,939)	$	2,689,100
	December 31, 2022
	Cost or		Allowance		Gross		Gross
	Amortized		for Credit		Unrealized		Unrealized		Fair
(in thousands)	Cost		Losses		Gains		Losses		Value
U.S. government	$	462,884	$	—	$	8	$	(8,871)	$	454,021
U.S. agency		75,074		—		26		(2,037)		73,063
Non-U.S. government & agency		6,798		—		—		(951)		5,847
Agency MBS		373,687		—		336		(42,217)		331,806
ABS/CMBS/MBS*		276,126		(8)		62		(35,444)		240,736
Corporate		1,122,097		(331)		541		(87,977)		1,034,330
Municipal		628,607		—		1,265		(102,725)		527,147
Total Fixed Income	$	2,945,273	$	(339)	$	2,238	$	(280,222)	$	2,666,950

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

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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. 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:

● Changes in technology that may impair the earnings potential of the investment,

● The discontinuance of a segment of business that may affect future earnings potential,

● Reduction of or non-payment of interest and/or principal,

● Specific concerns related to the issuer’s industry or geographic area of operation,

● Significant or recurring operating losses, poor cash flows and/or deteriorating liquidity ratios and

● Downgrades in credit quality by a major rating agency.

If changes in interest rates and credit spreads do not reasonably explain the unrealized loss for an available-for-sale security or if any of the criteria above indicate a potential credit loss, the security is subjected to a discounted cash flow analysis. Inputs into the discounted cash flow analysis include prepayment assumptions for structured securities, default rates and recoverability rates based on credit rating. The allowance for any security is limited to the amount that the security’s fair value is below amortized cost. As of June 30, 2023, the discounted cash flow analysis resulted in an allowance for credit losses on 18 securities. The following table presents changes in the allowance for expected credit losses on available-for-sale securities:

	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2023		2022		2023		2022
Beginning balance	$	465	$	594	$	339	$	441
Increase to allowance from securities for which credit losses were not previously recorded		2		149		25		223
Reduction from securities sold during the period		—		(433)		—		(433)
Reductions from intent to sell securities		—		—		—		(17)
Net increase (decrease) from securities that had an allowance at the beginning of the period		(33)		(18)		70		78
Balance as of June 30,	$	434	$	292	$	434	$	292

During the first six months of 2023, net realized gains included $1.7 million of losses on fixed income securities for which the cost basis was written down to fair value due to a credit event and restructurings. We recognized $0.1 million of losses on securities for which we no longer had the intent to hold until recovery during the first six months of 2022.

As of June 30, 2023, in addition to the securities included in the allowance for credit losses, the fixed income portfolio contained 1,474 securities with an unrealized loss position for which an allowance for credit losses had not been recorded. The $261 million in associated unrealized losses represents 9 percent of the fixed income portfolio’s cost basis and 7 percent of total invested assets. Isolated to these securities, unrealized losses decreased through the first six months of 2023, as credit spreads have tightened modestly while interest rates stayed flat during the period. Of the total 1,474 securities, 995 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 June 30, 2023 and December 31, 2022 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.

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	June 30, 2023						December 31, 2022
(in thousands)	< 12 Mos.		12 Mos. & Greater		Total		< 12 Mos.		12 Mos. & Greater		Total
U.S. government
Fair value	$	220,227	$	95,748	$	315,975	$	399,361	$	8,828	$	408,189
Amortized cost		225,987		99,905		325,892		407,340		9,720		417,060
Unrealized loss	$	(5,760)	$	(4,157)	$	(9,917)	$	(7,979)	$	(892)	$	(8,871)
U.S. agency
Fair value	$	33,951	$	9,768	$	43,719	$	32,987	$	2,170	$	35,157
Amortized cost		34,975		10,962		45,937		34,627		2,567		37,194
Unrealized loss	$	(1,024)	$	(1,194)	$	(2,218)	$	(1,640)	$	(397)	$	(2,037)
Non-U.S. government
Fair value	$	658	$	3,302	$	3,960	$	3,626	$	2,221	$	5,847
Amortized cost		702		4,097		4,799		3,798		3,000		6,798
Unrealized Loss	$	(44)	$	(795)	$	(839)	$	(172)	$	(779)	$	(951)
Agency MBS
Fair value	$	141,545	$	216,878	$	358,423	$	197,252	$	117,851	$	315,103
Amortized cost		146,150		254,952		401,102		212,776		144,544		357,320
Unrealized loss	$	(4,605)	$	(38,074)	$	(42,679)	$	(15,524)	$	(26,693)	$	(42,217)
ABS/CMBS/MBS*
Fair value	$	20,483	$	219,639	$	240,122	$	96,754	$	136,149	$	232,903
Amortized cost		21,028		252,692		273,720		104,724		163,623		268,347
Unrealized loss	$	(545)	$	(33,053)	$	(33,598)	$	(7,970)	$	(27,474)	$	(35,444)
Corporate
Fair value	$	429,215	$	607,324	$	1,036,539	$	660,830	$	323,337	$	984,167
Amortized cost		441,843		676,263		1,118,106		697,437		374,707		1,072,144
Unrealized loss	$	(12,628)	$	(68,939)	$	(81,567)	$	(36,607)	$	(51,370)	$	(87,977)
Municipal
Fair value	$	131,486	$	362,776	$	494,262	$	228,827	$	204,324	$	433,151
Amortized cost		133,340		451,043		584,383		255,240		280,636		535,876
Unrealized loss	$	(1,854)	$	(88,267)	$	(90,121)	$	(26,413)	$	(76,312)	$	(102,725)
Total fixed income
Fair value	$	977,565	$	1,515,435	$	2,493,000	$	1,619,637	$	794,880	$	2,414,517
Amortized cost		1,004,025		1,749,914		2,753,939		1,715,942		978,797		2,694,739
Unrealized loss	$	(26,460)	$	(234,479)	$	(260,939)	$	(96,305)	$	(183,917)	$	(280,222)

* 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 June 30, 2023 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.

	Equivalent	Equivalent	(dollars in thousands)
NAIC	S&P	Moody’s	Amortized				Unrealized		Percent
Rating	Rating	Rating	Cost		Fair Value		Loss		to Total
1	AAA/AA/A	Aaa/Aa/A	$	2,269,819	$	2,052,151	$	(217,668)	83.4	%
2	BBB	Baa		404,162		366,729		(37,433)	14.4	%
3	BB	Ba		45,298		41,464		(3,834)	1.5	%
4	B	B		32,264		30,844		(1,420)	0.5	%
5	CCC	Caa		2,396		1,812		(584)	0.2	%
6	CC or lower	Ca or lower		—		—		—	0.0	%
		Total	$	2,753,939	$	2,493,000	$	(260,939)	100.0	%

Other Invested Assets

We had $61 million of other invested assets at June 30, 2023, compared to $48 million at December 31, 2022. 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. Our LIHTC and

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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 $12 million at June 30, 2023, compared to $13 million on December 31, 2022. Our LIHTC interests recognized amortization of $0.8 million as a component of income tax expense and a total tax benefit of $0.8 million during the second quarter of 2023, compared to $0.8 million of amortization and $0.9 million of tax benefit during the same period in 2022. For the six-months ended June 30, 2023, our LIHTC interest recognized amortization of $1.6 million and a total benefit of $1.6 million, compared to $1.7 million of amortization and $1.7 million of tax benefit for the same period in 2022. Our unfunded commitment for our LIHTC investments totaled $1 million at June 30, 2023 and will be paid out in installments through 2035.

Our HTC investment had a balance of $15 million at June 30, 2023, compared to $11 million at December 31, 2022. Through 2022, the investment was accounted for as an investment in unconsolidated investee. Due to the adoption of ASU 2023-02, Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method, the investment was reclassified as an other invested asset during 2023. A total tax benefit of $1.5 million was recognized from our HTC investment during the second quarter of 2023, compared to $1.3 million in the second quarter of 2022. For the six-months ended June 30, 2023, our HTC investment recognized a total benefit of $2.9 million, compared to $2.6 million for the same period in 2022. Our HTC investment recognized $1.1 million of amortization as a component of income tax expense during the second quarter of 2023 and $2.3 million of amortization during the first six months of 2023. Our unfunded commitment for our HTC investment totaled $4 million at June 30, 2023 and is expected be paid during 2023.

As of June 30, 2023, $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. As of June 30, 2023, $50 million of borrowings were outstanding with the FHLBC.

Our investments in private funds totaled $27 million as of June 30, 2023, down from $28 million as of December 31, 2022, and had $5 million of associated unfunded commitments at June 30, 2023. 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 $55 million of investments in unconsolidated investees at June 30, 2023, compared to $58 million at December 31, 2022. At June 30, 2023, our investment in Prime Holdings Insurance Services, Inc. (Prime) was $55 million and other investments in unconsolidated investees totaled less than $1 million. Through December 31, 2022, our $11 million HTC investment was accounted for as an unconsolidated investee, but was reclassified as an other invested asset during 2023 due to the adoption of ASU 2023-02.

Cash and Short-Term Investments

Cash consists of uninvested balances in bank accounts. Short-term investments consist of investments with original maturities of 90 days or less, primarily AAA-rated government money market funds. Short-term investments are carried at cost. We had a cash and short-term investment balance of $17 million and $271 million, respectively, at June 30, 2023, compared to $23 million and $36 million, respectively, at December 31, 2022.

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3. HISTORICAL LOSS AND LAE DEVELOPMENT

The following table is a reconciliation of our unpaid losses and settlement expenses (LAE) for the first six months of 2023 and 2022:

	For the Six Months
	Ended June 30,
(in thousands)	2023		2022
Unpaid losses and LAE at beginning of year
Gross	$	2,315,637	$	2,043,555
Ceded		(740,089)		(608,086)
Net	$	1,575,548	$	1,435,469
Increase (decrease) in incurred losses and LAE
Current accident year	$	339,951	$	293,158
Prior accident years		(71,520)		(69,720)
Total incurred	$	268,431	$	223,438
Loss and LAE payments for claims incurred
Current accident year	$	(30,978)	$	(21,628)
Prior accident years		(172,282)		(153,490)
Total paid	$	(203,260)	$	(175,118)
Net unpaid losses and LAE at June 30,	$	1,640,719	$	1,483,789
Unpaid losses and LAE at June 30,
Gross	$	2,361,577	$	2,150,519
Ceded		(720,858)		(666,730)
Net	$	1,640,719	$	1,483,789

For the first six months of 2023, incurred losses and LAE included $72 million of favorable development on prior years’ loss reserves, largely from accident years 2018 through 2022. Commercial excess, professional services, surety, general liability, personal umbrella, marine and commercial property were drivers of the favorable development. No products experienced significant adverse development.

For the first six months of 2022, incurred losses and LAE included $70 million of favorable development on prior years’ loss reserves, largely from accident years 2018 through 2021. General liability, professional services, transportation, marine and surety were drivers of the favorable development. No products experienced significant adverse development.

4. INCOME TAXES

Our effective tax rate for the three and six months ended June 30, 2023 was 19.1 percent and 19.4 percent, respectively, compared to 65.8 percent and 12.1 percent, respectively, for the same period in 2022. Effective rates are dependent upon components of pretax earnings and the related tax effects. Tax-favored adjustments acting on pretax earnings resulted in a lower effective tax rate for the second quarter of 2023. The effective tax rate was higher for the six-month period in 2023, as higher pretax income decreased the percentage impact of tax-favored adjustments.

Income tax expense attributable to income from operations for the three and six-month period ended June 30, 2023 and 2022 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 below table. 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.

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	For the Three Months Ended June 30, 2023								For the Six Months Ended June 30, 2023
	2023				2022				2023				2022
(in thousands)	Amount		%		Amount		%		Amount		%		Amount		%
Provision for income taxes at the statutory rate of 21%	$	20,167	21.0	%	$	(1,376)	21.0	%	$	45,953	21.0	%	$	10,914	21.0	%
Increase (reduction) in taxes resulting from:
Excess tax benefit on share-based compensation		(878)	(0.9)	%		(761)	11.6	%		(2,868)	(1.3)	%		(2,175)	(4.2)	%
Tax exempt interest income		(274)	(0.3)	%		(288)	4.4	%		(557)	(0.3)	%		(570)	(1.1)	%
Dividends received deduction		(209)	(0.2)	%		(163)	2.5	%		(433)	(0.2)	%		(434)	(0.8)	%
Tax credit		(780)	(0.8)	%		(1,461)	22.3	%		(1,559)	(0.7)	%		(2,922)	(5.6)	%
ESOP dividends paid deduction		(144)	(0.2)	%		(138)	2.1	%		(281)	(0.1)	%		(268)	(0.5)	%
Nondeductible expenses		745	0.8	%		258	(3.9)	%		1,346	0.6	%		574	1.1	%
Other items, net		(248)	(0.3)	%		(386)	5.8	%		758	0.4	%		1,168	2.2	%
Total tax expense	$	18,379	19.1	%	$	(4,315)	65.8	%	$	42,359	19.4	%	$	6,287	12.1	%

We have recorded our deferred tax assets and liabilities using the statutory federal tax rate of 21 percent. We believe it is more likely than not that all deferred tax assets will be recovered, given the carry back availability as well as the result of future operations, which will generate sufficient taxable income to realize the deferred tax asset.

5. STOCK BASED COMPENSATION

Our RLI Corp. Long-Term Incentive Plan (2015 LTIP) was in place from 2015 to 2023. The 2015 LTIP provided for equity-based compensation, including stock options and restricted stock units, up to a maximum of 4,000,000 shares of common stock (subject to adjustment for changes in our capitalization and other events). Between 2015 and 2023, we granted 3,291,388 awards under the 2015 LTIP. The 2015 LTIP was replaced in 2023.

In 2023, our shareholders approved the 2023 RLI Corp. Long-Term Incentive Plan (2023, LTIP), which provides for equity-based compensation. In conjunction with the adoption of the 2023 LTIP, effective May 4, 2023, awards are no longer granted under the 2015 LTIP. Awards under the 2023 LTIP may be in the form of restricted stock, restricted stock units, stock options (incentive or non-qualified), stock appreciation rights, performance units as well as other stock-based awards. Eligibility under the 2023 LTIP is limited to employees, directors, consultants and independent contractors of the Company or any affiliate. The granting of awards under the 2023 LTIP is solely at the discretion of the Human Capital and Compensation Committee of the board of directors or its delegate. The maximum number of shares of common stock available for distribution under the 2023 LTIP is 4,004,891 shares (subject to adjustment for changes in our capitalization and other events). Since the plan’s approval in 2023, we have granted 135,838 awards under the 2023 LTIP.

Compensation expense is based on the probable number of awards expected to vest. The total compensation expense related to equity awards was $2.2 million and $4.7 million in the three and six-month periods ended June 30, 2023, respectively, compared to $2.3 million and $3.7 million, respectively, for the same period in 2022. The total income tax benefit was $0.3 million and $0.8 million for the three and six-month periods ended June 30, 2023, compared to $0.4 million and $0.6 million, respectively, for the same periods in 2022. Total unrecognized compensation expense relating to outstanding and unvested awards was $8 million, which will be recognized over the weighted average vesting period of 2.77 years.

Stock Options

Under the 2023 LTIP, as under the 2015 LTIP, we grant stock options for shares with an exercise price equal to the fair market value of the shares at the date of grant (subject to adjustments for changes in our capitalization, special dividends and other events as set forth in such plans). Options generally vest and become exercisable over a five-year period and expire eight years after grant.

For most participants, the requisite service period and vesting period will be the same. For participants who are retirement eligible, defined by the plan as those individuals whose age and years of service equals 75 or greater, the requisite service period is deemed to be met and options are immediately expensed on the date of grant. For participants who will become retirement eligible during the vesting period, the requisite service period over which expense is recognized is the period between the grant date and the attainment of retirement eligibility. Shares issued upon option exercise are newly issued shares.

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The following tables summarize option activity for the six-month period ended June 30, 2023:

				Weighted	Aggregate
		Weighted		Average	Intrinsic
		Average		Remaining	Value
	Options	Exercise Price		Contractual Life	(in 000’s)
Outstanding options at January 1, 2023	1,695,660	$	82.42
Options granted	144,375		135.72
Options exercised	(199,145)		56.17
Options canceled/forfeited	(1,000)		40.61
Outstanding options at June 30, 2023	1,639,890	$	90.33	5.01	$	75,687
Exercisable options at June 30, 2023	806,436	$	75.52	3.78	$	49,154

The intrinsic value, which is the difference between the fair value and the exercise price, of options exercised was $16 million and $5 million during the first six months of 2023 and 2022, 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 June 30:

	2023			2022
Weighted-average fair value of grants	$	26.79		$	21.05
Risk-free interest rates		3.44	%		2.84	%
Dividend yield		2.29	%		2.50	%
Expected volatility		22.95	%		22.89	%
Expected option life		4.94	years		5.06	years

The risk-free rate was determined based on U.S. treasury yields that most closely approximated the option’s expected life. The dividend yield was determined based on the average annualized quarterly dividends paid during the most recent five-year period and incorporated a consideration for special dividends paid in recent history. The expected volatility was calculated based on the median of the rolling volatilities for the expected life of the options. The expected option life was determined based on historical exercise behavior and the assumption that all outstanding options will be exercised at the midpoint of the current date and remaining contractual term, adjusted for the demographics of the current year’s grant.

Restricted Stock Units

In addition to stock options, restricted stock units (RSUs) are granted with a value equal to the closing stock price of the Company’s stock on the dates the units are granted. For employees, these units generally have a three-year cliff vesting, but have an accelerated vesting feature for participants who are retirement eligible, defined by the plan as those individuals whose age and years of service equals 75 or greater. For directors, these units vest on the earlier of one year from the date of grant or the next annual shareholders meeting. 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 $1 million and $2 million during the first six months of 2023 and 2022, respectively.

		Weighted
		Average
		Grant Date
	RSUs	Fair Value
Nonvested at January 1, 2023	44,208	$	109.51
Granted	19,063		136.33
Reinvested	206		129.72
Vested	(6,748)		118.66
Forfeited	(732)		136.58
Nonvested at June 30, 2023	55,997	$	117.49

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6. 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 Six Months
Revenues	Ended June 30,				Ended June 30,
(in thousands)	2023		2022		2023		2022
Casualty	$	187,048	$	177,123	$	373,079	$	348,879
Property		101,841		74,690		190,608		142,130
Surety		33,391		30,997		66,316		60,953
Net premiums earned	$	322,280	$	282,810	$	630,003	$	551,962
Net investment income		28,788		18,472		55,872		36,355
Net realized gains		5,580		12,804		20,200		18,392
Net unrealized gains (losses) on equity securities		25,214		(100,994)		40,710		(128,804)
Total consolidated revenue	$	381,862	$	213,092	$	746,785	$	477,905
Net Earnings
(in thousands)	2023		2022		2023		2022
Casualty	$	6,977	$	21,442	$	38,808	$	49,089
Property		25,877		26,105		54,260		48,581
Surety		8,347		8,409		16,023		17,764
Net underwriting income	$	41,201	$	55,956	$	109,091	$	115,434
Net investment income		28,788		18,472		55,872		36,355
Net realized gains		5,580		12,804		20,200		18,392
Net unrealized gains (losses) on equity securities		25,214		(100,994)		40,710		(128,804)
General corporate expense and interest on debt		(6,266)		(4,446)		(12,488)		(9,819)
Equity in earnings of unconsolidated investees		1,514		11,654		5,437		20,413
Earnings (loss) before income taxes	$	96,031	$	(6,554)	$	218,822	$	51,971
Income tax expense (benefit)		18,379		(4,315)		42,359		6,287
Net earnings (loss)	$	77,652	$	(2,239)	$	176,463	$	45,684

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

	For the Three Months				For the Six Months
Net Premiums Earned	Ended June 30,				Ended June 30,
(in thousands)	2023		2022		2023		2022
Casualty
Commercial excess and personal umbrella	$	69,261	$	62,463	$	136,843	$	122,535
General liability		26,016		25,106		51,916		48,846
Commercial transportation		25,398		23,941		50,630		47,569
Professional services		24,602		23,861		48,959		47,416
Small commercial		18,455		16,813		36,396		33,458
Executive products		6,153		7,075		12,506		13,652
Other casualty		17,163		17,864		35,829		35,403
Total	$	187,048	$	177,123	$	373,079	$	348,879
Property
Commercial property	$	60,219	$	38,929	$	109,481	$	72,218
Marine		32,412		28,178		63,048		54,907
Other property		9,210		7,583		18,079		15,005
Total	$	101,841	$	74,690	$	190,608	$	142,130
Surety
Commercial	$	12,505	$	11,663	$	24,923	$	23,366
Miscellaneous		11,887		11,587		23,934		22,940
Contract		8,999		7,747		17,459		14,647
Total	$	33,391	$	30,997	$	66,316	$	60,953
Grand Total	$	322,280	$	282,810	$	630,003	$	551,962

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7. LEASES

Right-of-use (ROU) assets are included in the other assets line item and lease liabilities are included in the other liabilities line item of the consolidated balance sheet. We determine if a contract contains a lease at inception and recognize operating lease ROU assets and operating lease liabilities based on the present value of the future minimum lease payments at the commencement date. As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. Lease agreements may include options to extend or terminate. The options are exercised at our discretion and are included in operating lease liabilities if it is reasonably certain the option will be exercised. Lease agreements have lease and non-lease components, which are accounted for as a single lease component. Operating lease cost for future minimum lease payments is recognized on a straight-line basis over the lease term. Variable lease cost is expensed in the period in which the obligation is incurred. Sublease income is recognized on a straight-line basis over the sublease term.

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 six-month periods ended June 30, 2023 and 2022 were as follows:

	For the Three Months				For the Six Months
	Ended June 30,				Ended June 30,
(in thousands)	2023		2022		2023		2022
Operating lease cost	$	1,239	$	1,256	$	2,508	$	2,414
Variable lease cost		444		349		882		695
Sublease income		(139)		(139)		(277)		(277)
Total lease cost	$	1,544	$	1,466	$	3,113	$	2,832
Cash paid for amounts included in measurement of lease liabilities
Operating cash outflows from operating leases	$	1,357	$	1,278	$	2,755	$	2,600
ROU assets obtained in exchange for new operating lease liabilities	$	943	$	2,431	$	984	$	2,431
Reduction to ROU assets resulting from reduction to lease liabilities	$	—	$	—	$	200	$	—
Other non-cash reductions to ROU assets	$	—	$	—	$	—	$	73

(in thousands)	June 30, 2023			December 31, 2022
Operating lease ROU assets	$	11,185		$	12,766
Operating lease liabilities	$	12,635		$	14,499
Weighted-average remaining lease term - operating leases		4.18	years		4.21	years
Weighted-average discount rate - operating leases		1.97	%		2.11	%

Future minimum lease payments under non-cancellable leases as of June 30, 2023 were as follows:

(in thousands)	June 30, 2023
2023	$	2,636
2024		3,827
2025		2,551
2026		1,646
2027		997
2028		704
Thereafter		883
Total future minimum lease payments	$	13,244
Less imputed interest		(609)
Total operating lease liability	$	12,635

8. ACQUISITONS AND DISPOSTIONS

On September 30, 2022, RLI Corp. completed the sale of its equity method investment in Maui Jim, Inc. to Kering Eyewear for cash proceeds of $687 million. A net realized gain of $571 million was recognized during 2022 and the payout of

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the working capital escrow during the first quarter of 2023 resulted in the recognition of an additional $14 million realized gain. The gains were recorded in the net realized gain line item of the statement of earnings.

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

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 appear throughout this report. These statements relate to our current expectations, beliefs, intentions, goals or strategies regarding the future and are based on certain underlying assumptions by the Company. These forward looking statements generally include words such as “expect,” “predict,” “estimate,” “will,” “should,” “anticipate,” “believe” and similar expressions. Such assumptions are, in turn, based on information available and internal estimates and analyses of general economic conditions, competitive factors, conditions specific to the property and casualty insurance, surety and reinsurance industries, claims development and the impact thereof on our loss reserves, the adequacy and financial security of our reinsurance programs, developments in the securities market and the impact on our investment portfolio, regulatory changes and conditions and other factors. These assumptions are subject to various risks, uncertainties and other factors, including, without limitation those set forth in “Item 1A. Risk Factors” within the Annual Report on Form 10-K for the year ended December 31, 2022 and Part II within this report. Actual results could differ materially from those expressed in, or implied by, these forward looking statements. We assume no obligation to update any such statements. You should review the various risks, uncertainties and other factors listed from time to time in our Securities and Exchange Commission filings.

OVERVIEW

RLI Corp. is a U.S.-based, specialty insurance company that underwrites select property, casualty and surety products through major subsidiaries. Our focus is on niche markets and developing unique products that are tailored to customers’ needs. We hire underwriters and claim examiners with deep expertise and provide exceptional customer service and support. We maintain a highly diverse product portfolio and underwrite for profit in all market conditions. In 2022, we achieved our 27th consecutive year of underwriting profitability. Over the 27-year period, we averaged an 88.2 combined ratio. This drives our ability to provide shareholder returns in three different ways: the underwriting income itself, net investment income from our investment portfolio and long-term appreciation in our equity portfolio.

We measure the results of our insurance operations by monitoring growth and profitability across three distinct business segments: casualty, property and surety. Growth is measured in terms of gross premiums written, and profitability is analyzed through combined ratios, which are further subdivided into their respective loss and expense components.

The property and casualty insurance business is cyclical and influenced by many factors, including price competition, economic conditions, natural or man-made disasters (for example, earthquakes, hurricanes, pandemics and terrorism), interest rates, state regulations, court decisions and changes in the law. One of the unique and challenging features of the property and casualty insurance business is that coverages must be priced before costs have fully developed, because premiums are charged before claims are incurred. This requires that liabilities be estimated and recorded in recognition of future loss and settlement obligations. Due to the inherent uncertainty in estimating these liabilities, there can be no assurance that actual liabilities will equal recorded amounts. If actual liabilities differ from recorded amounts, there will either be an adverse or favorable effect on net earnings.

The casualty portion of our business consists largely of commercial excess, personal umbrella, general liability, transportation and executive products coverages, as well as package business and other specialty coverages, such as professional liability and workers’ compensation for office-based professionals. We also assume a limited amount of hard-to-place risks through a quota share reinsurance agreement. The casualty business is subject to the risk of estimating losses and related loss reserves because the ultimate settlement of a casualty claim may take several years to fully develop. The casualty segment is also subject to inflation risk and may be affected by evolving legislation and court decisions that define the extent of coverage and the amount of compensation due for injuries or losses.

Our property segment is comprised primarily of commercial fire, earthquake, difference in conditions and marine coverages. We also offer select personal lines policies, including homeowners’ coverages. Property insurance results are subject to the variability introduced by perils such as earthquakes, fires, hurricanes and other storms. Our major catastrophe exposure is to losses caused by earthquakes, primarily on the West Coast, and wind storms to commercial properties throughout the Gulf and East Coast, as well as to homes we insure in Hawaii. We limit our net aggregate exposure to a catastrophic event by managing the total policy limits written in a particular region, purchasing reinsurance and maintaining policy terms and conditions throughout insurance cycles. We also use computer-assisted modeling techniques to provide estimates that help the Company carefully manage the concentration of risks exposed to catastrophic events.

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The surety segment specializes in writing small to medium-sized contract surety coverages, including payment and performance bonds. We offer a variety of commercial surety bonds for medium to large-sized businesses across a broad spectrum of industries, including the financial, healthcare as well as on and offshore energy, petrochemical and refining industries. We also offer miscellaneous bonds including license and permit, notary and court bonds. Often, our surety coverages involve a statutory requirement for bonds. While these bonds typically maintain a relatively low loss ratio, losses may fluctuate due to adverse economic conditions affecting the financial viability of our insureds. The contract surety product guarantees the construction work of a commercial contractor for a specific project. Generally, losses occur due to the deterioration of a contractor’s financial condition. This line has historically produced marginally higher loss ratios than other surety lines during economic downturns.

The insurance marketplace is competitive across all of our segments. However, we believe that our business model is built to create underwriting income by focusing on sound risk selection and discipline. Our primary focus will continue to be on underwriting profitability, with a secondary focus on premium growth where we believe underwriting profit exists, as opposed to general premium growth or market share measurements.

Key Performance Measures

The following is a list of key performance measures found throughout this report with their definitions, relationships to GAAP measures and explanations of their importance to our operations.

Underwriting Income

Underwriting income or profit represents one measure of the pretax profitability of our insurance operations, and is derived by subtracting losses and settlement expenses, policy acquisition costs and insurance operating expenses from net premiums earned, which are all GAAP financial measures. Each of these captions is presented in the statements of earnings but is not subtotaled. However, this information is available in total and by segment in note 6 to the unaudited condensed consolidated interim financial statements in this quarterly report on Form 10-Q, and in note 12 to the consolidated financial statements in our 2022 Annual Report on Form 10-K, regarding operating segment information. The nearest comparable GAAP measure is earnings before income taxes which, in addition to underwriting income, includes net investment income, net realized gains or losses, net unrealized gains or losses on equity securities, general corporate expenses, debt costs and our portion of earnings from unconsolidated investees. A reconciliation of net earnings to underwriting income follows:

	For the Three Months				For the Six Months
	Ended June 30,				Ended June 30,
(in thousands)	2023		2022		2023		2022
Net earnings (loss)	$	77,652	$	(2,239)	$	176,463	$	45,684
Income tax expense (benefit)		18,379		(4,315)		42,359		6,287
Earnings (loss) before income taxes	$	96,031	$	(6,554)	$	218,822	$	51,971
Equity in earnings of unconsolidated investees		(1,514)		(11,654)		(5,437)		(20,413)
General corporate expenses		4,219		2,435		8,433		5,798
Interest expense on debt		2,047		2,011		4,055		4,021
Net unrealized (gains) losses on equity securities		(25,214)		100,994		(40,710)		128,804
Net realized gains		(5,580)		(12,804)		(20,200)		(18,392)
Net investment income		(28,788)		(18,472)		(55,872)		(36,355)
Net underwriting income	$	41,201	$	55,956	$	109,091	$	115,434

Combined Ratio

The combined ratio, which is derived from components of underwriting income, is a common industry performance measure of profitability for underwriting operations and is calculated in two components. First, the loss ratio is losses and settlement expenses divided by net premiums earned. The second component, the expense ratio, reflects the sum of policy acquisition costs and insurance operating expenses divided by net premiums earned. All items included in these components of the combined ratio are presented in our GAAP consolidated financial statements. The sum of the loss and expense ratios is the combined ratio. The difference between the combined ratio and 100 reflects the per-dollar rate of underwriting income or loss.

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Critical Accounting Policies

In preparing the unaudited condensed consolidated interim financial statements, we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses for the reporting period. Actual results could differ significantly from those estimates.

The most critical accounting policies involve significant estimates and include those used in determining the liability for unpaid losses and settlement expenses, investment valuation, recoverability of reinsurance balances, deferred policy acquisition costs and deferred taxes. For a detailed discussion of each of these policies, refer to our 2022 Annual Report on Form 10-K.

There have been no significant changes to critical accounting policies during the year.

RESULTS OF OPERATIONS

Six Months Ended June 30, 2023 Compared to Six Months Ended June 30, 2022

Net premiums earned increased 14 percent, driven by growth from our property and casualty segments. Positive market performance resulted in $41 million of unrealized gains on equity securities in the first six months of 2023, while overall market declines resulted in $129 million of unrealized losses in our equity portfolio in 2022. Investment income was up 54 percent, due to an increased average asset base and higher interest rates relative to the prior year. Realized gains during the first six months of 2023 were comprised of $9 million of realized gains on equity securities, primarily due to rebalancing within our equity strategies, $3 million of realized losses on the fixed income portfolio and $14 million of realized gains from the payout of the working capital escrow from our sale of Maui Jim, Inc. (Maui Jim). This compares to $19 million of realized gains on the equity portfolio and $1 million of realized losses on the fixed income portfolio in the previous year.

	For the Six Months
	Ended June 30,
Consolidated Revenues (in thousands)	2023		2022
Net premiums earned	$	630,003	$	551,962
Net investment income		55,872		36,355
Net realized gains		20,200		18,392
Net unrealized gains (losses) on equity securities		40,710		(128,804)
Total consolidated revenue	$	746,785	$	477,905

Net earnings for the first six months of 2023 totaled $176 million, compared to $46 million for the same period in 2022. The increase for 2023 was largely attributed to the $39 million of net after-tax realized and unrealized gains on equity securities, compared to $87 million of after-tax realized and unrealized losses in 2022. Underwriting results for 2023 were impacted by $22 million of pretax storm losses, compared to $5 million of pretax storm losses in the first six months of 2022. Results for each period benefited from favorable development on prior years’ loss reserves, which provided additional pretax earnings of $72 million in the first six months of 2023, compared to $70 million in 2022.

Bonus and profit-sharing amounts earned by executives, managers and associates are predominantly influenced by corporate performance, including operating earnings, combined ratio and return on capital. Favorable development and other drivers of growth in book value will increase bonus and profit-sharing expenses, while catastrophe losses, adverse development and decreased investment portfolio returns would lead to expense reductions. These performance-related expenses affect policy acquisition, insurance operating and general corporate expenses.

Underwriting income was $109 million on an 82.7 combined ratio for the first six months of 2023, compared to $115 million on a 79.1 combined ratio in the same period of 2022. The loss ratio increased to 42.6 from 40.5, due to higher levels of storm losses in 2023. The expense ratio increased to 40.1 from 38.6, as higher net earnings and growth in book value led to larger levels of bonus and profit-sharing expenses in 2023. We also increased investments in our people and technology to support growth, improve customer experience and drive efficiencies, which impacted all segments.

Our equity in earnings of unconsolidated investees primarily relates to our investment in Prime Holdings Insurance Services, Inc. (Prime), a specialty insurance company. In the first six months of 2023, we recognized $6 million of investee earnings from Prime. Comparatively, the first six months of 2022 reflected investee earnings of $6 million from Prime and $15 million from Maui Jim. Our interest in Maui Jim was sold in the third quarter of 2022.

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Comprehensive earnings totaled $194 million for the first six months of 2023, compared to $167 million of comprehensive loss for the first six months of 2022. Other comprehensive earnings (loss) primarily included net after-tax unrealized gains and losses from the fixed income portfolio. Other comprehensive earnings of $18 million in the first six months of 2023 was attributable to modestly tighter credit spreads while interest rates remained relatively flat, which increased the fair value of securities held in the fixed income portfolio. Comparatively, $213 million of other comprehensive loss was recognized in 2022, as interest rates increased.

Premiums

Gross premiums written increased $145 million for the first six months of 2023, compared to the same period of 2022. Growth was achieved in all three segments, though the increase was largely driven by products in the property segment. Net premiums earned increased $78 million, driven by products in our property and casualty segments.

	Gross Premiums Written						Net Premiums Earned
	For the Six Months						For the Six Months
	Ended June 30,						Ended June 30,
(in thousands)	2023		2022		% Change		2023		2022		% Change
Casualty
Commercial excess and personal umbrella	$	176,840	$	163,298	8	%	$	136,843	$	122,535	12	%
General liability		55,612		59,192	(6)	%		51,916		48,846	6	%
Commercial transportation		58,715		60,592	(3)	%		50,630		47,569	6	%
Professional services		55,282		52,390	6	%		48,959		47,416	3	%
Small commercial		40,246		36,937	9	%		36,396		33,458	9	%
Executive products		40,345		45,622	(12)	%		12,506		13,652	(8)	%
Other casualty		41,851		46,105	(9)	%		35,829		35,403	1	%
Total	$	468,891	$	464,136	1	%	$	373,079	$	348,879	7	%
Property
Commercial property	$	284,945	$	162,148	76	%	$	109,481	$	72,218	52	%
Marine		74,970		64,996	15	%		63,048		54,907	15	%
Other property		20,820		18,302	14	%		18,079		15,005	20	%
Total	$	380,735	$	245,446	55	%	$	190,608	$	142,130	34	%
Surety
Commercial	$	27,039	$	25,230	7	%	$	24,923	$	23,366	7	%
Miscellaneous		25,821		25,814	0	%		23,934		22,940	4	%
Contract		20,490		17,322	18	%		17,459		14,647	19	%
Total	$	73,350	$	68,366	7	%	$	66,316	$	60,953	9	%
Grand Total	$	922,976	$	777,948	19	%	$	630,003	$	551,962	14	%

Casualty

Gross premiums written for the casualty segment were up $5 million in the first six months of 2023. Continued growth within our personal umbrella distribution base and positive rate movement across a large portion of our casualty segment offset challenging conditions some lines experienced during the first six months. As we mentioned in prior filings, we are running off our excess energy liability business, which resulted in a $9 million decrease within the commercial excess product and negatively impacted the production of our primary energy liability business within the general liability product. Increased competition led to a further reduction in commercial excess business. Additionally, executive products premium decreased as a result of a more competitive market, particularly with public directors and officers coverages. However, the benefit of our diversified book of business is that select products can work through challenges they may encounter while the success of other products allows us to achieve positive overall results.

Property

Gross premiums written for the property segment were up $135 million in the first six months of 2023. Our commercial property business was up $123 million, as wind rates continued to increase and limited exposure growth was experienced. Rate increases and new opportunities led to $10 million of premium growth for our marine product.

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Surety

Gross premiums written for the surety segment were up $5 million for the first six months of 2023. Contract surety benefited from new agency relationships and new construction projects. The expansion of existing accounts and new business resulted in increased premium for commercial surety.

Underwriting Income

	For the Six Months
	Ended June 30,
	2023		2022
Underwriting Income (in thousands)
Casualty	$	38,808	$	49,089
Property		54,260		48,581
Surety		16,023		17,764
Total	$	109,091	$	115,434
Combined Ratio
Casualty		89.6		85.9
Property		71.5		65.8
Surety		75.8		70.9
Total		82.7		79.1

Casualty

The casualty segment recorded underwriting income of $39 million in the first six months of 2023, compared to $49 million for the same period last year. Prior accident years’ reserve releases reduced loss and settlement expenses for the casualty segment by $47 million, primarily on accident years 2018 through 2022. Favorable development was widespread, with notable amounts from commercial excess, professional services, general liability and personal umbrella. In comparison, $45 million of prior accident years’ reserves were released in the first six months of 2022. General liability, professional services and transportation were drivers of the favorable development. Offsetting the favorable development, storm losses on casualty-oriented package policies that include property coverage resulted in $1.7 million of losses in 2023 and $0.5 million of losses in 2022.

The combined ratio for the casualty segment was 89.6 in 2023, compared to 85.9 in 2022. The segment’s loss ratio was 52.2 in 2023, up from 51.0 in 2022. A higher earned premium base, which reduced the loss ratio impact of favorable prior years’ reserve development, and an increased level of storm losses resulted in the higher loss ratio in 2023. The expense ratio for the casualty segment was 37.4, up from 34.9 for the same period last year. Higher net earnings and growth in book value led to larger levels of bonus and profit-sharing expenses in 2023 for all segments.

Property

The property segment recorded underwriting income of $54 million for the first six months of 2023, compared to $49 million for the same period last year. Underwriting results for 2023 included $17 million of favorable development on prior years’ loss and catastrophe reserves and $20 million of storm losses. Comparatively, the 2022 underwriting results included $17 million of favorable development on prior years’ loss and catastrophe reserves and $5 million of storm losses.

Underwriting results for the first six months of 2023 translated into a combined ratio of 71.5, compared to 65.8 for the same period last year. The segment’s loss ratio was 35.5 in 2023, up from 28.7 in 2022, due to an increase in storm losses. The segment’s expense ratio decreased to 36.0 in 2023 from 37.1 in the prior year, as the growth in the earned premium base exceeded the growth in expense.

Surety

The surety segment recorded underwriting income of $16 million for the first six months of 2023, compared to $18 million for the same period last year. Both periods reflected positive current accident year underwriting performance and benefited from favorable development on prior years’ loss reserves. Results for 2023 included favorable development on prior

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accident years’ reserves, which decreased loss and settlement expenses for the segment by $7.5 million. Results for 2022 also included $7.5 million of favorable development on prior accident years’ reserves.

The combined ratio for the surety segment totaled 75.8 for the first six months of 2023, compared to 70.9 for the same period in 2022. The segment’s loss ratio increased to 9.0 in 2023, up from 7.4 in 2022, as a higher earned premium base reduced the loss ratio impact of favorable prior accident years’ reserve development. The expense ratio was 66.8, up from 63.5 in the prior year.

Investment Income

Our investment portfolio generated net investment income of $56 million during the first six months of 2023, an increase of 54 percent from that reported for the same period in 2022. The increase in investment income was due to higher interest rates as well as an increased average asset base relative to the prior year.

Yields on our fixed income investments for the first six months of 2023 and 2022 were as follows:

	2023		2022
Pretax Yield
Taxable	3.40	%	2.75	%
Tax-Exempt	2.78	%	2.66	%
After-Tax Yield
Taxable	2.69	%	2.17	%
Tax-Exempt	2.63	%	2.52	%

The following table depicts the composition of our investment portfolio at June, 2023 as compared to December 31, 2022:

(in thousands)	June 30, 2023				December 31, 2022
Fixed income	$	2,689,100	74.9	%	$	2,666,950	81.5	%
Equity securities		552,566	15.4	%		498,382	15.2	%
Short-term investments		271,296	7.5	%		36,229	1.1	%
Other invested assets		60,907	1.7	%		47,922	1.5	%
Cash		16,707	0.5	%		22,818	0.7	%
Total investments and cash	$	3,590,576	100.0	%	$	3,272,301	100.0	%

We believe our overall asset allocation supports our strategy to preserve capital for policyholders, provide sufficient income to support insurance operations and effectively grow book value over a long-term investment horizon.

The fixed income portfolio increased by $22 million in the first six months of 2023. Average fixed income duration was 4.6 years at June 30, 2023, reflecting our liability structure and sound capital position. The equity portfolio increased by $54 million during the first six months of 2023, due to the positive performance of equity markets. Short-term investments increased by $235 million, as improved yields made AAA-rated government money market funds an investable asset class that also allowed us to maximize liquidity for events in the second half of the year.

Income Taxes

Our effective tax rate for the first six months of 2023 was 19.4 percent, compared to 12.1 percent for the same period in 2022. Effective rates are dependent upon components of pretax earnings or losses and the related tax effects. The effective tax rate was higher for the six-month period in 2023, as higher pretax income decreased the percentage impact of tax-favored adjustments, such as tax credits and excess tax benefits on share-based compensation.

Three Months Ended June 30, 2023 Compared to Three Months Ended June 30, 2022

Net premiums earned increased 14 percent, driven by growth from our property and casualty segments. Positive market performance resulted in $25 million of unrealized gains on equity securities in the second quarter of 2023, while overall market declines resulted in $101 million of unrealized losses in our equity portfolio in the second quarter of 2022. Investment income was up 56 percent, due to an increased average asset base and higher interest rates relative to the prior year. Realized gains

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during the second quarter of 2023 were comprised of $6 million of realized gains on equity securities, primarily due to rebalancing within our equity strategies, and less than $1 million of realized losses on the fixed income portfolio. This compares to $13 million of realized gains on the equity portfolio and less than $1 million of realized losses on the fixed income portfolio in the same period of 2022.

	For the Three Months
	Ended June 30,
Consolidated Revenues (in thousands)	2023		2022
Net premiums earned	$	322,280	$	282,810
Net investment income		28,788		18,472
Net realized gains		5,580		12,804
Net unrealized gains (losses) on equity securities		25,214		(100,994)
Total consolidated revenue	$	381,862	$	213,092

Net earnings for the second quarter of 2023 totaled $78 million, compared to a net loss of $2 million for the same period in 2022. The increase for 2023 was largely attributed to the $25 million of net after-tax realized and unrealized gains on equity securities, compared to $69 million of after-tax realized and unrealized losses in the second quarter of 2022. Underwriting results for 2023 were impacted by $18 million of pretax storm losses, compared to $3 million of pretax storm losses in the second quarter of 2022. Results for each period benefited from favorable development on prior years’ loss reserves, which provided additional pretax earnings of $20 million in the second quarter of 2023, compared to $24 million in 2022.

Bonus and profit-sharing amounts earned by executives, managers and associates are predominantly influenced by corporate performance, including operating earnings, combined ratio and return on capital. Favorable development and other drivers of growth in book value will increase bonus and profit-sharing expenses, while catastrophe losses, adverse development and decreased investment portfolio returns would lead to expense reductions. These performance-related expenses affect policy acquisition, insurance operating and general corporate expenses.

Underwriting income was $41 million on an 87.2 combined ratio for the second quarter of 2023, compared to $56 million on an 80.2 combined ratio in the same period of 2022. The loss ratio increased to 47.8 from 41.7, due to higher storm losses and lower levels of favorable development on prior years’ loss reserves in 2023. The expense ratio increased to 39.4 from 38.5, as higher net earnings and growth in book value led to larger levels of bonus and profit-sharing expenses in 2023. We also increased investments in our people and technology to support growth, improve customer experience and drive efficiencies, which impacted all segments.

In the second quarter of 2023, we recognized $2 million of investee earnings from Prime. Comparatively, the second quarter of 2022 reflected investee earnings of $4 million from Prime and $9 million from Maui Jim. Our interest in Maui Jim was sold in the third quarter of 2022.

Comprehensive earnings totaled $58 million for the second quarter of 2023, compared to $100 million of comprehensive loss for the second quarter of 2022. Other comprehensive earnings (loss) primarily included net after-tax unrealized gains and losses from the fixed income portfolio. Other comprehensive loss of $20 million in the second quarter of 2023 was attributable to higher interest rates, which decreased the fair value of securities held in the fixed income portfolio. Comparatively, $98 million of other comprehensive loss was recognized in 2022, as interest rates increased.

Premiums

Gross premiums written increased $89 million for the second quarter of 2023, compared to the same period of 2022. Growth was achieved in all three segments, though the increase was largely driven by products in the property segment. Net premiums earned increased $39 million, driven by products in our property and casualty segments.

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	Gross Premiums Written						Net Premiums Earned
	For the Three Months						For the Three Months
	Ended June 30,						Ended June 30,
(in thousands)	2023		2022		% Change		2023		2022		% Change
Casualty
Commercial excess and personal umbrella	$	95,409	$	85,512	12	%	$	69,261	$	62,463	11	%
General liability		30,823		31,298	(2)	%		26,016		25,106	4	%
Commercial transportation		35,842		38,291	(6)	%		25,398		23,941	6	%
Professional services		29,093		27,880	4	%		24,602		23,861	3	%
Small commercial		20,287		18,799	8	%		18,455		16,813	10	%
Executive products		22,518		24,941	(10)	%		6,153		7,075	(13)	%
Other casualty		17,085		21,594	(21)	%		17,163		17,864	(4)	%
Total	$	251,057	$	248,315	1	%	$	187,048	$	177,123	6	%
Property
Commercial property	$	173,006	$	93,068	86	%	$	60,219	$	38,929	55	%
Marine		37,781		32,913	15	%		32,412		28,178	15	%
Other property		11,102		9,867	13	%		9,210		7,583	21	%
Total	$	221,889	$	135,848	63	%	$	101,841	$	74,690	36	%
Surety
Commercial	$	11,943	$	12,567	(5)	%	$	12,505	$	11,663	7	%
Miscellaneous		12,474		12,452	0	%		11,887		11,587	3	%
Contract		10,601		9,607	10	%		8,999		7,747	16	%
Total	$	35,018	$	34,626	1	%	$	33,391	$	30,997	8	%
Grand Total	$	507,964	$	418,789	21	%	$	322,280	$	282,810	14	%

Casualty

Gross premiums written for the casualty segment were up $3 million in the second quarter of 2023. Continued momentum with our personal umbrella distribution base offset challenging conditions some lines experienced during the second quarter. The runoff of our excess energy liability business resulted in a $5 million decrease within the commercial excess product for the quarter and negatively impacted the production of our primary energy liability business within the general liability product. Commercial transportation was down, as the trucking market continues to be highly competitive and trucking companies’ revenues are down compared to last year. Additionally, executive products premium decreased as a result of a more competitive market, particularly with directors and officers coverages.

Property

Gross premiums written for the property segment were up $86 million in the second quarter of 2023. Our commercial property business was up $80 million. Continued rate increases on wind exposures has allowed us to achieve this result with limited exposure growth, while also strengthening terms and conditions. Rate increases and new opportunities led to $5 million of premium growth for our marine product.

Surety

Gross premiums written for the surety segment were up $0.4 million for the second quarter of 2023. The growth in contract surety was driven by new agency relationships, while the decline in commercial surety was due to accounts having non-recurring activity within select accounts that bolstered premium in 2022.

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Underwriting Income

	For the Three Months
	Ended June 30,
	2023		2022
Underwriting Income (in thousands)
Casualty	$	6,977	$	21,442
Property		25,877		26,105
Surety		8,347		8,409
Total	$	41,201	$	55,956
Combined Ratio
Casualty		96.3		87.9
Property		74.6		65.0
Surety		75.0		72.9
Total		87.2		80.2

Casualty

The casualty segment recorded underwriting income of $7 million in the second quarter of 2023, compared to $21 million for the same period last year. Prior accident years’ reserve releases reduced loss and settlement expenses for the casualty segment by $11 million, primarily on accident years 2020 through 2022. Favorable development was widespread, with notable amounts from small commercial, commercial excess and personal umbrella. In comparison, $17 million of prior accident years’ reserves were released in the second quarter of 2022. General liability, professional services and transportation were drivers of the favorable development. Storm losses on casualty-oriented package policies that include property coverage offset the favorable development and resulted in $1.3 million of losses in 2023 and $0.5 million of losses in 2022.

The combined ratio for the casualty segment was 96.3 in 2023, compared to 87.9 in 2022. The segment’s loss ratio was 58.9 in 2023, up from 53.2 in 2022. The increase in loss ratio was attributable to lower levels of reserve releases on prior accident years, as well as increased storm losses and modest additions to the current accident year for energy casualty. The expense ratio for the casualty segment was 37.4, up from 34.7 for the same period last year. Higher net earnings and growth in book value led to larger levels of bonus and profit-sharing expenses in 2023 for all segments.

Property

The property segment recorded underwriting income of $26 million for the second quarter of 2023 and 2022. Underwriting results for 2023 included $4 million of favorable development on prior years’ loss and catastrophe reserves and $17 million of storm losses. Comparatively, the 2022 underwriting results included $4 million of favorable development on prior years’ loss and catastrophe reserves and $3 million of storm losses.

Underwriting results for the second quarter of 2023 translated into a combined ratio of 74.6, compared to 65.0 for the same period last year. The segment’s loss ratio was 40.4 in 2023, up from 27.4 in 2022, due to the increase in storm losses. The segment’s expense ratio decreased to 34.2 in 2023 from 37.6 in the prior year, as the growth in the earned premium base exceeded the growth in expense.

Surety

The surety segment recorded underwriting income of $8 million for the second quarter of 2023 and 2022. Both periods reflected positive current accident year underwriting performance and benefited from favorable development on prior years’ loss reserves. Results for 2023 included favorable development on prior accident years’ reserves, which decreased loss and settlement expenses for the segment by $4 million, compared to $3 million in 2022.

The combined ratio for the surety segment totaled 75.0 for the second quarter of 2023, compared to 72.9 for the same period in 2022. The segment’s loss ratio was 7.8 in 2023, down from 10.3 in 2022, due to higher levels of prior accident year reserve releases. The expense ratio was 67.2, up from 62.6 in the prior year.

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Investment Income

Our investment portfolio generated net investment income of $29 million during the second quarter of 2023, an increase of 56 percent from that reported for the same period in 2022. The increase in investment income was due to higher interest rates, as well as an increased average asset base relative to the prior year.

Yields on our fixed income investments for the second quarter of 2023 and 2022 were as follows:

	2023		2022
Pretax Yield
Taxable	3.41	%	2.79	%
Tax-Exempt	2.79	%	2.69	%
After-Tax Yield
Taxable	2.69	%	2.20	%
Tax-Exempt	2.64	%	2.55	%

Income Taxes

Our effective tax rate for the second quarter of 2023 was 19.1 percent, compared to 65.8 percent for the same period in 2022. Effective rates are dependent upon components of pretax earnings or losses and the related tax effects. Tax-favored adjustments acting on pretax income decreased the effective tax rate in 2023, whereas tax-favored adjustments acting on pretax loss increased the effective tax rate in 2022.

LIQUIDITY AND CAPITAL RESOURCES

We have three primary types of cash flows: (1) cash flows from operating activities, which consist mainly of cash generated by our underwriting operations and income earned on our investment portfolio, (2) cash flows from investing activities related to the purchase, sale and maturity of investments and (3) cash flows from financing activities that impact our capital structure, such as shareholder dividend payments and changes in debt and shares outstanding.

The following table summarizes cash flows provided by (used in) our activities for the six-month periods ended June 30, 2023 and 2022:

(in thousands)	2023		2022
Operating cash flows	$	243,595	$	170,645
Investing cash flows		(226,116)		(124,946)
Financing cash flows		(23,590)		(21,459)
Total	$	(6,111)	$	24,240

Our largest source of cash is premiums received from customers and our largest cash outflow is claim payments on insured losses. Cash flows from operating activities can vary among periods due to the timing in which these payments are made or received. Operating cash flows in the first six months of 2023 benefited from increased premium receipts relative to the first six months of 2022.

We have $200 million in debt outstanding. On October 2, 2013, we completed a public debt offering, issuing $150 million in senior notes maturing September 15, 2023 (a 10-year maturity), and paying interest semi-annually at the rate of 4.875 percent per annum. The notes were issued at a discount resulting in proceeds, net of discount and commission, of $149 million. The estimated fair value for the senior notes at June 30, 2023 was $150 million. The fair value of our debt is estimated based on the limited observable prices that reflect thinly traded securities. Additionally, RLI Insurance Company borrowed $50 million from the Federal Home Loan Bank of Chicago (FHLBC) on November 10, 2021. The borrowing matures on November 10, 2023 and has an option to be paid off prior to maturity. Interest is paid monthly at an annualized rate of 0.84 percent.

As of June 30, 2023, we had cash and other investments maturing within one year of approximately $482 million and an additional $896 million maturing between one to five years. Whereas our strategy is to be fully invested at all times, short-term investments in excess of demand deposit balances are considered a component of investment activities, and thus are classified as investments in our consolidated balance sheets.

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We also maintain a revolving line of credit with PNC Bank, N.A., which permits us to borrow up to an aggregate principal amount of $100 million. This facility was entered into during the first quarter of 2023 and replaced the previous $60 million facility with Bank of Montreal, Chicago Branch, which expired on March 27, 2023. Under certain conditions, the line may be increased up to an aggregate principal amount of $130 million. The facility has a three-year term that expires on May 29, 2026. As of and during the six-month period ended June 30, 2023, no amounts were outstanding on either facility.

Additionally, two of our insurance companies, RLI Insurance Company (RLI Ins.) and Mt. Hawley Insurance Company, are members of the FHLBC. Membership in the Federal Home Loan Bank system provides both companies access to an additional source of liquidity via a secured lending facility. Our membership allows each insurance subsidiary to determine tenor and structure at the time of borrowing. As of June 30, 2023, $56 million of investments were pledged as collateral with the FHLBC to ensure timely access to the secured lending facility.

We believe that cash generated by operations and investments will provide sufficient sources of liquidity to meet our anticipated needs over the next 12 to 24 months. In the event they are not sufficient, we believe cash available from financing activities and other sources will provide sufficient additional liquidity.

We maintain a diversified investment portfolio representing policyholder funds that have not yet been paid out as claims, as well as the capital we hold for our shareholders. Invested assets at June 30, 2023 have increased $318 million from December 31, 2022. As of June 30, 2023, our investment portfolio had the following asset allocation breakdown:

	Cost or		Fair		Unrealized		% of Total
(in thousands)	Amortized Cost		Value		Gain/(Loss)		Fair Value		Quality*
U.S. government	$	325,893	$	315,976	$	(9,917)	8.8	%	AAA
U.S. agency		45,937		43,719		(2,218)	1.2	%	AAA
Non-U.S. government & agency		4,799		3,960		(839)	0.1	%	BBB+
Agency MBS		414,503		372,030		(42,473)	10.4	%	AAA
ABS/CMBS/MBS**		285,855		252,330		(33,525)	7.0	%	AA+
Corporate		1,227,628		1,147,504		(80,124)	32.0	%	A-
Municipal		642,305		553,581		(88,724)	15.4	%	AA
Total fixed income	$	2,946,920	$	2,689,100	$	(257,820)	74.9	%	AA-
Equity		340,184		552,566		212,382	15.4	%
Short-term investments		271,296		271,296		—	7.5	%
Other invested assets		58,275		60,907		2,632	1.7	%
Cash		16,707		16,707		—	0.5	%
Total portfolio	$	3,633,382	$	3,590,576	$	(42,806)	100.0	%

* Quality ratings provided by Moody’s, S&P and Fitch

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

Quality is an average of each bond’s credit rating, adjusted for its relative weighting in the portfolio. As of June 30, 2023, our fixed income portfolio had the following rating distribution:

AAA	38.2	%
AA	19.2	%
A	22.3	%
BBB	12.2	%
BB	2.8	%
B	2.3	%
CCC	0.1	%
D	0.0	%
NR	2.9	%
Total	100.0	%

As of June 30, 2023, our fixed income portfolio remained well diversified, with 1,751 individual issues.

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Our investment portfolio has limited exposure to structured asset-backed securities. As of June 30, 2023, we had $136 million in ABS, which are pools of assets collateralized by cash flows from several types of loans, including home equity, credit cards, autos and structured bank loans in the form of collateralized loan obligations (CLOs).

As of June 30, 2023, we had $116 million in commercial mortgage-backed securities and $372 million in mortgage-backed securities backed by government sponsored enterprises (GSEs - Freddie Mac, Fannie Mae and Ginnie Mae). Excluding the GSE-backed MBS, our exposure to ABS and CMBS was 7.0 percent of our investment portfolio at quarter end.

We had $1,148 million in corporate fixed income securities as of June 30, 2023, which includes $110 million invested in a high-yield credit strategy. This high-yield portfolio consists of floating rate bank loans and bonds that are below investment grade in credit quality and offer incremental yield over our core fixed income portfolio.

The municipal portfolio includes approximately 56 percent taxable securities and 44 percent tax-exempt securities. Approximately 90 percent of our municipal bond portfolio maintains an ‘AA’ or better rating, while 100 percent of the municipal bond portfolio is rated ‘A’ or better.

Securities within the equity portfolio are well diversified and are primarily invested in broad index exchange traded funds (ETFs). Our actively managed equity strategy has a preference for dividend income and value oriented security selection with low turnover, which minimizes transaction costs and taxes throughout our long investment horizon.

As of June 30, 2023, our equity portfolio had a dividend yield of 2.0 percent, compared to 1.5 percent for the S&P 500 index. Because of the corporate dividend-received-deduction applicable to our dividend income, we pay an effective tax rate of 13.1 percent on dividends, compared to 21.0 percent on taxable interest and 5.3 percent on municipal bond interest income. The equity portfolio is managed in a diversified and granular manner, with 85 individual securities and four ETF positions. No single company exposure in the equity portfolio represents more than 1 percent of invested assets.

Other invested assets include investments in low income housing tax credit and historic tax credit partnerships, membership in the FHLBC and investments in private funds.

We had $55 million of investments in unconsolidated investees at June 30, 2023, compared to $58 million at December 31, 2022.

Our investment portfolio does not have any exposure to derivatives.

Our capital structure is comprised of equity and debt outstanding. As of June 30, 2023, our capital structure consisted of $200 million in long-term debt and $1.4 billion of shareholders’ equity. Debt outstanding comprised 13 percent of total capital as of June 30, 2023. Interest and fees on debt obligations totaled $4 million for the first six months of 2023 and 2022. We incurred interest expense on debt at an average annual interest rate of 3.89 percent during the first six months of 2023 and 2022.

We paid a regular quarterly cash dividend of $0.27 per share on June 20, 2023, an increase of $0.01 from the prior quarter. We have increased dividends in each of the last 48 years.

Our three insurance companies are subsidiaries of RLI Corp, with RLI Ins. as the first-level, or principal, insurance company. At the holding company (RLI Corp.) level, we rely largely on dividends from our insurance subsidiaries to meet our obligations for paying principal and interest on outstanding debt, corporate expenses and dividends to RLI Corp. shareholders. As discussed further below, dividend payments to RLI Corp. from our principal insurance subsidiary are restricted by state insurance laws as to the amount that may be paid without prior approval of the insurance regulatory authorities of Illinois. As a result, we may not be able to receive dividends from such subsidiary at times and in amounts necessary to pay desired dividends to RLI Corp. shareholders. On a GAAP basis, as of June 30, 2023, our holding company had $1.4 billion in equity. This includes amounts related to the equity of our insurance subsidiaries, which is subject to regulatory restrictions under state insurance laws. The unrestricted portion of holding company net assets is comprised primarily of investments and cash, including $262 million in liquid assets, which was elevated by the cash proceeds received from the sale of Maui Jim. Unrestricted funds at the holding company are available to fund debt interest, general corporate obligations and dividend payments to our shareholders. If necessary, the holding company also has other potential sources of liquidity that could provide for additional funding to meet corporate obligations or pay shareholder dividends, which include a revolving line of credit, as well as access to capital markets.

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Ordinary dividends, which may be paid by our principal insurance subsidiary without prior regulatory approval, are subject to certain limitations based upon statutory income, surplus and earned surplus. The maximum ordinary dividend distribution from our principal insurance subsidiary in a rolling 12-month period is limited by Illinois law to the greater of 10 percent of RLI Ins. policyholder surplus, as of December 31 of the preceding year, or the net income of RLI Ins. for the 12-month period ending December 31 of the preceding year. Ordinary dividends are further restricted by the requirement that they be paid from earned surplus. Any dividend distribution in excess of the ordinary dividend limits is deemed extraordinary and requires prior approval from the Illinois Department of Insurance (IDOI). In the first six months of 2023, RLI Ins. paid $30 million in ordinary dividends to RLI Corp. In 2022, our principal insurance subsidiary paid ordinary dividends totaling $13 million. As of June 30, 2023, $120 million of the net assets of our principal insurance subsidiary were not restricted and could be distributed to RLI Corp. as ordinary dividends without prior approval from the IDOI. Because the limitations are based upon a rolling 12-month period, the amount and impact of these restrictions vary over time. In addition to restrictions from our principal subsidiary’s insurance regulator, we also consider internal models and how capital adequacy is defined by our rating agencies in determining amounts available for distribution.

Item 3.    Quantitative and Qualitative Disclosures about Market Risk

Market risk is the risk of economic losses due to adverse changes in the estimated fair value of a financial instrument as the result of changes in equity prices, interest rates, foreign currency exchange rates and commodity prices. Historically, our primary market risks have been equity price risk associated with investments in equity securities and interest rate risk associated with investments in fixed maturities. We have limited exposure to both foreign currency risk and commodity risk.

Credit risk is the potential loss resulting from adverse changes in an issuer’s ability to repay its debt obligations. We monitor our portfolio to ensure that credit risk does not exceed prudent levels. We have consistently invested in high credit quality, investment grade securities. Our fixed maturity portfolio has an average rating of AA-, with 80 percent rated A or better by at least two nationally recognized rating organizations.

On an overall basis, our exposure to market risk has not significantly changed from that reported in our 2022 Annual Report on Form 10-K.

Item 4.Controls and Procedures

We maintain a system of controls and procedures designed to provide reasonable assurance as to the reliability of the financial statements and other disclosures included in this report, as well as to safeguard assets from unauthorized use or disposition. An evaluation of the effectiveness of the design and operation of our disclosure controls and procedures was performed, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures are effective, as of the end of the period covered by this report.

In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurances of achieving the desired control objective, and management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. We believe that our disclosure controls and procedures provide such reasonable assurance.

No changes were made to our internal control over financial reporting during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1.Legal Proceedings – There were no material changes to report.

Item 1A. Risk Factors – There were no material changes to report.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds -

Items 2(a) and (b) are not applicable.

In 2010, our Board of Directors implemented a $100 million share repurchase program. We did not repurchase any shares during 2023. We have $87.5 million of remaining capacity from the repurchase program. The repurchase program may be suspended or discontinued at any time without prior notice.

Item 3.Defaults Upon Senior Securities - Not Applicable.

Item 4.Mine Safety Disclosures - Not Applicable.

Item 5.Other Information –

Securities Trading Plans of Executive Officers and Directors

Rule 10b5-1 under the Exchange Act provides an affirmative defense that enables prearranged transactions in Company securities in a manner that avoids concerns about initiating transactions at a future date while possibly in possession of material nonpublic information. Our Insider Trading Policy permits our executive officers and directors to enter into trading plans designed to comply with Rule 10b5-1.

During the three months ended June 30, 2023, no director or officer of the Company adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement, as each term is defined in Item 408(a) of Regulation S-K.

Item 6.Exhibits

Exhibit No.	Description of Document	Reference
3.1	Amended and Restated Certificate of Incorporation	Attached as Exhibit 3.1.
10.1	RLI Corp. Nonemployee Directors’ Deferred Compensation Plan, as amended*	Attached as Exhibit 10.1.
10.2	RLI Corp. Executive Deferred Compensation Plan, as amended*	Attached as Exhibit 10.2.
10.3	RLI Corp. 2023 Long-Term Incentive Plan*	Attached as Exhibit 10.3.
10.4	RLI Corp. 2023 Long-Term Incentive Plan Stock Option Agreement*	Attached as Exhibit 10.4.
10.5	RLI Corp. 2023 Long-Term Incentive Plan Non-Employee Director Restricted Stock Unit Agreement*	Attached as Exhibit 10.5.
31.1	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Attached as Exhibit 31.1.
31.2	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Attached as Exhibit 31.2.
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Attached as Exhibit 32.1.
32.2	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Attached as Exhibit 32.2.
101	iXBRL-Related Documents	Attached as Exhibit 101.
104	Cover Page Interactive Data File	Embedded in Inline XBRL and contained in Exhibit 101.

* Management contract or compensatory plan.

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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 thereunto duly authorized.

	RLI Corp.
	/s/ Todd W. Bryant
	Todd W. Bryant
	Chief Financial Officer
	(Principal Financial and Chief Accounting Officer)
Date: July 26, 2023

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EX-31.1

Exhibit 31.1

CERTIFICATION

Chief Executive Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Craig W. Kliethermes, certify that:

I have reviewed this quarterly report on Form 10-Q of RLI Corp.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 26, 2023

/s/ Craig W. Kliethermes

Craig W. Kliethermes

President & CEO

EX-31.2

Exhibit 31.2

CERTIFICATION

Chief Financial Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Todd W. Bryant, certify that:

I have reviewed this quarterly report on Form 10-Q of RLI Corp.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 26, 2023

/s/ Todd W. Bryant

Todd W. Bryant

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of RLI Corp. (the “Company”) on Form 10-Q for the period ending June 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Craig W. Kliethermes, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)  The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and

(2)  The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Craig W. Kliethermes

Craig W. Kliethermes

President & CEO

July 26, 2023

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of RLI Corp. (the “Company”) on Form 10-Q for the period ending June 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Todd W. Bryant, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)  The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and

(2)  The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Todd W. Bryant

Todd W. Bryant

Chief Financial Officer

July 26, 2023

EX-10.1

Exhibit 10.1

RLI CORP.

NONEMPLOYEE DIRECTORS

DEFERRED COMPENSATION PLAN

(Restated as of May 4, 2023)

RLI CORP.

NONEMPLOYEE DIRECTORS

DEFERRED COMPENSATION PLAN

Article 1

INTRODUCTION

1.1Establishment.  RLI Corp. established the RLI Corp. Nonemployee Directors Deferred Compensation Plan (“Plan”) effective January 1, 2005.  Prior to that date, RLI provided similar deferred compensation opportunities to its Directors under certain Prior Agreements.  All obligations under the Prior Agreements (including any predecessor arrangements) will be satisfied under the Prior Agreements, rather than under this Plan.  RLI restated the Plan, effective January 1, 2009, to comply with the requirements of the final regulations issued under Section 409A of the Code (“Section 409A”).  RLI thereafter amended the Plan, effective May 3, 2018, to clarify provisions with respect to the deferral of restricted stock units and to make clear how partial (or fractional) shares are paid in a single or final payment.  On January 1, 2020, RLI further restated the Plan to expand the types of investment and distribution alternatives available to Participants.  Such restatement applied to amounts deferred under the Plan on or after January 1, 2020 (the “Restatement Date”), and, to the extent permitted under Section 409A, to the payment of all amounts deferred under the Plan (whether such amounts were deferred before, on, or after the Restatement Date) that have not yet been distributed as of the Restatement Date.  On May 4, 2023, the Plan was further amended and restated to provide for installment payments to be accelerated and paid in a lump sum if the value of a Participant’s accounts fall below a specified amount.

The obligation of RLI to make payments under the Plan constitutes an unsecured (but legally enforceable) promise of RLI to make such payments and no person, including any Participant or Beneficiary, shall have any lien, prior claim or other security interest in any property of RLI as a result of the Plan.

1.2Purpose.  The purpose of the Plan is to attract and retain qualified Directors and to provide them with an opportunity to save on a pre-tax basis and accumulate tax-deferred income to achieve their financial goals.

1.3Definitions.  When the following terms are used herein with initial capital letters, they shall have the following meanings:

1.3.1Account - the separate recordkeeping account (unfunded and unsecured) maintained for each Participant in connection with the Participant’s participation in the Plan, which shall consist of separate subaccounts relating to the Direct Compensation deferred by such Participant in each Year.

1.3.2Affiliate - a business entity which is under a “common control” with RLI or which is a member of an “affiliated service group” that includes RLI, as those terms are defined in Code § 414(b), (c) and (m).

1.3.3Beneficiary - the person or persons designated as such under Section 5.2.

1.3.4Board - the Board of Directors of RLI.

1.3.5Code - the Internal Revenue Code of 1986, as the same may be amended from time to time.

1.3.6Direct Compensation - the total amounts, as determined by RLI, payable to a Director for services as a Director, whether payable in cash or in RLI Stock (including restricted stock unit awards), but excluding amounts determined by RLI to be expense reimbursements.

1.3.7Director - an individual who is a member of the Board but who is not an Employee of RLI or an Affiliate.

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1.3.8Employee - a common-law employee of RLI or an Affiliate (while it is an Affiliate).

1.3.9Measurement Fund - any mutual fund or other investment vehicle designated by RLI from time to time to be available to Participants for purposes of measuring the earnings to be credited to Accounts pursuant to Section 3.4 of the Plan.  

1.3.10Participant - a Director who enrolls as a Participant in the Plan under Section 2.2.

1.3.11Plan - the unfunded deferred compensation plan that is set forth in this document, as the same may be amended from time to time.  The name of the Plan is the “RLI Corp. Nonemployee Directors Deferred Compensation Plan.”

1.3.12Prior Agreement - an individual agreement entered into by a Director and RLI to provide deferred compensation opportunities to the Director.  In certain cases, such Prior Agreement was a successor to an earlier arrangement known as the Director Non-Qualified Deferred Compensation Plan.

1.3.13RLI - RLI Corp. and any Successor Corporation.

1.3.14RLI Stock - the common stock of RLI.

1.3.15Successor Corporation - any entity that succeeds to the business of RLI through merger, consolidation, acquisition of all or substantially all of its assets, or any other means and which elects before or within a reasonable time after such succession, by appropriate action evidenced in writing, to continue the Plan.

1.3.16Termination of Service - the Participant’s departure from the Board, unless the Director then becomes an Employee.  Notwithstanding the foregoing, a “Termination of Service” will be deemed not to have occurred if such departure would not be considered a “separation from service” under Section 409A(a)(2)(A)(i) of the Code or any regulations or other guidance issued by the Treasury Department under Section 409A.  In such case, a Termination of Service will be deemed to have occurred at the earliest time allowed under Section 409A.

1.3.17Vested - nonforfeitable.

1.3.18Year - the calendar year.

1.4Nonqualified Deferred Compensation.  The Plan is a nonqualified deferred compensation plan subject to Section 409A.  To the extent any provision of the Plan does not satisfy the requirements contained in Section 409A or in any regulations or other guidance issued by the Treasury Department under Section 409A, such provision will be applied in a manner consistent with such requirements, regulations or guidance, notwithstanding any contrary provision of the Plan or any inconsistent election made by a Participant.

Article 2

PARTICIPATION

2.1Eligibility.  All Directors will be eligible to participate in the Plan.  A Director may continue to participate in the Plan for so long as the Plan remains in effect and remains a Director.

2.2Enrollment.  A Director will be allowed to enroll in the Plan during the thirty (30) day period coinciding with and following the date the individual becomes a Director.  Such an enrollment will be effective as of the date it is made.  Thereafter, a Director may elect to enroll for a Year during the enrollment period established by RLI for such Year, which enrollment period will be a period of not less than thirty (30) days that ends not later than the last day of the prior Year.  Enrollment must be made in such manner and in accordance with such rules as may be

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prescribed for this purpose by RLI (including by means of a voice response or other electronic system under circumstances authorized by RLI).

2.3Direct Compensation Deferrals.

2.3.1Elections.  A Director may elect to reduce any Direct Compensation earned in the applicable Year by any whole percent, but not more than one-hundred percent (100%).  A separate reduction percentage may apply to the portion of Direct Compensation that is payable in cash and to the portion that is payable in RLI Stock.  A Director may separately elect to defer the receipt of RLI Stock otherwise issuable upon the vesting of any restricted stock unit awards that are granted to such Director in the applicable Year, and such election shall apply to all Years over which such restricted stock award vests.    An election must be made in such manner and in accordance with such rules as may be prescribed for this purpose by RLI (including by means of a voice response or other electronic system under circumstances authorized by RLI).  An election must be made as part of the enrollment described in Section 2.2.

2.3.2Elections Relate to Services Performed After the Election and Are Irrevocable.   An election will apply to all Direct Compensation attributable to services performed in a given Year, regardless of when such Direct Compensation would otherwise be provided to the Participant.  For example, an election to defer an annual retainer attributable to services performed in a given Year but payable in the next Year, must be made as part of the enrollment election made prior to the Year in which the services are performed.  However, an election will only be effective to defer Direct Compensation earned after the election is made, and not before.  For example, an election made in connection with a mid-year enrollment under Section 2.2 will only be effective for Direct Compensation attributable to services performed on and after the effective date of the enrollment as provided in Section 2.2.   An election to defer the shares of RLI Stock otherwise issuable upon the vesting of a restricted stock unit award will apply only to restricted stock unit awards granted in the applicable Year. An election will apply solely with respect to the given Year - that is, an election will not automatically be carried over and applied to the next Year.

In general, an election shall become irrevocable as of the last day of the enrollment period applicable to it.  However, if a Participant incurs an “unforeseeable emergency,” as defined in Section 4.8(h), or becomes entitled to receive a hardship distribution pursuant to Treas. Reg. § 1.401(k)-1(d)(3) after the election otherwise becomes irrevocable, the election shall be cancelled as of the date on which the Participant is determined to have incurred the unforeseeable emergency or becomes eligible to receive the hardship distribution and no further deferrals will be made under it.  

Article 3

ACCOUNTS

3.1Accounts.   RLI shall establish and maintain a separate Account for each Participant.  The Account shall be for recordkeeping purposes only and shall not represent a trust fund or other segregation of assets for the benefit of the Participant.  A separate subaccount shall be established within each Account to represent the amount deferred by a Participant for each Year in which the Participant defers Direct Compensation under the Plan.

3.2Credits to Accounts.  Each Participant’s Account shall be credited from time to time as provided in this Article 3.

3.3Direct Compensation Deferrals.  The amount of each Direct Compensation cash payment or RLI Stock grant (including restricted stock units) which the Participant has elected to defer under the Plan shall be credited to the Participant’s Account on, or as soon as administratively practicable after, the date it would otherwise be payable to the Participant.  

3.4Hypothetical Investment Funds.  A Participant shall have the right to direct the manner in which earnings are credited to the portion of the Participant’s Account relating to amounts deferred on or after January 1, 2020 by electing to have the Account notionally invested, in percentages elected by the Participant, in hypothetical investment options, the value of which shall track either RLI Stock or any of the Measurement Funds.  A Participant shall make

4

such elections in such manner and in accordance with such rules as may be prescribed for this purpose by RLI (including by means of a voice response or other electronic system under circumstances authorized by RLI).  The portion of each Participant’s Account relating to amounts deferred prior to January 1, 2020 shall be notionally invested in RLI Stock.

3.4.1To the extent a deferral is notionally invested in RLI Stock, the Participant’s Account shall be credited with a hypothetical number of shares of RLI Stock equal to the number of full and fractional shares that could be purchased with such amount on, or as soon as administratively feasible after, the date such amount is credited to the Participant’s Account. The Participant’s Account shall be credited with additional RLI Stock credits, equal to the number of full and fractional shares of RLI Stock that could be purchased with any cash dividends which would be payable on the RLI Stock credited to the Participant’s Account. For this purposes, the share price on, or as soon as administratively practicable after, the date the dividend is paid will be used. The Account also will be adjusted for any stock split, redemption or similar event, in a manner determined to be reasonable by RLI.

3.4.2To the extent a deferral is notionally invested in a Measurement Fund, the Participant’s Account shall be credited with a hypothetical number of shares of such Measurement Fund, equal to the number of full and fractional shares that could be purchased with such amount on, or as soon as administratively practicable after, the date such amount is credited to the Participant’s Account.

3.4.3Notwithstanding any other provision of this Plan that may be interpreted to the contrary, the RLI Stock and the Measurement Fund(s) are to be used for measurement purposes only, and the allocation of each Participant’s Account to RLI Stock or to a Measurement Fund, the calculation of additional amounts, and the crediting or debiting of such additional amounts to such Participant’s Account shall not be considered or construed in any manner as an actual investment of such Participant’s Account in RLI Stock or any Measurement Fund.

3.5Charges to Accounts.  As of the date any Plan benefit measured by the Account is paid to the Participant or the Participant’s Beneficiary, the Account shall be charged with the amount of such benefit payment.

Article 4

BENEFITS

4.1Vesting.   The Participant’s Account shall be fully (100%) Vested.

4.2Payment of Plan Benefits – Amounts Deferred Prior to January 1, 2020--General Rule.  If the Participant has an Account balance that relates to amounts deferred in Years prior to January 1, 2020, RLI shall pay that balance to the Participant in five (5) annual installments, commencing after the Participant’s Termination of Service, as follows:

(a)Time.  The first installment shall be paid on the January 1 following the Year in which the Participant’s Termination of Service occurs. The remaining installments shall be paid on each subsequent January 1.

(b)Amount.  The amount of each installment shall be determined using a “fractional” method – by multiplying the Participant’s Account balance immediately before the installment payment date by a fraction, the numerator of which is one and the denominator of which is the number of installments remaining (including the installment in question).

4.3Payment of Plan Benefits – Amounts Deferred On or After January 1, 2020--General Rule.  If the Participant has an Account balance that relates to amounts deferred in Years beginning on or after January 1, 2020, RLI shall pay that balance to the Participant as follows:

5

(a) Time.  At the time the Participant elects to defer Direct Compensation earned in a particular Year, the Participant shall elect to receive a distribution of the subaccount relating to such deferrals on or beginning on any of the following distribution dates (the applicable date, a “Distribution Date”): (i) January 1st of the Year following the Participant’s Termination of Service, (ii) January 1st of any Year designated by the Participant that is not less than two years and not more than 20 years after the beginning of the Year to which such deferral relates or (iii) the earlier of (A) January 1st of the Year following the Participant’s Termination of Service and (B) January 1st of any Year designated by the Participant that is not less than two years and not more than 20 years after the beginning of the Year to which such deferral relates.

(b) Form of Payment.  At the time the Participant elects to defer Direct Compensation earned in a particular Year, the Participant shall elect to receive the distribution of the subaccount relating to such deferrals in one of the following forms of distribution: (i) a lump sum payment or (ii) annual installments over a period of not less than five years and not more than 15 years.  

(c) Payment of Installments.  If the Participant elects to receive a distribution in the form of installments, the first installment shall be paid on the Distribution Date elected in accordance with Section 4.3(a), and the remaining installments shall be paid on January 1st of each subsequent Year until the applicable subaccount has been distributed in its entirety.  A distribution that is paid in the form of installments shall be considered a single payment for purposes of Section 409A.  The amount of each installment shall be determined using a “fractional” method – by multiplying the Participant’s Account balance immediately before the installment payment date by a fraction, the numerator of which is one and the denominator of which is the number of installments remaining (including the installment in question). If the distribution is made in shares of RLI Stock pursuant to Section 4.6.1, the result shall be rounded down to the next lower full share of RLI Stock, except for the final installment, which shall distribute the final shares and pay cash in lieu of any partial share

4.4Changing Payment Elections.

4.4.1General Rule.  A Participant may elect to change the Distribution Date or the form of distribution (i.e., from a lump sum to installments, from installments to a lump sum or the number of installments), subject to the rules below. Any such election must be made in such manner and in accordance with such rules as may be prescribed for this purpose by RLI (including by means of a voice response or other electronic system under circumstances authorized by RLI).

4.4.2Subsequent Election.  A Participant may change the Distribution Date or the form of distribution in accordance with the following rules:

(a) The election must be received by RLI in writing and in proper form and must not take effect for at least 12 months from the date on which it is submitted to RLI;

(b) The election must be submitted to RLI at least 12 months prior to the previously elected Distribution Date; and  

(c) The Distribution Date must be delayed at least five (5) years from the previously elected Distribution Date.

4.5Special Rules.

4.5.1Specified Employee Exception.  If a Participant becomes an Employee and subsequently has a “separation of service” (within the meaning of Section 409A(a)(2)(A)(i) of the Code), the initial installment (or lump-sum payment, if applicable) shall be delayed to the extent necessary to comply with Section 409A(a)(2)(B)(i) of the Code or any regulations or other guidance issued by the Treasury Department thereunder.

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4.5.2Acceleration of Small Amounts.  Any contrary provision or election notwithstanding, if the Participant’s Account balance is less than one hundred thousand dollars ($100,000) as of the date installments are to commence, the Account shall be paid to the Participant in a single lump-sum, as full settlement of all benefits due under the Plan; provided that, for purposes of applying the one hundred thousand dollar ($100,000) acceleration limit, all nonqualified deferred compensation amounts payable to the Participant by RLI and its Affiliates shall be aggregated if and to the extent required under Section 409A or any regulations or other guidance issued by the Treasury Department thereunder.  Further, any contrary provision or election notwithstanding, and effective for distributions commencing on or after May 4, 2023, if at any point after the commencement of installments under Sections 4.2 or 4.3 of the Plan the Participant’s Account balance is not greater than the applicable dollar amount under Section 402(g)(1)(B) of the Code (“Section 402(g) Limit”), the Account shall be paid to the Participant in a single lump-sum, as full settlement of all benefits due under the Plan; provided that, for purposes of applying the Section 402(g) Limit, all nonqualified deferred compensation amounts payable to the Participant by RLI and its Affiliates shall be aggregated if and to the extent required under Section 409A or any regulations or other guidance issued by the Treasury Department thereunder.

4.6Medium of Payments.  

4.6.1RLI Stock. To the extent a Participant’s Account is deemed to be invested in RLI Stock, the payment of the Account shall be made in whole shares of RLI Stock, except for a cash payment in lieu of a partial share as may be necessary. Unless the shares have been registered under the Securities Act of 1933 (the “Act”), are otherwise exempt from the registration requirements of the Act, are the subject of a favorable no action letter issued by the Securities and Exchange Commission, or are the subject of an opinion of counsel acceptable to RLI to the effect that such shares are exempt from the registration requirements of the Act, the transfer of such shares shall be subject to the provisions of Rule 144 of the Act, as the same may be amended from time to time.

4.6.2Measurement Funds.  To the extent a Participant’s Account is deemed to be invested in a Measurement Fund, the payment of the Account shall be made in cash.  

4.7Delay in Distributions.  A payment under the Plan may be delayed by RLI under any of the following circumstances so long as all payments to similarly situated Participants are treated on a reasonably consistent basis:

(a) RLI reasonably anticipates that the making of the payment will violate Federal securities laws or other applicable law, provided that the payment is made at the earliest date at which RLI reasonably anticipates that the making of the payment will not cause such violation.  

(b) Upon such other events as determined by RLI and according to such terms as are consistent with Section 409A or are prescribed by the Commissioner of Internal Revenue.

4.8Acceleration of Distributions.  RLI may, in its discretion, distribute all or a portion of a participant’s Accounts at an earlier time and in a different form than specified as otherwise provided in this Article 4, under the circumstances described below:

(a) As may be necessary to fulfill a Domestic Relations Order.  Distributions pursuant to a Domestic Relations Order shall be made according to administrative procedures established by RLI.

(b) To the extent reasonably necessary to avoid the violation of ethics laws or conflict of interest laws pursuant to Section 1.409A-3(j)(ii) of the Treasury regulations.

(c) To pay FICA on amounts deferred under the Plan and the income tax resulting from such payment.

(d) To pay the amount required to be included in income as a result of the Plan’s failure to comply with Section 409A.

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(e) If RLI determines, in its discretion, that it is advisable to liquidate the Plan in connection with a termination of the Plan subject to the requirements of Section 409A.

(f) As satisfaction of a debt of the Participant to RLI or an Affiliate, where such debt is incurred in the ordinary course of the service relationship between RLI or the Affiliate and the Participant, the entire amount of the reduction in any Year does not exceed $5,000, and the reduction is made at the same time and in the same amount as the debt otherwise would have been due and collected from the Participant.

(g) To pay state, local or foreign tax obligations that may arise with respect to amounts deferred under the Plan and the income tax resulting from such payment.

(h) If the Participant has an unforeseeable emergency.  For these purposes an “unforeseeable emergency” is a severe financial hardship to the Participant, resulting from an illness or accident of the Participant, the Participant’s spouse, the Beneficiary, or the Participant’s dependent (as defined in Section 152, without regard to Section 152(b)(1), (b)(2), and (d)(1)(B) of the Code); loss of the Participant’s property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by insurance); or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant.  For example, the imminent foreclosure of or eviction from the Participant’s primary residence may constitute an unforeseeable emergency.  In addition, the need to pay for medical expenses, including non-refundable deductibles, as well as for the cost of prescription drug medication, may constitute an unforeseeable emergency.  Finally, the need to pay for funeral expenses of a spouse, Beneficiary, or a dependent (as defined in Section 152, without regard to 152(b)(1), (b)(2),  and (d)(1)(B) of the Code) may also constitute an unforeseeable emergency.  Except as otherwise provided in this paragraph (h), the purchase of a home and the payment of college tuition are not unforeseeable emergencies.  Whether a Participant is faced with an unforeseeable emergency permitting a distribution under this paragraph (h) is to be determined based on the relevant facts and circumstances of each case, but, in any case a distribution on account of an unforeseeable emergency may not be made to the extent that such emergency is or may be relieved through reimbursement or compensation from insurance or otherwise, by liquidation of the Participant’s assets, to the extent the liquidation of such assets would not cause severe financial hardship, or by cessation of elective deferrals.

Distributions because of an unforeseeable emergency must be limited to the amount reasonably necessary to satisfy the emergency need (which may include amounts necessary to pay any Federal, state, local, or foreign income taxes or penalties reasonably anticipated to result from the distribution).  A determination of the amounts reasonably necessary to satisfy the emergency need must take into account any additional compensation that is available due to cancellation of the Participant’s election as a result of this paragraph (h).

Notwithstanding anything in this Section 4.8 to the contrary, except for a Participant’s election to request a distribution due to an unforeseeable emergency under paragraph (h), above (which the Participant, in the Participant’s discretion, may elect to make or not make), RLI shall not provide the Participant with discretion or a direct or indirect election regarding whether a payment is accelerated pursuant to this Section 4.8.

4.9When a Payment is Deemed to be Made.  Any payment that is due to be distributed as of a particular date pursuant to the provisions of the Plan, will be deemed to be distributed as of that date if it is distributed on such date or a later date within the same calendar year, or, if later, by the 15th day of the third calendar month following the date, and the Participant is not permitted, directly or indirectly, to designate the calendar year of payment.  Further, a payment will be treated as made on a date if it is made no earlier than 30 days before the date, and the Participant is not permitted, directly or indirectly, to designate the calendar year of payment.  For purposes of the foregoing, if the payment is required to be made during a period of time, the specified date is treated as the first day of the period of time.

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Article 5

DEATH BENEFITS

5.1Death Benefits.

5.1.1Benefits When Participant Dies Before Commencement of Payments.  If the Participant dies before payment of the Participant’s Account has commenced, the Participant’s Account balance shall be paid to the Participant’s Beneficiary in a lump sum payment within 90 days after the date of death.  

5.1.2Benefits When Participant Dies After Commencement of Payments.  If the Participant dies after installments commence and the Participant has an Account balance at death, the remaining Account balance shall be paid to the Participant’s Beneficiary in a lump sum payment within 90 days after the date of death.  

5.1.3Medium of Payments.  To the extent a Participant’s Account is deemed to be invested in RLI Stock, the payment of the Account shall be made in whole shares of RLI Stock, except for a cash payment in lieu of a partial share as may be necessary. To the extent a Participant’s Account is deemed to be invested in a Measurement Fund, the payment of the Account shall be made in cash.

5.2Designation of Beneficiary.

5.2.1Persons Eligible to Designate.  Any Participant may designate a Beneficiary to receive any amount payable under the Plan as a result of the Participant’s death, provided that the Beneficiary survives the Participant.  The Beneficiary may be one or more persons, natural or otherwise.  By way of illustration, but not by way of limitation, the Beneficiary may be an individual, trustee, executor, or administrator.  A Participant may also change or revoke a designation previously made, without the consent of any Beneficiary named therein.

5.2.2Form and Method of Designation.  Any designation or a revocation of a prior designation of Beneficiary shall be in writing on a form acceptable to RLI and shall be filed with RLI.  RLI and all other parties involved in making payment to a Beneficiary may rely on the latest Beneficiary designation on file with RLI at the time of payment or may make payment pursuant to Section 5.2.3 if an effective designation is not on file, shall be fully protected in doing so, and shall have no liability whatsoever to any person making claim for such payment under a subsequently filed designation of Beneficiary or for any other reason.

5.2.3No Effective Designation.  If there is not on file with RLI an effective designation of Beneficiary by a deceased Participant, the Beneficiary shall be the person or persons surviving the Participant in the first of the following classes in which there is a survivor, share and share alike:

(a) The Participant’s spouse.  (A “spouse” is a person to whom the Participant is legally married, including a common-law spouse if the marriage was entered into in a state that recognizes common-law marriages and RLI has received acceptable proof and/or certification of common-law married status.)

(b) The Participant’s then living descendants, per stirpes.

(c) The individuals entitled to inherit the Participant’s property under the law of the state in which the Participant resides immediately before the Participant’s death, in the proportions determined under such law.

Determination of the identity of the Beneficiary in each case shall be made by RLI.

5.2.4Successor Beneficiary.  If a Beneficiary who survives the Participant subsequently dies before receiving the complete payment to which the Beneficiary was entitled, the successor Beneficiary, determined in accordance with the provisions of this section, shall be entitled to the payments remaining.  The successor

9

Beneficiary shall be the person or persons surviving the Beneficiary in the first of the following classes in which there is a survivor, share and share alike:

(a) The Beneficiary’s spouse. (A “spouse” is a person to whom the Beneficiary is legally married, including a common-law spouse if the marriage was entered into in a state that recognizes common-law marriages and RLI has received acceptable proof and/or certification of common-law married status.)

(b) The Beneficiary’s then living descendants, per stirpes.

(c) The individuals entitled to inherit the Beneficiary’s property under the law of the state in which the Beneficiary resides immediately before the Beneficiary’s death, in the proportions determined under such law.

Article 6

PAYMENT PROCEDURES

6.1Application for Benefits.  Benefits shall be paid to Participants automatically (without a written request) at the time and in the manner specified in the Plan.  Benefits shall be paid to a Beneficiary upon RLI’s receipt of a written request for the benefits, including appropriate proof of the Participant’s death and the Beneficiary’s identity and right to payment.

6.2Deferral of Payment.   If there is a dispute regarding a Plan benefit, RLI, in its sole discretion, may defer payment of the benefit until the dispute has been resolved.

Article 7

ADMINISTRATION

7.1Administrator.  RLI shall be the administrator of the Plan.  RLI shall control and manage the administration and operation of the Plan and shall make all decisions and determinations incident thereto.  Except with respect to the ordinary day-to-day administration of the Plan, action on behalf of RLI must be taken by one of the following:

(a) The Board; or

(b) The Nominating/Corporate Governance Committee of the Board.

7.1.1Delegation.  The ordinary day-to-day administration of the Plan may be delegated by the chief executive officer of RLI to an individual or a committee.  Such individual or committee shall have the authority to delegate or redelegate to one or more persons, jointly or severally, such functions assigned to such individual or committee as such individual or committee may from time to time deem advisable.

7.1.2Automatic Removal.  If any individual or committee member to whom responsibility under the Plan is allocated is a director, officer or employee of RLI or an Affiliate when responsibility is so allocated, then such individual shall be automatically removed as a member of a committee at the earliest time such individual ceases to be a director, officer or employee of RLI or an Affiliate.  This removal shall occur automatically and without any requirement for action by RLI or any notice to the individual so removed.

7.1.3Conflict of Interest.  If any individual or committee member to whom responsibility under the Plan is allocated is also a Participant or Beneficiary, such individual shall have no authority as such member with respect to any matter specifically affecting such Participant or Beneficiary’s individual interest hereunder (as distinguished from the interests of all Participants and Beneficiaries or a broad class of Participants and Beneficiaries), all such authority being reserved exclusively to the other members to the exclusion of such Participant or Beneficiary, and such Participant or Beneficiary shall act only in an individual capacity in connection with any such matter.

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7.1.4Binding Effect.  The determination of the Board or the Nominating/Corporate Governance Committee of the Board in any matter within its authority shall be binding and conclusive upon RLI and all persons having any right or benefit under the Plan.

7.1.5Third-Party Service Providers.  RLI may from time to time appoint or contract with an administrator, recordkeeper or other third-party service provider for the Plan.  Any such administrator, recordkeeper or other third-party service provider will serve in a nondiscretionary capacity and will act in accordance with directions given and procedures established by RLI.

7.2Benefits Not Transferable.  No Participant or Beneficiary shall have the power to transmit, alienate, dispose of, pledge or encumber any benefit payable under the Plan before its actual payment to the Participant or Beneficiary.  Any such effort by a Participant or Beneficiary to convey any interest in the Plan shall not be given effect under the Plan.  No benefit payable under the Plan shall be subject to attachment, garnishment, execution following judgment or other legal process before its actual payment to the Participant or Beneficiary.

7.3Benefits Not Secured.  The rights of each Participant and Beneficiary shall be solely those of an unsecured, general creditor of RLI.  No Participant or Beneficiary shall have any lien, prior claim or other security interest in any property of RLI.

7.4RLI’s Obligations.  RLI shall provide the benefits under the Plan.  RLI’s obligation may be satisfied by distributions from a trust fund created and maintained by RLI, in its sole discretion, for such purpose.  However, the assets of any such trust fund shall be subject to claims by the general creditors of RLI in the event RLI is (i) unable to pay its debts as they become due, or (ii) is subject to a pending proceeding as a debtor under the United States Bankruptcy Code.

7.5Withholding Taxes.  RLI shall have the right to withhold (and transmit to the proper taxing authority) such federal, state or local taxes as it may be required to withhold by applicable laws.  Such taxes may be withheld from any benefits due under the Plan or from any other compensation to which the Participant is entitled from RLI and its Affiliates.

7.6Service of Process.  The chief executive officer of RLI is designated as the appropriate and exclusive agent for the receipt of service of process directed to the Plan in any legal proceeding, including arbitration, involving the Plan.

7.7Limitation on Liability.  Neither RLI’s officers nor any member of its Board nor any individual or committee to whom RLI delegates responsibility under the Plan in any way secures or guarantees the payment of any benefit or amount which may become due and payable hereunder to or with respect to any Participant.  Each Participant and other person entitled at any time to payments hereunder shall look solely to the assets of RLI for such payments as an unsecured, general creditor.  After benefits have been paid to or with respect to a Participant and such payment purports to cover in full the benefit hereunder, such former Participant or other person(s), as the case may be, shall have no further right or interest in the other assets of RLI in connection with the Plan.  Neither RLI nor any of its officers nor any member of its Board nor any individual or committee to whom RLI delegates responsibility under the Plan shall be under any liability or responsibility for failure to effect any of the objectives or purposes of the Plan by reason of the insolvency of RLI.

Article 8

AMENDMENT AND TERMINATION

8.1Amendment.  RLI reserves the power to amend the Plan either prospectively or retroactively or both, in any respect, by action of its Board; provided that, no amendment shall be effective to reduce or divest benefits payable with respect to the Account of any Participant or Beneficiary without consent.  No amendment of the Plan shall be effective unless it is in writing and signed on behalf of RLI by a person authorized to execute such writing.  No oral representation concerning the interpretation or effect of the Plan shall be effective to amend the Plan.

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8.2Termination.  RLI reserves the right to terminate the Plan at any time by action of its Board; provided that, the termination of the Plan shall not reduce or divest benefits payable with respect to the Account of any Participant or Beneficiary or negate the Participant’s or Beneficiary’s rights with respect to such benefits.  Any such termination will be done in accordance with the requirements of Section 409A.

Article 9

MISCELLANEOUS

9.1Effect on Other Plans.  This Plan shall not alter, enlarge or diminish any person’s rights or obligations under any other benefit plan maintained by RLI or any Affiliate.

9.2Effect on Service.  Neither the terms of this Plan nor the benefits hereunder nor the continuance thereof shall be a term of the service of any Director.  RLI shall not be obliged to continue the Plan.  The terms of this Plan shall not give any Director the right to continue serving as a member of the Board, nor shall it create any obligation on the part of the Board to nominate any Director for reelection by RLI’s stockholders.

9.3Disqualification.  Notwithstanding any other provision of the Plan or any designation made under the Plan, any individual who feloniously and intentionally kills a Participant shall be deemed for all purposes of the Plan and all elections and designations made under the Plan to have died before such Participant.  A final judgment of conviction of felonious and intentional killing is conclusive for this purpose.  In the absence of a conviction of felonious and intentional killing, RLI shall determine whether the killing was felonious and intentional for this purpose.

9.4Rules of Document Construction.  Whenever appropriate, words used herein in the singular may be read in the plural, or words used herein in the plural may be read in the singular; and the words “hereof,” “herein” or “hereunder” or other similar compounds of the word “here” shall mean and refer to the entire Plan and not to any particular article, section or paragraph of the Plan unless the context clearly indicates to the contrary.  The titles given to the various articles and sections of the Plan are inserted for convenience of reference only and are not part of the Plan, and they shall not be considered in determining the purpose, meaning or intent of any provision hereof.  Written notification under the Plan shall include such other methods (for example, facsimile or e-mail) as RLI, in its sole discretion, may authorize from time to time.

9.5References to Laws.  Any reference in the Plan to a statute shall be considered also to mean and refer to the applicable regulations for that statute. Any reference in the Plan to a statute or regulation shall be considered also to mean and refer to any subsequent amendment or replacement of that statute or regulation.

9.6Choice of Law.  The Plan has been executed in the State of Illinois and has been drawn in conformity to the laws of that state and shall, except to the extent that federal law is controlling, be construed and enforced in accordance with the laws of the State of Illinois (without regard to its conflict of law principles).

9.7Binding Effect.   The Plan shall be binding upon and inure to the benefit of the successors and assigns of RLI, and the Beneficiaries, personal representatives and heirs of the Participant.

RLI Corp.

By: Craig W. Kliethermes

Its: President & Chief Executive Officer

And

By: Jeffrey D. Fick

Its: Chief Legal Officer & Corporate Secretary

IN WITNESS WHEREOF, RLI has cause the Plan to be executed by its duly authorized officers as of the 4th day of May, 2023.

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EX-10.2

Exhibit 10.2

RLI CORP. EXECUTIVES

DEFERRED COMPENSATION PLAN

Restated as of May 4, 2023

Article 1 INTRODUCTION‌2

1.1Establishment‌3

1.2Purpose‌4

1.3Definitions‌4

1.4“Top-Hat” Plan‌5

Article 2 PARTICIPATION‌6

2.1Eligibility and Selection‌6

2.2Notification‌6

2.3Enrollment‌6

2.4Elective Deferrals‌6

Article 3 ACCOUNTS‌8

3.1Accounts‌8

3.2Credits to Accounts‌8

3.3Elective Deferrals‌8

3.5Charges to Accounts‌9

Article 4 BENEFITS‌9

4.1Vesting‌9

4.2Payment of Plan Benefits on Termination of Employment - General Rule‌9

4.3Changing Payment Elections‌9

4.4Special Rules‌10

4.5Medium of Payments‌10

4.6Delay in Distributions‌11

4.7Acceleration of Distributions‌11

4.8When a Payment is Deemed to be Made‌11

Article 5 DEATH BENEFITS‌12

5.1Death Benefits‌12

5.2Designation of Beneficiary‌13

Article 6 CLAIMS AND REVIEW PROCEDURES‌14

6.1Application for Benefits‌14

6.2Claims and Review Procedures‌14

6.3Claims Rules‌15

6.4Deadline to File Claim‌16

6.5Exhaustion of Administrative Remedies‌16

6.6Arbitration‌16

6.7Deadline to File an Arbitration Action‌16

6.8Knowledge of Fact by Participant Imputed to Beneficiary‌16

6.9Deferral of Payment‌17

Article 7 ADMINISTRATION‌17

7.1Administrator‌17

7.2Benefits Not Transferable‌17

7.3Benefits Not Secured‌18

7.4RLI’s Obligations‌18

7.5Withholding Taxes‌18

7.6Service of Process‌18

7.7Limitation on Liability‌18

Article 8 AMENDMENT AND TERMINATION‌18

8.1Amendment‌18

8.2Termination‌18

Article 9 MISCELLANEOUS‌18

9.1Effect on Other Plans‌18

9.2Effect on Employment‌18

9.3Disqualification‌19

9.4Rules of Document Construction‌19

9.5References to Laws‌19

9.6Choice of Law‌19

9.7Binding Effect‌19

RLI CORP. EXECUTIVES

DEFERRED COMPENSATION PLAN

Article 1

INTRODUCTION

1.1Establishment.  RLI Corp. established the RLI Corp. Executives Deferred Compensation Plan effective January 1, 2005. Prior to that date, RLI provided similar deferred compensation opportunities to a select group of executives under certain Prior Agreements. All obligations under the Prior Agreements (including any predecessor arrangements) will be satisfied under the Prior Agreements, rather than under this Plan. On April 10, 2007, RLI restated the Plan, effective January 1, 2009, to comply with the requirements of the final regulations issued under Section 409A of the Code (“Section 409A”).  RLI thereafter amended the Plan effective May 4, 2017 to make clear how partial (or fractional) shares are paid in a single or final payment.  On January 1, 2020, RLI further restated the Plan to expand the types of investment and distribution alternatives available to Participants.  Such restatement applied to amounts deferred under the Plan on or after January 1, 2020 (the “Restatement Date”), and, to the extent permitted under Section 409A, to the payment of all amounts deferred under the Plan (whether such amounts were deferred before, on, or after the Restatement Date) that have not yet been distributed as of the Restatement Date. On May 4,

2023, the Plan was further amended and restated to provide for installment payments to be accelerated and paid in a lump sum if the value of a Participant’s accounts fall below a specified amount.

The obligation of RLI to make payments under the Plan constitutes an unsecured (but legally enforceable) promise of RLI to make such payments and no person, including any Participant or Beneficiary, shall have any lien, prior claim or other security interest in any property of RLI as a result of the Plan.

1.2Purpose.  The purpose of the Plan is to attract and retain qualified executives and to provide them with an opportunity to save on a pre-tax basis and accumulate tax-deferred income to achieve their financial goals.

1.3Definitions.  When the following terms are used herein with initial capital letters, they shall have the following meanings:

1.3.1.Account - the separate recordkeeping account (unfunded and unsecured) maintained for each Participant in connection with the Participant’s participation in the Plan, which shall consist of separate subaccounts relating to the Deferral Eligible Amounts deferred by such Participant in each Year.

1.3.2.Affiliate - a business entity which is under a “common control” with RLI or which is a member of an “affiliated service group” that includes RLI, as those terms are defined in Section 414(b), (c) and (m) of the Code.

1.3.3.Base Salary -  the Participant’s total salary and wages from RLI and all Affiliates, including any amount that would be included in the definition of Base Salary but for the individual’s election to defer some of such Participant’s salary pursuant to the Plan or any other deferred compensation plan established by RLI or any Affiliate; but excluding disability pay and any other remuneration paid by RLI or its Affiliates, such as overtime, incentive compensation, stock options, distributions of compensation previously deferred, restricted stock, allowances for expenses (including moving, travel expenses, and automobile allowances), and fringe benefits whether payable in cash or in a form other than cash. In the case of an individual in a plan sponsored by RLI or an Affiliate that is described in Section 401(k), 125 or 132(f) of the Code, the term Base Salary shall include any amount that would be included in the definition of Base Salary but for the individual’s election to reduce such individual’s salary and have the amount of the reduction contributed to or used to purchase benefits under such plan.

1.3.4.Beneficiary - the person or persons designated as such under Section 5.2.

1.3.5.Board - the Board of Directors of RLI.

1.3.6.Chief Executive Officer - the Chief Executive Officer of RLI.

1.3.7.Code - the Internal Revenue Code of 1986, as the same may be amended from time to time.

1.3.8.Committee - the Human Capital & Compensation Committee of the Board or its successor.

1.3.9.Deferral Eligible Amounts - with respect to a Participant for any period, means the sum of such Participant’s Base Salary and Incentive Compensation for such period.

1.3.10.Employee - a common-law employee of RLI or an Affiliate (while it is an Affiliate).

1.3.11.ERISA - the Employee Retirement Income Security Act of 1974, as the same may be amended from time to time.  

1.3.12.Incentive Compensation - the total remuneration of the Participant of the Participant from RLI and all Affiliates under [the various cash incentive compensation programs maintained by RLI and all Affiliates, including, but not limited to,] amounts received under the Market Value Potential (“MVP”) Executive Incentive Program and the Underwriting Profit Program (“UPP”), but excluding any other type of

remuneration paid by RLI or its Affiliates, such as Base Salary, overtime, stock options, distributions of compensation previously deferred, restricted stock, allowances for expenses, and fringe benefits. [The Committee, from time to time, shall designate those items of a Participant’s Compensation deemed to be Incentive Compensation.]

1.3.13.Measurement Fund - any mutual fund or other investment vehicle designated by RLI from time to time to be available to Participants for purposes of measuring the earnings to be credited to Accounts pursuant to Section 3.4 of the Plan.  

1.3.14.Participant – an eligible Employee who enrolls as a Participant in the Plan under Section 2.3. An Employee who becomes a Participant shall remain a Participant in the Plan until the complete payment of the Participant’s Account balance after the Participant’s Termination of Employment or death.

1.3.15.Performance-Based Compensation – the Incentive Compensation of the Participant for a period where the amount of, or entitlement to, the Incentive Compensation is contingent on the satisfaction of pre-established organizational or individual performance criteria relating to a performance period of at least 12 consecutive months. Organizational or individual performance criteria are considered pre-established if established in writing by no later than 90 days of the commencement period of service to which the criteria relate, provided that the outcome is substantially uncertain at the time the criteria are established. Performance-Based Compensation may include payment based on performance criteria that are not approved by the Board or the Compensation Committee of the Board or by the stockholders of the Company. Performance-Based Compensation does not include any amount or portion of any amount that will be paid either regardless of performance, or based upon a level of performance that is substantially certain to be met at the time the criteria are established.

1.3.16.Plan - the unfunded deferred compensation plan that is set forth in this document, as the same may be amended from time to time. The name of the Plan is the “RLI Corp. Executives Deferred Compensation Plan.”

1.3.17.Prior Agreement - an individual agreement entered into by an Employee and RLI to provide deferred compensation opportunities to the Employee.

1.3.18.RLI - RLI Corp. and any Successor Corporation.

1.3.19.RLI Stock - the common stock of RLI.

1.3.20.Specified Employee - means an employee of RLI or an Affiliate who is subject to the six-month delay rule described in Section 409A(2)(B)(i) of the Code. RLI shall establish a written policy for identifying Specified Employees in a manner consistent with Section 409A, which policy may be amended by RLI from time to time as permitted by Section 409A.

1.3.21.Successor Corporation - any entity that succeeds to the business of RLI through merger, consolidation, acquisition of all or substantially all of its assets, or any other means and which elects before or within a reasonable time after such succession, by appropriate action evidenced in writing, to continue the Plan.

1.3.22.Termination of Employment - with respect to a Participant, means the Participant’s separation from service with RLI and all Affiliates, within the meaning of Section 409A(a)(2)(A)(i) of the Code and the regulations under such section. Solely for this purpose, a Participant who is an eligible Employee will be considered to have a Termination of Employment when the Participant dies, retires, or otherwise has a termination of employment with RLI and all Affiliates. The employment relationship is treated as continuing intact while the Participant is on military leave, sick leave, or other bona fide leave of absence if the period of such leave does not exceed six months, or if longer, so long as the individual retains a right to reemployment with RLI or an Affiliate under an applicable statute or by contract. For purposes hereof, a leave of absence constitutes a bona fide leave of absence only if there is a reasonable expectation that the

Participant will return to perform services for RLI or an Affiliate. If the period of leave exceeds six months and the individual does not retain a right to reemployment under an applicable statute or by contract, the employment relationship is deemed to terminate on the first date immediately following such six-month period. Notwithstanding the foregoing, where a leave of absence is due to any medically determinable physical or mental impairment that can be expected to last for a continuous period of not less than six months, where such impairment causes the employee to be unable to perform the duties of such employee’s position of employment or any substantially similar position of employment, RLI may substitute a 29-month period of absence for such six-month period.

Whether a termination of employment has occurred is determined based on whether the facts and circumstances indicate that RLI or its Affiliate and the Participant reasonably anticipated that no further services will be performed after a certain date or that the level of bona fide services the Participant will perform after such date will permanently decrease to no more than 49 percent of the average level of bona fide services performed over the immediately preceding 36-month period (or the full period of services if the Participant has been providing services for less than 36 months).

Notwithstanding anything in Section 1.3.22 to the contrary, in determining whether a Participant has had a Termination of Employment with RLI or an Affiliate, an entity’s status as an “Affiliate” shall be determined substituting “50 percent” for “80 percent” each place it appears in Section 1563(a)(1),(2), and (3) and in Treasury Regulation Section 1.414(c)-2.

RLI shall have discretion to determine whether a Participant has experienced a Termination of Employment in connection with an asset sale transaction entered into by RLI or an Affiliate, provided that such determination conforms to the requirements of Section 409A and the regulations and other guidance issued under such section, in which case RLI’s determination shall be binding on the Participant.

1.3.23.Vested – non-forfeitable.

1.3.24.Year - the calendar year.

1.4“Top-Hat” Plan.  The Plan is intended to be a “top-hat” plan – that is, an unfunded plan maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated individuals within the meaning of ERISA §§ 201(2), 301(a)(3) and 401(a)(1), which is exempt from Parts 2, 3 and 4 of Title I of ERISA. The Plan also is a nonqualified deferred compensation plan subject to Section 409A. To the extent any provision of the Plan does not satisfy the requirements contained in Section 409A or in any regulations or other guidance issued by the Treasury Department under Section 409A, such provision will be applied in a manner consistent with such requirements, regulations or guidance, notwithstanding any contrary provision of the Plan or any inconsistent election made by a Participant.

Article 2

PARTICIPATION

2.1Eligibility and Selection.  The following Employees shall be eligible to enroll as Participants in the Plan:

(a)Employees with the titles: Chief Executive Officer, President and Senior Vice President; and

(b)Such other Employees as the Committee, in its sole discretion, shall determine from time to time, provided that each such Employee must;

(1) Have the title of Vice President or above, and

(2) Be expected to have compensation in excess of the Section 401(a)(17) of the Code limit in the Participant’s initial Year of eligibility.

2.2Notification.  RLI shall provide each eligible Employee with (i) written notification of the Employee’s eligibility to participate in the Plan, and (ii) either a copy of the Plan or written notification that such a copy is available upon request.

2.3Enrollment.  Except as otherwise permitted under Section 2.4.2, below, an eligible Employee will be allowed to enroll in the Plan during the thirty (30) day period coinciding with and following the date the Employee is notified of the Employee’s initial eligibility to participate in accordance with Section 2.2. Such an enrollment will be effective as of the date it is made. Thereafter, an eligible Employee may elect to enroll for a Year during the enrollment period established by RLI for such Year, which enrollment period will be a period of not less than thirty (30) days that, except as otherwise permitted under Section 2.4.2, below, ends not later than the last day of the prior Year. Enrollment must be made in such manner and in accordance with such rules as may be prescribed for this purpose by RLI (including by means of a voice response or other electronic system under circumstances authorized by RLI).

2.4Elective Deferrals.

2.4.1.Elections.  A Participant may elect to reduce Deferral Eligible Amounts by any dollar amount or whole percent, but not more than one-hundred percent (100%). A separate reduction amount or percentage may apply to Base Salary and to Incentive Compensation. In addition, a Participant may make a separate election to reduce his or her Base Salary by an amount equal to the amount, if any, distributed to the Participant in the applicable Year under the RLI Corp. 401k Plan, or a successor thereto, and representing excess contributions for the previous Year under Section 415(c) of the Code.  An election must be made in such manner and in accordance with such rules as may be prescribed for this purpose by RLI (including by means of a voice response or other electronic system under circumstances authorized by RLI). An election must be made as part of the enrollment described in Section 2.3.

2.4.2.Elections Relate to Services Performed After the Election and Are Irrevocable.  An election will apply to all Deferral Eligible Amounts attributable to services performed in a given Year, regardless of when such Deferral Eligible Amounts would otherwise be payable to the Participant (for example, an election to defer Incentive Compensation attributable to services performed in a given Year but payable in the next Year, must be made as part of the enrollment election made prior to the Year in which the services are performed). However, an election will only be effective to defer Deferral Eligible Amounts earned after the election is made, and not before. For example, an election made in connection with a mid-year enrollment under Section 2.3 will only be effective for Deferral Eligible Amounts attributable to services performed on and after the effective date of the enrollment as provided in Section 2.3. An election will apply solely with respect to the given Year – that is, an election will not automatically be carried over and applied to the next Year.

Notwithstanding the foregoing, elections for Incentive Compensation that is Performance-Based Compensation must be completed and submitted to the Company not later than six months before the end of the performance period for the Incentive Compensation; provided, however, that in order for such an election to be valid, the Participant must perform services continuously from the beginning of the performance period (or the date the performance criteria are established, if later) through the date the election is entered into, and provided further, that in no event may an election be effective to defer Incentive Compensation after the Incentive Compensation has become reasonably ascertainable. For purposes hereof, if Incentive Compensation is a specific or calculable amount, the Incentive Compensation is readily ascertainable if and when the amount is first substantially certain to be paid. If Incentive Compensation is not a specific or calculable amount, the Incentive Compensation, or any portion thereof, is readily ascertainable when the amount is both calculable and substantially certain to be paid. Accordingly, in general, any minimum amount that is both calculable and substantially certain to be paid will be treated as readily ascertainable.

In general, an election shall become irrevocable as of the last day of the enrollment period applicable to it. However, if a Participant incurs an “unforeseeable emergency,” as defined in Section 4.8(h), or becomes entitled to receive a hardship distribution pursuant to Treas. Reg. § 1.401(k)-1(d)(3) after the election otherwise becomes irrevocable, the election shall be cancelled as of the date on which the Participant is determined to have incurred the unforeseeable emergency or becomes eligible to receive the hardship distribution and no further deferrals will be made under it. In addition, if a Participant becomes “disabled”

(as defined below), RLI may, in its discretion, cancel the Participant’s election then in effect, provided that such cancellation is made no later than the end of the Plan Year, or if later, the 15th day of the third month following the date on which the Participant becomes disabled, and provided further that RLI does not allow the Participant a direct or indirect election regarding the cancellation. For purposes of the preceding sentence, “disability” means any medically determinable physical or mental impairment resulting in the Participant’s inability to perform the duties required by the Participant’s position or any substantially similar position, where such impairment can be expected to result in death or can be expected to last for a continuous period of not less than six months.

2.4.3.Limits.  RLI may, in its sole discretion, limit the minimum or maximum amount of deferrals that are allowed under the Plan by any Participant or any group of Participants, provided that such limit is established prior to the beginning of the Year or prior to enrollment of the affected Participant.

Article 3

ACCOUNTS

3.1Accounts.  RLI shall establish and maintain a separate Account for each Participant. The Account shall be for recordkeeping purposes only and shall not represent a trust fund or other segregation of assets for the benefit of the Participant. A separate subaccount shall be established within each Account to represent the amount deferred by a Participant for each Year in which the Participant defers a Deferral Eligible Amount under the Plan.

3.2Credits to Accounts.  Each Participant’s Account shall be credited from time to time as provided in this Article 3.

3.3Elective Deferrals.  Each Deferral Eligible Amount which the Participant has elected to defer under the Plan shall be credited to the Participant’s Account on, or as soon as administratively practicable after, the date it would otherwise be paid to the Participant.

3.4Hypothetical Investment Funds.  A Participant shall have the right to direct the manner in which earnings are credited to the portion of such Participant’s Account relating to amounts deferred on or after January 1, 2020 by electing to have the Account notionally invested, in percentages elected by the Participant, in hypothetical investment options, the value of which shall track either RLI Stock or any of the Measurement Funds.  A Participant shall make such elections in such manner and in accordance with such rules as may be prescribed for this purpose by RLI (including by means of a voice response or other electronic system under circumstances authorized by RLI).  The portion of each Participant’s Account relating to amounts deferred prior to January 1, 2020 shall be notionally invested in RLI Stock.

3.4.1.To the extent a deferral is notionally invested in RLI Stock, the Participant’s Account shall be credited with a hypothetical number of shares of RLI Stock equal to the number of full and fractional shares that could be purchased with such amount on, or as soon as administratively feasible after, the date such amount is credited to the Participant’s Account. The Participant’s Account shall be credited with additional RLI Stock credits, equal to the number of full and fractional shares of RLI Stock that could be purchased with any cash dividends which would be payable on the RLI Stock credited to the Participant’s Account. For this purposes, the share price on, or as soon as administratively practicable after, the date the dividend is paid will be used. The Account also will be adjusted for any stock split, redemption or similar event, in a manner determined to be reasonable by RLI.

3.4.2.To the extent a deferral is notionally invested in a Measurement Fund, the Participant’s Account shall be credited with a hypothetical number of shares of such Measurement Fund, equal to the number of full and fractional shares that could be purchased with such amount on, or as soon as administratively practicable after, the date such amount is credited to the Participant’s Account.

3.4.3.Notwithstanding any other provision of this Plan that may be interpreted to the contrary, the RLI Stock and the Measurement Fund(s) are to be used for measurement purposes only, and the allocation of each Participant’s Account to RLI Stock or to a Measurement Fund, the calculation of additional amounts, and the

crediting or debiting of such additional amounts to such Participant’s Account shall not be considered or construed in any manner as an actual investment of such Participant’s Account in RLI Stock or any Measurement Fund.

3.5Charges to Accounts.  As of the date any Plan benefit measured by the Account is paid to the Participant or the Participant’s Beneficiary, the Account shall be charged with the amount of such benefit payment.

Article 4

BENEFITS

4.1Vesting.   The Participant’s Account shall be fully (100%) Vested.

4.2Payment of Plan Benefits – Amounts Deferred Prior to January 1, 2020--General Rule.  If the Participant has an Account balance that relates to amounts deferred in Years prior to January 1, 2020, RLI shall pay that balance to the Participant in five (5) annual installments, commencing after the Participant’s Termination of Employment, as follows:

(a)Time.  The first installment shall be paid on the January 1 following the Year in which the Participant’s Termination of Employment occurs. The remaining installments shall be paid on each subsequent January 1.

(b)Amount.  The amount of each installment shall be determined using a “fractional” method – by multiplying the Participant’s Account balance immediately before the installment payment date by a fraction, the numerator of which is one and the denominator of which is the number of installments remaining (including the installment in question).

4.3Payment of Plan Benefits – Amounts Deferred On or After January 1, 2020--General Rule.  If the Participant has an Account balance that relates to amounts deferred in Years beginning on or after January 1, 2020, RLI shall pay that balance to the Participant as follows:

(a)Time.  At the time the Participant elects to defer Deferral Eligible Amounts earned in a particular Year, the Participant shall elect to receive a distribution of the subaccount relating to such deferrals on or beginning on any of the following distribution dates (the applicable date, a “Distribution Date”): (i) January 1st of the Year following the Participant’s Termination of Employment, (ii) January 1st of any Year designated by the Participant that is not less than two years and not more than 20 years after the beginning of the Year to which such deferral relates or (iii) the earlier of (A) January 1st of the Year following the Participant’s Termination of Employment and (B) January 1st of any Year designated by the Participant that is not less than two years and not more than 20 years after the beginning of the Year to which such deferral relates.

(b)Form of Payment.  At the time the Participant elects to defer Deferral Eligible Amounts earned in a particular Year, the Participant shall elect to receive the distribution of the subaccount relating to such deferrals in one of the following forms of distribution: (i) a lump sum payment or (ii) annual installments over a period of not less than five years and not more than 15 years.  

(c)Payment of Installments.  If the Participant elects to receive a distribution in the form of installments, the first installment shall be paid on the Distribution Date elected in accordance with Section 4.3(a), and the remaining installments shall be paid on January 1st of each subsequent Year until the applicable subaccount has been distributed in its entirety.  A distribution that is paid in the form of installments shall be considered a single payment for purposes of Section 409A.  The amount of each installment shall be determined using a “fractional” method – by multiplying the Participant’s Account balance immediately before the installment payment date by a fraction, the numerator of which is one and the denominator of which is the number of installments remaining (including the installment in question). If the distribution is made in shares of RLI Stock pursuant to Section 4.6.1, the result shall be rounded down to the next lower full share of RLI Stock, except

for the final installment, which shall distribute the final shares and pay cash in lieu of any partial share

4.4Changing Payment Elections.

4.4.1.General Rule.  A Participant may elect to change the Distribution Date or the form of distribution (i.e., from a lump sum to installments, from installments to a lump sum or the number of installments), subject to the rules below. Any such election must be made in such manner and in accordance with such rules as may be prescribed for this purpose by RLI (including by means of a voice response or other electronic system under circumstances authorized by RLI).

4.4.2.Subsequent Election.  A Participant may change the Distribution Date or the form of distribution in accordance with the following rules:

(a)The election must be received by RLI in writing and in proper form and must not take effect for at least 12 months from the date on which it is submitted to RLI;

(b)The election must be submitted to RLI at least 12 months prior to the previously elected Distribution Date; and  

(c)The Distribution Date must be delayed at least five (5) years from the previously elected Distribution Date.

4.5Special Rules.

4.5.1.Specified Employee Exception.  If a Participant is a Specified Employee and the Distribution Date occurs upon the Participant’s Termination of Employment, the Distribution Date shall be delayed to the later of (i) the January 1 following the Year in which the Participant’s Termination of Employment occurs or (ii) the first day of the seventh month following the Participant’s Termination of Employment. This delay shall not apply in the event of the Participant’s death. If the subaccount is paid in the form of installments, any subsequent annual installments shall be paid as described in Section 4.3(c).  

4.5.2.Acceleration of Small Amounts.  Any contrary provision or election notwithstanding, if the Participant’s Account balance is less than one hundred thousand dollars ($100,000) as of the date installments are to commence, the Account shall be paid to the Participant in a single lump-sum, as full settlement of all benefits due under the Plan; provided that, for purposes of applying the one hundred thousand dollar ($100,000) acceleration limit, all nonqualified deferred compensation amounts payable to the Participant by RLI and its Affiliates shall be aggregated if and to the extent required under Section 409A or any regulations or other guidance issued by the Treasury Department thereunder. Further, any contrary provision or election notwithstanding, and effective for distributions commencing on or after May 4, 2023, if at any point after the commencement of installments under Sections 4.2 or 4.3 of the Plan the Participant’s Account balance is not greater than the applicable dollar amount under Section 402(g)(1)(B) of the Code (“Section 402(g) Limit”), the Account shall be paid to the Participant in a single lump-sum, as full settlement of all benefits due under the Plan; provided that, for purposes of applying the Section 402(g) Limit, all nonqualified deferred compensation amounts payable to the Participant by RLI and its Affiliates shall be aggregated if and to the extent required under Section 409A or any regulations or other guidance issued by the Treasury Department thereunder.

4.6Medium of Payments.  

4.6.1.RLI Stock. To the extent a Participant’s Account is deemed to be invested in RLI Stock, the payment of the Account shall be made in whole shares of RLI Stock, except for a cash payment in lieu of a partial share as may be necessary. Unless the shares have been registered under the Securities Act of 1933

(the “Act”), are otherwise exempt from the registration requirements of the Act, are the subject of a favorable no action letter issued by the Securities and Exchange Commission, or are the subject of an opinion of counsel acceptable to RLI to the effect that such shares are exempt from the registration requirements of the Act, the transfer of such shares shall be subject to the provisions of Rule 144 of the Act, as the same may be amended from time to time.

4.6.2.Measurement Funds.  To the extent a Participant’s Account is deemed to be invested in a Measurement Fund, the payment of the Account shall be made in cash.  

4.7Delay in Distributions.  A payment under the Plan may be delayed by RLI under any of the following circumstances so long as all payments to similarly situated Participants are treated on a reasonably consistent basis:

(a)RLI reasonably anticipates that the making of the payment will violate Federal securities laws or other applicable law, provided that the payment is made at the earliest date at which RLI reasonably anticipates that the making of the payment will not cause such violation.

(b)Upon such other events as determined by RLI and according to such terms as are consistent with Section 409A or are prescribed by the Commissioner of Internal Revenue.

4.8Acceleration of Distributions.  RLI may, in its discretion, distribute all or a portion of a Participant’s Accounts at an earlier time and in a different form than specified as otherwise provided in this Article 4, under the circumstances described below:

(a)As may be necessary to fulfill a Domestic Relations Order. Distributions pursuant to a Domestic Relations Order shall be made according to administrative procedures established by RLI.

(b)To the extent reasonably necessary to avoid the violation of ethics laws or conflict of interest laws pursuant to Section 1.409A-3(j)(ii) of the Treasury regulations.

(c)To pay FICA on amounts deferred under the Plan and the income tax resulting from such payment.

(d)To pay the amount required to be included in income as a result of the Plan’s failure to comply with Section 409A.

(e)If RLI determines, in its discretion, that it is advisable to liquidate the Plan in connection with a termination of the Plan subject to the requirements of Section 409A.

(f)As satisfaction of a debt of the Participant to RLI or an Affiliate, where such debt is incurred in the ordinary course of the service relationship between RLI or the Affiliate and the Participant, the entire amount of the reduction in any Plan Year does not exceed $5,000, and the reduction is made at the same time and in the same amount as the debt otherwise would have been due and collected from the Participant.

(g)To pay state, local or foreign tax obligations that may arise with respect to amounts deferred under the Plan and the income tax resulting from such payment.

(h)If the Participant has an unforeseeable emergency. For these purposes an “unforeseeable emergency” is a severe financial hardship to the Participant, resulting from an illness or accident of the Participant, the Participant’s spouse, the Beneficiary, or the Participant’s dependent (as defined in Section 152, without regard to Section 152(b)(1), (b)(2), and (d)(1)(B) of the Code); loss of the Participant’s property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by insurance); or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. For example, the imminent foreclosure of or eviction from the Participant’s primary residence may constitute an

unforeseeable emergency. In addition, the need to pay for medical expenses, including non-refundable deductibles, as well as for the cost of prescription drug medication, may constitute an unforeseeable emergency. Finally, the need to pay for funeral expenses of a spouse, Beneficiary, or a dependent (as defined in Section 152, without regard to 152(b)(1), (b)(2), and (d)(1)(B) of the Code) may also constitute an unforeseeable emergency. Except as otherwise provided in this paragraph (h), the purchase of a home and the payment of college tuition are not unforeseeable emergencies. Whether a Participant is faced with an unforeseeable emergency permitting a distribution under this paragraph (h) is to be determined based on the relevant facts and circumstances of each case, but, in any case a distribution on account of an unforeseeable emergency may not be made to the extent that such emergency is or may be relieved through reimbursement or compensation from insurance or otherwise, by liquidation of the Participant’s assets, to the extent the liquidation of such assets would not cause severe financial hardship, or by cessation of elective deferrals.

Distributions because of an unforeseeable emergency must be limited to the amount reasonably necessary to satisfy the emergency need (which may include amounts necessary to pay any Federal, state, local, or foreign income taxes or penalties reasonably anticipated to result from the distribution). A determination of the amounts reasonably necessary to satisfy the emergency need must take into account any additional compensation that is available due to cancellation of the Participant’s election as a result of this paragraph (h).

Notwithstanding anything in this Section 4.8 to the contrary, except for a Participant’s election to request a distribution due to an unforeseeable emergency under paragraph (h), above (which the Participant, in the Participant’s discretion, may elect to make or not make), RLI shall not provide the Participant with discretion or a direct or indirect election regarding whether a payment is accelerated pursuant to this Section 4.8.

4.9When a Payment is Deemed to be Made.  Any payment that is due to be distributed as of a particular date pursuant to the provisions of the Plan, will be deemed to be distributed as of that date if it is distributed on such date or a later date within the same calendar year, or, if later, by the 15th day of the third calendar month following the date, and the Participant is not permitted, directly or indirectly, to designate the calendar year of payment. Further, a payment will be treated as made on a date if it is made no earlier than 30 days before the date, and the Participant is not permitted, directly or indirectly, to designate the calendar year of payment. For purposes of the foregoing, if the payment is required to be made during a period of time, the specified date is treated as the first day of the period of time.

Article 5

DEATH BENEFITS

5.1Death Benefits.

5.1.1.Benefits When Participant Dies Before Commencement of Payments.  If the Participant dies before payment of the Participant’s Account has commenced, the Participant’s Account balance shall be paid to the Participant’s Beneficiary in a lump sum payment within 90 days after the date of death.  

5.1.2.Benefits When Participant Dies After Commencement of Payments.  If the Participant dies after installments commence and the Participant has an Account balance at death, the remaining Account balance shall be paid to the Participant’s Beneficiary in a lump sum payment within 90 days after the date of death.  

5.1.3.Medium of Payments.  To the extent a Participant’s Account is deemed to be invested in RLI Stock, the payment of the Account shall be made in whole shares of RLI Stock, except for a cash payment in lieu of a partial share as may be necessary. To the extent a Participant’s Account is deemed to be invested in a Measurement Fund, the payment of the Account shall be made in cash.

5.2Designation of Beneficiary.

5.2.1.Persons Eligible to Designate.  Any Participant may designate a Beneficiary to receive any amount payable under the Plan as a result of the Participant’s death, provided that the Beneficiary survives the Participant. The Beneficiary may be one or more persons, natural or otherwise. By way of illustration, but not by way of limitation, the Beneficiary may be an individual, trustee, executor, or administrator. A Participant may also change or revoke a designation previously made, without the consent of any Beneficiary named therein.

5.2.2.Form and Method of Designation.  Any designation or a revocation of a prior designation of Beneficiary shall be in writing on a form acceptable to RLI and shall be filed with RLI. RLI and all other parties involved in making payment to a Beneficiary may rely on the latest Beneficiary designation on file with RLI at the time of payment or may make payment pursuant to Section 5.2.3 if an effective designation is not on file, shall be fully protected in doing so, and shall have no liability whatsoever to any person making claim for such payment under a subsequently filed designation of Beneficiary or for any other reason.

Notwithstanding any provision of this Section 5.2 to the contrary, any Beneficiary designation made under the Prior Agreements will continue in effect under this Plan until modified by the Participant pursuant to this Section 5.2.

5.2.3.No Effective Designation.  If there is not on file with RLI an effective designation of Beneficiary by a deceased Participant, the Beneficiary shall be the person or persons surviving the Participant in the first of the following classes in which there is a survivor, share and share alike:

(a)The Participant’s spouse. (A “spouse” is a person to whom the Participant is legally married, including a common-law spouse if the marriage was entered into in a state that recognizes common-law marriages and RLI has received acceptable proof and/or certification of common-law married status.)

(b)The Participant’s then living descendants, per stirpes.

(c)The Participant’s estate.

Determination of the identity of the Beneficiary in each case shall be made by RLI.

5.2.4.Successor Beneficiary.  If a Beneficiary who survives the Participant subsequently dies before receiving the complete payment to which the Beneficiary was entitled, the successor Beneficiary, determined in accordance with the provisions of this section, shall be entitled to the payments remaining. The successor Beneficiary shall be the person or persons surviving the Beneficiary in the first of the following classes in which there is a survivor, share and share alike:

(a)The Participant’s spouse. (A “spouse” is a person to whom the Participant is legally married, including a common-law spouse if the marriage was entered into in a state that recognizes common-law marriages and RLI has received acceptable proof and/or certification of common-law married status.)

(b)The Participant’s then living descendants, per stirpes.

(c)The Participant’s estate.

Article 6

CLAIMS AND REVIEW PROCEDURES

6.1Application for Benefits.  Benefits shall be paid to Participants automatically (without a written request) at the time and in the manner specified in the Plan. Benefits shall be paid to a Beneficiary upon RLI’s receipt of a written

request for the benefits, including appropriate proof of the Participant’s death and the Beneficiary’s identity and right to payment. This written request shall be considered a claim for the purposes of this article.

6.2Claims and Review Procedures.  The claims and review procedures set forth in this article shall be the mandatory claims and review procedures for the resolution of disputes and disposition of claims filed under the Plan.

6.2.1.Initial Claim.  An individual may, subject to any applicable deadline, file with the Committee a written claim for benefits under the Plan in a form and manner prescribed by RLI.

(a)If the claim is denied in whole or in part, the Committee shall notify the claimant of the adverse benefit determination within ninety (90) days after receipt of the claim.

(b)The ninety (90) day period for making the claim determination may be extended for ninety (90) days if the Committee determines that special circumstances require an extension of time for determination of the claim, provided that the Committee notifies the claimant, prior to the expiration of the initial ninety (90) day period, of the special circumstances requiring an extension and the date by which a claim determination is expected to be made.

6.2.2.Notice of Initial Adverse Determination. A notice of an adverse determination shall set forth in a manner calculated to be understood by the claimant:

(a)The specific reasons for the adverse determination;

(b)References to the specific provisions of the Plan (or other applicable document) on which the adverse determination is based;

(c)A description of any additional material or information necessary to perfect the claim and an explanation of why such material or information is necessary; and

(d)A description of the claims review procedures, including the time limits applicable to such procedures.

6.2.3.Request for Review.  Within ninety (90) days after receipt of an initial adverse benefit determination notice, the claimant may file with the Board a written request for a review of the adverse determination and may, in connection therewith submit written comments, documents, records and other information relating to the claim benefits.  Any request for review of the initial adverse determination not filed within ninety (90) days after receipt of the initial adverse determination notice shall be untimely.

6.2.4.Claim on Review.  If the claim, upon review, is denied in whole or in part, the Board shall notify the claimant of the adverse benefit determination within sixty (60) days after receipt of such a request for review.

(a)The sixty (60) day period for deciding the claim on review may be extended for sixty (60) days if the Board determines that special circumstances require an extension of time for determination of the claim, provided that the Board notifies the claimant, prior to the expiration of the initial sixty (60) day period, of the special circumstances requiring an extension and the date by which a claim determination is expected to be made.

(b)In the event that the time period is extended due to a claimant’s failure to submit information necessary to decide a claim on review, the claimant shall have sixty (60) days within which to provide the necessary information and the period for making the claim determination on review shall be tolled from the date on which the notification of the extension is sent to the claimant until the date on which the claimant responds to the request for additional information or, if earlier, the expiration of sixty (60) days.

(c)The Board's review of a denied claim shall take into account all comments, documents, records, and other information submitted by the claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.

6.2.5.Notice of Adverse Determination for Claim on Review.  A notice of an adverse determination for a claim on review shall set forth in a manner calculated to be understood by the claimant:

(a)The specific reasons for the denial;

(b)References to the specific provisions of the Plan (or other applicable document) on which the adverse determination is based; and

(c)A statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimant’s claim for benefits.

6.3Claims Rules.

(a)No inquiry or question shall be deemed to be a claim or a request for a review of a denied claim unless made in accordance with the established claims and review procedures. RLI may require that any claim for benefits and any request for a review of a denied claim be filed on forms to be furnished by RLI upon request.

(b)All decisions on claims and on requests for a review of denied claims shall be made by RLI.

(c)Claimants may be represented by a lawyer or other representative at their own expense, but RLI reserves the right to (i) require the claimant to furnish written authorization and (ii) establish reasonable procedures for determining whether an individual has been authorized to act on behalf of a claimant. A claimant’s representative shall be entitled to copies of all notices given to the claimant.

(d)The decision of RLI on a claim and on a request for a review of a denied claim may be provided to the claimant in electronic form instead of in writing at the discretion of RLI.

(e)In connection with the review of a denied claim, the claimant or the claimant’s representative shall be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimant’s claim for benefits.

(f)The time period within which a benefit determination will be made shall begin to run at the time a claim or request for review is filed in accordance with the claims and review procedures, without regard to whether all the information necessary to make a benefit determination accompanies the filing.

(g)The claims and review procedures shall be administered with appropriate safeguards so that benefit claim determinations are made in accordance with governing Plan documents and, where appropriate, the Plan provisions have been applied consistently with respect to similarly situated claimants.

(h)For the purpose of this article, a document, record, or other information shall be considered “relevant” if such document, record, or other information:  (i) was relied upon in making the benefit determination; (ii) was submitted, considered, or generated in the course of making the benefit determination, without regard to whether such document, record, or other information was relied upon in making the benefit determination; or (iii) demonstrates compliance with the administration processes and safeguards designed to ensure that the benefit claim determination was made in

accordance with governing Plan documents and that, where appropriate, the Plan provisions have been applied consistently with respect to similarly situated claimants.

(i)RLI may, in its discretion, rely on any applicable statute of limitation or deadline as a basis for denial of any claim.

6.4Deadline to File Claim.  To be considered timely under the Plan’s claims and review procedures, a claim must be filed with the Committee within one (1) year after the claimant knew or reasonably should have known of the principal facts upon which the claim is based.

6.5Exhaustion of Administrative Remedies.  The exhaustion of the claims and review procedures is mandatory for resolving every claim and dispute arising under the Plan. As to such claims and disputes no claimant shall be permitted to commence an arbitration action to recover Plan benefits or to enforce or clarify rights under the Plan or under any provision of the law, whether or not statutory, until the claims and review procedures set forth herein have been exhausted in their entirety.

6.6Arbitration.  Any claim, dispute or other matter in question of any kind relating to the Plan which is not resolved by the claims and review procedures shall be settled by arbitration in accordance with the Federal Arbitration Act 9 U.S.C. §1, et seq. Notice of demand for arbitration must be made in writing to the opposing party within the time period specified in Section 6.7. In no event will a demand for arbitration be made after the date when the applicable statute of limitations would bar the institution of a legal or equitable proceeding based on such claim, dispute or other matter in question. The decision of the arbitrator(s) will be final and may be enforced in any court of competent jurisdiction. The arbitrator(s) may award reasonable fees and expenses to the prevailing party in any dispute hereunder and will award reasonable fees and expenses in the event that the arbitrator(s) find that the losing party acted in bad faith or with intent to harass, hinder or delay the prevailing party in the exercise of its rights in connection with the matter under dispute. The arbitration will take place in Peoria, Illinois, unless otherwise agreed by the parties.

6.7Deadline to File an Arbitration Action.  No arbitration action to recover Plan benefits or to enforce or clarify rights under the Plan under or under any provision of the law, whether or not statutory, may be brought by any claimant on any matter pertaining to the Plan unless the action is commenced before the earlier of:

(a)Thirty (30) months after the claimant knew or reasonably should have known of the principal facts on which the claim is based, or

(b)Six (6) months after the claimant has exhausted the claims and review procedures.

6.8Knowledge of Fact by Participant Imputed to Beneficiary.  Knowledge of all facts that a Participant knew or reasonably should have known shall be imputed to every claimant who is or claims to be a Beneficiary of the Participant or otherwise claims to derive an entitlement by reference to the Participant for the purpose of applying the previously specified periods.

6.9Deferral of Payment.  If there is a dispute regarding a Plan benefit, RLI, in its sole discretion, may defer payment of the benefit until the dispute has been resolved.

Article 7

ADMINISTRATION

7.1Administrator.  RLI shall be the administrator of the Plan. RLI shall control and manage the administration and operation of the Plan and shall make all decisions and determinations incident thereto. Except with respect to the ordinary day-to-day administration of the Plan, action on behalf of RLI must be taken by one of the following:

(a)The Board; or

(b)The Committee.

7.1.1.Delegation.  The ordinary day-to-day administration of the Plan may be delegated by the Chief Executive Officer to an individual or a committee. Such individual or committee shall have the authority to delegate or redelegate to one or more persons, jointly or severally, such functions assigned to such individual or committee as such individual or committee may from time to time deem advisable.

7.1.2.Automatic Removal.  If any individual or committee member to whom responsibility under the Plan is allocated is a director, officer or employee of RLI when responsibility is so allocated, then such individual shall be automatically removed as a member of a committee at the earliest time such individual ceases to be a director, officer or employee of RLI. This removal shall occur automatically and without any requirement for action by RLI or any notice to the individual so removed.

7.1.3.Conflict of Interest.  If any individual or committee member to whom responsibility under the Plan is allocated is also a Participant or Beneficiary, that individual or committee member shall have no authority as such member with respect to any matter specifically affecting such individual’s interest hereunder (as distinguished from the interests of all Participants and Beneficiaries or a broad class of Participants and Beneficiaries), all such authority being reserved exclusively to the other members to the exclusion of such individual, and such Participant or Beneficiary shall act only in an individual capacity in connection with any such matter.

7.1.4.Binding Effect.  The determination of the Board, the Committee or the Chief Executive Officer in any matter within its authority shall be binding and conclusive upon RLI and all persons having any right or benefit under the Plan.

7.1.5.Third-Party Service Providers.  RLI may from time to time appoint or contract with an administrator, record keeper or other third-party service provider for the Plan. Any such administrator, record keeper or other third-party service provider will serve in a nondiscretionary capacity and will act in accordance with directions given and procedures established by RLI.

7.2Benefits Not Transferable.  No Participant or Beneficiary shall have the power to transmit, alienate, dispose of, pledge or encumber any benefit payable under the Plan before its actual payment to the Participant or Beneficiary. Any such effort by a Participant or Beneficiary to convey any interest in the Plan shall not be given effect under the Plan. No benefit payable under the Plan shall be subject to attachment, garnishment, execution following judgment or other legal process before its actual payment to the Participant or Beneficiary.

7.3Benefits Not Secured.  The rights of each Participant and Beneficiary shall be solely those of an unsecured, general creditor of RLI.  No Participant or Beneficiary shall have any lien, prior claim or other security interest in any property of RLI.

7.4RLI’s Obligations.  RLI shall provide the benefits under the Plan. RLI’s obligation may be satisfied by distributions from a trust fund created and maintained by RLI, in its sole discretion, for such purpose. However, the assets of any such trust fund shall be subject to claims by the general creditors of RLI in the event RLI is (i) unable to pay its debts as they become due, or (ii) is subject to a pending proceeding as a debtor under the United States Bankruptcy Code.

7.5Withholding Taxes.  RLI shall have the right to withhold (and transmit to the proper taxing authority) such federal, state or local taxes, including (but not limited to) FICA and FUTA taxes, as it may be required to withhold by applicable laws. Such taxes may be withheld from any benefits due under the Plan or from any other compensation to which the Participant is entitled from RLI and its Affiliates.

7.6Service of Process.  The Chief Executive Officer is designated as the appropriate and exclusive agent for the receipt of service of process directed to the Plan in any legal proceeding, including arbitration, involving the Plan.

7.7Limitation on Liability.  Neither RLI’s officers nor any member of its Board nor any individual or committee to whom RLI delegates responsibility under the Plan in any way secures or guarantees the payment of any benefit or amount which may become due and payable hereunder to or with respect to any Participant. Each Participant

and other person entitled at any time to payments hereunder shall look solely to the assets of RLI for such payments as an unsecured, general creditor. After benefits have been paid to or with respect to a Participant and such payment purports to cover in full the benefit hereunder, such former Participant or other person(s), as the case may be, shall have no further right or interest in the other assets of RLI in connection with the Plan. Neither RLI nor any of its officers nor any member of its Board nor any individual or committee to whom RLI delegates responsibility under the Plan shall be under any liability or responsibility for failure to effect any of the objectives or purposes of the Plan by reason of the insolvency of RLI.

Article 8

AMENDMENT AND TERMINATION

8.1Amendment.  RLI reserves the power to amend the Plan either prospectively or retroactively or both, in any respect, by action of its Board; provided that, no amendment shall be effective to reduce or divest benefits payable with respect to the Account of any Participant or Beneficiary without consent. No amendment of the Plan shall be effective unless it is in writing and signed on behalf of RLI by a person authorized to execute such writing. No oral representation concerning the interpretation or effect of the Plan shall be effective to amend the Plan.

8.2Termination.  RLI reserves the right to terminate the Plan at any time by action of its Board; provided that, the termination of the Plan shall not reduce or divest benefits payable with respect to the Account of any Participant or Beneficiary or negate the Participant’s or Beneficiary’s rights with respect to such benefits. Any such termination will be done in accordance with the requirements of Section 409A.

Article 9

MISCELLANEOUS

9.1Effect on Other Plans.  This Plan shall not alter, enlarge or diminish any person’s rights or obligations under any other benefit plan maintained by RLI or any Affiliate.

9.2Effect on Employment.  Neither the terms of this Plan nor the benefits hereunder nor the continuance thereof shall be a term of the employment of any Employee. RLI shall not be obliged to continue the Plan. The terms of this Plan shall not give any Employee the right to be retained in the service of RLI or any Affiliate.

9.3Disqualification.  Notwithstanding any other provision of the Plan or any designation made under the Plan, any individual who feloniously and intentionally kills a Participant shall be deemed for all purposes of the Plan and all elections and designations made under the Plan to have died before such Participant. A final judgment of conviction of felonious and intentional killing is conclusive for this purpose. In the absence of a conviction of felonious and intentional killing, RLI shall determine whether the killing was felonious and intentional for this purpose.

9.4Rules of Document Construction.  Whenever appropriate, words used herein in the singular may be read in the plural, or words used herein in the plural may be read in the singular; and the words “hereof,” “herein” or “hereunder” or other similar compounds of the word “here” shall mean and refer to the entire Plan and not to any particular article, section or paragraph of the Plan unless the context clearly indicates to the contrary. The titles given to the various articles and sections of the Plan are inserted for convenience of reference only and are not part of the Plan, and they shall not be considered in determining the purpose, meaning or intent of any provision hereof. Written notification under the Plan shall include such other methods (for example, facsimile or e-mail) as RLI, in its sole discretion, may authorize from time to time.

9.5References to Laws.  Any reference in the Plan to a statute shall be considered also to mean and refer to the applicable regulations for that statute. Any reference in the Plan to a statute or regulation shall be considered also to mean and refer to any subsequent amendment or replacement of that statute or regulation.

9.6Choice of Law.  The Plan has been executed in the State of Illinois and has been drawn in conformity to the laws of that state and shall, except to the extent that federal law is controlling, be construed and enforced in accordance with the laws of the State of Illinois (without regard to its conflict of law principles).

9.7Binding Effect.  The Plan shall be binding upon and inure to the benefit of the successors and assigns of RLI, and the Beneficiaries, personal representatives and heirs of the Participant.

IN WITNESS WHEREOF, RLI has cause the Plan to be executed by its duly authorized officers as of the 4th day of May, 2023.

RLI Corp.

By: Craig W. Kliethermes

Its: President & Chief Executive Officer

And

By: Jeffrey D. Fick

Its: Chief Legal Officer & Corporate Secretary

EX-10.3

Exhibit 10.3

RLI CORP.

2023 LONG-TERM INCENTIVE PLAN

I. INTRODUCTION

1.1Purposes. The purposes of the RLI Corp. 2023 Long-Term Incentive Plan (this “Plan”) are (i) to align the interests of the Company’s stockholders and the recipients of awards under this Plan by increasing the proprietary interest of such recipients in the Company’s growth and success, (ii) to advance the interests of the Company by attracting and retaining officers, other employees, Non-Employee Directors, consultants and independent contractors and (iii) to motivate such persons to act in the long-term best interests of the Company and its stockholders.

1.2Certain Definitions.

“Agreement” shall mean the written or electronic agreement evidencing an award hereunder between the Company and the recipient of such award.

“Automatic Exercise Date” shall mean the last business day of the term of an option or SAR.

“Board” shall mean the Board of Directors of the Company.

“Cause” shall mean the participant’s: (i) failure to comply with any material policies and procedures of the Company or any Subsidiary; (ii) conduct reflecting dishonesty or disloyalty to the Company or any Subsidiary, or which may have a negative impact on the reputation of the Company or any Subsidiary; (iii) commission of a felony, theft or fraud, or violations of law involving moral turpitude; (iv) failure to perform the material duties of his or her employment; (v) excessive absenteeism; (vi) unethical behavior. If a participant’s employment is terminated for “Cause,” the date on which the participant’s employment is considered to be terminated, for purposes hereof, shall be the time at which such participant is instructed or notified to cease performing job responsibilities for the Company or any Subsidiary, whether or not for other reasons, such as payroll, benefits or compliance with legal procedures or requirements, he or she may still have other attributes of an employee.

“Change in Control” shall have the meaning set forth in Section 5.8(b).

“Code” shall mean the Internal Revenue Code of 1986, as amended.

“Committee” shall mean the Human Capital & Compensation Committee of the Board, or a subcommittee thereof, or such other committee designated by the Board, in each case, consisting of two or more members of the Board, each of whom is intended to be (i) a “Non-Employee Director” within the meaning of Rule 16b-3 under the Exchange Act and (ii) “independent” within the meaning of the rules of the New York Stock Exchange or, if the Common Stock is not listed on the New York Stock Exchange, within the meaning of the rules of the principal stock exchange on which the Common Stock is then traded.

“Common Stock” shall mean the common stock, par value $0.01 per share, of the Company, and all rights appurtenant thereto.

“Company” shall mean RLI Corp., a corporation organized under the laws of the State of Delaware, or any successor thereto.

“Disabled” or “Disability,” with respect to a participant, means that the participant satisfies the requirements to receive long-term disability benefits under the Company-sponsored group long-term disability plan in which the participant participates (or in the case of a Non-Employee Director, would have satisfied the requirements of the Company-sponsored long-term disability plan had the Non-Employee Director participated) without regard to any waiting periods, or that the participant has been determined by the Social Security

Administration to be eligible to receive Social Security disability benefits. In addition, if Disability constitutes a payment event with respect to any award which provides for the deferral of compensation and is subject to Code Section 409A, the disability described in the preceding sentences of this Section 2(i) must be a “disability” within the meaning of Treasury Regulation Section 1.409A-3(i)(4). A participant shall not be considered to be “Disabled” unless the participant furnishes proof of the Disability to the Company in such form and manner as the Company may require.

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

“Fair Market Value” shall mean the closing transaction price of a share of Common Stock as reported on the New York Stock Exchange on the date as of which such value is being determined or, if the Common Stock is not listed on the New York Stock Exchange, the closing transaction price of a share of Common Stock on the principal national stock exchange on which the Common Stock is traded on the date as of which such value is being determined or, if there shall be no reported transactions for such date, on the next following date for which transactions were reported; provided, however, the Company may in its discretion use the closing transaction price of a share of Common Stock on the day preceding the date as of which such value is being determined to the extent the Company determines such method is more practical for administrative purposes, such as for purposes of tax withholding. If the Common Stock is not listed on a national stock exchange or if Fair Market Value for any date cannot be so determined, Fair Market Value shall be determined by the Committee by whatever means or method as the Committee, in the good faith exercise of its discretion, shall at such time deem appropriate and in compliance with Section 409A of the Code.

“Free-Standing SAR” shall mean an SAR which is not granted in tandem with, or by reference to, an option, which entitles the holder thereof to receive, upon exercise, shares of Common Stock (which may be Restricted Stock) or, to the extent set forth in the applicable Agreement, cash or a combination thereof, with an aggregate value equal to the excess of the Fair Market Value of one share of Common Stock on the date of exercise over the base price of such SAR, multiplied by the number of such SARs which are exercised.

“Fundamental Change” means a dissolution or liquidation of the Company, a sale of substantially all of the assets of the Company, a merger or consolidation of the Company with or into any other corporation, regardless of whether the Company is the surviving corporation, or a statutory share exchange involving capital stock of the Company.

“Good Reason” means any of the following conditions arising without the consent of the participant: (i) a material diminution in base salary or in the opportunity for any bonus or incentive compensation; (ii) a material diminution in the participant’s authority, duties or responsibilities; (iii) a material diminution in the authority, duties or responsibilities of the supervisor to whom the participant is required to report, including a requirement that the participant report to an officer or employee instead of directly to the Board; (iv) a material diminution in the budget over which the participant retains authority; (v) a material change in the geographic location at which the participant must perform services; or (vi) any action or inaction that results in a material breach in the terms of an applicable employment agreement. A termination will only be considered to have been made for Good Reason if the participant provides written notice of the existence of such condition to the Company or any successor employer within 90 days after the participant first becomes aware of such condition, the Company or successor employer fails to cure such condition within 30 days after receipt of such notice and the participant terminates employment within six months after the existence of such condition.

“Incentive Stock Option” shall mean an option to purchase shares of Common Stock that meets the requirements of Section 422 of the Code, or any successor provision, which is intended by the Committee to constitute an Incentive Stock Option.

“Non-Employee Director” shall mean any director of the Board who is considered a non-employee director within the meaning of Rule 16b-3(b)(3) of the Exchange Act or its successor provision.

“Nonqualified Stock Option” shall mean an option to purchase shares of Common Stock which is not an Incentive Stock Option.

“Other Stock Award” shall mean an award granted pursuant to Section 3.4 of the Plan.

“Performance Award” shall mean a right to receive an amount of cash, Common Stock, or a combination of both, contingent upon the attainment of specified Performance Measures within a specified Performance Period.

“Performance Measures” shall mean the criteria and objectives, established by the Committee, which shall be satisfied or met (i) as a condition to the grant or exercisability of all or a portion of an option or SAR or (ii) during the applicable Restriction Period or Performance Period as a condition to the vesting of the holder’s interest, in the case of a Restricted Stock Award, of the shares of Common Stock subject to such award, or, in the case of a Restricted Stock Unit Award, Other Stock Award or Performance Award, to the holder’s receipt of the shares of Common Stock subject to such award or of payment with respect to such award. Such performance criteria and objectives may include, without limitation, any one or more of the following business criteria for the Company, on a consolidated basis, and/or for specified subsidiaries, business or geographical units or operating areas of the Company (except with respect to the total shareholder return and earnings per share criteria) on an individual basis: the attainment by a share of Common Stock of a specified Fair Market Value for a specified period of time; increase in stockholder value; earnings per share; return on or net assets; return on equity; return on investments; return on capital or invested capital; total stockholder return; earnings or income of the Company before or after taxes and/or interest; earnings before interest, taxes, depreciation and amortization (“EBITDA”); EBITDA margin; operating income; revenues; operating expenses, attainment of expense levels or cost reduction goals; market share; cash flow, cash flow per share, cash flow margin or free cash flow; interest expense; economic value created; gross profit or margin; operating profit or margin; net cash provided by operations; price-to-earnings growth; comprehensive earnings; growth in book value; combined ratio (or corollary underwriting profit); and strategic business criteria, consisting of one or more objectives based on meeting specified goals relating to market penetration, customer acquisition, business expansion, cost targets, customer satisfaction, reductions in errors and omissions, reductions in lost business, management of employment practices and employee benefits, supervision of litigation, supervision of information technology, quality and quality audit scores, efficiency, and acquisitions or divestitures, or such other goals as the Committee may determine whether or not listed herein. Each such goal may be determined on a pre-tax or post-tax basis or on an absolute or relative basis, and may include comparisons based on current internal targets, the past performance of the Company (including the performance of one or more subsidiaries, divisions, or operating units) or the past or current performance of other companies or market indices (or a combination of such past and current performance). In addition to the ratios specifically enumerated above, performance goals may include comparisons relating to capital (including, but not limited to, the cost of capital), shareholders’ equity, shares outstanding, assets or net assets, sales, or any combination thereof. In establishing a Performance Measure or determining the achievement of a Performance Measure, the Committee may provide that achievement of the applicable Performance Measures may be amended or adjusted to include or exclude components of any Performance Measure, including, without limitation, foreign exchange gains and losses, asset write-downs, acquisitions and divestitures, change in fiscal year, unbudgeted capital expenditures, special charges such as restructuring or impairment charges, debt refinancing costs, extraordinary or noncash items, unusual, infrequently occurring, nonrecurring or one-time events affecting the Company or its financial statements or changes in law or accounting principles. Performance Measures shall be subject to such other special rules and conditions as the Committee may establish at any time.

“Performance Period” shall mean any period designated by the Committee during which (i) the Performance Measures applicable to an award shall be measured and (ii) the conditions to vesting applicable to an award shall remain in effect.

“Prior Plan” shall mean the RLI Corp. 2015 Long-Term Incentive Plan.

“Qualifying Termination” means an involuntary termination of employment without Cause or a termination of employment for Good Reason that occurs within two years following a Change in Control. In addition, if the participant’s termination of employment occurs prior to a Change in Control and it is determined that such termination (A) was at the request of a third party who has indicated an intention or taken steps reasonably calculated to effect a Change in Control and who subsequently effectuates a Change in Control or (B) otherwise occurred in connection with, or in anticipation of, a Change in Control which actually occurs, for purposes of this definition, the date of a Change in Control with respect to the participant shall mean the date immediately prior to the date of the participant’s termination of employment.

“Restricted Stock” shall mean shares of Common Stock which are subject to a Restriction Period and which may, in addition thereto, be subject to the attainment of specified Performance Measures within a specified Performance Period.

“Restricted Stock Award” shall mean an award of Restricted Stock under this Plan.

“Restricted Stock Unit” shall mean a right to receive one share of Common Stock or, in lieu thereof and to the extent set forth in the applicable Agreement, the Fair Market Value of such share of Common Stock in cash, which shall be contingent upon the expiration of a specified Restriction Period and which may, in addition thereto, be contingent upon the attainment of specified Performance Measures within a specified Performance Period.

“Restricted Stock Unit Award” shall mean an award of Restricted Stock Units under this Plan.

“Restriction Period” shall mean any period designated by the Committee during which (i) the Common Stock subject to a Restricted Stock Award may not be sold, transferred, assigned, pledged, hypothecated or otherwise encumbered or disposed of, except as provided in this Plan or the Agreement relating to such award, or (ii) the conditions to vesting applicable to a Restricted Stock Unit Award or Other Stock Award shall remain in effect.

“Retirement” or “Retires” means a participant’s termination of employment on or after the date when the participant’s age plus years of service equals at least 75. For this purpose, (i) a participant’s age shall be measured in whole and partial years (with partial years measured in days) as of the date of the participant’s termination of employment and (ii) a participant’s years of service shall be based only on the participant’s actual service with the Company or a Subsidiary (and not with any other employer that may be acquired by the Company with respect to service prior to the acquisition, except as otherwise provided by the Company in writing) and shall be calculated based on the number of whole and partial years of employment (with partial years measured in days) that the participant has completed from the date of the participant’s initial employment with the Company or a Subsidiary through the date of the participant’s termination of employment. Notwithstanding the foregoing, the Committee may specify, in its discretion, in a written Agreement, policy or guideline that a participant will be considered to have had a “Retirement” if the participant satisfies the terms of a non-competition covenant or under such other terms and conditions as specified by the Committee in its discretion.

“SAR” shall mean a stock appreciation right which may be a Free-Standing SAR or a Tandem SAR.

“Stock Award” shall mean a Restricted Stock Award, Restricted Stock Unit Award or Other Stock Award.

“Subsidiary” shall mean any corporation, limited liability company, partnership, joint venture or similar entity in which the Company owns, directly or indirectly, an equity interest possessing more than 50% of the combined voting power of the total outstanding equity interests of such entity.

“Substitute Award” shall mean an award granted under this Plan upon the assumption of, or in substitution for, outstanding equity awards previously granted by a company or other entity in connection with a corporate transaction, including a merger, combination, consolidation or acquisition of property or stock; provided, however, that in no event shall the term “Substitute Award” be construed to refer to an award made in connection with the cancellation and repricing of an option or SAR.

“Tandem SAR” shall mean an SAR which is granted in tandem with, or by reference to, an option (including a Nonqualified Stock Option granted prior to the date of grant of the SAR), which entitles the holder thereof to receive, upon exercise of such SAR and surrender for cancellation of all or a portion of such option, shares of Common Stock (which may be Restricted Stock) or, to the extent set forth in the applicable Agreement, cash or a combination thereof, with an aggregate value equal to the excess of the Fair Market Value of one share of Common Stock on the date of exercise over the base price of such SAR, multiplied by the number of shares of Common Stock subject to such option, or portion thereof, which is surrendered.

“Tax Date” shall have the meaning set forth in Section 5.5.

“Ten Percent Holder” shall have the meaning set forth in Section 2.1(a).

1.3Administration. This Plan shall be administered by the Committee. Any one or a combination of the following awards may be made under this Plan to eligible persons: (i) options to purchase shares of Common Stock in the form of Incentive Stock Options or Nonqualified Stock Options; (ii) SARs in the form of Tandem SARs or Free-Standing SARs; (iii) Stock Awards in the form of Restricted Stock, Restricted Stock Units or Other Stock Awards; and (iv) Performance Awards. The Committee shall, subject to the terms of this Plan, select eligible persons for participation in this Plan and determine the form, amount and timing of each award to such persons and, if applicable, the number of shares of Common Stock subject to an award, the number of SARs, the number of Restricted Stock Units, the dollar value subject to a Performance Award, the purchase price or base price associated with the award, the time and conditions of exercise or settlement of the award and all other terms and conditions of the award, including, without limitation, the form of the Agreement evidencing the award. The Committee may, in its sole discretion and for any reason at any time, take action such that (i) any or all outstanding options and SARs shall become exercisable in part or in full, (ii) all or a portion of the Restriction Period applicable to any outstanding awards shall lapse, (iii) all or a portion of the Performance Period applicable to any outstanding awards shall lapse and (iv) the Performance Measures (if any) applicable to any outstanding awards shall be deemed to be satisfied at the target, maximum or any other level. The Committee shall, subject to the terms of this Plan, interpret this Plan and the application thereof, establish rules and regulations it deems necessary or desirable for the administration of this Plan and may impose, incidental to the grant of an award, conditions with respect to the award, such as limiting competitive employment or other activities. All such interpretations, rules, regulations and conditions shall be conclusive and binding on all parties.

The Committee may delegate some or all of its power and authority hereunder to the Board or, subject to applicable law, to a subcommittee of the Board, a member of the Board, the President and the Chief Executive Officer or other executive officer of the Company as the Committee deems appropriate; provided, however, that the Committee may not delegate its power and authority to a member of the Board, the President and the Chief Executive Officer or other executive officer of the Company with regard to the selection for participation in this Plan of an officer, director or other person subject to Section 16 of the Exchange Act or decisions concerning the timing, pricing or amount of an award to such an officer, director or other person.

No member of the Board or Committee, and neither the President and the Chief Executive Officer nor any other executive officer to whom the Committee delegates any of its power and authority hereunder, shall be liable for any act, omission, interpretation, construction or determination made in connection with this Plan in good faith, and the members of the Board and the Committee and the President and the Chief Executive Officer or other executive officer shall be entitled to indemnification and reimbursement by the Company in respect of any claim, loss, damage or expense (including attorneys’ fees) arising therefrom to the full extent permitted by law (except as otherwise may be provided in the Company’s Certificate of Incorporation and/or By-laws) and under any directors’ and officers’ liability insurance that may be in effect from time to time.

1.4Eligibility. Participants in this Plan shall consist of such officers, other employees, Non-Employee Directors, consultants and independent contractors, and persons expected to become officers, other employees, Non-Employee Directors, consultants and independent contractors of the Company and its Subsidiaries as the Committee in its sole discretion may select from time to time. The Committee’s selection of a person to participate in this Plan at any time shall not require the Committee to select such person to participate in this Plan at any other time. Except as otherwise provided for in an Agreement, for purposes of this Plan, references to employment by the Company shall also mean employment by a Subsidiary, and references to employment shall include service as a Non-Employee Director, consultant or independent contractor. The Committee shall determine, in its sole discretion, the extent to which a participant shall be considered employed during an approved leave of absence. The aggregate value of cash compensation and the grant date fair value of shares of Common Stock that may be awarded or granted during any fiscal year of the Company to any Non-Employee Director shall not exceed $500,000.

1.5Shares Available. Subject to adjustment as provided in Section 5.7 and to all other limits set forth in this Plan, the number of shares of Common Stock that shall initially be available for all awards under this Plan, other than Substitute Awards, shall be the sum of (i) 3,250,000 and (ii) the number of Shares that remain available for issuance under the Prior Plan as of the effective date of this Plan, all of which may be issued under the Plan in connection with Incentive Stock Options. To the extent the Company grants an option or a Free-Standing SAR

under the Plan, the number of shares of Common Stock that remain available for future grants under the Plan shall be reduced by an amount equal to the number of shares subject to such option or Free-Standing SAR. To the extent the Company grants a Stock Award or settles a Performance Award in shares of Common Stock, the number of shares of Common Stock that remain available for future grants under the Plan shall be reduced by an amount equal to 2.5 times the number of shares subject to such Stock Award or Performance Award. The number of shares of Common Stock subject to a Performance Award shall be deemed to be the maximum number of Shares that could be received under such Performance Award.

To the extent that shares of Common Stock subject to an outstanding option, SAR, Stock Award or Performance Award granted under the Plan or the Prior Plan, other than Substitute Awards, are not issued or delivered by reason of (i) the expiration, termination, cancellation or forfeiture of such award (excluding shares subject to an option cancelled upon settlement in shares of a related Tandem SAR or shares subject to a Tandem SAR cancelled upon exercise of a related option) or (ii) the settlement of such award in cash, then such shares of Common Stock shall again be available under this Plan; provided, however, that shares of Common Stock subject to an award under this Plan or the Prior Plan shall not again be available for issuance under this Plan if such shares are (x) shares that were subject to an option or stock-settled SAR and were not issued or delivered upon the net settlement or net exercise of such option or SAR, (y) shares delivered to or withheld by the Company to pay the purchase price or the withholding taxes related to an outstanding award or (z) shares repurchased by the Company on the open market with the proceeds of an option exercise. The number of shares that again become available pursuant to this paragraph shall be equal to (i) one share for each share subject to an option or Free-Standing SAR described herein and (ii) 2.5 shares for each share subject to a Stock Award or Performance Award described herein. At the time this Plan becomes effective, none of the shares of Common Stock available for future grant under the Prior Plan shall be available for grant under the Prior Plan.

The number of shares of Common Stock available for awards under this Plan shall not be reduced by (i) the number of shares of Common Stock subject to Substitute Awards or (ii) available shares under a stockholder approved plan of a company or other entity which was a party to a corporate transaction with the Company (as appropriately adjusted to reflect such corporate transaction) which become subject to awards granted under this Plan (subject to applicable stock exchange requirements).

Shares of Common Stock to be delivered under this Plan shall be made available from authorized and unissued shares of Common Stock, or authorized and issued shares of Common Stock reacquired and held as treasury shares or otherwise or a combination thereof.

1.6Minimum Vesting Requirements. No award granted under the Plan shall become exercisable or vested prior to the one-year anniversary of the date of grant; provided, however, that, such restriction shall not apply to awards granted under this Plan with respect to the number of shares of Common Stock which, in the aggregate, does not exceed five percent (5%) of the total number of shares initially available for awards under this Plan. This Section 1.7 shall not restrict the right of the Committee to accelerate or continue the vesting or exercisability of an award upon or after a Change in Control or termination of employment or otherwise pursuant to Section 1.3 of the Plan.

II. STOCK OPTIONS AND STOCK APPRECIATION RIGHTS

2.1Stock Options. The Committee may, in its discretion, grant options to purchase shares of Common Stock to such eligible persons as may be selected by the Committee; provided that an Incentive Stock Option may be granted only to an employee of the Company or one of its Subsidiaries in accordance with Section 422 of the Code. Each option, or portion thereof, that is not an Incentive Stock Option, shall be a Nonqualified Stock Option. To the extent that the aggregate Fair Market Value (determined as of the date of grant) of shares of Common Stock with respect to which options designated as Incentive Stock Options are exercisable for the first time by a participant during any calendar year (under this Plan or any other plan of the Company, or any parent or Subsidiary) exceeds the amount (currently $100,000) established by the Code, such options shall constitute Nonqualified Stock Options.

Options shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable:

(a)Number of Shares and Purchase Price. The number of shares of Common Stock subject to an option and the purchase price per share of Common Stock purchasable upon exercise of the option shall be determined by the Committee; provided, however, that the purchase price per share of Common Stock purchasable upon exercise of an option shall not be less than 100% of the Fair Market Value of a share of Common Stock on the date of grant of such option; providedfurther, that if an Incentive Stock Option shall be granted to any person who, at the time such option is granted, owns capital stock possessing more than 10 percent of the total combined voting power of all classes of capital stock of the Company (or of any parent or Subsidiary) (a “Ten Percent Holder”), the purchase price per share of Common Stock shall not be less than the price (currently 110% of Fair Market Value) required by the Code in order to constitute an Incentive Stock Option.

Notwithstanding the foregoing, in the case of an option that is a Substitute Award, the purchase price per share of the shares subject to such option may be less than 100% of the Fair Market Value per share on the date of grant, provided, that the excess of: (a) the aggregate Fair Market Value (as of the date such Substitute Award is granted) of the shares subject to the Substitute Award, over (b) the aggregate purchase price thereof does not exceed the excess of: (x) the aggregate fair market value (as of the time immediately preceding the transaction giving rise to the Substitute Award, such fair market value to be determined by the Committee) of the shares of the predecessor company or other entity that were subject to the grant assumed or substituted for by the Company, over (y) the aggregate purchase price of such shares.

(b)Option Period and Exercisability. The period during which an option may be exercised shall be determined by the Committee; provided, however, that no option shall be exercised later than ten years after its date of grant; providedfurther, that if an Incentive Stock Option shall be granted to a Ten Percent Holder, such option shall not be exercised later than five years after its date of grant. The Committee may, in its discretion, establish Performance Measures which shall be satisfied or met as a condition to the grant of an option or to the exercisability of all or a portion of an option. The Committee shall determine whether an option shall become exercisable in cumulative or non-cumulative installments and in part or in full at any time. An exercisable option, or portion thereof, may be exercised only with respect to whole shares of Common Stock.

(c)Method of Exercise. An option may be exercised (i) by giving written notice to the Company specifying the number of whole shares of Common Stock to be purchased and accompanying such notice with payment therefor in full (or arrangement made for such payment to the Company’s satisfaction) either (A) in cash, (B) by delivery (either actual delivery or by attestation procedures established by the Company) of shares of Common Stock having a Fair Market Value, determined as of the date of exercise, equal to the aggregate purchase price payable by reason of such exercise, (C) authorizing the Company to withhold whole shares of Common Stock which would otherwise be delivered having an aggregate Fair Market Value, determined as of the date of exercise, equal to the amount necessary to satisfy such obligation, (D) in cash by a broker-dealer acceptable to the Company to whom the participant has submitted an irrevocable notice of exercise or (E) a combination of (A), (B) and (C), in each case to the extent set forth in the Agreement relating to the option, (ii) if applicable, by surrendering to the Company any Tandem SARs which are cancelled by reason of the exercise of the option and (iii) by executing such documents as the Company may reasonably request; provided that, notwithstanding anything in this Section 2.1(c) to the contrary, payment shall not be permitted with shares of Common Stock if, in the opinion of the Committee, payment in such manner could have adverse financial accounting consequences for the Company. No shares of Common Stock shall be issued and no certificate representing Common Stock shall be delivered until the full purchase price therefor and any withholding taxes thereon, as described in Section 5.5, have been paid (or arrangement made for such payment to the Company’s satisfaction).

(d)Automatic Exercise. The Company may, in its discretion, provide in an Agreement or adopt procedures that an option outstanding on the Automatic Exercise Date that has a “Specified Minimum Value” shall be automatically and without further action by the participant (or in the event of the participant’s death, the participant’s personal representative or estate), be exercised on the Automatic Exercise Date. Payment of the exercise price applicable to such option may be made pursuant to such procedures as may be approved by the Company from time to time and the Company shall deduct or withhold an amount sufficient to satisfy all taxes associated with such exercise in accordance with Section 5.5. For purposes of this Section 2.1(d), the term “Specified Minimum Value” means that the Fair Market Value per share of Common Stock exceeds the exercise price of a share of Common Stock subject to an expiring option by at least such amount as the Company shall determine from time to time. The Company may elect to discontinue the automatic exercise of options pursuant to

this Section 2.1(d) at any time upon notice to a participant or to apply the automatic exercise feature only to certain groups of participants. The automatic exercise of an option pursuant to this Section 2.1(d) shall apply only to an option that has been timely accepted by a participant under procedures specified by the Company from time to time.

2.2Stock Appreciation Rights. The Committee may, in its discretion, grant SARs to such eligible persons as may be selected by the Committee. The Agreement relating to an SAR shall specify whether the SAR is a Tandem SAR or a Free-Standing SAR.

SARs shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable:

(a)Number of SARs and Base Price. The number of SARs subject to an award shall be determined by the Committee. Any Tandem SAR related to an Incentive Stock Option shall be granted at the same time that such Incentive Stock Option is granted. The base price of a Tandem SAR shall be the purchase price per share of Common Stock of the related option. The base price of a Free-Standing SAR shall be determined by the Committee; provided, however, that such base price shall not be less than 100% of the Fair Market Value of a share of Common Stock on the date of grant of such SAR (or, if earlier, the date of grant of the option for which the SAR is exchanged or substituted).

Notwithstanding the foregoing, in the case of an SAR that is a Substitute Award, the base price per share of the shares subject to such SAR may be less than 100% of the Fair Market Value per share on the date of grant, provided, that the excess of: (a) the aggregate Fair Market Value (as of the date such Substitute Award is granted) of the shares subject to the Substitute Award, over (b) the aggregate base price thereof does not exceed the excess of: (x) the aggregate fair market value (as of the time immediately preceding the transaction giving rise to the Substitute Award, such fair market value to be determined by the Committee) of the shares of the predecessor company or other entity that were subject to the grant assumed or substituted for by the Company, over (y) the aggregate base price of such shares.

(b)Exercise Period and Exercisability. The period for the exercise of an SAR shall be determined by the Committee; provided, however, that (i) no Tandem SAR shall be exercised later than the expiration, cancellation, forfeiture or other termination of the related option and (ii) no Free-Standing SAR shall be exercised later than ten years after its date of grant. The Committee may, in its discretion, establish Performance Measures which shall be satisfied or met as a condition to the grant of an SAR or to the exercisability of all or a portion of an SAR. The Committee shall determine whether an SAR may be exercised in cumulative or non-cumulative installments and in part or in full at any time. An exercisable SAR, or portion thereof, may be exercised, in the case of a Tandem SAR, only with respect to whole shares of Common Stock and, in the case of a Free-Standing SAR, only with respect to a whole number of SARs. If an SAR is exercised for shares of Restricted Stock, a certificate or certificates representing such Restricted Stock shall be issued in accordance with Section 3.2(c), or such shares shall be transferred to the holder in book entry form with restrictions on the shares duly noted, and the holder of such Restricted Stock shall have such rights of a stockholder of the Company as determined pursuant to Section 3.2(d). Prior to the exercise of a stock-settled SAR, the holder of such SAR shall have no rights as a stockholder of the Company with respect to the shares of Common Stock subject to such SAR.

(c)Method of Exercise. A Tandem SAR may be exercised (i) by giving written notice to the Company specifying the number of whole SARs which are being exercised, (ii) by surrendering to the Company any options which are cancelled by reason of the exercise of the Tandem SAR and (iii) by executing such documents as the Company may reasonably request. A Free-Standing SAR may be exercised (A) by giving written notice to the Company specifying the whole number of SARs which are being exercised and (B) by executing such documents as the Company may reasonably request. No shares of Common Stock shall be issued and no certificate representing Common Stock shall be delivered until any withholding taxes thereon, as described in Section 5.5, have been paid (or arrangement made for such payment to the Company’s satisfaction).

(d)Automatic Exercise. The Company may, in its discretion, provide in an Agreement or adopt procedures that an SAR outstanding on the Automatic Exercise Date that has a “Specified Minimum Value” shall be automatically and without further action by the participant (or in the event of the participant’s death, the participant’s personal representative or estate), be exercised on the Automatic Exercise Date. The Company shall

deduct or withhold an amount sufficient to satisfy all taxes associated with such exercise in accordance with Section 5.5. For purposes of this Section 2.2(d), the term “Specified Minimum Value” means that the Fair Market Value per share of Common Stock exceeds the base price of a share of Common Stock subject to an expiring SAR by at least such amount as the Company shall determine from time to time. The Company may elect to discontinue the automatic exercise of SARs pursuant to this Section 2.2(d) at any time upon notice to a participant or to apply the automatic exercise feature only to certain groups of participants. The automatic exercise of an SAR pursuant to this Section 2.2(d) shall apply only to an SAR that has been timely accepted by a participant under procedures specified by the Company from time to time.

2.3Termination of Employment or Service. All of the terms relating to the exercise, cancellation or other disposition of an option or SAR (i) upon a termination of employment with or service to the Company of the holder of such option or SAR, as the case may be, whether by reason of Disability, Retirement, death or any other reason, or (ii) during a paid or unpaid leave of absence, shall be determined by the Committee and set forth in the applicable Agreement; provided that, notwithstanding the foregoing, unless otherwise determined by the Committee and set forth in the applicable Agreement, the following terms shall apply to an option or SAR:

(a)Death. Upon a termination of employment with or service to the Company by reason of death, then any option or SAR that has not expired or been terminated shall become fully vested and exercisable in full and may be exercised by the participant’s beneficiary at any time, or from time to time, within one year after the date of the participant’s death.

(b)Disability. Upon a termination of employment with or service to the Company by reason of Disability, then any option or SAR that has not expired or been terminated shall become fully vested and exercisable in full and may be exercised by the participant’s beneficiary at any time, or from time to time, within three years after the date of such termination of employment or service.

(c)Retirement. Upon a termination of employment with or service to the Company by reason of Retirement, then any option or SAR (or portion thereof) that has not expired or been terminated, shall, to the extent vested and exercisable as of the date of such termination of employment or service, including as a result of any acceleration that occurs pursuant to the terms of the applicable Agreement, remain exercisable by the participant at any time, or from time to time, for three years after the date of such termination of employment or service, and any remaining portion of such option or SAR shall be forfeited as of the date of such termination.

(d)Qualifying Termination. Upon a Qualifying Termination, then any option or SAR (or portion thereof) that has not expired or been terminated, shall become fully vested and exercisable as of the date of such termination of employment or service, remain exercisable by the participant at any time, or from time to time, until the expiration of the term of such option or SAR.

(e)Other Termination. Upon a termination of employment with or service to the Company for any reason other than death, Disability, Retirement, a Qualifying Termination or Cause, then any option or SAR (or portion thereof) that has not expired or been terminated, shall, to the extent vested and exercisable as of the date of such termination of employment or service, remain exercisable by the participant at any time, or from time to time, for three months after the date of such termination, and any remaining portion of such option or SAR shall be forfeited as of the date of such termination.

(f)Cause. Upon a termination of employment with or service to the Company for Cause, then any option or SAR that that has not expired or been terminated may be exercised, shall be forfeited without consideration, whether vested or unvested.

(g)Non-Employee Director. Notwithstanding the foregoing, if the holder is a Non-Employee Director, upon on a termination of service to the Company for any reason other than Cause, then any option or SAR (or portion thereof) that has not expired or been terminated, shall if (i) unvested and not exercisable as of the date of such termination of service, be treated for vesting purposes in accordance with the terms of clauses (a)-(e) based on the type of termination and (ii) vested and exercisable as of the date of such termination of service, remain exercisable by the participant at any time, or from time to time, until the expiration of the term of such option or SAR.

2.4No Repricing. The Committee shall not, without the approval of the stockholders of the Company, (i) reduce the purchase price or base price of any previously granted option or SAR, (ii) cancel any previously granted option or SAR in exchange for another option or SAR with a lower purchase price or base price or (iii) cancel any previously granted option or SAR in exchange for cash or another award if the purchase price of such option or the base price of such SAR exceeds the Fair Market Value of a share of Common Stock on the date of such cancellation, in each case, other than in connection with a Change in Control or the adjustment provisions set forth in Section 5.7.

2.5No Dividend Equivalents.Notwithstanding anything in an Agreement to the contrary, the holder of an option or SAR shall not be entitled to receive dividend equivalents with respect to the number of shares of Common Stock subject to such option or SAR.

III. STOCK AWARDS

3.1Stock Awards. The Committee may, in its discretion, grant Stock Awards to such eligible persons as may be selected by the Committee. The Agreement relating to a Stock Award shall specify whether the Stock Award is a Restricted Stock Award, a Restricted Stock Unit Award or, in the case of an Other Stock Award, the type of award being granted.

3.2Terms of Restricted Stock Awards. Restricted Stock Awards shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable.

(a)Number of Shares and Other Terms. The number of shares of Common Stock subject to a Restricted Stock Award and the Restriction Period, Performance Period (if any) and Performance Measures (if any) applicable to a Restricted Stock Award shall be determined by the Committee.

(b)Vesting and Forfeiture. The Agreement relating to a Restricted Stock Award shall provide, in the manner determined by the Committee, in its discretion, and subject to the provisions of this Plan, for the vesting of the shares of Common Stock subject to such award (i) if the holder of such award remains continuously in the employment of the Company during the specified Restriction Period or (ii) if specified Performance Measures (if any) are satisfied or met during a specified Performance Period, and for the forfeiture of the shares of Common Stock subject to such award (x) if the holder of such award does not remain continuously in the employment of the Company during the specified Restriction Period or (y) if specified Performance Measures (if any) are not satisfied or met during a specified Performance Period.

(c)Stock Issuance. During the Restriction Period, the shares of Restricted Stock shall be held by a custodian in book entry form with restrictions on such shares duly noted or, alternatively, a certificate or certificates representing a Restricted Stock Award shall be registered in the holder’s name and may bear a legend, in addition to any legend which may be required pursuant to Section 5.6, indicating that the ownership of the shares of Common Stock represented by such certificate is subject to the restrictions, terms and conditions of this Plan and the Agreement relating to the Restricted Stock Award. All such certificates shall be deposited with the Company, together with stock powers or other instruments of assignment (including a power of attorney), each endorsed in blank with a guarantee of signature if deemed necessary or appropriate, which would permit transfer to the Company of all or a portion of the shares of Common Stock subject to the Restricted Stock Award in the event such award is forfeited in whole or in part. Upon termination of any applicable Restriction Period (and the satisfaction or attainment of applicable Performance Measures), subject to the Company’s right to require payment of any taxes in accordance with Section 5.5, the restrictions shall be removed from the requisite number of any shares of Common Stock that are held in book entry form, and all certificates evidencing ownership of the requisite number of shares of Common Stock shall be delivered to the holder of such award.

(d)Rights with Respect to Restricted Stock Awards. Unless otherwise set forth in the Agreement relating to a Restricted Stock Award, and subject to the terms and conditions of a Restricted Stock Award, the holder of such award shall have all rights as a stockholder of the Company, including, but not limited to, voting rights, the right to receive dividends and the right to participate in any capital adjustment applicable to all holders of Common Stock; provided, however, that a distribution or dividend with respect to shares of Common Stock, including a

regular cash dividend, shall be deposited with the Company and shall be subject to the same restrictions as the shares of Common Stock with respect to which such distribution was made.

3.3Terms of Restricted Stock Unit Awards. Restricted Stock Unit Awards shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable.

(a)Number of Shares and Other Terms. The number of shares of Common Stock subject to a Restricted Stock Unit Award, including the number of shares that are earned upon the attainment of any specified Performance Measures, and the Restriction Period, Performance Period (if any) and Performance Measures (if any) applicable to a Restricted Stock Unit Award shall be determined by the Committee.

(b)Vesting and Forfeiture. The Agreement relating to a Restricted Stock Unit Award shall provide, in the manner determined by the Committee, in its discretion, and subject to the provisions of this Plan, for the vesting of such Restricted Stock Unit Award (i) if the holder of such award remains continuously in the employment of the Company during the specified Restriction Period or (ii) if specified Performance Measures (if any) are satisfied or met during a specified Performance Period, and for the forfeiture of the shares of Common Stock subject to such award (x) if the holder of such award does not remain continuously in the employment of the Company during the specified Restriction Period or (y) if specified Performance Measures (if any) are not satisfied or met during a specified Performance Period.

(c)Settlement of Vested Restricted Stock Unit Awards. The Agreement relating to a Restricted Stock Unit Award shall specify (i) whether such award may be settled in shares of Common Stock or cash or a combination thereof and (ii) whether the holder thereof shall be entitled to receive, on a current or deferred basis, dividend equivalents, and, if determined by the Committee, interest on, or the deemed reinvestment of, any deferred dividend equivalents, with respect to the number of shares of Common Stock subject to such award. Any dividend equivalents with respect to Restricted Stock Units that are subject to vesting conditions shall be subject to the same vesting conditions as the underlying awards. Prior to the settlement of a Restricted Stock Unit Award, the holder of such award shall have no rights as a stockholder of the Company with respect to the shares of Common Stock subject to such award.

3.4Other Stock Awards.  Subject to the limitations set forth in the Plan, the Committee is authorized to grant other awards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, shares of Common Stock, including without limitation shares of Common Stock granted as a bonus and not subject to any vesting conditions, dividend equivalents, deferred stock units, stock purchase rights and shares of Common Stock issued in lieu of obligations of the Company to pay cash under any compensatory plan or arrangement, subject to such terms as shall be determined by the Committee.  The Committee shall determine the terms and conditions of such awards, which may include the right to elective deferral thereof, subject to such terms and conditions as the Committee may specify in its discretion. Any distribution, dividend or dividend equivalents with respect to Other Stock Awards that are subject to vesting conditions shall be subject to the same vesting conditions as the underlying awards.

3.5Termination of Employment or Service. All of the terms relating to the satisfaction of Performance Measures and the termination of the Restriction Period or Performance Period relating to a Stock Award, or any forfeiture and cancellation of such award (i) upon a termination of employment with or service to the Company of the holder of such award, whether by reason of Disability, Retirement, death or any other reason, or (ii) during a paid or unpaid leave of absence, shall be determined by the Committee and set forth in the applicable Agreement; provided that, notwithstanding the foregoing, unless otherwise determined by the Committee and set forth in the applicable Agreement, if the holder of an award has a termination of employment during the Restriction Period or the Performance Period as a result of (i) the holder’s death or Disability, then all restrictions shall lapse with respect to a number of Shares under the Stock Award that has been prorated for the portion of the Restriction Period or Performance Period prior to the holder’s termination of employment, based on target performance, or (y) any other reason, the holder will immediately forfeit any portion of the Stock Award that is unvested as of the date of the holder’s termination of employment or service.

IV. PERFORMANCE AWARDS

4.1Performance Awards. The Committee may, in its discretion, grant Performance Awards to such eligible persons as may be selected by the Committee.

4.2Terms of Performance Awards. Performance Awards shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable.

(a)Value of Performance Awards and Performance Measures. The method of determining the value of the Performance Award and the Performance Measures and Performance Period applicable to a Performance Award shall be determined by the Committee.

(b)Vesting and Forfeiture. The Agreement relating to a Performance Award shall provide, in the manner determined by the Committee, in its discretion, and subject to the provisions of this Plan, for the vesting of such Performance Award if the specified Performance Measures are satisfied or met during the specified Performance Period and for the forfeiture of such award if the specified Performance Measures are not satisfied or met during the specified Performance Period.

(c)Settlement of Vested Performance Awards. The Agreement relating to a Performance Award shall specify whether such award may be settled in shares of Common Stock (including shares of Restricted Stock) or cash or a combination thereof. If a Performance Award is settled in shares of Restricted Stock, such shares of Restricted Stock shall be issued to the holder in book entry form or a certificate or certificates representing such Restricted Stock shall be issued in accordance with Section 3.2(c) and the holder of such Restricted Stock shall have such rights as a stockholder of the Company as determined pursuant to Section 3.2(d). Any dividends or dividend equivalents with respect to a Performance Award shall be subject to the same restrictions as such Performance Award. Prior to the settlement of a Performance Award in shares of Common Stock, including Restricted Stock, the holder of such award shall have no rights as a stockholder of the Company.

4.3Termination of Employment or Service. All of the terms relating to the satisfaction of Performance Measures and the termination of the Performance Period relating to a Performance Award, or any forfeiture and cancellation of such award (i) upon a termination of employment with or service to the Company of the holder of such award, whether by reason of Disability, Retirement, death or any other reason, or (ii) during a paid or unpaid leave of absence, shall be determined by the Committee and set forth in the applicable Agreement; provided that, notwithstanding the foregoing, unless otherwise determined by the Committee and set forth in the applicable Agreement, if the holder of an award has a termination of employment during the Performance Period as a result of (i) the holder’s death or Disability, then all restrictions shall lapse with respect to a number of Shares under the Award that has been prorated for the portion of the Performance Period prior to the holder’s termination of employment, based on target performance, or (y) any other reason, the holder will immediately forfeit any portion of the Performance Award that is unvested as of the date of the holder’s termination of employment or service.

V. GENERAL

5.1Effective Date and Term of Plan. This Plan shall be submitted to the stockholders of the Company for approval at the Company’s 2023 annual meeting of stockholders and shall become effective as of the date on which the Plan is approved by stockholders. This Plan shall terminate as of the first annual meeting of the Company’s stockholders to occur on or after the tenth anniversary of its effective date, unless terminated earlier by the Board. Termination of this Plan shall not affect the terms or conditions of any award granted prior to termination.

Awards hereunder may be made at any time prior to the termination of this Plan, provided that no Incentive Stock Option may be granted later than ten years after the date on which the Plan was approved by the Board. In the event that this Plan is not approved by the stockholders of the Company, this Plan and any awards hereunder shall be void and of no force or effect, and the RLI Corp. 2015 Long-Term Incentive Plan shall remain in effect in accordance with its terms.

5.2Amendments. The Board may amend this Plan as it shall deem advisable; provided, however, that no amendment to the Plan shall be effective without the approval of the Company’s stockholders if (i) stockholder approval is required by applicable law, rule or regulation, including any rule of the New York Stock Exchange, or any other stock exchange on which the Common Stock is then traded, or (ii) such amendment seeks to modify the Non-Employee Director compensation limit set forth in Section 1.3 or the prohibition on repricing set forth in Section 2.4 hereof; providedfurther, that no amendment may materially impair the rights of a holder of an outstanding award without the consent of such holder.

5.3Agreement. Each award under this Plan shall be evidenced by an Agreement setting forth the terms and conditions applicable to such award. No award shall be valid until an Agreement is executed by the Company and, to the extent required by the Company, executed or electronically accepted by the recipient of such award. Upon such execution or acceptance and delivery of the Agreement to the Company within the time period specified by the Company, such award shall be effective as of the effective date set forth in the Agreement.

5.4Non-Transferability. No award shall be transferable other than by will, the laws of descent and distribution or pursuant to beneficiary designation procedures approved by the Company or, to the extent expressly permitted in the Agreement relating to such award, to the holder’s family members, a trust or entity established by the holder for estate planning purposes, a charitable organization designated by the holder or pursuant to a domestic relations order, in each case, without consideration. Except to the extent permitted by the foregoing sentence or the Agreement relating to an award, each award may be exercised or settled during the holder’s lifetime only by the holder or the holder’s legal representative or similar person. Except as permitted by the second preceding sentence, no award may be sold, transferred, assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether by operation of law or otherwise) or be subject to execution, attachment or similar process. Upon any attempt to so sell, transfer, assign, pledge, hypothecate, encumber or otherwise dispose of any award, such award and all rights thereunder shall immediately become null and void.

5.5Tax Withholding. The Company shall have the right to require, prior to the issuance or delivery of any shares of Common Stock or the payment of any cash pursuant to an award made hereunder, payment by the holder of such award of any federal, state, local or other taxes which may be required to be withheld or paid in connection with such award. An Agreement may provide that (i) the Company shall withhold whole shares of Common Stock which would otherwise be delivered to a holder, having an aggregate Fair Market Value determined as of the date the obligation to withhold or pay taxes arises in connection with an award (the “Tax Date”), or withhold an amount of cash which would otherwise be payable to a holder, in the amount necessary to satisfy any such obligation or (ii) the holder may satisfy any such obligation by any of the following means: (A) a cash payment to the Company; (B) delivery (either actual delivery or by attestation procedures established by the Company) to the Company of previously owned whole shares of Common Stock having an aggregate Fair Market Value, determined as of the Tax Date, equal to the amount necessary to satisfy any such obligation; (C) authorizing the Company to withhold whole shares of Common Stock which would otherwise be delivered having an aggregate Fair Market Value, determined as of the Tax Date, or withhold an amount of cash which would otherwise be payable to a holder, in either case equal to the amount necessary to satisfy any such obligation; (D) in the case of the exercise of an option, a cash payment by a broker-dealer acceptable to the Company to whom the participant has submitted an irrevocable notice of exercise or (E) any combination of (A), (B) and (C), in each case to the extent set forth in the Agreement relating to the award. Shares of Common Stock to be withheld may not have an aggregate Fair Market Value in excess of the amount determined by applying the minimum statutory withholding rate (or, if permitted by the Company, such other rate as will not cause adverse accounting consequences under the accounting rules then in effect, and is permitted under applicable IRS withholding rules). Any fraction of a share of Common Stock which would be required to satisfy such an obligation shall be disregarded and the remaining amount due shall be paid in cash by the holder.

5.6Restrictions on Shares. Each award made hereunder shall be subject to the requirement that if at any time the Company determines that the listing, registration or qualification of the shares of Common Stock subject to such award upon any securities exchange or under any law, or the consent or approval of any governmental body, or the taking of any other action is necessary or desirable as a condition of, or in connection with, the delivery of shares thereunder, such shares shall not be delivered unless such listing, registration, qualification, consent, approval or other action shall have been effected or obtained, free of any conditions not acceptable to the Company. The Company may require that certificates evidencing shares of Common Stock delivered pursuant to any award made

hereunder bear a legend indicating that the sale, transfer or other disposition thereof by the holder is prohibited except in compliance with the Securities Act of 1933, as amended, and the rules and regulations thereunder.

5.7Adjustment. In the event of any Fundamental Change or equity restructuring (within the meaning of Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation or any successor or replacement accounting standard) that causes the per share value of shares of Common Stock to change, such as a stock dividend, stock split, spinoff, rights offering or recapitalization through an extraordinary cash dividend, the number and class of securities available under this Plan, the terms of each outstanding option and SAR (including the number and class of securities subject to each outstanding option or SAR and the purchase price or base price per share), the terms of each outstanding Stock Award (including the number and class of securities subject thereto), and the terms of each outstanding Performance Award (including the number and class of securities subject thereto, if applicable), shall be appropriately adjusted by the Committee, such adjustments to be made in the case of outstanding options and SARs in accordance with Section 409A of the Code. In the event of any other change in corporate capitalization, including a merger, consolidation, reorganization, or partial or complete liquidation of the Company, such equitable adjustments described in the foregoing sentence may be made as determined to be appropriate and equitable by the Committee to prevent dilution or enlargement of rights of participants. In either case, the decision of the Committee regarding any such adjustment shall be final, binding and conclusive.

5.8Change in Control.

(a)Subject to the terms of the applicable Agreements, in the event of a “Change in Control,” the Board, as constituted prior to the Change in Control, may, in its discretion:

(1) require that (i) some or all outstanding options and SARs shall become exercisable in full or in part, either immediately or upon a subsequent termination of employment, (ii) the Restriction Period applicable to some or all outstanding Stock Awards shall lapse in full or in part, either immediately or upon a subsequent termination of employment, (iii) the Performance Period applicable to some or all outstanding awards shall lapse in full or in part, and (iv) the Performance Measures applicable to some or all outstanding awards shall be deemed to be satisfied at the target, maximum or any other level;

(2) require that shares of capital stock of the corporation resulting from or succeeding to the business of the Company pursuant to such Change in Control, or a parent corporation thereof, be substituted for some or all of the shares of Common Stock subject to an outstanding award, with an appropriate and equitable adjustment to such award as determined by the Board in accordance with Section 5.7; and/or

(3) require outstanding awards, in whole or in part, to be surrendered to the Company by the holder, and to be immediately cancelled by the Company, and to provide for the holder to receive (i) a cash payment or other property in an amount equal to (A) in the case of an option or an SAR, the aggregate number of shares of Common Stock then subject to the portion of such option or SAR surrendered, whether or not vested or exercisable, multiplied by the excess, if any, of the Fair Market Value of a share of Common Stock as of the date of the Change in Control, over the purchase price or base price per share of Common Stock subject to such option or SAR, (B) in the case of a Stock Award or a Performance Award denominated in shares of Common Stock, the number of shares of Common Stock then subject to the portion of such award surrendered to the extent the Performance Measures applicable to such award have been satisfied or are deemed satisfied pursuant to Section 5.8(a)(i), whether or not vested, multiplied by the Fair Market Value of a share of Common Stock as of the date of the Change in Control, and (C) in the case of a Performance Award denominated in cash, the value of the Performance Award then subject to the portion of such award surrendered to the extent the Performance Measures applicable to such award have been satisfied or are deemed satisfied pursuant to Section 5.8(a)(i); (ii) shares of capital stock of the corporation resulting from or succeeding to the business of the Company pursuant to such Change in Control, or a parent corporation thereof, having a fair market value not less

than the amount determined under clause (i) above; or (iii) a combination of the payment of cash pursuant to clause (i) above and the issuance of shares pursuant to clause (ii) above.

For the avoidance of doubt, except as explicitly authorized in an Agreement, by this Section 5.8(a) or by a participant in writing, the Board may not terminate or cancel any equity awards (whether vested or unvested) in connection with a Change in Control.

(b)For purposes of this Plan, a “Change in Control” shall be deemed to have occurred if:

(1) any “Person,” within the meaning of Section 13(d) or 14(d) under the Exchange Act, including any group (within the meaning of Section 13(d)(3) under the Exchange Act), becomes the “Beneficial Owner,” as such term is defined in Rule 13d-3 promulgated under the Exchange Act, of 30% or more of the combined voting power of the Company’s outstanding shares, other than beneficial ownership by (A) the Company or any subsidiary of the Company, (B) any employee benefit plan of the Company or any subsidiary of the Company or (C) any entity of the Company for or pursuant to the terms of any such plan.

Notwithstanding the foregoing, a Change in Control shall not occur as the result of an acquisition of outstanding shares of the Company by the Company which, by reducing the number of shares outstanding, increases the proportionate number of shares beneficially owned by a Person to 30% or more of the shares of the Company then outstanding; provided, however, that if a Person becomes the Beneficial Owner of 30% or more of the shares of the Company then outstanding by reason of share purchases by the Company and shall, after such share purchases by the Company, become the Beneficial Owner of any additional shares of the Company, then a Change in Control shall be deemed to have occurred; or

(2) the Company consummates a merger or consolidation with another entity, or engages in a reorganization with or a statutory share exchange or an exchange offer for the Company’s outstanding voting stock of any class with another entity or acquires another entity by means of a statutory share exchange or an exchange offer, or engages in a similar transaction; provided that no Change in Control shall have occurred by reason of this paragraph unless either:

(A) the stockholders of the Company immediately prior to the consummation of the transaction would not, immediately after such consummation, as a result of their beneficial ownership of voting stock of the Company immediately prior to such consummation

(I)be the Beneficial Owners, directly or indirectly, of securities of the resulting or acquiring entity entitled to elect a majority of the members of the board of directors or other governing body of the resulting or acquiring entity; and

(II)be the Beneficial Owners of the resulting or acquiring entity in substantially the same proportion as their beneficial ownership of the voting stock of the Company immediately prior to such transaction; or

(B) those persons who were directors of the Company immediately prior to the consummation of the proposed transaction would not, immediately after such consummation, constitute a majority of the directors of the resulting entity; or

(3) the sale or disposition, in one or a series of related transactions, of all or substantially all of the assets of the Company to any Person (as defined in paragraph (1) above) other than a Subsidiary; or

(4) the number of duly elected and qualified directors of the Company who were not either elected by the Board or nominated by the Board or its nominating/governance committee for election by the shareholders constitute a majority of the total number of directors of the Company as fixed by its Bylaws;

provided, that with respect to any nonqualified deferred compensation that becomes payable on account of the Change in Control, the transaction or event described in clause (1), (2), (3) or (4) also constitutes a “change in control event,” as defined in Treasury Regulation §1.409A-3(i)(5) if required in order for the payment not to violate Section 409A of the Code.

The Committee shall have full and final authority, which shall be exercised in its discretion, to determine conclusively whether a Change in Control of the Company has occurred pursuant to the above definition, and the date of the occurrence of such Change in Control and any incidental matters relating thereto.

5.9Deferrals and Section 409A. The Committee may determine that the delivery of shares of Common Stock or the payment of cash, or a combination thereof, upon the settlement of all or a portion of any award made hereunder, other than awards of options or SARs, shall be deferred, or the Committee may, in its sole discretion, approve deferral elections made by holders of awards. Deferrals shall be for such periods and upon such terms as the Committee may determine in its sole discretion, subject to the requirements of Section 409A of the Code. Awards under the Plan are intended to comply with, or be exempt from, the applicable requirements of Section 409A of the Code and shall be limited, construed and interpreted in accordance with such intent. Although the Company does not guarantee any particular tax treatment, to the extent that any award is subject to Section 409A of the Code, it shall be paid in a manner that is intended to comply with Section 409A of the Code, including regulations and any other guidance issued by the Secretary of the Treasury and the Internal Revenue Service with respect thereto. In no event whatsoever shall the Company be liable for any additional tax, interest or penalties that may be imposed on the participant by Section 409A of the Code or any damages for failing to comply with Section 409A of the Code. Notwithstanding anything in the Plan or any Agreement to the contrary, each participant shall be solely responsible for the tax consequences of awards, and in no event shall the Company have any responsibility or liability if an award does not meet any applicable requirements of Section 409A. Although the Company intends to administer the Plan to prevent taxation under section 409A, the Company does not represent or warrant that the Plan or any award complies with Section 409A or any other provision of federal, state, local or other tax law.

5.10No Right of Participation, Employment or Service. Unless otherwise set forth in an employment agreement, no person shall have any right to participate in this Plan. Neither this Plan nor any award made hereunder shall confer upon any person any right to continued employment by or service with the Company or any Subsidiary or affect in any manner the right of the Company or any Subsidiary to terminate the employment or service of any person at any time without liability hereunder.

5.11Rights as Stockholder. No person shall have any right as a stockholder of the Company with respect to any shares of Common Stock or other equity security of the Company which is subject to an award hereunder unless and until such person becomes a stockholder of record with respect to such shares of Common Stock or equity security.

5.12Designation of Beneficiary. To the extent permitted by the Company, a holder of an award may file with the Company a written designation of one or more persons as such holder’s beneficiary or beneficiaries (both primary and contingent) in the event of the holder’s death or incapacity. To the extent an outstanding option or SAR granted hereunder is exercisable, such beneficiary or beneficiaries shall be entitled to exercise such option or SAR pursuant to procedures prescribed by the Company. Each beneficiary designation shall become effective only when filed in writing with the Company during the holder’s lifetime on a form prescribed by the Company. The spouse of a married holder domiciled in a community property jurisdiction shall join in any designation of a beneficiary other than such spouse. The filing with the Company of a new beneficiary designation shall cancel all previously filed beneficiary designations. If a holder fails to designate a beneficiary, or if all designated beneficiaries of a holder predecease the holder, then each outstanding award held by such holder, to the extent vested or exercisable, shall be payable to or may be exercised by such holder’s executor, administrator, legal representative or similar person.

5.13Awards Subject to Clawback.  The awards granted under this Plan and any cash payment or shares of Common Stock delivered pursuant to such an award are subject to forfeiture, recovery by the Company or other action pursuant to the applicable Agreement or any clawback or recoupment policy which the Company may adopt from time to time, including without limitation any such policy which the Company may be required to adopt under the Dodd-Frank Wall Street Reform and Consumer Protection Act and implementing rules and regulations thereunder, or as otherwise required by law.

5.14Governing Law. This Plan, each award hereunder and the related Agreement, and all determinations made and actions taken pursuant thereto, to the extent not otherwise governed by the Code or the laws of the United States, shall be governed by the laws of the State of Delaware and construed in accordance therewith without giving effect to principles of conflicts of laws.

5.15Foreign Employees. Without amending this Plan, the Committee may grant awards to eligible persons who are foreign nationals and/or reside outside of the United States on such terms and conditions different from those specified in this Plan as may in the judgment of the Committee be necessary or desirable to foster and promote achievement of the purposes of this Plan and, in furtherance of such purposes the Committee may make such modifications, amendments, procedures, subplans and the like as may be necessary or advisable to comply with provisions of laws in other countries or jurisdictions in which the Company or its Subsidiaries operates or has employees.

Date: May 4, 2023RLI CORP.

By: Craig W. Kliethermes

Chief Executive Officer

EX-10.4

Exhibit 10.4

RLI CORP.

2023 Long-Term Incentive Plan

Stock Option Agreement

(May 4, 2023 Form of Agreement)

Name of Participant:
Number of Shares of Common Stock Covered:	Date of Grant:
Exercise Price Per Share of Common Stock:	Expiration Date:
Exercise Schedule (Cumulative): Actual vesting dates and corresponding shares incorporated as follows:
Date(s) of Exercisability [Date of Grant plus one year] [Date of Grant plus two years] [Date of Grant plus three years] [Date of Grant plus four years] [Date of Grant plus five years]	Number of Shares as to Which Option Becomes Exercisable [20%] [20%] [20%] [20%] [20%]

Effective as of the “Date of Grant” specified above, RLI Corp., a Delaware corporation (the “Company”), grants to the individual named above (the “Participant”) an option representing the right to purchase shares of common stock, par value $0.01 per share, of the Company (“Common Stock”) at the “Exercise Price Per Share of Common Stock” stated above (the “Option”).  The Option shall be subject to the terms and conditions set forth in this Stock Option Agreement (the “Agreement”) and in the RLI Corp. 2023 Long-Term Incentive Plan (the “Plan”).  In the event of any conflict between the terms of the Agreement and the Plan, the terms of the Plan shall govern.  Capitalized terms used but not defined shall have the meaning ascribed thereto in the Plan.

Background

A.The Company maintains the Plan (i) to align the interests of the Company’s stockholders and the recipients of awards under the Plan by increasing the proprietary interest of such recipients in the Company’s growth and success, (ii) to advance the interests of the Company by attracting and retaining officers, other employees, Non-Employee Directors, consultants and independent contractors and (iii) to motivate such persons to act in the long-term best interests of the Company and its stockholders.

B.Under the Plan, the Human Capital & Compensation Committee of the Board of Directors of the Company, or such other committee designated by the Board in accordance with the Plan (the “Committee”), administers the Plan and has the authority to determine the awards to be granted under the Plan.

C.The Committee has determined that the Participant is eligible to receive an award under the Plan in the form of an Option.

D.The Company hereby grants the Option to the Participant under the following terms and conditions:

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Terms and Conditions

1. Grant.  The Participant is granted the Option to purchase the number of shares of Common Stock specified at the beginning of this Agreement.

2. Exercise Price.  The purchase price of each share of Common Stock subject to the Option will be the Exercise Price Per Share of Common Stock specified at the beginning of this Agreement (which price shall not be less than 100% of the Fair Market Value of a share of Common Stock on the date of grant).

3. Non-Qualified Stock Option.  The Option is not intended to be and is not an “incentive stock option” within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).  Accordingly, the Option does not qualify for the tax treatment specified therein.  The Option is a Nonqualified Stock Option for purposes of the Plan.

4. Exercise Schedule.  The Option will become vested and exercisable with respect to twenty percent (20%) of the shares of Common Stock covered under the Option annually over each of the five years from the Date of Grant as specified in the exercise schedule at the beginning of this Agreement.  The exercise schedule will be cumulative; thus, to the extent the Option has not already been exercised and has not expired, terminated or been cancelled, the Participant or the person otherwise entitled to exercise the Option as to vested shares of Common Stock as provided herein may at any time, and from time to time, purchase all or any portion of the whole shares of Common Stock then purchasable under the exercise schedule.  

Nothwithstanding the foregoing or any other provision of this Agreement, the Participant may not exercise all or any portion of the Option (in any manner) during the Company’s quiet periods in accordance with the Company’s Insider Trading Policy in effect at such time.

The Option may also be exercised in full (notwithstanding the exercise schedule) under the circumstances described in Section 8 of this Agreement if it has not expired prior thereto.

5. Expiration.  The Option shall expire at 5:00 p.m. Central Time on the “Expiration Date” specified at the beginning of this Agreement.  In no event may anyone exercise the Option, in whole or in part, after it has expired, notwithstanding any other provision of this Agreement.  

6. Procedure to Exercise Option.

(a)  Notice of Exercise.  The Company partners with Solium Capital for the management and administration of its long-term incentives program using Solium’s web-based application, Shareworks by Morgan Stanley®.  The Option may be exercised by initiating an exercise through the Company’s Shareworks by Morgan Stanley® site, https://rli.solium.com, or by delivering written notice of exercise to the Company at the principal executive office of the Company, to the attention of the Company’s Secretary or other designated Company employees or representative.  The notice shall be in writing and state the Grant Date and number of whole shares of Common Stock subject to such Option to be exercised. If the person exercising the Option is not the Participant, he/she also must submit appropriate proof that is satisfactory to the Committee in its sole discretion of his/her right to exercise the Option.  

(b)  Tender of Payment.  Upon giving notice of any exercise hereunder, the Participant shall provide for payment of the purchase price of the shares of Common Stock being purchased through one or a combination of the following methods:

(i)Purchase.  Cash (including check paid to the Company, wire transfer, bank draft, or money order);

(ii)Broker-Assisted Cashless Exercise.  By directing, via an irrevocable notice of exercise, a stockbroker designated by the Company through Shareworks by Morgan Stanley to effect a broker assisted cashless exercise to sell shares of Common Stock issued on exercise of the Option and remitting the proceeds of such sale to the Company to pay the exercise price and taxes, and remitting the net cash and/or shares to the Participant; or

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(iii)  Net Exercise.  By instructing the Company to withhold whole shares of Common Stock having an aggregate Fair Market Value, determined as of the date of exercise, less than or equal to the purchase price of the Shares acquired upon exercise and any applicable withholding taxes in accordance with Section 6(d) of this Agreement; provided that this method of exercise may only be used to deliver net shares to the Participant and no cash compensation may be provided, other than cash in lieu of a fractional share.

Notwithstanding the foregoing, the Participant shall not be permitted to pay any portion of the purchase price with Shares, though a broker-assisted cashless exercise or through net exercise, if the Committee, in its sole discretion, determines that payment in such manner could have adverse tax or financial accounting consequences for the Company.

(c)  Company’s Option to Cash-Out.  Upon receipt of notice of exercise, the Committee may elect to cash out all or part of the portion of the shares of Common Stock for which an Option is being exercised by paying Participant an amount, in cash or shares of Common Stock, equal to the excess of the Fair Market Value of the shares of Common Stock over the aggregate purchase price for the shares of Common Stock for which the Option is being exercised on the effective date of such cash-out.

(d)  Withholding Taxes.  Participant is responsible for payment of any federal, state, local or other taxes which must be withheld or paid in connection with the Option, and Participant must promptly pay to the Company any such taxes.  The Participant hereby authorizes the Company and any Subsidiary to deduct from any payment owed to Participant any taxes required to be withheld or paid in connection with the Option, including social security and Medicare (FICA) taxes and federal, state and local taxes.  The Company shall have the right to require that the Participant satisfy such obligations by making a cash payment to the Company.  In lieu of all or any part of such a cash payment, the Participant may elect to authorize the Company to withhold whole shares of Common Stock which would otherwise be issuable upon the settlement of the Option equal to the amount necessary to satisfy any such tax obligations.  Shares of Common Stock to be withheld may not have an aggregate Fair Market Value in excess of the amount determined by applying the maximum individual statutory tax rate in the Participant’s applicable jurisdiction; provided that the Company shall be permitted to limit the number of shares so withheld to a lesser number if necessary, in the judgment of the Committee, to avoid adverse accounting consequences or for administrative convenience.  Any fraction of a share of Common Stock which would be required to satisfy such an obligation shall be disregarded and the remaining amount due shall be withheld.

(d)  Delivery of Certificates.  As soon as practicable after the Company receives the notice and purchase price in full and payment for applicable taxes as provided above, it shall deliver to the person exercising the Option, in the name of such person, a certificate or certificates representing the shares of Common Stock being purchased; provided, however, that the Company may deliver the shares of Common Stock electronically in book-entry form.  The Company shall pay any original issue or transfer taxes with respect to the issue or transfer of the shares of Common Stock and all fees and expenses incurred by it in connection therewith.  All shares of Common Stock so issued shall be fully paid and nonassessable.  Notwithstanding anything to the contrary in this Agreement, no certificate for shares of Common Stock distributable under the Plan shall be issued and delivered unless the issuance of such certificate complies with all applicable legal requirements including, without limitation, compliance with the provisions of applicable state securities laws, the federal Securities Act of 1933 and the Securities Exchange Act of 1934, and related regulations, and the Company may may further require that any such certificates bear a legend indicating that the sale, transfer or other disposition thereof by the holder is prohibited except in compliance with the Securities Act of 1933, as amended, and the rules and regulations thereunder.

7. Termination of Employment.  The Option may be exercised at any time prior to the Expiration Date only while the Participant remains employed with the Company or a parent or subsidiary thereof, and only if the Participant has been continuously so employed since the date the Option was granted; provided that:

(a)Except as otherwise provided below, the Option may be exercised for three months after termination of the Participant’s employment, but only to the extent that it was exercisable immediately prior to termination of employment; provided that if the Participant dies within such three-month period, the Option may be exercised until the first anniversary of the Participant’s termination of employment;

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(b)The Option may be exercised for one year after termination of the Participant’s employment if such termination is because of death of the Participant;

(c)The Option may be exercised for three years after the date of Participant’s termination of employment if such termination of employment is because of the Participant’s Disability;

(d)The Option may be exercised for three years after termination of the Participant’s employment if such termination is because of the Participant’s Retirement; and

(e)The Option may be exercised at any time prior to the expiration of the Option pursuant to Section 5 of this Agreement if such termination is because of the Participant’s Qualifying Termination (pursuant to Section 18(a) of the Agreement).

Notwithstanding the above, in no event will any Option be exercisable at any time after the Expiration Date.  When an Option is no longer exercisable, it shall be deemed to have lapsed or terminated.  The Company has no duty to inform Participant of the imminent expiration of the Option.  The Option will expire as provided in this Section 7 and the term of the Option will not be extended, even if the Option expires during a period when the Option is unexercisable (i.e., during a “quiet period” or on a date on which the NYSE is closed for trading).

Termination for Cause. Notwithstanding the foregoing, the Option shall terminate immediately if Participant is notified that Participant’s employment is being terminated or has been terminated for Cause. Participant's termination shall be deemed to have been for Cause if, before or after such termination, facts and circumstances are discovered that would have justified a termination for Cause. 

8. Acceleration of Vesting.  In the event of the death, Disability, Retirement or Qualifying Termination of the Participant, any portion of the Option that has not expired or otherwise been terminated and was not previously exercisable shall become immediately exercisable in full if the Participant shall have been continuously employed by the Company or a parent or subsidiary thereof between the date the Option was granted and the date of such Disability, Retirement or Qualifying Termination.

9. Limitation on Transfer.  During the lifetime of the Participant, only the Participant or his/her guardian or legal representative may exercise the Option.  The Option may not be sold, transferred, assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether by operation of law or otherwise) or be subject to execution, attachment or similar process otherwise than by will, the laws of descent and distribution, pursuant to beneficiary designation procedures approved by the Committee, or pursuant to a qualified domestic relations order.  Notwithstanding the foregoing, the Participant may transfer the Option, without payment or consideration from the transferee, (a) to any one or more of the Participant’s spouse or issue, (b) to one or more trusts established solely for the benefit of the Participant’s spouse or issue or (c) to one or more partnerships in which the only partners are the Participant’s spouse or issue.  For purpose of this provision, the term “spouse” shall include a former spouse who receives a transfer pursuant to a qualified domestic relations order, and the term issue shall include stepchildren, step-grandchildren and adopted children.  No such transfer shall be effective unless reasonable prior notice thereof is delivered to the Company.  Any such permitted transferee shall be subject to all of the terms and conditions applicable to the person transferring the Option including the terms and conditions set forth in the Plan and this Agreement.  Any attempt to sell, transfer, assign, pledge, hypothecate, encumber or otherwise dispose of the Option other than in accordance with this Section 9 shall be null and void.

10. No Stockholder Rights Before Exercise.  No person shall have any of the rights of a stockholder of the Company with respect to any share of Common Stock subject to the Option unless and until the share of Common Stock actually is issued to him/her upon valid exercise of the Option and such person becomes a stockholder of record with respect to such shares of Common Stock.

11. Adjustment.  The Option is subject to adjustment, without the consent of the Participant, pursuant to Section 5.7 of the Plan.

12. Interpretation of this Agreement.  All decisions and interpretations made by the Committee (or, as applicable, the Board) with regard to any question arising hereunder or under the Plan shall be binding and conclusive upon

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the Company and the Participant.  If there is any inconsistency between the provisions of this Agreement and the Plan, the provisions of the Plan shall govern.

13. Discontinuance of Employment.  This Agreement shall not give the Participant a right to continued employment with the Company or any parent or subsidiary of the Company, and the Company or any such parent or subsidiary employing the Participant may terminate his/her employment at any time and otherwise deal with the Participant without regard to the effect it may have upon him/her under this Agreement.

14. Binding Effect.  This Agreement shall be binding in all respects on the heirs, representatives, successors and assigns of the Participant.

15. Choice of Law; Jurisdiction.  This Agreement is entered into under the laws of the State of Delaware and shall be construed and interpreted thereunder (without regard to its conflict of law principles), provided that Sections 16, 17, 20, 22 and 23 shall be construed and interpreted under the laws of the State of Illinois (without regard to its conflicts of law principles).  All disputes under this Agreement shall be heard in the federal and state courts located in Peoria, Illinois.

16. Restrictions on Solicitation of Company Employee(s).  Participant understands and acknowledges that the Company and its Subsidiaries have expended and continues to expend significant time and expense in recruiting and training its employees and that the loss of employees would cause significant and irreparable harm to the Company and any Subsidiary.

(a)  Solicitation of Company Employee(s) During Participant’s Employment.  Unless otherwise prohibited by applicable law, in return for this Option grant and by virtue of Participant’s ongoing duty of loyalty to the Company, the Participant – while Participant remains employed by the Company – shall not, directly, indirectly, or through the direction or control of others, solicit, hire, recruit, attempt to hire or recruit, encourage, or induce any employee(s) of the Company or any Subsidiary to terminate their employment with the Company or any Subsidiary (collectively, “Solicitation of Company Employee(s) During Participant’s Employment”), unless Participant’s Solicitation of Company Employee(s) during Participant’s Employment is in the best interest of the Company and prior consent for the Solicitation of Company Employee(s) During Participant’s Employment has been received from an authorized officer of the Company.

(b)  Solicitation of Company Employee(s) Following Participant’s Employment.  Unless otherwise prohibited by applicable law, in return for this Option grant, the Participant – during the twelve (12) month period that immediately follows the Participant’s termination of employment with the Company, regardless of the reason for termination and whether it is initiated by the Participant, the Company or otherwise – shall not, directly, indirectly, or through the direction or control of others, solicit, hire, recruit, attempt to hire or recruit, encourage, or induce any employee(s) of the Company or any Subsidiary whom Participant supervised or with whom Participant directly worked (regardless of whether such individuals worked in the same location) during the last two (2) years of Participant’s employment by the Company and/or with respect to whom Participant received confidential employment or background information during the last two (2) years of Participant’s employment by the Company to terminate their employment with the Company or any Subsidiary (collectively, “Solicitation of Company Employee(s) Following Participant’s Employment”), unless Participant’s Solicitation of Company Employee(s) Following Participant’s Employment is in the best interest of the Company and prior consent for the Solicitation of Company Employee(s) Following Participant’s Employment has been received from an authorized officer of the Company. Participant's obligations under this Section 16(b) shall not apply to soliciting any individual(s) formerly employed by or who otherwise provided services to the Company or any Subsidiary whose employment was terminated or whose services were disengaged by the Company or any Subsidiary; or to any individual(s) who voluntarily terminated their employment with or ceased providing services to the Company or any Subsidiary at least six (6) months prior to any solicitation by Participant.

(c)  Violation(s) of Section 16.  If Participant has received or been entitled to payment of cash, delivery of shares of Common Stock, or a combination thereof pursuant to this Option grant within six (6) months before the Participant’s termination of employment with the Company or any Subsidiary, the Committee, in its sole discretion, may require Participant to return or forfeit the cash and/or shares of Common Stock received with respect to the Option (or its economic value as of the date of the exercise of Option) in the event of a violation of

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this Section 16. The Committee’s right to require forfeiture must be exercised within ninety (90) days after discovery of such an occurrence but in no event later than fifteen (15) months after Participant’s termination of employment with the Company or any Subsidiary.

17. Restrictions on Solicitation of Company Customer(s).  Participant understands and acknowledges that because of Participant’s experience with, training by, and relationship to the Employer or any Subsidiary, Participant will have access to and learn about the Company and any Subsidiary's Confidential Information (defined below), including its or their customer information. It is understood and agreed by Participant that all business relationships and goodwill now existing with respect to the prospects and customers of the Company or any Subsidiary, whether or not created by Participant, and all such relationships and goodwill which may hereafter be created or enhanced during Participant’s employment by the Company or any Subsidiary, at all times shall be considered by the parties as near permanent relationships belonging to the Company and any Subsidiary, and that the loss of any such business relationship or goodwill will cause significant and irreparable harm to the Company or any Subsidiary. Accordingly, Participant agrees to the restrictions on solicitation of Company Customer(s) (as defined below) as outlined below in this Section 17.

(a)  Solicitation of Company Customer(s) During Participant’s Employment.  Unless otherwise prohibited by applicable law, in return for this Option grant and by virtue of Participant’s ongoing duty of loyalty to the Company,  the Participant – while Participant remains employed by the Company – shall not, directly or indirectly, solicit or otherwise induce any person or entity engaged in a business relationship with Company, including, but not limited to, any policyholder, or any reinsurer, producer, broker, or other third party business partner of the Company (collectively, “Company Customer(s)”) to: (a) discontinue or diminish its or their relationship with the Company and/or any Subsidiary ; (b) conduct with any person or entity other than the Company or any Subsidiary any business that such Company Customer(s) conducts or could conduct with the Company and/or any Subsidiary; or (c) otherwise interfere with or disrupt, or in any manner attempt to interfere with or disrupt, any of the Company's and/or any Subsidiary relationships with Company Customer(s) (collectively, “Solicitation of Company Customer(s) During Participant’s Employment”).

(b)  Solicitation of Company Customer(s) Following Participant’s Employment.  Unless otherwise prohibited by applicable law, in return for this Option grant, the Participant – during the twelve (12) month period that immediately follows the Participant’s termination of employment with the Company, regardless of the reason for termination and whether it is initiated by the Participant, the Company or otherwise – shall not, as proprietor, partner, joint venturer, stockholder, director, officer, trustee, principal, agent, member, consultant, servant, employee, or in any other capacity whatsoever, directly or indirectly, solicit or otherwise induce any Company Customer(s) to: (a) discontinue or diminish its or their relationship with the Company and/or any Subsidiary; (b) conduct with any person or entity other than the Company or any Subsidiary any business that such Company Customer(s) conducts or could conduct with the Company and/or any Subsidiary; or (c) otherwise interfere with or disrupt, or in any manner attempt to interfere with or disrupt, any of the Company's and/or any Subsidiary’s relationships with Company Customer(s) (collectively, “Solicitation of Company Customer(s) Following Participant’s Employment”); provided, however, Participant’s obligations under this Section 17(b) shall apply only to any Company Customer(s) doing business with the Company and/or any Subsidiary at any time during the last twelve (12) months of the Participant’s employment with the Company (or at any time during the Participant’s employment with the Company, if the length of employment is less than twelve (12) months): and either (i) with which Participant had material personal dealings during the last twelve (12) months of the Participant’s employment with the Company (or at any time during the Participant’s employment with the Company, if the length of employment is less than twelve (12) months); (ii) with which someone under Participant's direct supervision had material personal dealings during the last twelve (12) months of the Participant’s employment with the Company (or at any time during the Participant’s employment with the Company, if the length of employment is less than twelve (12) months); or (iii) about which Participant received Confidential Information, or other information that is not publicly available, by or through their relationship to the Company or any Subsidiary. The Company and any Subsidiary, on the one hand, and Participant, on the other, expressly acknowledge and agree that this Section 17(b) in itself is not intended to, and will not, function as a covenant against competition.

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(c)  Violation(s) of Section 17.  If Participant has received or been entitled to payment of cash, delivery of shares of Common Stock, or a combination thereof pursuant to this Option grant within six (6) months before the Participant’s termination of employment with the Company or any Subsidiary, the Committee, in its sole discretion, may require Participant to return or forfeit the cash and/or shares of Common Stock received with respect to the Option (or its economic value as of the date of the exercise of Option) in the event of a violation of this Section 17. The Committee’s right to require forfeiture must be exercised within ninety (90) days after discovery of such an occurrence but in no event later than fifteen (15) months after Participant’s termination of employment with the Company or any Subsidiary.

18. Change in Control.  In the event of a Change in Control, the Committee shall take one of the actions described in Sections 18(a) or (b).

(a)  Substitution.  If the Change in Control is a merger, consolidation or statutory share exchange, the Committee may make appropriate provision for the replacement of the Option by the substitution of an option to purchase stock of the corporation surviving any merger or consolidation with substantially similar terms and conditions (or, if appropriate, an option to purchase stock of the parent corporation of the Company or such surviving corporation), provided such option preserves the full economic value of the Option (to the extent permitted under Code Section 409A, or, if applicable, the stock rights exemption from Code Section 409A) and provides for full vesting of the option in the event Participant experiences a Qualifying Termination; provided that  if the Company continues to be a publicly traded corporation immediately after a Change in Control, the Committee may provide for the Option to continue in effect in accordance with its terms, in which case the Option shall become fully vested in the event Participant experiences a Qualifying Termination.

(b)  Acceleration of Vesting and Payment of Awards.  At least ten days before the occurrence of the Change in Control, the Committee may declare, and provide written notice to Participant of the declaration that the Option, whether or not then exercisable, shall be cancelled at the time of, or immediately before the occurrence of, the Change in Control in exchange for payment to Participant, within ten (10) days after the Change in Control of cash equal to,  for each share of Common Stock covered by the canceled Option, the amount, if any, by which the Fair Market Value per share of Common Stock exceeds the purchase price per share of Common Stock covered by the Option.  Alternatively, at least ten days before the occurrence of the Change in Control, the Committee may cause the Option to become immediately become exercisable in full and Participant shall have the right, during the period preceding the time of cancellation of the Option, to exercise the Option as to all or any part of the shares of Common Stock covered thereby in whole or in part.  In the event the Committee takes the actions contemplated by the preceding sentence, to the extent the Option shall not have been exercised before the Change in Control, the Option shall be cancelled at the time of, or immediately before, the Change in Control.  

19. Amendment.  Subject to the terms of the Plan,  the Committee may amend the terms and conditions of this Agreement.  Amendments to the Agreement may be unilaterally made by the Company (with the approval of the Committee) unless such amendments are deemed by the Committee to be materially impair the rights of Participant and not required as a matter of law.

20. Confidential Information.

(a)Restrictions on Use/Disclosure of Confidential Information.  Pursuant to this Agreement, the Company’s Confidential Information Protection Policy, the Company’s Code of Conduct, and any additional confidentiality policy and/or agreement governing Participant’s use/disclosure of confidential information, the Participant understands and acknowledges that during the course of employment by the Company, Participant will have access to and learn about confidential, secret, and proprietary documents, materials, data, and other information, in tangible and intangible form, of and relating to the Company and any Subsidiary, and the foregoing’s businesses and existing and prospective customers, suppliers, and other associated third parties ("Confidential Information"). The parties specifically recognize that the Company’s Confidential Information includes, without limitation: (i) business/financial information (preliminary financial results that have not been made available to the public, investment information; financial data, budgets, and projections; the terms and conditions of contracts and the existence of other actual or potential relationships between the Company and other persons or entities); (ii) strategies and plans

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(strategic plans; marketing plans and data; business development plans and objectives; and management reports); (iii) personal information (employee information; personally-identifiable information concerning any person – such as address, date of birth, social security number, etc. – that can be used to identify, contact, or locate a person; and medical or health information concerning any person); (iv)  underwriting/claims information (the identity of RLI’s agents, brokers, insureds, or customers; the types of policies or bonds sold through a particular agency or producer; claims, loss history, reserves, litigation plans and similar or related information; policy forms and other forms or agreements created or used by the Company; underwriting guidelines or requirements, forms, templates, training and support materials; rates, rate manuals, and commissions); and (v) other confidential information (information related to the Company’s cyber security measures, attorney-client privileged information, software code, and any other information that has not been made public by RLI). For purposes of this Agreement, Confidential Information shall not include any information that (i) is or becomes generally available to the public other than as a result of a disclosure or wrongful act of Employee or any of Employee’s agents; (ii) was available to Employee on a non-confidential basis before its disclosure by a member of the Company Group; or (iii) becomes available to Employee on a non-confidential basis from a source other than a member of the Company Group; provided, however, that such source is not bound by a confidentiality agreement with, or other obligation with respect to confidentiality to, a member of the Company Group.

Participant further understands and acknowledges that this Confidential Information and the Company’s ability to reserve it for the exclusive knowledge and use of the Company and any Subsidiary is of great competitive importance and commercial value to the Company, and that improper use or disclosure of the Confidential Information by Participant will cause irreparable harm to the Company, for which remedies at law will not be adequate, and may also cause the Company to incur financial costs, loss of business advantage, liability under confidentiality agreements with third parties, and civil damages.

Participant acknowledges and agrees that Participant, shall not, without the express prior written consent of an authorized officer of the Company, directly or indirectly use, disclose, communicate, publish, copy, or make available any Confidential Information, including any work in which the Participant may have been engaged on behalf of the Company, to any person, firm, corporation, association or other entity, for any reason or purpose whatsoever, except as required in the performance of Participant’s authorized employment duties to the Company. At the conclusion of employment with the Company, the Participant is required to return or destroy all Company documents and records in his or her possession or control, including those containing Confidential Information. The Participant further acknowledges that Participant’s obligations to maintain and protect Confidential Information pursuant to this Agreement, the Company’s Confidential Information Protection Policy, the Company’s Code of Conduct, and any additional confidentiality policy and/or agreement governing Participant’s use/disclosure of confidential information, will continue after Participant’s employment termination date. However, unless otherwise prohibited by applicable law, Participant’s nondisclosure obligation shall extend for three (3) years after Participant’s employment termination date as to Confidential Information that does not qualify as a trade secret or is not otherwise protected under applicable law; trade secret information shall be protected from disclosure as long as the information at issue continues to qualify as a trade secret.

(b)Exceptions to Confidentiality Obligations.  Notwithstanding, the foregoing, nothing in this Agreement shall prohibit or restrict Participant from lawfully: (i) initiating communications directly with, cooperating with, providing information to, causing information to be provided to, or otherwise assisting in an investigation by, any governmental authority regarding a possible violation of any law; (ii) responding to any inquiry or legal process directed to Participant from any such governmental authority; (iii) testifying, participating or otherwise assisting in any action or proceeding by any such governmental authority relating to a possible violation of law; or (iv) making any other disclosures that are protected under the whistleblower provisions of any applicable law. Additionally, as provided by the Federal Defend Trade Secrets Act, Participant will not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret made: (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, and solely for the purpose of reporting or investigating a suspected violation of law; (ii) to the individual’s attorney in relation to a lawsuit for retaliation against the individual for reporting a suspected violation of law;  or (iii) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.

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(c)  Violation(s) of Section 20.  If Participant has received or been entitled to payment of cash, delivery of shares of Common Stock, or a combination thereof pursuant to this Option grant within six (6) months before the Participant’s termination of employment with the Company or any Subsidiary, the Committee, in its sole discretion, may require Participant to return or forfeit the cash and/or shares of Common Stock received with respect to the Option (or its economic value as of the date of the exercise of Option) in the event of a violation of this Section 20. The Committee’s right to require forfeiture must be exercised within ninety (90) days after discovery of such an occurrence but in no event later than fifteen (15) months after Participant’s termination of employment with the Company or any Subsidiary.

21. Consideration.  Participant acknowledges that the Option provided pursuant to this Agreement is in exchange for the promises made in this Agreement, including the confidentiality and non-solicitation obligations. Participant agrees that the Company has business interests which are legitimately in need of the protections provided for herein.

22. Specific Performance.  Because of the difficulty of measuring economic losses to the Company as a result of a breach or threatened breach of the covenants set forth in Sections 16, 17 and 20 of this Agreement, and because of the immediate and irreparable damage that would be caused to the Company for which it would have no other adequate remedy, the Company shall be entitled to enforce the foregoing covenants in the event of a breach or threatened breach, by injunctions and restraining orders from any arbitrator or court of competent jurisdiction, without the necessity of showing any actual damages or that money damages would not afford an adequate remedy, and without the necessity of posting any bond or other security. The aforementioned equitable relief shall not be the Company’s exclusive remedy for a breach but instead shall be in addition to all other rights and remedies available to the Company, at law and equity.

23. Survival; Third Party Beneficiaries. Participant’s obligations under Sections 16, 17, and 20 of this Agreement will continue in effect after the termination of Participant’s employment, regardless of the reason or reasons for termination, and whether such termination is voluntary or involuntary. Participant’s obligations under this Agreement will be binding upon Participant’s heirs, executors, assigns, and administrators and will inure to the benefit of each Subsidiary of the Company and their respective subsidiaries, successors, and assigns. Each Subsidiary of the Company that is not a signatory hereto shall be a third-party beneficiary of Employee’s representations and covenants hereunder and shall be entitled to enforce this Agreement as if a party hereto.

24. Modification.  Should any provision of this Agreement be declared or be determined by any court of competent jurisdiction to be illegal or invalid, the validity of the remaining parts, terms or provisions shall not be affected thereby, and said illegal or invalid part, term, or provision shall be deemed not be a part of this Agreement. The parties expressly empower a court of competent jurisdiction to modify any term or provision of this Agreement to the extent necessary to comply with existing law and to enforce the Agreement as modified.

25. Advice of Counsel.  Certain statutes and/or other regulations require that Participant be provided with an opportunity to consult with an attorney before signing this Agreement, including the covenants not to solicit in Section 16-17.  Participant acknowledges that they have been given at least fourteen (14) calendar days from the time they receive this Agreement to consider whether to sign this Agreement.

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The Participant and the Company have executed this Agreement as of ###TODAY’S DATE AND TIME OF ACCEPTANCE###.

RLI Corp.

By​ ​

Name​ ​

Title____________________________________

I, ###PARTICIPANT_NAME###, by clicking on the “Accept” button below do hereby electronically accept the Stock Option Award (“Award”) as of today’s date and agree to the terms and conditions set forth in the Stock Option Agreement included above.

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EX-10.5

Exhibit 10.5

RLI CORP.

2023 Long-Term Incentive Plan

Non-Employee Director Restricted Stock Unit Agreement

(May 4, 2023 Form of Agreement)

Name of Participant:
Number of Units:	Date of Grant:
Restriction Period:
Date of Vesting [______]	Percentage of Units that Become Vested 100%

Effective as of the “Date of Grant” specified above, RLI Corp., a Delaware corporation (the “Company”), grants to the individual named above (the “Participant”) Restricted Stock Units (“Restricted StockUnits”), each of which represents the right to receive one share of common stock, par value $0.01 per share, of the Company (“Common Stock”) at the time and subject to the terms and conditions set forth in this Restricted Stock Unit Agreement (the “Agreement”) and in the RLI Corp. 2023 Long-Term Incentive Plan (the “Plan”).  In the event of any conflict between the terms of the Agreement and the Plan, the terms of the Plan shall govern.  Capitalized terms used but not defined shall have the meaning ascribed thereto in the Plan.

Background

A.The Company maintains the Plan (i) to align the interests of the Company’s stockholders and the recipients of awards under the Plan by increasing the proprietary interest of such recipients in the Company’s growth and success, (ii) to advance the interests of the Company by attracting and retaining officers, other employees, Non-Employee Directors, consultants and independent contractors and (iii) to motivate such persons to act in the long term best interests of the Company and its stockholders.

B.Under the Plan, the Human Capital & Compensation Committee of the Board of Directors of the Company, or such other committee designated by the Board in accordance with the Plan (the “Committee”), administers the Plan and has the authority to determine the awards to be granted under the Plan.

C.Pursuant to the outside director compensation program recommended by the Nominating/Corporate Governance Committee and approved by the Board of Directors, the Committee has determined that the Participant is eligible to receive an award of Restricted Stock Units under the Plan (the “Restricted Stock UnitAward”).

D.The Company grants the Restricted Stock Unit Award to the Participant under the following terms and conditions:

Terms and Conditions

1. Grant.  The Participant is granted the Restricted Stock Unit Award with respect to the number of Restricted Stock Units specified at the beginning of this Agreement.

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2. Restriction Period.  One hundred percent (100%) of the Restricted Stock Units subject to the Award will become vested on the Date of Vesting as specified at the beginning of this Agreement, provided that the Participant continuously serves as a Non-Employee Director or otherwise provides services to the Company as an employee or service provider through such Date of Vesting.  

The Restricted Stock Units shall also become vested in full (notwithstanding the vesting schedule) under the circumstances described in Section 3 of this Agreement or in the event of a Qualifying Termination in accordance with Section 14 of this Agreement if they have not been forfeited prior thereto.  Except as provided in Sections 3 or 14 of this Agreement, the Restricted Stock Units shall be forfeited in their entirety the Participant’s service as a Non-Employee Director, employee or service provider of the Company terminates prior to the Date of Vesting.

3. Acceleration of Vesting.  In the event of the death or Disability of the Participant, the Units shall immediately become vested in full if the Participant continuously served as a Non-Employee Director or otherwise provided services to the Company as an employee or service provider between the date the Award was granted and the date of such death or Disability.

4. Dividend Equivalents.  As of each date on which the Company pays a cash dividend to record owners of Shares of Stock (a “Dividend Date”), the number of Restricted Stock Units subject to the Restricted Stock Unit Award shall increase by (i) the product of the total number of Restricted Stock Units subject to the Restricted Stock Unit Award which remain unsettled by shares of Common Stock issued to the Participant in accordance with Section 5 hereof (as reflected in the records of the Company’s transfer agent) immediately prior to such Dividend Date multiplied by the dollar amount of the cash dividend paid per share of Common Stock by the Company on such Dividend Date, divided by (ii) the Fair Market Value on such Dividend Date and rounded down to the nearest whole share; provided that any fractional shares shall be paid to the Participant in cash.  Any such additional Restricted Stock Units shall be subject to the same vesting conditions and payment terms set forth herein as the Restricted Stock Units to which they relate.  

5. Delivery of Certificates.  Except to the extent deferred in accordance with a deferred compensation program established by the Company and Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), as soon as practicable, but not more than 30 days, after the date of vesting in accordance with Sections 2 or 3, the Company shall deliver to the Participant or his or her beneficiary, in the name of such person, a certificate or certificates representing a number of shares of Common Stock equal to the number of Restricted Stock Units subject to the Restricted Stock Unit Award (including any dividend equivalents pursuant to Section 4 of this Agreement) that have become vested pursuant to Section 2 or Section 3 of this Agreement; provided, however, that the Company may deliver the shares of Common Stock electronically in book-entry form.  The Company shall pay any original issue or transfer taxes with respect to the issue or transfer of the shares of Common Stock and all fees and expenses incurred by it in connection therewith.  All shares of Common Stock so issued shall be fully paid and nonassessable.  Notwithstanding anything to the contrary in this Agreement, no certificate for shares of Common Stock distributable under the Plan shall be issued and delivered unless the issuance of such certificate complies with all applicable legal requirements including, without limitation, compliance with the provisions of applicable state securities laws, the federal Securities Act of 1933 and the Securities Exchange Act of 1934, and related regulations, and the Company may further require that any such certificates bear a legend indicating that the sale, transfer or other disposition thereof by the holder is prohibited except in compliance with the Securities Act of 1933, as amended, and the rules and regulations thereunder.

6. Withholding Taxes.  Except as required by applicable law, no federal, state, local or other taxes will be withheld or paid in connection with the Restricted Stock Unit Award, and the Participant is responsible for the payment of all such taxes.  

7. Limitation on Transfer.  The Restricted Stock Unit Award may not be sold, transferred, assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether by operation of law or otherwise) or be subject to execution, attachment or similar process otherwise than by will, the laws of descent and distribution, pursuant to beneficiary designation procedures approved by the Committee, or pursuant to a qualified domestic relations order.  Notwithstanding the foregoing, the Participant may transfer the Restricted Stock Unit Award, without payment or consideration from the transferee, (a) to any one or more of the Participant’s spouse or issue, (b) to one or more trusts established solely for the benefit of the Participant’s spouse or issue or (c) to one or more partnerships in which the only partners are the Participant’s spouse or issue.  For purpose of this provision, the

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term “spouse” shall include a former spouse who receives a transfer pursuant to a qualified domestic relations order, and the term issue shall include stepchildren, step-grandchildren and adopted children.  No such transfer shall be effective unless reasonable prior notice thereof is delivered to the Company.  Any such permitted transferee shall be subject to all of the terms and conditions applicable to the person transferring the Restricted Stock Unit Award including the terms and conditions set forth in the Plan and this Agreement.  Any attempt to sell, transfer, assign, pledge, hypothecate, encumber or otherwise dispose of the Restricted Stock Unit Award other than in accordance with this Section 7 shall be null and void.

8. No Stockholder Rights Before Issuance of Shares.  No person shall have any of the rights of a stockholder of the Company with respect to any share of Common Stock subject to the Restricted Stock Unit Award unless and until the share of Common Stock actually is issued to him/her following the vesting and settlement of the Restricted Stock Unit Award and such person becomes a stockholder of record with respect to such shares of Common Stock.

9. Adjustment.  The Restricted Stock Unit Award is subject to adjustment, without the consent of the Participant, pursuant to Section 5.7 of the Plan.

10. Interpretation of this Agreement.  All decisions and interpretations made by the Committee (or, as applicable, the Board) with regard to any question arising hereunder or under the Plan shall be binding and conclusive upon the Company and the Participant.  If there is any inconsistency between the provisions of this Agreement and the Plan, the provisions of the Plan shall govern.

11. Discontinuance of Service.  This Agreement shall not give the Participant a right to continued service with the Company, and the Company may terminate his/her service at any time and otherwise deal with the Participant without regard to the effect it may have upon him/her under this Agreement.

12. Binding Effect.  This Agreement shall be binding in all respects on the heirs, representatives, successors and assigns of the Participant.

13. Choice of Law; Jurisdiction.  This Agreement is entered into under the laws of the State of Delaware and shall be construed and interpreted thereunder (without regard to its conflict of law principles).  All disputes hereunder shall be heard in the federal and state courts located in Peoria, Illinois.

14. Change in Control.  In the event of a Change in Control, the Committee shall take one of the actions described in Sections 14(a) or (b).

(a)  Substitution.  If the Change in Control is a merger, consolidation or statutory share exchange, the Committee may make appropriate provision for the replacement of the Restricted Stock Unit Award by the substitution of an award relating to the stock of the corporation surviving any merger or consolidation with substantially similar terms and conditions (or, if appropriate, an award relating to the stock of the parent corporation of the Company or such surviving corporation), provided such award preserves the full economic value of the Restricted Stock Unit Award (to the extent permitted under Section 409A of the Code) and provides for full vesting of the award in the event the Participant experiences a Qualifying Termination; provided that if the Company continues to be a publicly traded corporation immediately after a Change in Control, the Committee may provide for the Award to continue in effect in accordance with its terms, in which case the Restricted Stock Unit Award shall become fully vested in the event the Participant experiences a Qualifying Termination.

(b)  Acceleration of Vesting and Payment of Awards.  The Committee may declare, and provide written notice to the Participant of the declaration, that the Restricted Stock Unit Award, whether or not then vested, shall be cancelled at the time of, or immediately before the occurrence of, the Change in Control in exchange for payment to the Participant, within ten (10) days after the Change in Control, of cash equal to, for each Restricted Stock Unit covered by the canceled Restricted Stock Unit Award, an amount equal to the Fair Market Value per share of Common Stock; provided, however, that if the Restricted Stock Unit Award is deferred compensation, within the meaning of Section 409A of the Code, and the Change in Control is not a “change in control event,” within the meaning of Section 409A of the Code, the Restricted Stock Unit

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Award shall become immediately vested upon the Change in Control, but the cash payment pursuant to this Section 14(b) shall be made in accordance with Section 5 of this Agreement.

15. Amendment.  Subject to the terms of the Plan, the Committee may amend the terms and conditions of this Agreement.  Amendments to the Agreement may be unilaterally made by the Company (with the approval of the Committee) unless such amendments are deemed by the Committee to be materially impair the rights of the Participant and not required as a matter of law.

16. Section 409A.  This Agreement is intended to comply with, or be exempt from, the applicable requirements of Section 409A of the Code, and limited, construed and interpreted in accordance with such intent.  Although the Company does not guarantee any particular tax treatment, to the extent that the Restricted Stock Unit Award is subject to Section 409A of the Code, it shall be paid in a manner that is intended to comply with Section 409A of the Code, including regulations and any other guidance issued by the Secretary of the Treasury and the Internal Revenue Service with respect thereto. In no event whatsoever shall the Company be liable for any additional tax, interest or penalties that may be imposed on the Participant by Section 409A of the Code or any damages for failing to comply with Section 409A of the Code.  Notwithstanding anything in the Plan or this Agreement to the contrary, the Participant shall be solely responsible for the tax consequences of the Restricted Stock Unit Award, and in no event shall the Company have any responsibility or liability if the Restricted Stock Unit Award does not meet any applicable requirements of Section 409A of the Code.  Although the Company intends to administer the Plan to prevent taxation under Section 409A of the Code, the Company does not represent or warrant that the Plan or the Restricted Stock Unit Award complies with Section 409A or any other provision of federal, state, local or other tax law.  To the extent any amounts under this Agreement are payable by reference to the Participant’s termination of employment, such term shall be deemed to refer to the Participant’s “separation from service,” within the meaning of Section 409A of the Code.  

17. Plan Administration.The Company partners with Solium Capital for the management and administration of its long-term incentives program using Solium’s web-based application, Shareworks by Morgan Stanley®.  The Participant may access information pertaining to the Restricted Stock Unit Award via the Company’s Shareworks by Morgan Stanley® site, https://rli.solium.com.  

****Signatures Appear on the Following Page****

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****Signature Page to [NAME] Restricted Stock Unit Agreement****

The Participant and the Company have executed this Agreement as of the [__] day of [__], [___].

PARTICIPANT

RLI Corp.

By

Name   ​ ​

Title__ ____________________________________

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EX-3.1

Exhibit 3.1

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

OF

RLI CORP.

The name of the corporation is RLI Corp. (the “Corporation”). The Corporation was incorporated under the name RLI Corp. by the filing of its original Certificate of Incorporation with the Secretary of State of the State of Delaware on November 20, 2017.  This Amended and Restated Certificate of Incorporation of the Corporation, which amends and restates in its entirety the Corporation’s original Certificate of Incorporation, was duly adopted in accordance with the provisions of Sections 242 and 245 of the General Corporation Law of the State of Delaware (the “DGCL”). The original Certificate of Incorporation of the Corporation is hereby amended, integrated and restated to read in its entirety as follows:

FIRST: The name of the Corporation is RLI Corp.

SECOND: The address of the Corporation’s registered office in the State of Delaware is 251 Little Falls Drive, Wilmington, County of New Castle, Delaware, 19808, and the name of its registered agent at such address is Corporation Service Company.

THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the DGCL, as it now exists or may hereafter be amended and supplemented.

FOURTH: The Corporation is authorized to issue two classes of stock to be designated, respectively, “Common Stock” and “Preferred Stock.”  The total number of shares of capital stock which the Corporation shall have authority to issue is 205,000,000.  The total number of shares of Common Stock that the Corporation is authorized to issue is 200,000,000, having a par value of $0.01 per share, and the total number of shares of Preferred Stock that the corporation is authorized to issue is 5,000,000, having a par value of $0.01 per share.

FIFTH: The designations and the powers, privileges and rights, and the qualifications, limitations or restrictions thereof in respect of each class of capital stock of the Corporation are as follows:

A. COMMON STOCK.

1. General. The voting, dividend, liquidation, conversion and stock split rights of the holders of the Common Stock are subject to and qualified by the rights of the holders of the Preferred Stock of any series as may be designated by the Board of Directors of the Corporation (the “Board of Directors”) upon any issuance of the Preferred Stock of any series.

2. Voting.Each holder of Common Stock shall be entitled to one (1) vote for each share of Common Stock held by such holder.  Each holder of Common Stock shall be entitled to notice of any stockholders’ meeting in accordance with the Bylaws of the Corporation (as in effect at the time in question) (the “Bylaws”) and applicable law on all matters put to a vote of the stockholders of the Corporation.

The number of authorized shares of Common Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the stock of the Corporation entitled to vote, irrespective of the provisions of Section 242(b)(2) of the DGCL.

3. Dividends. Subject to the rights of any holders of any shares of Preferred Stock which may from time to time come into existence and be outstanding, the holders of Common Stock shall be entitled to the payment of dividends when and as declared by the Board of Directors in accordance with applicable law and to receive other distributions from the Corporation.  Any dividends declared by the Board of Directors to the holders of the then outstanding Common Stock shall be paid to the holders thereof prorata in accordance with the number of shares of Common Stock held by each such holder as of the record date of such dividend.

4. Liquidation. Subject to the rights of any holders of any shares of Preferred Stock which may from time

to time come into existence and be outstanding, in the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the funds and assets of the Corporation that may be legally distributed to the Corporation’s stockholders shall be distributed among the holders of the then outstanding Common Stock prorata in accordance with the number of shares of Common Stock held by each such holder.

B. PREFERRED STOCK

Preferred Stock may be issued from time to time in one or more series, each of such series to have such terms as stated or expressed herein and in the resolution or resolutions providing for the issue of such series adopted by the Board of Directors as hereinafter provided.

Authority is hereby expressly granted to the Board of Directors from time to time to issue the Preferred Stock in one or more series, and in connection with the creation of any such series, by adopting a resolution or resolutions providing for the issuance of the shares thereof and by filing a certificate of designations relating thereto in accordance with the DGCL, to determine and fix the number of shares of such series and such voting powers, full or limited, or no voting powers, and such designations, preferences and relative participating, optional or other special rights, and qualifications, limitations or restrictions thereof, including without limitation thereof, dividend rights, conversion rights, redemption privileges and liquidation preferences, as shall be stated and expressed in such resolutions, all to the fullest extent now or hereafter permitted by the DGCL.  Without limiting the generality of the foregoing, the resolution or resolutions providing for the issuance of any series of Preferred Stock may provide that such series shall be superior or rank equally or be junior to any other series of Preferred Stock to the extent permitted by law.

The number of authorized shares of Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the stock of the Corporation entitled to vote, irrespective of the provisions of Section 242(b)(2) of the DGCL.

SIXTH: The personal liability of the directors and officers of the Corporation, to the Corporation or its stockholders for monetary damages for breach of his or her fiduciary duty as director or officer, is hereby eliminated to the fullest extent permitted by the DGCL, as the same may be amended and supplemented. Any amendment, repeal or modification of this Article Sixth, or the adoption of any provision of the Amended and Restated Certificate of Incorporation inconsistent with this Article Sixth, shall not adversely affect any right or protection of a director or officer of the Corporation existing immediately prior to such amendment, repeal or modification. If the DGCL is amended after approval by the stockholders of this Article Sixth to authorize corporate action further eliminating or limiting the personal liability of directors or officers, then the liability of a director or officer of the Corporation shall be eliminated or limited to the fullest extent permitted by the DGCL as so amended. For purposes of this Article Sixth, “officer” shall have the meaning provided in Section 102(b)(7) of the DGCL, as it presently exists or may hereafter be amended from time to time.

SEVENTH: The Corporation shall, through the Bylaws or otherwise, to the fullest extent permitted by the DGCL, as the same exists or may hereafter be amended and supplemented, indemnify, advance expenses and hold harmless any person who was or is a director or officer of the Corporation or its subsidiaries.  The Corporation may, by action of the Board of Directors, provide rights to indemnification and to advancement of expenses to such other employees or agents of the Corporation or its subsidiaries to such extent and to such effect as the Board of Directors shall determine to be appropriate and authorized by the DGCL.  Any amendment, repeal or modification of this Article Seventh shall not adversely affect any rights or protection existing hereunder immediately prior to such repeal or modification.  Notwithstanding the foregoing, the Corporation shall be required to indemnify a person in connection with any action, suit or proceeding, whether civil, criminal, administrative or investigative (each a “Proceeding”), initiated by such person only if the Proceeding was authorized in the specific case by the Board of Directors.

EIGHTH: From time to time any of the provisions of this Amended and Restated Certificate of Incorporation may be amended, altered, changed or repealed, and other provisions authorized by the laws of the State of Delaware at the time in force may be added or inserted in the manner and at the time prescribed by said laws, and all rights at any time conferred upon the stockholders of the Corporation by this Amended and Restated Certificate of Incorporation are granted subject to the provisions of this Article Eighth.

NINTH:In furtherance and not in limitation of the rights, powers, privileges and discretionary authority granted or conferred by the DGCL or other statutes or laws of the State of Delaware, the Board of Directors is expressly authorized to make, alter, amend or repeal the Bylaws, without any action on the part of the stockholders, but the stockholders may make additional Bylaws and may alter, amend or repeal any Bylaw whether adopted by them or otherwise.  The Corporation may in its Bylaws confer powers upon its Board of Directors in addition to the foregoing and in addition to the powers and authorities expressly conferred upon the Board of Directors by applicable law.

[Signature Page to Follow.]

IN WITNESS WHEREOF, the Corporation has executed this Amended and Restated Certificate of Incorporation on this 9^th day of May, 2023

/s/ Craig W. Kliethermes ​ ​

Craig W. Kliethermes

President and Chief Executive Officer

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Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2023	Jul. 17, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Jun. 30, 2023
Entity File Number	001-09463
Entity Registrant Name	RLI Corp
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	37-0889946
Entity Address, Address Line One	9025 North Lindbergh Drive,
Entity Address, City or Town	Peoria,
Entity Address, State or Province	IL
Entity Address, Postal Zip Code	61615
City Area Code	309
Local Phone Number	692-1000
Title of 12(b) Security	Common Stock $0.01 par value
Trading Symbol	RLI
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		45,596,196
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q2
Entity Central Index Key	0000084246
Amendment Flag	false

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Condensed Consolidated Statements of Earnings and Comprehensive Earnings - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Income Statement [Abstract]
Net premiums earned	$ 322,280	$ 282,810	$ 630,003	$ 551,962
Net investment income	28,788	18,472	55,872	36,355
Net realized gains	5,580	12,804	20,200	18,392
Net unrealized gains (losses) on equity securities	25,214	(100,994)	40,710	(128,804)
Consolidated revenue	381,862	213,092	746,785	477,905
Losses and settlement expenses	153,943	117,914	268,431	223,438
Policy acquisition costs	102,626	89,615	204,070	174,902
Insurance operating expenses	24,510	19,325	48,411	38,188
Interest expense on debt	2,047	2,011	4,055	4,021
General corporate expenses	4,219	2,435	8,433	5,798
Total expenses	287,345	231,300	533,400	446,347
Equity in earnings of unconsolidated investees	1,514	11,654	5,437	20,413
Earnings (loss) before income taxes	96,031	(6,554)	218,822	51,971
Income tax expense (benefit)	18,379	(4,315)	42,359	6,287
Net earnings (loss)	77,652	(2,239)	176,463	45,684
Other comprehensive earnings (loss), net of tax	(19,721)	(97,563)	17,986	(213,144)
Comprehensive earnings (loss)	$ 57,931	$ (99,802)	$ 194,449	$ (167,460)
Basic net earnings (loss) per share	$ 1.70	$ (0.05)	$ 3.87	$ 1.01
Diluted net earnings (loss) per share	$ 1.69	$ (0.05)	$ 3.83	$ 1.00
Weighted average number of common shares outstanding:
Basic	45,591	45,354	45,560	45,330
Diluted	46,044	45,354	46,045	45,748

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Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
ASSETS
Available-for-sale, at fair value (amortized cost of $2,946,920 and allowance for credit losses of $434 at 6/30/23) (amortized cost of $2,945,273 and allowance for credit losses of $339 at 12/31/22)	$ 2,689,100	$ 2,666,950
Equity securities, at fair value (cost - $340,184 at 6/30/23 and $328,019 at 12/31/22)	552,566	498,382
Short-term investments, at cost which approximates fair value	271,296	36,229
Other invested assets	60,907	47,922
Cash	16,707	22,818
Total investments and cash	3,590,576	3,272,301
Accrued investment income	22,525	21,259
Premiums and reinsurance balances receivable, net of allowances for uncollectible amounts of $18,768 at 6/30/23 and $18,696 at 12/31/22	229,471	189,501
Ceded unearned premium	112,353	138,457
Reinsurance balances recoverable on unpaid losses and settlement expenses, net of allowances for uncollectible amounts of $10,251 at 6/30/23 and $11,250 at 12/31/22	720,858	740,089
Deferred policy acquisition costs	148,336	127,859
Property and equipment, at cost, net of accumulated depreciation of $72,404 at 6/30/23 and $68,633 at 12/31/22	48,358	49,573
Investment in unconsolidated investees	55,250	58,275
Goodwill and intangibles	53,562	53,562
Income taxes-deferred	29,864	40,269
Other assets	54,693	75,923
TOTAL ASSETS	5,065,846	4,767,068
Liabilities
Unpaid losses and settlement expenses	2,361,577	2,315,637
Unearned premiums	891,103	785,085
Reinsurance balances payable	35,931	61,100
Funds held	102,429	101,144
Income taxes-current	5,326
Current portion of long-term debt	199,956	199,863
Accrued expenses	70,220	94,869
Other liabilities	47,392	32,029
TOTAL LIABILITIES	3,713,934	3,589,727
Shareholders' Equity
Common stock ($0.01 par value) (Shares authorized - 200,000,000) (68,526,410 shares issued, 45,596,196 shares outstanding at 6/30/23) (68,399,966 shares issued, 45,469,752 shares outstanding at 12/31/22)	685	684
Paid-in capital	357,656	352,391
Accumulated other comprehensive earnings (loss)	(211,090)	(229,076)
Retained earnings	1,597,660	1,446,341
Deferred compensation	12,507	12,015
Treasury shares, at cost (22,930,214 shares at 6/30/23 and 12/31/22)	(405,506)	(405,014)
TOTAL SHAREHOLDERS' EQUITY	1,351,912	1,177,341
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$ 5,065,846	$ 4,767,068

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Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Statement Of Financial Position [Abstract]
Available-for-sale, amortized cost	$ 2,946,920	$ 2,945,273
Available-for-sale, allowance for credit losses	434	339
Equity securities, cost	340,184	328,019
Premiums and reinsurance balances receivable, allowances for uncollectible amounts	18,768	18,696
Reinsurance balances recoverable on unpaid losses and settlement expenses, allowances for uncollectible amounts	10,251	11,250
Property and equipment, accumulated depreciation	$ 72,404	$ 68,633
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	200,000,000	200,000,000
Common stock, shares issued (in shares)	68,526,410	68,399,966
Common stock, shares outstanding (in shares)	45,596,196	45,469,752
Treasury stock, shares (in shares)	22,930,214	22,930,214

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Condensed Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands	Common stock	Paid-in Capital	Accumulated Other Comprehensive Earnings (Loss)	Retained Earnings Cumulative Effect, Period of Adoption, Adjustment	Retained Earnings	Deferred Compensation	Treasury Stock at Cost	Cumulative Effect, Period of Adoption, Adjustment	Total
Stockholders' Equity Attributable to Parent, Beginning Balance at Dec. 31, 2021	$ 682	$ 343,742	$ 49,826		$ 1,228,110	$ 9,642	$ (402,641)		$ 1,229,361
Shares, Outstanding, Beginning Balance at Dec. 31, 2021	45,289,337
Increase Decrease In Stockholders Equity Roll Forward
Net Income (Loss)					47,923				47,923
Other comprehensive earnings (loss), net of tax			(115,581)						(115,581)
Deferred compensation						(973)	973
Share-based compensation		3,049							3,049
Share-based compensation (in shares)	26,605
Dividends and dividend equivalents					(11,330)				(11,330)
Stockholders' Equity Attributable to Parent, Ending Balance at Mar. 31, 2022	$ 682	346,791	(65,755)		1,264,703	8,669	(401,668)		1,153,422
Shares, Outstanding, Ending Balance at Mar. 31, 2022	45,315,942
Stockholders' Equity Attributable to Parent, Beginning Balance at Dec. 31, 2021	$ 682	343,742	49,826		1,228,110	9,642	(402,641)		1,229,361
Shares, Outstanding, Beginning Balance at Dec. 31, 2021	45,289,337
Increase Decrease In Stockholders Equity Roll Forward
Net Income (Loss)									45,684
Other comprehensive earnings (loss), net of tax									(213,144)
Stockholders' Equity Attributable to Parent, Ending Balance at Jun. 30, 2022	$ 683	349,161	(163,318)		1,250,661	8,945	(401,944)		1,044,188
Shares, Outstanding, Ending Balance at Jun. 30, 2022	45,368,804
Stockholders' Equity Attributable to Parent, Beginning Balance at Mar. 31, 2022	$ 682	346,791	(65,755)		1,264,703	8,669	(401,668)		1,153,422
Shares, Outstanding, Beginning Balance at Mar. 31, 2022	45,315,942
Increase Decrease In Stockholders Equity Roll Forward
Net Income (Loss)					(2,239)				(2,239)
Other comprehensive earnings (loss), net of tax			(97,563)						(97,563)
Deferred compensation						276	(276)
Share-based compensation	$ 1	2,370							2,371
Share-based compensation (in shares)	52,862
Dividends and dividend equivalents					(11,803)				(11,803)
Stockholders' Equity Attributable to Parent, Ending Balance at Jun. 30, 2022	$ 683	349,161	(163,318)		1,250,661	8,945	(401,944)		1,044,188
Shares, Outstanding, Ending Balance at Jun. 30, 2022	45,368,804
Stockholders' Equity Attributable to Parent, Beginning Balance at Dec. 31, 2022	$ 684	352,391	(229,076)	$ (951)	1,446,341	12,015	(405,014)	$ (951)	1,177,341
Shares, Outstanding, Beginning Balance at Dec. 31, 2022	45,469,752
Increase Decrease In Stockholders Equity Roll Forward
Net Income (Loss)					98,811				98,811
Other comprehensive earnings (loss), net of tax			37,707						37,707
Deferred compensation						249	(249)
Share-based compensation	$ 1	2,863							2,864
Share-based compensation (in shares)	84,944
Dividends and dividend equivalents					(11,851)				(11,851)
Stockholders' Equity Attributable to Parent, Ending Balance at Mar. 31, 2023	$ 685	355,254	(191,369)		1,532,350	12,264	(405,263)		1,303,921
Shares, Outstanding, Ending Balance at Mar. 31, 2023	45,554,696
Stockholders' Equity Attributable to Parent, Beginning Balance at Dec. 31, 2022	$ 684	352,391	(229,076)	$ (951)	1,446,341	12,015	(405,014)	$ (951)	1,177,341
Shares, Outstanding, Beginning Balance at Dec. 31, 2022	45,469,752
Increase Decrease In Stockholders Equity Roll Forward
Net Income (Loss)									176,463
Other comprehensive earnings (loss), net of tax									17,986
Stockholders' Equity Attributable to Parent, Ending Balance at Jun. 30, 2023	$ 685	357,656	(211,090)		1,597,660	12,507	(405,506)		1,351,912
Shares, Outstanding, Ending Balance at Jun. 30, 2023	45,596,196
Stockholders' Equity Attributable to Parent, Beginning Balance at Mar. 31, 2023	$ 685	355,254	(191,369)		1,532,350	12,264	(405,263)		1,303,921
Shares, Outstanding, Beginning Balance at Mar. 31, 2023	45,554,696
Increase Decrease In Stockholders Equity Roll Forward
Net Income (Loss)					77,652				77,652
Other comprehensive earnings (loss), net of tax			(19,721)						(19,721)
Deferred compensation						243	(243)
Share-based compensation		2,402							2,402
Share-based compensation (in shares)	41,500
Dividends and dividend equivalents					(12,342)				(12,342)
Stockholders' Equity Attributable to Parent, Ending Balance at Jun. 30, 2023	$ 685	$ 357,656	$ (211,090)		$ 1,597,660	$ 12,507	$ (405,506)		$ 1,351,912
Shares, Outstanding, Ending Balance at Jun. 30, 2023	45,596,196

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Condensed Consolidated Statements of Shareholders' Equity (Parenthetical) - $ / shares	3 Months Ended
	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Mar. 31, 2022
Statement Of Stockholders Equity [Abstract]
Cash dividends paid per common share	$ 0.27	$ 0.26	$ 0.26	$ 0.25

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Statement Of Cash Flows [Abstract]
Net cash provided by operating activities	$ 243,595	$ 170,645
Purchase of:
Fixed income securities, available-for-sale	(365,976)	(292,056)
Equity securities	(25,454)	(36,605)
Property and equipment	(2,790)	(3,024)
Other	(2,669)	(6,326)
Proceeds from sale of:
Fixed income securities - available-for-sale	19,490	20,892
Equity securities	22,029	53,525
Equity method investments	14,134
Other	473	1,172
Proceeds from call or maturity of:
Fixed income securities - available-for-sale	349,714	137,476
Net proceeds from sale (purchase) of short-term investments	(235,067)
Net cash used in investing activities	(226,116)	(124,946)
Cash Flows from Financing Activities
Cash dividends paid	(24,172)	(23,115)
Proceeds from stock option exercises	582	1,656
Net cash used in financing activities	(23,590)	(21,459)
Net increase in cash	(6,111)	24,240
Cash at the beginning of the period	22,818	88,804
Cash at June 30	$ 16,707	$ 113,044

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. BASIS OF PRESENTATION

The unaudited condensed consolidated interim financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (GAAP) for interim financial reporting and with the instructions to Form 10-Q and Regulation S-X. Accordingly, they do not include all the disclosures required by GAAP for complete financial statements. As such, these unaudited condensed consolidated interim financial statements should be read in conjunction with our 2022 Annual Report on Form 10-K. Management believes that the disclosures are adequate to make the information presented not misleading, and all normal and recurring adjustments necessary to present fairly the financial position at June 30, 2023 and the results of operations of RLI Corp. (the Company) and subsidiaries for all periods presented have been made. The results of operations for any interim period are not necessarily indicative of the operating results for a full year. Certain reclassifications were made to 2022 to conform to the classifications used in the current year.

The preparation of the unaudited condensed consolidated interim financial statements requires management to make estimates and assumptions relating to the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated interim financial statements and the reported amounts of revenue and expenses during the period. These estimates are inherently subject to change and actual results could differ significantly from these estimates.

B. ADOPTED ACCOUNTING STANDARDS

2023-02—Investments – Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Method

The amendments in this ASU permit the use of the proportional amortization method for investments in tax credits if certain conditions are met. Under the proportional amortization method, the initial cost of an investment is amortized in proportion to the amount of tax credits and other tax benefits received, with the amortization and tax credits presented as a component of income tax expense. Under previous guidance, equity investments in tax credit structures, other than qualified affordable housing projects, were accounted for using the equity method of accounting, which required the presentation of income, gains and losses, and tax credits in their respective line items of the statement of earnings. This ASU allows entities to make an accounting policy election on an individual tax credit program basis for all equity investments whose primary purpose is receiving income tax credits or other income tax benefits. When the proportional amortization method is selected, this amendment also requires a liability be recognized for delayed equity contributions that are unconditional or for contingent contributions when the contingent event becomes probable.

We adopted ASU 2023-02 on January 1, 2023 using a modified-retrospective approach. Through 2022, our investment in historic tax credit partnerships was presented in the balance sheet as an investment in unconsolidated investee. On January 1, 2023, the $11 million investment was moved to the other invested assets line item, an unfunded commitment for the investment was recognized by establishing a $7 million liability and increasing other invested assets, and the asset and retained earnings were reduced by $1 million to reflect the difference between applying the equity method and the proportional method since the investment was entered into. While the amortization of the investment will be presented in income tax expense going forward, rather than in equity in earnings of unconsolidated investees, the impact to net earnings will not have a material impact on our financial statements.

C. PROSPECTIVE ACCOUNTING STANDARDS

There are no prospective accounting standards which would have a material impact on our financial statements as of June 30, 2023.

D. REINSURANCE

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. Such balances are subject to the credit risk associated with the individual reinsurer. 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. We also review insurance industry developments that may impact the financial condition of our reinsurers. We analyze the credit risk associated with our reinsurance balances recoverable by monitoring the AM Best and Standard & Poor’s (S&P) ratings of our reinsurers. In addition, we subject our reinsurance recoverables to detailed recoverability tests, including a segment-based analysis using the average default rating percentage by S&P rating, which assists the Company in assessing the sufficiency of its allowance. Additionally, we perform an in-depth reinsurer financial condition analysis prior to the renewal of each of our reinsurance placements.

Our policy is to charge to earnings, in the form of an allowance, an estimate of unrecoverable amounts from reinsurers. 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 recoverables for the reinsurer are specifically identified and written off through 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 recoverables were $16.2 million and $10.3 million, respectively, at June 30, 2023. At December 31, 2022, the amounts were $16.1 million and $11.3 million, respectively. 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 or recoveries were applied to the allowances in the first six months of 2023. We have no receivables with a due date that extends beyond one year that are not included in our allowance for uncollectible amounts.

E. INTANGIBLE ASSETS

The composition of goodwill and intangible assets at June 30, 2023 and December 31, 2022 is detailed in the following table:

	June 30,		December 31,
(in thousands)	2023		2022
Goodwill
Surety	$	40,816	$	40,816
Casualty		5,246		5,246
Total goodwill	$	46,062	$	46,062
Indefinite-lived intangibles		7,500		7,500
Total goodwill and intangibles	$	53,562	$	53,562

Annual impairment assessments were performed on our goodwill and state insurance license indefinite-lived intangible assets during the second quarter of 2023. Based upon these reviews, none of the assets were impaired. In addition, there were no triggering events as of June 30, 2023 that would suggest an updated impairment test would be needed for our goodwill and intangible assets.

F. EARNINGS PER SHARE

Basic earnings per share (EPS) is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the dilution that could occur if securities or other contracts to issue common stock or common stock equivalents were exercised or converted into common stock. When inclusion of these items increases the earnings per share or reduces the loss per share, the effect on earnings is anti-dilutive. Under these circumstances, the diluted net earnings or net loss per share is computed excluding these items. The following represents a reconciliation of the numerator and denominator of the basic and diluted EPS computations contained in the unaudited condensed consolidated interim financial statements:

	For the Three Months						For the Three Months
	Ended June 30, 2023						Ended June 30, 2022
	Income		Shares		Per Share		Income		Shares		Per Share
(in thousands, except per share data)	(Numerator)		(Denominator)		Amount		(Numerator)		(Denominator)		Amount
Basic EPS
Earnings available to common shareholders	$	77,652		45,591	$	1.70	$	(2,239)		45,354	$	(0.05)
Effect of Dilutive Securities
Stock options and restricted stock units		—		453				—		—
Diluted EPS
Earnings available to common shareholders	$	77,652		46,044	$	1.69	$	(2,239)		45,354	$	(0.05)
Anti-dilutive securities excluded from diluted EPS				118						736
	For the Six Months						For the Six Months
	Ended June 30, 2023						Ended June 30, 2022
	Income		Shares		Per Share		Income		Shares		Per Share
(in thousands, except per share data)	(Numerator)		(Denominator)		Amount		(Numerator)		(Denominator)		Amount
Basic EPS
Earnings available to common shareholders	$	176,463		45,560	$	3.87	$	45,684		45,330	$	1.01
Effect of Dilutive Securities
Stock options and restricted stock units		—		485				—		418
Diluted EPS
Earnings available to common shareholders	$	176,463		46,045	$	3.83	$	45,684		45,748	$	1.00
Anti-dilutive securities excluded from diluted EPS				118						436

G. COMPREHENSIVE EARNINGS

Our comprehensive earnings include net earnings plus after-tax unrealized gains and losses on our available-for-sale fixed income portfolio. 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 benefit of $5 million for the second quarter of 2023, compared to $26 million of tax benefit for the same period in 2022. For the six-month period ended June 30, 2023, other comprehensive earnings (loss) is net of tax expense of $5 million, compared to $57 million of tax benefit for the same period in 2022.

Unrealized gains, net of tax, recognized in other comprehensive earnings (loss) were $18 million for the first six months of 2023, compared to $213 million of unrealized losses, net of tax, during the same period last year. The unrealized gains in 2023 were attributable to a decline in interest rates, which increased the fair value of securities held in the fixed income portfolio, compared to rising interest rates during 2022, which decreased the fair value of fixed income securities.

The following table illustrates the changes in the balance of each component of accumulated other comprehensive earnings (loss) for each period presented in the unaudited condensed consolidated interim financial statements:

(in thousands)	For the Three Months				For the Six Months
	Ended June 30,				Ended June 30,
Unrealized Gains/Losses on Available-for-Sale Securities	2023		2022		2023		2022
Beginning balance	$	(191,369)	$	(65,755)	$	(229,076)	$	49,826
Other comprehensive earnings (loss) before reclassifications		(20,347)		(97,894)		15,908		(213,636)
Amounts reclassified from accumulated other comprehensive earnings		626		331		2,078		492
Net current-period other comprehensive earnings (loss)	$	(19,721)	$	(97,563)	$	17,986	$	(213,144)
Ending balance	$	(211,090)	$	(163,318)	$	(211,090)	$	(163,318)
Balance of securities for which an allowance for credit losses has been recognized in net earnings					$	1,053	$	1,083

Credit losses on or the sale of an available-for-sale security results in amounts being reclassified from accumulated other comprehensive earnings (loss) to current period net earnings. The effects of reclassifications out of accumulated other comprehensive earnings (loss) by the respective line items of net earnings are presented in the following table:

	Amount Reclassified from Accumulated Other
(in thousands)	Comprehensive Earnings (Loss)
	For the Three Months				For the Six Months
Component of Accumulated	Ended June 30,				Ended June 30,				Affected line item in the
Other Comprehensive Earnings (Loss)	2023		2022		2023		2022		Statement of Earnings
Unrealized gains and losses on available-for-sale securities	$	(824)	$	(722)	$	(2,536)	$	(772)	Net realized gains (losses)
		31		303		(95)		149	Credit gains presented within net realized gains
	$	(793)	$	(419)	$	(2,631)	$	(623)	Earnings (loss) before income taxes
		167		88		553		131	Income tax (expense) benefit
	$	(626)	$	(331)	$	(2,078)	$	(492)	Net earnings (loss)

H. FAIR VALUE MEASUREMENTS

Fair value is defined as the price in the principal market that would be received for an asset to facilitate an orderly transaction between market participants on the measurement date. We determined the fair value of certain financial instruments based on their underlying characteristics and relevant transactions in the marketplace. We maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The following are the levels of the fair value hierarchy and a brief description of the type of valuation inputs that are used to establish each level. Financial assets are classified based upon the lowest level of significant input that is used to determine fair value.

Level 1 is applied to valuations based on readily available, unadjusted quoted prices in active markets for identical assets.

Level 2 is applied to valuations based upon quoted prices for similar assets in active markets, quoted prices for identical or similar assets in inactive markets; or valuations based on models where the significant inputs are observable (e.g. interest rates, yield curves, prepayment speeds, default rates, loss severities) or can be corroborated by observable market data.

Level 3 is applied to valuations that are derived from techniques in which one or more of the significant inputs are unobservable.

As a part of management’s process to determine fair value, we utilize widely recognized, third-party pricing sources to determine our fair values. We have obtained an understanding of the third-party pricing sources’ valuation methodologies and inputs. The following is a description of the valuation techniques used for financial assets that are measured at fair value, including the general classification of such assets pursuant to the fair value hierarchy.

Corporate, Agencies, Government and Municipal Bonds: The pricing vendor employs a multi-dimensional model which uses standard inputs including (listed in approximate order of priority for use) benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, market bids/offers and other reference data. The pricing vendor also monitors market indicators, as well as industry and economic events. All bonds valued using these techniques are classified as Level 2. All corporate, agency, government and municipal securities are deemed Level 2.

Mortgage-backed Securities (MBS)/Commercial Mortgage-backed Securities (CMBS) and Asset-backed Securities (ABS): The pricing vendor evaluation methodology primarily includes interest rate movements and new issue data. Evaluation of the tranches (non-volatile, volatile or credit sensitivity) is based on the pricing vendors’ interpretation of accepted modeling and pricing conventions. This information is then used to determine the cash flows for each tranche, benchmark yields, pre-payment assumptions and to incorporate collateral performance. To evaluate MBS and CMBS volatility, an option adjusted spread model is used in combination with models that simulate interest rate paths to determine market price information. This process allows the pricing vendor to obtain evaluations of a broad universe of securities in a way that reflects changes in yield curve, index rates, implied volatility, mortgage rates and recent trade activity. MBS/CMBS and ABS with corroborated, observable inputs are classified as Level 2. All of our MBS/CMBS and ABS are deemed Level 2.

Regulation D Private Placement Securities: 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. 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. Unobservable inputs include a liquidity spread premium calculated based on public corporate spread and private corporate spread matrices. The quantitative detail of the liquidity spread premium is neither provided nor reasonably available to the Company. An increase to the credit spread assumptions would result in a lower fair value.

For all of our fixed income securities classified as Level 2, we periodically conduct a review to assess the reasonableness of the fair values provided by our pricing services. Our review consists of a two-pronged approach. First, we compare prices provided by our pricing services to those provided by an additional source. In some cases, we obtain prices from securities brokers and compare them to the prices provided by our pricing services. If discrepancies are found in our comparisons, we compare our prices to actual reported trade data for like securities. No changes to the fair values supplied by our pricing services have occurred as a result of our reviews. Based on these assessments, we have determined that the fair values of our Level 2 fixed income securities provided by our pricing services are reasonable.

Equity Securities: As of June 30, 2023, 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). Pricing for the equity securities not traded on an exchange is provided by a third-party pricing source using observable inputs and are classified as Level 2. Pricing for equity securities not traded on an exchange rely on one or more unobservable inputs and are classified as Level 3.

Due to the relatively short-term nature of cash, short-term investments, accounts receivable and accounts payable, their carrying amounts are reasonable estimates of fair value. Our investments in private funds, classified as other invested assets, are measured using the investments’ net asset value per share and are not categorized within the fair value hierarchy.

I. RISKS AND UNCERTAINTIES

Certain risks and uncertainties are inherent in our day-to-day operations. Adverse changes in the economy, including inflation; rising interest rates; volatile equity markets; and ongoing supply chain disruptions, could lower demand for our insurance products, result in increased levels of loss costs that we could not anticipate at the time we priced our coverages, or negatively impact our investment results, all of which could have an adverse effect on the profitability of our operations.

Catastrophe Exposures

Our catastrophe reinsurance treaty renewed on January 1, 2023. We purchased limits of $700 million in excess of $25 million first-dollar retention for earthquakes in California, $700 million in excess of $50 million first-dollar retention for earthquakes outside of California and $600 million in excess of $50 million first-dollar retention for all other perils, including wind. These amounts are subject to certain co-participations by the Company on losses in excess of the first-dollar retentions. On June 1, 2023, we purchased $150 million of additional catastrophe reinsurance protection on top of the previously described coverage. This increases the limits to $850 million in excess of $25 million first-dollar retention for earthquakes in California, $850 million in excess of $50 million first-dollar retention for earthquakes outside of California and $750 million in excess of $50 million first-dollar retention for all other perils, including wind, all of which are still subject to certain co-participations in excess of the retentions.

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Investments

6 Months Ended

Jun. 30, 2023

Investments Debt And Equity Securities [Abstract]

Investments

2. INVESTMENTS

Our investments are primarily composed of fixed income debt securities and common stock equity securities. We carry our equity securities at fair value and categorize all of our debt securities as available-for-sale, which are carried at fair value.

Realized gains and losses on disposition of investments are based on 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 six-month periods ended June 30, 2023 and 2022:

Sales	Proceeds		Gross Realized				Net Realized
(in thousands)	From Sales		Gains		Losses		Gain (Loss)
2023
Fixed income securities - available-for-sale	$	20,729	$	99	$	(910)	$	(811)
Equity securities		22,029		8,841		(101)		8,740
2022
Fixed income securities - available-for-sale	$	19,390	$	215	$	(432)	$	(217)
Equity securities		53,525		19,244		(15)		19,229
Calls/Maturities			Gross Realized				Net Realized
(in thousands)	Proceeds		Gains		Losses		Gain (Loss)
2023
Fixed income securities - available-for-sale	$	349,734	$	37	$	(43)	$	(6)
2022
Fixed income securities - available-for-sale	$	137,499	$	76	$	(55)	$	21

FAIR VALUE MEASUREMENTS

Assets measured at fair value on a recurring basis as of June 30, 2023 and December 31, 2022 are summarized below:

	As of June 30, 2023
	Quoted Prices in		Significant Other		Significant
	Active Markets for		Observable		Unobservable
	Identical Assets		Inputs		Inputs
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Total
Fixed income securities - available-for-sale
U.S. government	$	—	$	315,976	$	—	$	315,976
U.S. agency		—		43,719		—		43,719
Non-U.S. government & agency		—		3,960		—		3,960
Agency MBS		—		372,030		—		372,030
ABS/CMBS/MBS*		—		252,330		—		252,330
Corporate		—		1,095,038		52,466		1,147,504
Municipal		—		553,581		—		553,581
Total fixed income securities - available-for-sale	$	—	$	2,636,634	$	52,466	$	2,689,100
Equity securities		550,986		—		1,580		552,566
Total	$	550,986	$	2,636,634	$	54,046	$	3,241,666

	As of December 31, 2022
	Quoted Prices in		Significant Other		Significant
	Active Markets for		Observable		Unobservable
	Identical Assets		Inputs		Inputs
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Total
Fixed income securities - available-for-sale
U.S. government	$	—	$	454,021	$	—	$	454,021
U.S. agency		—		73,063		—		73,063
Non-U.S. government & agency		—		5,847		—		5,847
Agency MBS		—		331,806		—		331,806
ABS/CMBS/MBS*		—		240,736		—		240,736
Corporate		—		980,676		53,654		1,034,330
Municipal		—		527,147		—		527,147
Total fixed income securities - available-for-sale	$	—	$	2,613,296	$	53,654	$	2,666,950
Equity securities		496,731		39		1,612		498,382
Total	$	496,731	$	2,613,335	$	55,266	$	3,165,332

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

The following table summarizes changes in the balance of securities whose fair value was measured using significant unobservable inputs (Level 3).

(in thousands)	Level 3 Securities
Balance as of January 1, 2023	$	55,266
Net realized and unrealized gains (losses)
Included in other comprehensive earnings (loss)		551
Sales / Calls / Maturities		(1,771)
Balance as of June 30, 2023	$	54,046
Change in unrealized gains (losses) during the period for Level 3 assets held at period-end - included in other comprehensive earnings (loss)	$	551

The amortized cost and fair value of available-for-sale fixed income securities by contractual maturity as of June 30, 2023 were as follows:

	June 30, 2023
(in thousands)	Amortized Cost		Fair Value
Due in one year or less	$	195,245	$	193,554
Due after one year through five years		910,005		861,351
Due after five years through 10 years		567,327		529,864
Due after 10 years		573,985		479,971
ABS/CMBS/MBS*		700,358		624,360
Total available-for-sale	$	2,946,920	$	2,689,100

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

The amortized cost and fair value of available-for-sale securities at June 30, 2023 and December 31, 2022 are presented in the tables below. Amortized cost does not include the $22 million and $20 million of accrued interest receivable as of June 30, 2023 and December 31, 2022, respectively.

	June 30, 2023
	Cost or		Allowance		Gross		Gross
	Amortized		for Credit		Unrealized		Unrealized		Fair
(in thousands)	Cost		Losses		Gains		Losses		Value
U.S. government	$	325,893	$	—	$	—	$	(9,917)	$	315,976
U.S. agency		45,937		—		—		(2,218)		43,719
Non-U.S. government & agency		4,799		—		—		(839)		3,960
Agency MBS		414,503		—		206		(42,679)		372,030
ABS/CMBS/MBS*		285,855		(5)		78		(33,598)		252,330
Corporate		1,227,628		(429)		1,872		(81,567)		1,147,504
Municipal		642,305		—		1,397		(90,121)		553,581
Total Fixed Income	$	2,946,920	$	(434)	$	3,553	$	(260,939)	$	2,689,100
	December 31, 2022
	Cost or		Allowance		Gross		Gross
	Amortized		for Credit		Unrealized		Unrealized		Fair
(in thousands)	Cost		Losses		Gains		Losses		Value
U.S. government	$	462,884	$	—	$	8	$	(8,871)	$	454,021
U.S. agency		75,074		—		26		(2,037)		73,063
Non-U.S. government & agency		6,798		—		—		(951)		5,847
Agency MBS		373,687		—		336		(42,217)		331,806
ABS/CMBS/MBS*		276,126		(8)		62		(35,444)		240,736
Corporate		1,122,097		(331)		541		(87,977)		1,034,330
Municipal		628,607		—		1,265		(102,725)		527,147
Total Fixed Income	$	2,945,273	$	(339)	$	2,238	$	(280,222)	$	2,666,950

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

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. 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:

● Changes in technology that may impair the earnings potential of the investment,

● The discontinuance of a segment of business that may affect future earnings potential,

● Reduction of or non-payment of interest and/or principal,

● Specific concerns related to the issuer’s industry or geographic area of operation,

● Significant or recurring operating losses, poor cash flows and/or deteriorating liquidity ratios and

● Downgrades in credit quality by a major rating agency.

If changes in interest rates and credit spreads do not reasonably explain the unrealized loss for an available-for-sale security or if any of the criteria above indicate a potential credit loss, the security is subjected to a discounted cash flow analysis. Inputs into the discounted cash flow analysis include prepayment assumptions for structured securities, default rates and recoverability rates based on credit rating. The allowance for any security is limited to the amount that the security’s fair value is below amortized cost. As of June 30, 2023, the discounted cash flow analysis resulted in an allowance for credit losses on 18 securities. The following table presents changes in the allowance for expected credit losses on available-for-sale securities:

	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2023		2022		2023		2022
Beginning balance	$	465	$	594	$	339	$	441
Increase to allowance from securities for which credit losses were not previously recorded		2		149		25		223
Reduction from securities sold during the period		—		(433)		—		(433)
Reductions from intent to sell securities		—		—		—		(17)
Net increase (decrease) from securities that had an allowance at the beginning of the period		(33)		(18)		70		78
Balance as of June 30,	$	434	$	292	$	434	$	292

During the first six months of 2023, net realized gains included $1.7 million of losses on fixed income securities for which the cost basis was written down to fair value due to a credit event and restructurings. We recognized $0.1 million of losses on securities for which we no longer had the intent to hold until recovery during the first six months of 2022.

As of June 30, 2023, in addition to the securities included in the allowance for credit losses, the fixed income portfolio contained 1,474 securities with an unrealized loss position for which an allowance for credit losses had not been recorded. The $261 million in associated unrealized losses represents 9 percent of the fixed income portfolio’s cost basis and 7 percent of total invested assets. Isolated to these securities, unrealized losses decreased through the first six months of 2023, as credit spreads have tightened modestly while interest rates stayed flat during the period. Of the total 1,474 securities, 995 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 June 30, 2023 and December 31, 2022 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.

	June 30, 2023						December 31, 2022
(in thousands)	< 12 Mos.		12 Mos. & Greater		Total		< 12 Mos.		12 Mos. & Greater		Total
U.S. government
Fair value	$	220,227	$	95,748	$	315,975	$	399,361	$	8,828	$	408,189
Amortized cost		225,987		99,905		325,892		407,340		9,720		417,060
Unrealized loss	$	(5,760)	$	(4,157)	$	(9,917)	$	(7,979)	$	(892)	$	(8,871)
U.S. agency
Fair value	$	33,951	$	9,768	$	43,719	$	32,987	$	2,170	$	35,157
Amortized cost		34,975		10,962		45,937		34,627		2,567		37,194
Unrealized loss	$	(1,024)	$	(1,194)	$	(2,218)	$	(1,640)	$	(397)	$	(2,037)
Non-U.S. government
Fair value	$	658	$	3,302	$	3,960	$	3,626	$	2,221	$	5,847
Amortized cost		702		4,097		4,799		3,798		3,000		6,798
Unrealized Loss	$	(44)	$	(795)	$	(839)	$	(172)	$	(779)	$	(951)
Agency MBS
Fair value	$	141,545	$	216,878	$	358,423	$	197,252	$	117,851	$	315,103
Amortized cost		146,150		254,952		401,102		212,776		144,544		357,320
Unrealized loss	$	(4,605)	$	(38,074)	$	(42,679)	$	(15,524)	$	(26,693)	$	(42,217)
ABS/CMBS/MBS*
Fair value	$	20,483	$	219,639	$	240,122	$	96,754	$	136,149	$	232,903
Amortized cost		21,028		252,692		273,720		104,724		163,623		268,347
Unrealized loss	$	(545)	$	(33,053)	$	(33,598)	$	(7,970)	$	(27,474)	$	(35,444)
Corporate
Fair value	$	429,215	$	607,324	$	1,036,539	$	660,830	$	323,337	$	984,167
Amortized cost		441,843		676,263		1,118,106		697,437		374,707		1,072,144
Unrealized loss	$	(12,628)	$	(68,939)	$	(81,567)	$	(36,607)	$	(51,370)	$	(87,977)
Municipal
Fair value	$	131,486	$	362,776	$	494,262	$	228,827	$	204,324	$	433,151
Amortized cost		133,340		451,043		584,383		255,240		280,636		535,876
Unrealized loss	$	(1,854)	$	(88,267)	$	(90,121)	$	(26,413)	$	(76,312)	$	(102,725)
Total fixed income
Fair value	$	977,565	$	1,515,435	$	2,493,000	$	1,619,637	$	794,880	$	2,414,517
Amortized cost		1,004,025		1,749,914		2,753,939		1,715,942		978,797		2,694,739
Unrealized loss	$	(26,460)	$	(234,479)	$	(260,939)	$	(96,305)	$	(183,917)	$	(280,222)

* 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 June 30, 2023 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.

	Equivalent	Equivalent	(dollars in thousands)
NAIC	S&P	Moody’s	Amortized				Unrealized		Percent
Rating	Rating	Rating	Cost		Fair Value		Loss		to Total
1	AAA/AA/A	Aaa/Aa/A	$	2,269,819	$	2,052,151	$	(217,668)	83.4	%
2	BBB	Baa		404,162		366,729		(37,433)	14.4	%
3	BB	Ba		45,298		41,464		(3,834)	1.5	%
4	B	B		32,264		30,844		(1,420)	0.5	%
5	CCC	Caa		2,396		1,812		(584)	0.2	%
6	CC or lower	Ca or lower		—		—		—	0.0	%
		Total	$	2,753,939	$	2,493,000	$	(260,939)	100.0	%

Other Invested Assets

We had $61 million of other invested assets at June 30, 2023, compared to $48 million at December 31, 2022. 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. 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 $12 million at June 30, 2023, compared to $13 million on December 31, 2022. Our LIHTC interests recognized amortization of $0.8 million as a component of income tax expense and a total tax benefit of $0.8 million during the second quarter of 2023, compared to $0.8 million of amortization and $0.9 million of tax benefit during the same period in 2022. For the six-months ended June 30, 2023, our LIHTC interest recognized amortization of $1.6 million and a total benefit of $1.6 million, compared to $1.7 million of amortization and $1.7 million of tax benefit for the same period in 2022. Our unfunded commitment for our LIHTC investments totaled $1 million at June 30, 2023 and will be paid out in installments through 2035.

Our HTC investment had a balance of $15 million at June 30, 2023, compared to $11 million at December 31, 2022. Through 2022, the investment was accounted for as an investment in unconsolidated investee. Due to the adoption of ASU 2023-02, Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method, the investment was reclassified as an other invested asset during 2023. A total tax benefit of $1.5 million was recognized from our HTC investment during the second quarter of 2023, compared to $1.3 million in the second quarter of 2022. For the six-months ended June 30, 2023, our HTC investment recognized a total benefit of $2.9 million, compared to $2.6 million for the same period in 2022. Our HTC investment recognized $1.1 million of amortization as a component of income tax expense during the second quarter of 2023 and $2.3 million of amortization during the first six months of 2023. Our unfunded commitment for our HTC investment totaled $4 million at June 30, 2023 and is expected be paid during 2023.

As of June 30, 2023, $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. As of June 30, 2023, $50 million of borrowings were outstanding with the FHLBC.

Our investments in private funds totaled $27 million as of June 30, 2023, down from $28 million as of December 31, 2022, and had $5 million of associated unfunded commitments at June 30, 2023. 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 $55 million of investments in unconsolidated investees at June 30, 2023, compared to $58 million at December 31, 2022. At June 30, 2023, our investment in Prime Holdings Insurance Services, Inc. (Prime) was $55 million and other investments in unconsolidated investees totaled less than $1 million. Through December 31, 2022, our $11 million HTC investment was accounted for as an unconsolidated investee, but was reclassified as an other invested asset during 2023 due to the adoption of ASU 2023-02.

Cash and Short-Term Investments

Cash consists of uninvested balances in bank accounts. Short-term investments consist of investments with original maturities of 90 days or less, primarily AAA-rated government money market funds. Short-term investments are carried at cost. We had a cash and short-term investment balance of $17 million and $271 million, respectively, at June 30, 2023, compared to $23 million and $36 million, respectively, at December 31, 2022.

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Historical Loss And LAE Development

6 Months Ended

Jun. 30, 2023

Historical Loss And L A E Development Disclosure [Abstract]

Historical Loss And LAE Development

3. HISTORICAL LOSS AND LAE DEVELOPMENT

The following table is a reconciliation of our unpaid losses and settlement expenses (LAE) for the first six months of 2023 and 2022:

	For the Six Months
	Ended June 30,
(in thousands)	2023		2022
Unpaid losses and LAE at beginning of year
Gross	$	2,315,637	$	2,043,555
Ceded		(740,089)		(608,086)
Net	$	1,575,548	$	1,435,469
Increase (decrease) in incurred losses and LAE
Current accident year	$	339,951	$	293,158
Prior accident years		(71,520)		(69,720)
Total incurred	$	268,431	$	223,438
Loss and LAE payments for claims incurred
Current accident year	$	(30,978)	$	(21,628)
Prior accident years		(172,282)		(153,490)
Total paid	$	(203,260)	$	(175,118)
Net unpaid losses and LAE at June 30,	$	1,640,719	$	1,483,789
Unpaid losses and LAE at June 30,
Gross	$	2,361,577	$	2,150,519
Ceded		(720,858)		(666,730)
Net	$	1,640,719	$	1,483,789

For the first six months of 2023, incurred losses and LAE included $72 million of favorable development on prior years’ loss reserves, largely from accident years 2018 through 2022. Commercial excess, professional services, surety, general liability, personal umbrella, marine and commercial property were drivers of the favorable development. No products experienced significant adverse development.

For the first six months of 2022, incurred losses and LAE included $70 million of favorable development on prior years’ loss reserves, largely from accident years 2018 through 2021. General liability, professional services, transportation, marine and surety were drivers of the favorable development. No products experienced significant adverse development.

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Income Taxes

6 Months Ended

Jun. 30, 2023

Income Tax Disclosure [Abstract]

Income Taxes

4. INCOME TAXES

Our effective tax rate for the three and six months ended June 30, 2023 was 19.1 percent and 19.4 percent, respectively, compared to 65.8 percent and 12.1 percent, respectively, for the same period in 2022. Effective rates are dependent upon components of pretax earnings and the related tax effects. Tax-favored adjustments acting on pretax earnings resulted in a lower effective tax rate for the second quarter of 2023. The effective tax rate was higher for the six-month period in 2023, as higher pretax income decreased the percentage impact of tax-favored adjustments.

Income tax expense attributable to income from operations for the three and six-month period ended June 30, 2023 and 2022 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 below table. 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 June 30, 2023								For the Six Months Ended June 30, 2023
	2023				2022				2023				2022
(in thousands)	Amount		%		Amount		%		Amount		%		Amount		%
Provision for income taxes at the statutory rate of 21%	$	20,167	21.0	%	$	(1,376)	21.0	%	$	45,953	21.0	%	$	10,914	21.0	%
Increase (reduction) in taxes resulting from:
Excess tax benefit on share-based compensation		(878)	(0.9)	%		(761)	11.6	%		(2,868)	(1.3)	%		(2,175)	(4.2)	%
Tax exempt interest income		(274)	(0.3)	%		(288)	4.4	%		(557)	(0.3)	%		(570)	(1.1)	%
Dividends received deduction		(209)	(0.2)	%		(163)	2.5	%		(433)	(0.2)	%		(434)	(0.8)	%
Tax credit		(780)	(0.8)	%		(1,461)	22.3	%		(1,559)	(0.7)	%		(2,922)	(5.6)	%
ESOP dividends paid deduction		(144)	(0.2)	%		(138)	2.1	%		(281)	(0.1)	%		(268)	(0.5)	%
Nondeductible expenses		745	0.8	%		258	(3.9)	%		1,346	0.6	%		574	1.1	%
Other items, net		(248)	(0.3)	%		(386)	5.8	%		758	0.4	%		1,168	2.2	%
Total tax expense	$	18,379	19.1	%	$	(4,315)	65.8	%	$	42,359	19.4	%	$	6,287	12.1	%

We have recorded our deferred tax assets and liabilities using the statutory federal tax rate of 21 percent. We believe it is more likely than not that all deferred tax assets will be recovered, given the carry back availability as well as the result of future operations, which will generate sufficient taxable income to realize the deferred tax asset.

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Stock Based Compensation

6 Months Ended

Jun. 30, 2023

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock Based Compensation

5. STOCK BASED COMPENSATION

Our RLI Corp. Long-Term Incentive Plan (2015 LTIP) was in place from 2015 to 2023. The 2015 LTIP provided for equity-based compensation, including stock options and restricted stock units, up to a maximum of 4,000,000 shares of common stock (subject to adjustment for changes in our capitalization and other events). Between 2015 and 2023, we granted 3,291,388 awards under the 2015 LTIP. The 2015 LTIP was replaced in 2023.

In 2023, our shareholders approved the 2023 RLI Corp. Long-Term Incentive Plan (2023, LTIP), which provides for equity-based compensation. In conjunction with the adoption of the 2023 LTIP, effective May 4, 2023, awards are no longer granted under the 2015 LTIP. Awards under the 2023 LTIP may be in the form of restricted stock, restricted stock units, stock options (incentive or non-qualified), stock appreciation rights, performance units as well as other stock-based awards. Eligibility under the 2023 LTIP is limited to employees, directors, consultants and independent contractors of the Company or any affiliate. The granting of awards under the 2023 LTIP is solely at the discretion of the Human Capital and Compensation Committee of the board of directors or its delegate. The maximum number of shares of common stock available for distribution under the 2023 LTIP is 4,004,891 shares (subject to adjustment for changes in our capitalization and other events). Since the plan’s approval in 2023, we have granted 135,838 awards under the 2023 LTIP.

Compensation expense is based on the probable number of awards expected to vest. The total compensation expense related to equity awards was $2.2 million and $4.7 million in the three and six-month periods ended June 30, 2023, respectively, compared to $2.3 million and $3.7 million, respectively, for the same period in 2022. The total income tax benefit was $0.3 million and $0.8 million for the three and six-month periods ended June 30, 2023, compared to $0.4 million and $0.6 million, respectively, for the same periods in 2022. Total unrecognized compensation expense relating to outstanding and unvested awards was $8 million, which will be recognized over the weighted average vesting period of 2.77 years.

Stock Options

Under the 2023 LTIP, as under the 2015 LTIP, we grant stock options for shares with an exercise price equal to the fair market value of the shares at the date of grant (subject to adjustments for changes in our capitalization, special dividends and other events as set forth in such plans). Options generally vest and become exercisable over a five-year period and expire eight years after grant.

For most participants, the requisite service period and vesting period will be the same. For participants who are retirement eligible, defined by the plan as those individuals whose age and years of service equals 75 or greater, the requisite service period is deemed to be met and options are immediately expensed on the date of grant. For participants who will become retirement eligible during the vesting period, the requisite service period over which expense is recognized is the period between the grant date and the attainment of retirement eligibility. Shares issued upon option exercise are newly issued shares.

The following tables summarize option activity for the six-month period ended June 30, 2023:

				Weighted	Aggregate
		Weighted		Average	Intrinsic
		Average		Remaining	Value
	Options	Exercise Price		Contractual Life	(in 000’s)
Outstanding options at January 1, 2023	1,695,660	$	82.42
Options granted	144,375		135.72
Options exercised	(199,145)		56.17
Options canceled/forfeited	(1,000)		40.61
Outstanding options at June 30, 2023	1,639,890	$	90.33	5.01	$	75,687
Exercisable options at June 30, 2023	806,436	$	75.52	3.78	$	49,154

The intrinsic value, which is the difference between the fair value and the exercise price, of options exercised was $16 million and $5 million during the first six months of 2023 and 2022, 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 June 30:

	2023			2022
Weighted-average fair value of grants	$	26.79		$	21.05
Risk-free interest rates		3.44	%		2.84	%
Dividend yield		2.29	%		2.50	%
Expected volatility		22.95	%		22.89	%
Expected option life		4.94	years		5.06	years

The risk-free rate was determined based on U.S. treasury yields that most closely approximated the option’s expected life. The dividend yield was determined based on the average annualized quarterly dividends paid during the most recent five-year period and incorporated a consideration for special dividends paid in recent history. The expected volatility was calculated based on the median of the rolling volatilities for the expected life of the options. The expected option life was determined based on historical exercise behavior and the assumption that all outstanding options will be exercised at the midpoint of the current date and remaining contractual term, adjusted for the demographics of the current year’s grant.

Restricted Stock Units

In addition to stock options, restricted stock units (RSUs) are granted with a value equal to the closing stock price of the Company’s stock on the dates the units are granted. For employees, these units generally have a three-year cliff vesting, but have an accelerated vesting feature for participants who are retirement eligible, defined by the plan as those individuals whose age and years of service equals 75 or greater. For directors, these units vest on the earlier of one year from the date of grant or the next annual shareholders meeting. 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 $1 million and $2 million during the first six months of 2023 and 2022, respectively.

		Weighted
		Average
		Grant Date
	RSUs	Fair Value
Nonvested at January 1, 2023	44,208	$	109.51
Granted	19,063		136.33
Reinvested	206		129.72
Vested	(6,748)		118.66
Forfeited	(732)		136.58
Nonvested at June 30, 2023	55,997	$	117.49

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Operating Segment Information

6 Months Ended

Jun. 30, 2023

Segment Reporting [Abstract]

Operating Segment Information

6. 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 Six Months
Revenues	Ended June 30,				Ended June 30,
(in thousands)	2023		2022		2023		2022
Casualty	$	187,048	$	177,123	$	373,079	$	348,879
Property		101,841		74,690		190,608		142,130
Surety		33,391		30,997		66,316		60,953
Net premiums earned	$	322,280	$	282,810	$	630,003	$	551,962
Net investment income		28,788		18,472		55,872		36,355
Net realized gains		5,580		12,804		20,200		18,392
Net unrealized gains (losses) on equity securities		25,214		(100,994)		40,710		(128,804)
Total consolidated revenue	$	381,862	$	213,092	$	746,785	$	477,905
Net Earnings
(in thousands)	2023		2022		2023		2022
Casualty	$	6,977	$	21,442	$	38,808	$	49,089
Property		25,877		26,105		54,260		48,581
Surety		8,347		8,409		16,023		17,764
Net underwriting income	$	41,201	$	55,956	$	109,091	$	115,434
Net investment income		28,788		18,472		55,872		36,355
Net realized gains		5,580		12,804		20,200		18,392
Net unrealized gains (losses) on equity securities		25,214		(100,994)		40,710		(128,804)
General corporate expense and interest on debt		(6,266)		(4,446)		(12,488)		(9,819)
Equity in earnings of unconsolidated investees		1,514		11,654		5,437		20,413
Earnings (loss) before income taxes	$	96,031	$	(6,554)	$	218,822	$	51,971
Income tax expense (benefit)		18,379		(4,315)		42,359		6,287
Net earnings (loss)	$	77,652	$	(2,239)	$	176,463	$	45,684

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

	For the Three Months				For the Six Months
Net Premiums Earned	Ended June 30,				Ended June 30,
(in thousands)	2023		2022		2023		2022
Casualty
Commercial excess and personal umbrella	$	69,261	$	62,463	$	136,843	$	122,535
General liability		26,016		25,106		51,916		48,846
Commercial transportation		25,398		23,941		50,630		47,569
Professional services		24,602		23,861		48,959		47,416
Small commercial		18,455		16,813		36,396		33,458
Executive products		6,153		7,075		12,506		13,652
Other casualty		17,163		17,864		35,829		35,403
Total	$	187,048	$	177,123	$	373,079	$	348,879
Property
Commercial property	$	60,219	$	38,929	$	109,481	$	72,218
Marine		32,412		28,178		63,048		54,907
Other property		9,210		7,583		18,079		15,005
Total	$	101,841	$	74,690	$	190,608	$	142,130
Surety
Commercial	$	12,505	$	11,663	$	24,923	$	23,366
Miscellaneous		11,887		11,587		23,934		22,940
Contract		8,999		7,747		17,459		14,647
Total	$	33,391	$	30,997	$	66,316	$	60,953
Grand Total	$	322,280	$	282,810	$	630,003	$	551,962

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Leases

6 Months Ended

Jun. 30, 2023

Leases [Abstract]

Leases

7. LEASES

Right-of-use (ROU) assets are included in the other assets line item and lease liabilities are included in the other liabilities line item of the consolidated balance sheet. We determine if a contract contains a lease at inception and recognize operating lease ROU assets and operating lease liabilities based on the present value of the future minimum lease payments at the commencement date. As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. Lease agreements may include options to extend or terminate. The options are exercised at our discretion and are included in operating lease liabilities if it is reasonably certain the option will be exercised. Lease agreements have lease and non-lease components, which are accounted for as a single lease component. Operating lease cost for future minimum lease payments is recognized on a straight-line basis over the lease term. Variable lease cost is expensed in the period in which the obligation is incurred. Sublease income is recognized on a straight-line basis over the sublease term.

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 six-month periods ended June 30, 2023 and 2022 were as follows:

	For the Three Months				For the Six Months
	Ended June 30,				Ended June 30,
(in thousands)	2023		2022		2023		2022
Operating lease cost	$	1,239	$	1,256	$	2,508	$	2,414
Variable lease cost		444		349		882		695
Sublease income		(139)		(139)		(277)		(277)
Total lease cost	$	1,544	$	1,466	$	3,113	$	2,832
Cash paid for amounts included in measurement of lease liabilities
Operating cash outflows from operating leases	$	1,357	$	1,278	$	2,755	$	2,600
ROU assets obtained in exchange for new operating lease liabilities	$	943	$	2,431	$	984	$	2,431
Reduction to ROU assets resulting from reduction to lease liabilities	$	—	$	—	$	200	$	—
Other non-cash reductions to ROU assets	$	—	$	—	$	—	$	73

(in thousands)	June 30, 2023			December 31, 2022
Operating lease ROU assets	$	11,185		$	12,766
Operating lease liabilities	$	12,635		$	14,499
Weighted-average remaining lease term - operating leases		4.18	years		4.21	years
Weighted-average discount rate - operating leases		1.97	%		2.11	%

Future minimum lease payments under non-cancellable leases as of June 30, 2023 were as follows:

(in thousands)	June 30, 2023
2023	$	2,636
2024		3,827
2025		2,551
2026		1,646
2027		997
2028		704
Thereafter		883
Total future minimum lease payments	$	13,244
Less imputed interest		(609)
Total operating lease liability	$	12,635

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Acquisitions and Dispositions

6 Months Ended

Jun. 30, 2023

Business Combination and Asset Acquisition [Abstract]

Acquisitions and Dispositions

8. ACQUISITONS AND DISPOSTIONS

On September 30, 2022, RLI Corp. completed the sale of its equity method investment in Maui Jim, Inc. to Kering Eyewear for cash proceeds of $687 million. A net realized gain of $571 million was recognized during 2022 and the payout of

the working capital escrow during the first quarter of 2023 resulted in the recognition of an additional $14 million realized gain. The gains were recorded in the net realized gain line item of the statement of earnings.

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Basis of Presentation

A. BASIS OF PRESENTATION

The unaudited condensed consolidated interim financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (GAAP) for interim financial reporting and with the instructions to Form 10-Q and Regulation S-X. Accordingly, they do not include all the disclosures required by GAAP for complete financial statements. As such, these unaudited condensed consolidated interim financial statements should be read in conjunction with our 2022 Annual Report on Form 10-K. Management believes that the disclosures are adequate to make the information presented not misleading, and all normal and recurring adjustments necessary to present fairly the financial position at June 30, 2023 and the results of operations of RLI Corp. (the Company) and subsidiaries for all periods presented have been made. The results of operations for any interim period are not necessarily indicative of the operating results for a full year. Certain reclassifications were made to 2022 to conform to the classifications used in the current year.

The preparation of the unaudited condensed consolidated interim financial statements requires management to make estimates and assumptions relating to the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated interim financial statements and the reported amounts of revenue and expenses during the period. These estimates are inherently subject to change and actual results could differ significantly from these estimates.

Adopted Accounting Standards

B. ADOPTED ACCOUNTING STANDARDS

2023-02—Investments – Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Method

The amendments in this ASU permit the use of the proportional amortization method for investments in tax credits if certain conditions are met. Under the proportional amortization method, the initial cost of an investment is amortized in proportion to the amount of tax credits and other tax benefits received, with the amortization and tax credits presented as a component of income tax expense. Under previous guidance, equity investments in tax credit structures, other than qualified affordable housing projects, were accounted for using the equity method of accounting, which required the presentation of income, gains and losses, and tax credits in their respective line items of the statement of earnings. This ASU allows entities to make an accounting policy election on an individual tax credit program basis for all equity investments whose primary purpose is receiving income tax credits or other income tax benefits. When the proportional amortization method is selected, this amendment also requires a liability be recognized for delayed equity contributions that are unconditional or for contingent contributions when the contingent event becomes probable.

We adopted ASU 2023-02 on January 1, 2023 using a modified-retrospective approach. Through 2022, our investment in historic tax credit partnerships was presented in the balance sheet as an investment in unconsolidated investee. On January 1, 2023, the $11 million investment was moved to the other invested assets line item, an unfunded commitment for the investment was recognized by establishing a $7 million liability and increasing other invested assets, and the asset and retained earnings were reduced by $1 million to reflect the difference between applying the equity method and the proportional method since the investment was entered into. While the amortization of the investment will be presented in income tax expense going forward, rather than in equity in earnings of unconsolidated investees, the impact to net earnings will not have a material impact on our financial statements.

Prospective Accounting Standards

C. PROSPECTIVE ACCOUNTING STANDARDS

There are no prospective accounting standards which would have a material impact on our financial statements as of June 30, 2023.

Reinsurance

D. REINSURANCE

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. Such balances are subject to the credit risk associated with the individual reinsurer. 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. We also review insurance industry developments that may impact the financial condition of our reinsurers. We analyze the credit risk associated with our reinsurance balances recoverable by monitoring the AM Best and Standard & Poor’s (S&P) ratings of our reinsurers. In addition, we subject our reinsurance recoverables to detailed recoverability tests, including a segment-based analysis using the average default rating percentage by S&P rating, which assists the Company in assessing the sufficiency of its allowance. Additionally, we perform an in-depth reinsurer financial condition analysis prior to the renewal of each of our reinsurance placements.

Our policy is to charge to earnings, in the form of an allowance, an estimate of unrecoverable amounts from reinsurers. 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 recoverables for the reinsurer are specifically identified and written off through 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 recoverables were $16.2 million and $10.3 million, respectively, at June 30, 2023. At December 31, 2022, the amounts were $16.1 million and $11.3 million, respectively. 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 or recoveries were applied to the allowances in the first six months of 2023. We have no receivables with a due date that extends beyond one year that are not included in our allowance for uncollectible amounts.

Goodwill and Intangible Assets

E. INTANGIBLE ASSETS

The composition of goodwill and intangible assets at June 30, 2023 and December 31, 2022 is detailed in the following table:

	June 30,		December 31,
(in thousands)	2023		2022
Goodwill
Surety	$	40,816	$	40,816
Casualty		5,246		5,246
Total goodwill	$	46,062	$	46,062
Indefinite-lived intangibles		7,500		7,500
Total goodwill and intangibles	$	53,562	$	53,562

Annual impairment assessments were performed on our goodwill and state insurance license indefinite-lived intangible assets during the second quarter of 2023. Based upon these reviews, none of the assets were impaired. In addition, there were no triggering events as of June 30, 2023 that would suggest an updated impairment test would be needed for our goodwill and intangible assets.

Earnings Per Share

F. EARNINGS PER SHARE

Basic earnings per share (EPS) is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the dilution that could occur if securities or other contracts to issue common stock or common stock equivalents were exercised or converted into common stock. When inclusion of these items increases the earnings per share or reduces the loss per share, the effect on earnings is anti-dilutive. Under these circumstances, the diluted net earnings or net loss per share is computed excluding these items. The following represents a reconciliation of the numerator and denominator of the basic and diluted EPS computations contained in the unaudited condensed consolidated interim financial statements:

	For the Three Months						For the Three Months
	Ended June 30, 2023						Ended June 30, 2022
	Income		Shares		Per Share		Income		Shares		Per Share
(in thousands, except per share data)	(Numerator)		(Denominator)		Amount		(Numerator)		(Denominator)		Amount
Basic EPS
Earnings available to common shareholders	$	77,652		45,591	$	1.70	$	(2,239)		45,354	$	(0.05)
Effect of Dilutive Securities
Stock options and restricted stock units		—		453				—		—
Diluted EPS
Earnings available to common shareholders	$	77,652		46,044	$	1.69	$	(2,239)		45,354	$	(0.05)
Anti-dilutive securities excluded from diluted EPS				118						736
	For the Six Months						For the Six Months
	Ended June 30, 2023						Ended June 30, 2022
	Income		Shares		Per Share		Income		Shares		Per Share
(in thousands, except per share data)	(Numerator)		(Denominator)		Amount		(Numerator)		(Denominator)		Amount
Basic EPS
Earnings available to common shareholders	$	176,463		45,560	$	3.87	$	45,684		45,330	$	1.01
Effect of Dilutive Securities
Stock options and restricted stock units		—		485				—		418
Diluted EPS
Earnings available to common shareholders	$	176,463		46,045	$	3.83	$	45,684		45,748	$	1.00
Anti-dilutive securities excluded from diluted EPS				118						436

Comprehensive Earnings

G. COMPREHENSIVE EARNINGS

Our comprehensive earnings include net earnings plus after-tax unrealized gains and losses on our available-for-sale fixed income portfolio. 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 benefit of $5 million for the second quarter of 2023, compared to $26 million of tax benefit for the same period in 2022. For the six-month period ended June 30, 2023, other comprehensive earnings (loss) is net of tax expense of $5 million, compared to $57 million of tax benefit for the same period in 2022.

Unrealized gains, net of tax, recognized in other comprehensive earnings (loss) were $18 million for the first six months of 2023, compared to $213 million of unrealized losses, net of tax, during the same period last year. The unrealized gains in 2023 were attributable to a decline in interest rates, which increased the fair value of securities held in the fixed income portfolio, compared to rising interest rates during 2022, which decreased the fair value of fixed income securities.

The following table illustrates the changes in the balance of each component of accumulated other comprehensive earnings (loss) for each period presented in the unaudited condensed consolidated interim financial statements:

(in thousands)	For the Three Months				For the Six Months
	Ended June 30,				Ended June 30,
Unrealized Gains/Losses on Available-for-Sale Securities	2023		2022		2023		2022
Beginning balance	$	(191,369)	$	(65,755)	$	(229,076)	$	49,826
Other comprehensive earnings (loss) before reclassifications		(20,347)		(97,894)		15,908		(213,636)
Amounts reclassified from accumulated other comprehensive earnings		626		331		2,078		492
Net current-period other comprehensive earnings (loss)	$	(19,721)	$	(97,563)	$	17,986	$	(213,144)
Ending balance	$	(211,090)	$	(163,318)	$	(211,090)	$	(163,318)
Balance of securities for which an allowance for credit losses has been recognized in net earnings					$	1,053	$	1,083

Credit losses on or the sale of an available-for-sale security results in amounts being reclassified from accumulated other comprehensive earnings (loss) to current period net earnings. The effects of reclassifications out of accumulated other comprehensive earnings (loss) by the respective line items of net earnings are presented in the following table:

	Amount Reclassified from Accumulated Other
(in thousands)	Comprehensive Earnings (Loss)
	For the Three Months				For the Six Months
Component of Accumulated	Ended June 30,				Ended June 30,				Affected line item in the
Other Comprehensive Earnings (Loss)	2023		2022		2023		2022		Statement of Earnings
Unrealized gains and losses on available-for-sale securities	$	(824)	$	(722)	$	(2,536)	$	(772)	Net realized gains (losses)
		31		303		(95)		149	Credit gains presented within net realized gains
	$	(793)	$	(419)	$	(2,631)	$	(623)	Earnings (loss) before income taxes
		167		88		553		131	Income tax (expense) benefit
	$	(626)	$	(331)	$	(2,078)	$	(492)	Net earnings (loss)

Fair Value Disclosures

H. FAIR VALUE MEASUREMENTS

Fair value is defined as the price in the principal market that would be received for an asset to facilitate an orderly transaction between market participants on the measurement date. We determined the fair value of certain financial instruments based on their underlying characteristics and relevant transactions in the marketplace. We maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The following are the levels of the fair value hierarchy and a brief description of the type of valuation inputs that are used to establish each level. Financial assets are classified based upon the lowest level of significant input that is used to determine fair value.

Level 1 is applied to valuations based on readily available, unadjusted quoted prices in active markets for identical assets.

Level 2 is applied to valuations based upon quoted prices for similar assets in active markets, quoted prices for identical or similar assets in inactive markets; or valuations based on models where the significant inputs are observable (e.g. interest rates, yield curves, prepayment speeds, default rates, loss severities) or can be corroborated by observable market data.

Level 3 is applied to valuations that are derived from techniques in which one or more of the significant inputs are unobservable.

As a part of management’s process to determine fair value, we utilize widely recognized, third-party pricing sources to determine our fair values. We have obtained an understanding of the third-party pricing sources’ valuation methodologies and inputs. The following is a description of the valuation techniques used for financial assets that are measured at fair value, including the general classification of such assets pursuant to the fair value hierarchy.

Corporate, Agencies, Government and Municipal Bonds: The pricing vendor employs a multi-dimensional model which uses standard inputs including (listed in approximate order of priority for use) benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, market bids/offers and other reference data. The pricing vendor also monitors market indicators, as well as industry and economic events. All bonds valued using these techniques are classified as Level 2. All corporate, agency, government and municipal securities are deemed Level 2.

Mortgage-backed Securities (MBS)/Commercial Mortgage-backed Securities (CMBS) and Asset-backed Securities (ABS): The pricing vendor evaluation methodology primarily includes interest rate movements and new issue data. Evaluation of the tranches (non-volatile, volatile or credit sensitivity) is based on the pricing vendors’ interpretation of accepted modeling and pricing conventions. This information is then used to determine the cash flows for each tranche, benchmark yields, pre-payment assumptions and to incorporate collateral performance. To evaluate MBS and CMBS volatility, an option adjusted spread model is used in combination with models that simulate interest rate paths to determine market price information. This process allows the pricing vendor to obtain evaluations of a broad universe of securities in a way that reflects changes in yield curve, index rates, implied volatility, mortgage rates and recent trade activity. MBS/CMBS and ABS with corroborated, observable inputs are classified as Level 2. All of our MBS/CMBS and ABS are deemed Level 2.

Regulation D Private Placement Securities: 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. 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. Unobservable inputs include a liquidity spread premium calculated based on public corporate spread and private corporate spread matrices. The quantitative detail of the liquidity spread premium is neither provided nor reasonably available to the Company. An increase to the credit spread assumptions would result in a lower fair value.

For all of our fixed income securities classified as Level 2, we periodically conduct a review to assess the reasonableness of the fair values provided by our pricing services. Our review consists of a two-pronged approach. First, we compare prices provided by our pricing services to those provided by an additional source. In some cases, we obtain prices from securities brokers and compare them to the prices provided by our pricing services. If discrepancies are found in our comparisons, we compare our prices to actual reported trade data for like securities. No changes to the fair values supplied by our pricing services have occurred as a result of our reviews. Based on these assessments, we have determined that the fair values of our Level 2 fixed income securities provided by our pricing services are reasonable.

Equity Securities: As of June 30, 2023, 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). Pricing for the equity securities not traded on an exchange is provided by a third-party pricing source using observable inputs and are classified as Level 2. Pricing for equity securities not traded on an exchange rely on one or more unobservable inputs and are classified as Level 3.

Due to the relatively short-term nature of cash, short-term investments, accounts receivable and accounts payable, their carrying amounts are reasonable estimates of fair value. Our investments in private funds, classified as other invested assets, are measured using the investments’ net asset value per share and are not categorized within the fair value hierarchy.

Risks and Uncertainties

I. RISKS AND UNCERTAINTIES

Certain risks and uncertainties are inherent in our day-to-day operations. Adverse changes in the economy, including inflation; rising interest rates; volatile equity markets; and ongoing supply chain disruptions, could lower demand for our insurance products, result in increased levels of loss costs that we could not anticipate at the time we priced our coverages, or negatively impact our investment results, all of which could have an adverse effect on the profitability of our operations.

Catastrophe Exposures

Our catastrophe reinsurance treaty renewed on January 1, 2023. We purchased limits of $700 million in excess of $25 million first-dollar retention for earthquakes in California, $700 million in excess of $50 million first-dollar retention for earthquakes outside of California and $600 million in excess of $50 million first-dollar retention for all other perils, including wind. These amounts are subject to certain co-participations by the Company on losses in excess of the first-dollar retentions. On June 1, 2023, we purchased $150 million of additional catastrophe reinsurance protection on top of the previously described coverage. This increases the limits to $850 million in excess of $25 million first-dollar retention for earthquakes in California, $850 million in excess of $50 million first-dollar retention for earthquakes outside of California and $750 million in excess of $50 million first-dollar retention for all other perils, including wind, all of which are still subject to certain co-participations in excess of the retentions.

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Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Schedule of Goodwill and Intangible Assets

	June 30,		December 31,
(in thousands)	2023		2022
Goodwill
Surety	$	40,816	$	40,816
Casualty		5,246		5,246
Total goodwill	$	46,062	$	46,062
Indefinite-lived intangibles		7,500		7,500
Total goodwill and intangibles	$	53,562	$	53,562

Schedule of Reconciliation of Numerator and Denominator of the Basic and Diluted Earnings Per Share Computations

	For the Three Months						For the Three Months
	Ended June 30, 2023						Ended June 30, 2022
	Income		Shares		Per Share		Income		Shares		Per Share
(in thousands, except per share data)	(Numerator)		(Denominator)		Amount		(Numerator)		(Denominator)		Amount
Basic EPS
Earnings available to common shareholders	$	77,652		45,591	$	1.70	$	(2,239)		45,354	$	(0.05)
Effect of Dilutive Securities
Stock options and restricted stock units		—		453				—		—
Diluted EPS
Earnings available to common shareholders	$	77,652		46,044	$	1.69	$	(2,239)		45,354	$	(0.05)
Anti-dilutive securities excluded from diluted EPS				118						736
	For the Six Months						For the Six Months
	Ended June 30, 2023						Ended June 30, 2022
	Income		Shares		Per Share		Income		Shares		Per Share
(in thousands, except per share data)	(Numerator)		(Denominator)		Amount		(Numerator)		(Denominator)		Amount
Basic EPS
Earnings available to common shareholders	$	176,463		45,560	$	3.87	$	45,684		45,330	$	1.01
Effect of Dilutive Securities
Stock options and restricted stock units		—		485				—		418
Diluted EPS
Earnings available to common shareholders	$	176,463		46,045	$	3.83	$	45,684		45,748	$	1.00
Anti-dilutive securities excluded from diluted EPS				118						436

Schedule of Changes in the Balance of Each Component of Accumulated Other Comprehensive Earnings (Loss)

(in thousands)	For the Three Months				For the Six Months
	Ended June 30,				Ended June 30,
Unrealized Gains/Losses on Available-for-Sale Securities	2023		2022		2023		2022
Beginning balance	$	(191,369)	$	(65,755)	$	(229,076)	$	49,826
Other comprehensive earnings (loss) before reclassifications		(20,347)		(97,894)		15,908		(213,636)
Amounts reclassified from accumulated other comprehensive earnings		626		331		2,078		492
Net current-period other comprehensive earnings (loss)	$	(19,721)	$	(97,563)	$	17,986	$	(213,144)
Ending balance	$	(211,090)	$	(163,318)	$	(211,090)	$	(163,318)
Balance of securities for which an allowance for credit losses has been recognized in net earnings					$	1,053	$	1,083

Schedule of Effects of Reclassifications out of Accumulated Other Comprehensive Earnings (Loss)

	Amount Reclassified from Accumulated Other
(in thousands)	Comprehensive Earnings (Loss)
	For the Three Months				For the Six Months
Component of Accumulated	Ended June 30,				Ended June 30,				Affected line item in the
Other Comprehensive Earnings (Loss)	2023		2022		2023		2022		Statement of Earnings
Unrealized gains and losses on available-for-sale securities	$	(824)	$	(722)	$	(2,536)	$	(772)	Net realized gains (losses)
		31		303		(95)		149	Credit gains presented within net realized gains
	$	(793)	$	(419)	$	(2,631)	$	(623)	Earnings (loss) before income taxes
		167		88		553		131	Income tax (expense) benefit
	$	(626)	$	(331)	$	(2,078)	$	(492)	Net earnings (loss)

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Investments (Tables)

6 Months Ended

Jun. 30, 2023

Investments Debt And Equity Securities [Abstract]

Schedule of Disposition of Fixed Income and Equity Securities

Sales	Proceeds		Gross Realized				Net Realized
(in thousands)	From Sales		Gains		Losses		Gain (Loss)
2023
Fixed income securities - available-for-sale	$	20,729	$	99	$	(910)	$	(811)
Equity securities		22,029		8,841		(101)		8,740
2022
Fixed income securities - available-for-sale	$	19,390	$	215	$	(432)	$	(217)
Equity securities		53,525		19,244		(15)		19,229
Calls/Maturities			Gross Realized				Net Realized
(in thousands)	Proceeds		Gains		Losses		Gain (Loss)
2023
Fixed income securities - available-for-sale	$	349,734	$	37	$	(43)	$	(6)
2022
Fixed income securities - available-for-sale	$	137,499	$	76	$	(55)	$	21

Fair Value, Assets Measured on Recurring Basis

	As of June 30, 2023
	Quoted Prices in		Significant Other		Significant
	Active Markets for		Observable		Unobservable
	Identical Assets		Inputs		Inputs
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Total
Fixed income securities - available-for-sale
U.S. government	$	—	$	315,976	$	—	$	315,976
U.S. agency		—		43,719		—		43,719
Non-U.S. government & agency		—		3,960		—		3,960
Agency MBS		—		372,030		—		372,030
ABS/CMBS/MBS*		—		252,330		—		252,330
Corporate		—		1,095,038		52,466		1,147,504
Municipal		—		553,581		—		553,581
Total fixed income securities - available-for-sale	$	—	$	2,636,634	$	52,466	$	2,689,100
Equity securities		550,986		—		1,580		552,566
Total	$	550,986	$	2,636,634	$	54,046	$	3,241,666

	As of December 31, 2022
	Quoted Prices in		Significant Other		Significant
	Active Markets for		Observable		Unobservable
	Identical Assets		Inputs		Inputs
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Total
Fixed income securities - available-for-sale
U.S. government	$	—	$	454,021	$	—	$	454,021
U.S. agency		—		73,063		—		73,063
Non-U.S. government & agency		—		5,847		—		5,847
Agency MBS		—		331,806		—		331,806
ABS/CMBS/MBS*		—		240,736		—		240,736
Corporate		—		980,676		53,654		1,034,330
Municipal		—		527,147		—		527,147
Total fixed income securities - available-for-sale	$	—	$	2,613,296	$	53,654	$	2,666,950
Equity securities		496,731		39		1,612		498,382
Total	$	496,731	$	2,613,335	$	55,266	$	3,165,332

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

Summary of Changes in Balance of Level 3 Securities

(in thousands)	Level 3 Securities
Balance as of January 1, 2023	$	55,266
Net realized and unrealized gains (losses)
Included in other comprehensive earnings (loss)		551
Sales / Calls / Maturities		(1,771)
Balance as of June 30, 2023	$	54,046
Change in unrealized gains (losses) during the period for Level 3 assets held at period-end - included in other comprehensive earnings (loss)	$	551

Schedule of Contractual Maturity of Securities

	June 30, 2023
(in thousands)	Amortized Cost		Fair Value
Due in one year or less	$	195,245	$	193,554
Due after one year through five years		910,005		861,351
Due after five years through 10 years		567,327		529,864
Due after 10 years		573,985		479,971
ABS/CMBS/MBS*		700,358		624,360
Total available-for-sale	$	2,946,920	$	2,689,100

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

Schedule of Amortized Cost and Fair Value of Available-for-sale Securities

	June 30, 2023
	Cost or		Allowance		Gross		Gross
	Amortized		for Credit		Unrealized		Unrealized		Fair
(in thousands)	Cost		Losses		Gains		Losses		Value
U.S. government	$	325,893	$	—	$	—	$	(9,917)	$	315,976
U.S. agency		45,937		—		—		(2,218)		43,719
Non-U.S. government & agency		4,799		—		—		(839)		3,960
Agency MBS		414,503		—		206		(42,679)		372,030
ABS/CMBS/MBS*		285,855		(5)		78		(33,598)		252,330
Corporate		1,227,628		(429)		1,872		(81,567)		1,147,504
Municipal		642,305		—		1,397		(90,121)		553,581
Total Fixed Income	$	2,946,920	$	(434)	$	3,553	$	(260,939)	$	2,689,100
	December 31, 2022
	Cost or		Allowance		Gross		Gross
	Amortized		for Credit		Unrealized		Unrealized		Fair
(in thousands)	Cost		Losses		Gains		Losses		Value
U.S. government	$	462,884	$	—	$	8	$	(8,871)	$	454,021
U.S. agency		75,074		—		26		(2,037)		73,063
Non-U.S. government & agency		6,798		—		—		(951)		5,847
Agency MBS		373,687		—		336		(42,217)		331,806
ABS/CMBS/MBS*		276,126		(8)		62		(35,444)		240,736
Corporate		1,122,097		(331)		541		(87,977)		1,034,330
Municipal		628,607		—		1,265		(102,725)		527,147
Total Fixed Income	$	2,945,273	$	(339)	$	2,238	$	(280,222)	$	2,666,950

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

Schedule of Debt Securities Available-for-sale Allowance for Credit Loss

	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2023		2022		2023		2022
Beginning balance	$	465	$	594	$	339	$	441
Increase to allowance from securities for which credit losses were not previously recorded		2		149		25		223
Reduction from securities sold during the period		—		(433)		—		(433)
Reductions from intent to sell securities		—		—		—		(17)
Net increase (decrease) from securities that had an allowance at the beginning of the period		(33)		(18)		70		78
Balance as of June 30,	$	434	$	292	$	434	$	292

Schedule of Securities in an Unrealized Loss Position Segregated by Type and Length of Time in an Unrealized Loss Position

	June 30, 2023						December 31, 2022
(in thousands)	< 12 Mos.		12 Mos. & Greater		Total		< 12 Mos.		12 Mos. & Greater		Total
U.S. government
Fair value	$	220,227	$	95,748	$	315,975	$	399,361	$	8,828	$	408,189
Amortized cost		225,987		99,905		325,892		407,340		9,720		417,060
Unrealized loss	$	(5,760)	$	(4,157)	$	(9,917)	$	(7,979)	$	(892)	$	(8,871)
U.S. agency
Fair value	$	33,951	$	9,768	$	43,719	$	32,987	$	2,170	$	35,157
Amortized cost		34,975		10,962		45,937		34,627		2,567		37,194
Unrealized loss	$	(1,024)	$	(1,194)	$	(2,218)	$	(1,640)	$	(397)	$	(2,037)
Non-U.S. government
Fair value	$	658	$	3,302	$	3,960	$	3,626	$	2,221	$	5,847
Amortized cost		702		4,097		4,799		3,798		3,000		6,798
Unrealized Loss	$	(44)	$	(795)	$	(839)	$	(172)	$	(779)	$	(951)
Agency MBS
Fair value	$	141,545	$	216,878	$	358,423	$	197,252	$	117,851	$	315,103
Amortized cost		146,150		254,952		401,102		212,776		144,544		357,320
Unrealized loss	$	(4,605)	$	(38,074)	$	(42,679)	$	(15,524)	$	(26,693)	$	(42,217)
ABS/CMBS/MBS*
Fair value	$	20,483	$	219,639	$	240,122	$	96,754	$	136,149	$	232,903
Amortized cost		21,028		252,692		273,720		104,724		163,623		268,347
Unrealized loss	$	(545)	$	(33,053)	$	(33,598)	$	(7,970)	$	(27,474)	$	(35,444)
Corporate
Fair value	$	429,215	$	607,324	$	1,036,539	$	660,830	$	323,337	$	984,167
Amortized cost		441,843		676,263		1,118,106		697,437		374,707		1,072,144
Unrealized loss	$	(12,628)	$	(68,939)	$	(81,567)	$	(36,607)	$	(51,370)	$	(87,977)
Municipal
Fair value	$	131,486	$	362,776	$	494,262	$	228,827	$	204,324	$	433,151
Amortized cost		133,340		451,043		584,383		255,240		280,636		535,876
Unrealized loss	$	(1,854)	$	(88,267)	$	(90,121)	$	(26,413)	$	(76,312)	$	(102,725)
Total fixed income
Fair value	$	977,565	$	1,515,435	$	2,493,000	$	1,619,637	$	794,880	$	2,414,517
Amortized cost		1,004,025		1,749,914		2,753,939		1,715,942		978,797		2,694,739
Unrealized loss	$	(26,460)	$	(234,479)	$	(260,939)	$	(96,305)	$	(183,917)	$	(280,222)

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

Schedule of Credit Quality Indicators for Investments in Unrealized Loss Positions

	Equivalent	Equivalent	(dollars in thousands)
NAIC	S&P	Moody’s	Amortized				Unrealized		Percent
Rating	Rating	Rating	Cost		Fair Value		Loss		to Total
1	AAA/AA/A	Aaa/Aa/A	$	2,269,819	$	2,052,151	$	(217,668)	83.4	%
2	BBB	Baa		404,162		366,729		(37,433)	14.4	%
3	BB	Ba		45,298		41,464		(3,834)	1.5	%
4	B	B		32,264		30,844		(1,420)	0.5	%
5	CCC	Caa		2,396		1,812		(584)	0.2	%
6	CC or lower	Ca or lower		—		—		—	0.0	%
		Total	$	2,753,939	$	2,493,000	$	(260,939)	100.0	%

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Historical Loss And LAE Development (Tables)

6 Months Ended

Jun. 30, 2023

Historical Loss And L A E Development Disclosure [Abstract]

Schedule of Reconciliation of Unpaid Losses and Settlement Expenses (LAE)

	For the Six Months
	Ended June 30,
(in thousands)	2023		2022
Unpaid losses and LAE at beginning of year
Gross	$	2,315,637	$	2,043,555
Ceded		(740,089)		(608,086)
Net	$	1,575,548	$	1,435,469
Increase (decrease) in incurred losses and LAE
Current accident year	$	339,951	$	293,158
Prior accident years		(71,520)		(69,720)
Total incurred	$	268,431	$	223,438
Loss and LAE payments for claims incurred
Current accident year	$	(30,978)	$	(21,628)
Prior accident years		(172,282)		(153,490)
Total paid	$	(203,260)	$	(175,118)
Net unpaid losses and LAE at June 30,	$	1,640,719	$	1,483,789
Unpaid losses and LAE at June 30,
Gross	$	2,361,577	$	2,150,519
Ceded		(720,858)		(666,730)
Net	$	1,640,719	$	1,483,789

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Income Taxes (Tables)

6 Months Ended

Jun. 30, 2023

Income Tax Disclosure [Abstract]

Schedule of Reconciliation of Income Tax Expense Attributable to Income from Operations with Amounts Computed by Applying U.S. Federal Tax Rate to Pretax Income from Continuing Operations

	For the Three Months Ended June 30, 2023								For the Six Months Ended June 30, 2023
	2023				2022				2023				2022
(in thousands)	Amount		%		Amount		%		Amount		%		Amount		%
Provision for income taxes at the statutory rate of 21%	$	20,167	21.0	%	$	(1,376)	21.0	%	$	45,953	21.0	%	$	10,914	21.0	%
Increase (reduction) in taxes resulting from:
Excess tax benefit on share-based compensation		(878)	(0.9)	%		(761)	11.6	%		(2,868)	(1.3)	%		(2,175)	(4.2)	%
Tax exempt interest income		(274)	(0.3)	%		(288)	4.4	%		(557)	(0.3)	%		(570)	(1.1)	%
Dividends received deduction		(209)	(0.2)	%		(163)	2.5	%		(433)	(0.2)	%		(434)	(0.8)	%
Tax credit		(780)	(0.8)	%		(1,461)	22.3	%		(1,559)	(0.7)	%		(2,922)	(5.6)	%
ESOP dividends paid deduction		(144)	(0.2)	%		(138)	2.1	%		(281)	(0.1)	%		(268)	(0.5)	%
Nondeductible expenses		745	0.8	%		258	(3.9)	%		1,346	0.6	%		574	1.1	%
Other items, net		(248)	(0.3)	%		(386)	5.8	%		758	0.4	%		1,168	2.2	%
Total tax expense	$	18,379	19.1	%	$	(4,315)	65.8	%	$	42,359	19.4	%	$	6,287	12.1	%

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Stock Based Compensation (Tables)

6 Months Ended

Jun. 30, 2023

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Summary of Option Activity

				Weighted	Aggregate
		Weighted		Average	Intrinsic
		Average		Remaining	Value
	Options	Exercise Price		Contractual Life	(in 000’s)
Outstanding options at January 1, 2023	1,695,660	$	82.42
Options granted	144,375		135.72
Options exercised	(199,145)		56.17
Options canceled/forfeited	(1,000)		40.61
Outstanding options at June 30, 2023	1,639,890	$	90.33	5.01	$	75,687
Exercisable options at June 30, 2023	806,436	$	75.52	3.78	$	49,154

Summary of Weighted Average Grant-date Assumptions and Weighted Average Fair Values

	2023			2022
Weighted-average fair value of grants	$	26.79		$	21.05
Risk-free interest rates		3.44	%		2.84	%
Dividend yield		2.29	%		2.50	%
Expected volatility		22.95	%		22.89	%
Expected option life		4.94	years		5.06	years

Schedule of Restricted Stock Units Activity

		Weighted
		Average
		Grant Date
	RSUs	Fair Value
Nonvested at January 1, 2023	44,208	$	109.51
Granted	19,063		136.33
Reinvested	206		129.72
Vested	(6,748)		118.66
Forfeited	(732)		136.58
Nonvested at June 30, 2023	55,997	$	117.49

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Operating Segment Information (Tables)

6 Months Ended

Jun. 30, 2023

Segment Reporting [Abstract]

Summary of Selected Information by Operating Segment

	For the Three Months				For the Six Months
Revenues	Ended June 30,				Ended June 30,
(in thousands)	2023		2022		2023		2022
Casualty	$	187,048	$	177,123	$	373,079	$	348,879
Property		101,841		74,690		190,608		142,130
Surety		33,391		30,997		66,316		60,953
Net premiums earned	$	322,280	$	282,810	$	630,003	$	551,962
Net investment income		28,788		18,472		55,872		36,355
Net realized gains		5,580		12,804		20,200		18,392
Net unrealized gains (losses) on equity securities		25,214		(100,994)		40,710		(128,804)
Total consolidated revenue	$	381,862	$	213,092	$	746,785	$	477,905
Net Earnings
(in thousands)	2023		2022		2023		2022
Casualty	$	6,977	$	21,442	$	38,808	$	49,089
Property		25,877		26,105		54,260		48,581
Surety		8,347		8,409		16,023		17,764
Net underwriting income	$	41,201	$	55,956	$	109,091	$	115,434
Net investment income		28,788		18,472		55,872		36,355
Net realized gains		5,580		12,804		20,200		18,392
Net unrealized gains (losses) on equity securities		25,214		(100,994)		40,710		(128,804)
General corporate expense and interest on debt		(6,266)		(4,446)		(12,488)		(9,819)
Equity in earnings of unconsolidated investees		1,514		11,654		5,437		20,413
Earnings (loss) before income taxes	$	96,031	$	(6,554)	$	218,822	$	51,971
Income tax expense (benefit)		18,379		(4,315)		42,359		6,287
Net earnings (loss)	$	77,652	$	(2,239)	$	176,463	$	45,684

Summary of Revenue by Major Product Type

	For the Three Months				For the Six Months
Net Premiums Earned	Ended June 30,				Ended June 30,
(in thousands)	2023		2022		2023		2022
Casualty
Commercial excess and personal umbrella	$	69,261	$	62,463	$	136,843	$	122,535
General liability		26,016		25,106		51,916		48,846
Commercial transportation		25,398		23,941		50,630		47,569
Professional services		24,602		23,861		48,959		47,416
Small commercial		18,455		16,813		36,396		33,458
Executive products		6,153		7,075		12,506		13,652
Other casualty		17,163		17,864		35,829		35,403
Total	$	187,048	$	177,123	$	373,079	$	348,879
Property
Commercial property	$	60,219	$	38,929	$	109,481	$	72,218
Marine		32,412		28,178		63,048		54,907
Other property		9,210		7,583		18,079		15,005
Total	$	101,841	$	74,690	$	190,608	$	142,130
Surety
Commercial	$	12,505	$	11,663	$	24,923	$	23,366
Miscellaneous		11,887		11,587		23,934		22,940
Contract		8,999		7,747		17,459		14,647
Total	$	33,391	$	30,997	$	66,316	$	60,953
Grand Total	$	322,280	$	282,810	$	630,003	$	551,962

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Leases (Tables)

6 Months Ended

Jun. 30, 2023

Leases [Abstract]

Schedule of Components of Lease Expense and Other lease Information

	For the Three Months				For the Six Months
	Ended June 30,				Ended June 30,
(in thousands)	2023		2022		2023		2022
Operating lease cost	$	1,239	$	1,256	$	2,508	$	2,414
Variable lease cost		444		349		882		695
Sublease income		(139)		(139)		(277)		(277)
Total lease cost	$	1,544	$	1,466	$	3,113	$	2,832
Cash paid for amounts included in measurement of lease liabilities
Operating cash outflows from operating leases	$	1,357	$	1,278	$	2,755	$	2,600
ROU assets obtained in exchange for new operating lease liabilities	$	943	$	2,431	$	984	$	2,431
Reduction to ROU assets resulting from reduction to lease liabilities	$	—	$	—	$	200	$	—
Other non-cash reductions to ROU assets	$	—	$	—	$	—	$	73

(in thousands)	June 30, 2023			December 31, 2022
Operating lease ROU assets	$	11,185		$	12,766
Operating lease liabilities	$	12,635		$	14,499
Weighted-average remaining lease term - operating leases		4.18	years		4.21	years
Weighted-average discount rate - operating leases		1.97	%		2.11	%

Schedule of Future Minimum Lease Payments under Non-cancellable Leases

(in thousands)	June 30, 2023
2023	$	2,636
2024		3,827
2025		2,551
2026		1,646
2027		997
2028		704
Thereafter		883
Total future minimum lease payments	$	13,244
Less imputed interest		(609)
Total operating lease liability	$	12,635

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Summary of Significant Accounting Policies - Adopted Accounting Standards (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Jun. 30, 2023
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Investment in unconsolidated investees	$ 58,275	$ 55,250
Other Investments	47,922	60,907
Retained earnings	$ 1,446,341	1,597,660
Cumulative Effect, Period of Adoption, Adjustment
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Accounting Standards Update [Extensible Enumeration]	rli:AccountingStandardsUpdate202302Member
Historic tax credit partnerships (HTC)
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Investment in unconsolidated investees	$ 11,000
Other Investments		15,000
Equity investments in tax credit structures, unfunded commitment		$ 4,000
Historic tax credit partnerships (HTC) | Cumulative Effect, Period of Adoption, Adjustment
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Equity investments in tax credit structures, unfunded commitment	7,000
Retained earnings	(1,000)
Historic tax credit partnerships (HTC) | Cumulative Effect, Period of Adoption, Adjustment | Other Invested Assets
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Other Investments	$ 11,000

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Summary of Significant Accounting Policies - Reinsurance - Additional Information (Details) - USD ($)	6 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Accounting Policies [Abstract]
Amount of allowance for uncollectible amounts on paid recoverables	$ 16,200,000	$ 16,100,000
Reinsurance balances recoverable on unpaid losses and settlement expenses, allowances for uncollectible amounts	10,251,000	$ 11,250,000
Financing receivable, allowance for credit Loss, write-off	0
Amount of allowance for uncollectible amounts due beyond one year	$ 0
Threshold period for including reinsurance receivables in the allowance for uncollectible amounts	1 year

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Summary of Significant Accounting Policies - Goodwill and Intangible Assets - Schedule of Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Business Acquisition
Goodwill	$ 46,062	$ 46,062
Indefinite-lived intangibles	7,500	7,500
Total goodwill and intangibles	53,562	53,562
Surety
Business Acquisition
Goodwill	40,816	40,816
Casualty
Business Acquisition
Goodwill	$ 5,246	$ 5,246

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Summary of Significant Accounting Policies - Goodwill and Intangible Assets - Additional Information (Details)	3 Months Ended
	Jun. 30, 2023 USD ($)
Accounting Policies [Abstract]
Goodwill and intangible asset impairment	$ 0

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Summary of Significant Accounting Policies - Schedule of Reconciliation of Numerator and Denominator of the Basic and Diluted Earnings Per Share Computations (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Basic EPS, Income (Numerator)
Earnings available to common shareholders	$ 77,652	$ (2,239)	$ 176,463	$ 45,684
Diluted EPS, Income (Numerator)
Earnings available to common shareholders	$ 77,652	$ (2,239)	$ 176,463	$ 45,684
Basic EPS, Weighted Average Shares (Denominator)
Number of shares outstanding	45,591	45,354	45,560	45,330
Effect of Dilutive Securities, Shares (Denominator)
Stock options and restricted stock units	453		485	418
Diluted EPS, Weighted Average Shares (Denominator)
Number of shares outstanding	46,044	45,354	46,045	45,748
Earnings Per Share, Diluted, Other Disclosures
Anti-dilutive securities excluded from diluted EPS	118	736	118	436
Basic EPS, Per Share Amount
Basic net earnings per share (in dollars per share)	$ 1.70	$ (0.05)	$ 3.87	$ 1.01
Diluted EPS, Per Share Amount
Diluted earnings per share (in dollars per share)	$ 1.69	$ (0.05)	$ 3.83	$ 1.00

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Summary of Significant Accounting Policies - Comprehensive Earnings (Loss) - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2023	Jun. 30, 2022
COMPREHENSIVE EARNINGS (LOSS)
Tax rate used (as a percent)	21.00%		21.00%		21.00%	21.00%
Other comprehensive earnings (loss), tax (benefit)	$ (5,000)		$ (26,000)		$ 5,000	$ (57,000)
Changes in the balance of each component of accumulated other comprehensive earnings (loss)
Other comprehensive earnings (loss), net of tax	$ (19,721)	$ 37,707	$ (97,563)	$ (115,581)	$ 17,986	$ (213,144)

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Summary of Significant Accounting Policies - Schedule of Changes in the Balance of Each Component of Accumulated Other Comprehensive Earnings (Details) - USD ($) $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2023	Jun. 30, 2022
Changes in the balance of each component of accumulated other comprehensive earnings (loss)
Beginning balance		$ (229,076)			$ (229,076)
Net current-period other comprehensive earnings (loss)	$ (19,721)	37,707	$ (97,563)	$ (115,581)	17,986	$ (213,144)
Ending balance	(211,090)				(211,090)
Unrealized Gains and Losses on Available-for-Sale Securities
Changes in the balance of each component of accumulated other comprehensive earnings (loss)
Beginning balance	(191,369)	(229,076)	(65,755)	49,826	(229,076)	49,826
Other comprehensive earnings (loss) before reclassifications	(20,347)		(97,894)		15,908	(213,636)
Amounts reclassified from accumulated other comprehensive earnings	626		331		2,078	492
Net current-period other comprehensive earnings (loss)	(19,721)		(97,563)		17,986	(213,144)
Ending balance	(211,090)	$ (191,369)	(163,318)	$ (65,755)	(211,090)	(163,318)
Balance of securities for which an allowance for credit losses has not been recognized in net earnings	$ 1,053		$ 1,083		$ 1,053	$ 1,083

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Summary of Significant Accounting Policies - Schedule of Effects of Reclassifications out of Accumulated Other Comprehensive Earnings (Loss) (Details) - USD ($) $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2023	Jun. 30, 2022
Reclassification Adjustment Out of Accumulated Other Comprehensive Income (Loss)
Earnings (loss) before income taxes	$ 96,031		$ (6,554)		$ 218,822	$ 51,971
Income tax (expense) benefit	(18,379)		4,315		(42,359)	(6,287)
Net earnings (loss)	77,652	$ 98,811	(2,239)	$ 47,923	176,463	45,684
Unrealized Gains and Losses on Available-for-Sale Securities | Reclassification out of Accumulated Other Comprehensive Income
Reclassification Adjustment Out of Accumulated Other Comprehensive Income (Loss)
Net realized gains (losses) - Available-for-sale	(824)		(722)		(2,536)	(772)
Credit gains presented within net realized gains	31		303		(95)	149
Earnings (loss) before income taxes	(793)		(419)		(2,631)	(623)
Income tax (expense) benefit	167		88		553	131
Net earnings (loss)	$ (626)		$ (331)		$ (2,078)	$ (492)

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Summary of Significant Accounting Policies - Catastrophe Exposures - Additional Information (Details) - USD ($) $ in Millions	Jun. 01, 2023	Jan. 01, 2023
California Earthquake
Liability For Catastrophe Claims [Line Items]
Catastrophe reinsurance	$ 850	$ 700
First-dollar retention	25	25
Outside of California Earthquake
Liability For Catastrophe Claims [Line Items]
Catastrophe reinsurance	850	700
First-dollar retention	50	50
Other Perils including Wind
Liability For Catastrophe Claims [Line Items]
Catastrophe reinsurance	750	600
First-dollar retention	50	$ 50
Catastrophe
Liability For Catastrophe Claims [Line Items]
Additional catastrophe reinsurance	$ 150

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Investments - Disposition of Fixed Income and Equity Securities (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Summary of the disposition of fixed income and equity securities
Fixed income securities - available-for-sale	$ 19,490	$ 20,892
Fixed income securities - available-for-sale	349,714	137,476
SALES
Summary of the disposition of fixed income and equity securities
Fixed income securities - available-for-sale	20,729	19,390
Gross Realized Gains - Fixed income securities - available-for-sale	99	215
Gross Realized Losses - Fixed income securities - available-for-sale	(910)	(432)
Net Realized Gain (Loss) - Fixed income securities - available-for-sale	(811)	(217)
Proceeds from Sales - Equity securities	22,029	53,525
Gross Realized Gains - Equity securities	8,841	19,244
Gross Realized Losses - Equity securities	(101)	(15)
Net Realized Gain (Loss) - Equity securities	8,740	19,229
Calls And Maturities Of Marketable Securities
Summary of the disposition of fixed income and equity securities
Fixed income securities - available-for-sale	349,734	137,499
Gross Realized Gains - Fixed income securities - available-for-sale	37	76
Gross Realized Losses - Fixed income securities - available-for-sale	(43)	(55)
Net Realized Gain (Loss) - Fixed income securities - available-for-sale	$ (6)	$ 21

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Investments - Assets Measured at Fair Value (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Assets measured at Fair Value
Available-for-sale fixed income	$ 2,689,100	$ 2,666,950
Equity securities	552,566	498,382
U.S. government
Assets measured at Fair Value
Available-for-sale fixed income	315,976	454,021
U.S. Agency
Assets measured at Fair Value
Available-for-sale fixed income	43,719	73,063
Non-U.S. government & agency
Assets measured at Fair Value
Available-for-sale fixed income	3,960	5,847
Agency MBS
Assets measured at Fair Value
Available-for-sale fixed income	372,030	331,806
ABS/CMBS/MBS
Assets measured at Fair Value
Available-for-sale fixed income	252,330	240,736
Corporate Debt
Assets measured at Fair Value
Available-for-sale fixed income	1,147,504	1,034,330
Municipal
Assets measured at Fair Value
Available-for-sale fixed income	553,581	527,147
Fair Value Measured on Recurring Basis
Assets measured at Fair Value
Available-for-sale fixed income	2,689,100	2,666,950
Equity securities	552,566	498,382
Total assets at fair value	3,241,666	3,165,332
Fair Value Measured on Recurring Basis | Quoted Prices in Active Markets for Identical Assets (Level 1)
Assets measured at Fair Value
Equity securities	550,986	496,731
Total assets at fair value	550,986	496,731
Fair Value Measured on Recurring Basis | Significant Other Observable Inputs (Level 2)
Assets measured at Fair Value
Available-for-sale fixed income	2,636,634	2,613,296
Equity securities		39
Total assets at fair value	2,636,634	2,613,335
Fair Value Measured on Recurring Basis | Significant Unobservable Inputs (Level 3)
Assets measured at Fair Value
Available-for-sale fixed income	52,466	53,654
Equity securities	1,580	1,612
Total assets at fair value	54,046	55,266
Fair Value Measured on Recurring Basis | U.S. government
Assets measured at Fair Value
Available-for-sale fixed income	315,976	454,021
Fair Value Measured on Recurring Basis | U.S. government | Significant Other Observable Inputs (Level 2)
Assets measured at Fair Value
Available-for-sale fixed income	315,976	454,021
Fair Value Measured on Recurring Basis | U.S. Agency
Assets measured at Fair Value
Available-for-sale fixed income	43,719	73,063
Fair Value Measured on Recurring Basis | U.S. Agency | Significant Other Observable Inputs (Level 2)
Assets measured at Fair Value
Available-for-sale fixed income	43,719	73,063
Fair Value Measured on Recurring Basis | Non-U.S. government & agency
Assets measured at Fair Value
Available-for-sale fixed income	3,960	5,847
Fair Value Measured on Recurring Basis | Non-U.S. government & agency | Significant Other Observable Inputs (Level 2)
Assets measured at Fair Value
Available-for-sale fixed income	3,960	5,847
Fair Value Measured on Recurring Basis | Agency MBS
Assets measured at Fair Value
Available-for-sale fixed income	372,030	331,806
Fair Value Measured on Recurring Basis | Agency MBS | Significant Other Observable Inputs (Level 2)
Assets measured at Fair Value
Available-for-sale fixed income	372,030	331,806
Fair Value Measured on Recurring Basis | ABS/CMBS/MBS
Assets measured at Fair Value
Available-for-sale fixed income	252,330	240,736
Fair Value Measured on Recurring Basis | ABS/CMBS/MBS | Significant Other Observable Inputs (Level 2)
Assets measured at Fair Value
Available-for-sale fixed income	252,330	240,736
Fair Value Measured on Recurring Basis | Corporate Debt
Assets measured at Fair Value
Available-for-sale fixed income	1,147,504	1,034,330
Fair Value Measured on Recurring Basis | Corporate Debt | Significant Other Observable Inputs (Level 2)
Assets measured at Fair Value
Available-for-sale fixed income	1,095,038	980,676
Fair Value Measured on Recurring Basis | Corporate Debt | Significant Unobservable Inputs (Level 3)
Assets measured at Fair Value
Available-for-sale fixed income	52,466	53,654
Fair Value Measured on Recurring Basis | Municipal
Assets measured at Fair Value
Available-for-sale fixed income	553,581	527,147
Fair Value Measured on Recurring Basis | Municipal | Significant Other Observable Inputs (Level 2)
Assets measured at Fair Value
Available-for-sale fixed income	$ 553,581	$ 527,147

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Investments - Summary of Changes in Balance of Level 3 securities (Details) - Significant Unobservable Inputs (Level 3) $ in Thousands	6 Months Ended
	Jun. 30, 2023 USD ($)
Summary of changes in Level 3 securities
Beginning balance	$ 55,266
Included in other comprehensive earnings (loss)	551
Sales / Calls / Maturities	(1,771)
Ending balance	54,046
Change in unrealized gains (losses) during the period for Level 3 assets held at period-end - OCI	$ 551

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Investments - Amortized Cost and Fair Value of Available-for-sale Fixed Income Securities (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Amortized Cost
Due in one year or less	$ 195,245
Due after one year through five years	910,005
Due after five years through 10 years	567,327
Due after 10 years	573,985
ABS/CMBS/MBS	700,358
Total available-for-sale	2,946,920	$ 2,945,273
Fair Value
Due in one year or less	193,554
Due after one year through five years	861,351
Due after five years through 10 years	529,864
Due after 10 years	479,971
ABS/CMBS/MBS	624,360
Total available-for-sale	$ 2,689,100	$ 2,666,950

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Investments - Additional Information (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2023 USD ($) security	Jun. 30, 2022 USD ($)	Dec. 31, 2022 USD ($)
Investment Holdings [Line Items]
Accrued investment income	$ 22,525		$ 21,259
Unrealized loss	260,939		280,222
Fixed Income Securities
Investment Holdings [Line Items]
Accrued investment income	$ 22,000		$ 20,000
Number of debt securities for which there is an allowance for credit losses | security	18
Losses on fixed income securities	$ 1,700	$ 100
Number of debt securities in an unrealized loss position for which an allowance for credit losses has not been recorded | security	1,474
Unrealized loss	$ 261,000
Unrealized losses as percentage of fixed income portfolio cost basis	9.00%
Unrealized losses relative to total invested assets (as a percent)	7.00%
Number of unrealized loss positions | security	1,474
Number of securities in unrealized loss positions for 12 months or longer | security	995

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Investments - Amortized Cost and Fair Value of Available-for-sale Securities (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Mar. 31, 2023	Dec. 31, 2022	Jun. 30, 2022	Mar. 31, 2022	Dec. 31, 2021
Schedule Of Available For Sale Securities [Line Items]
Cost or Amortized Cost	$ 2,946,920		$ 2,945,273
Allowance for Credit Losses	(434)	$ (465)	(339)	$ (292)	$ (594)	$ (441)
Gross Unrealized Gains	3,553		2,238
Gross Unrealized Losses	(260,939)		(280,222)
Fair Value	2,689,100		2,666,950
U.S. government
Schedule Of Available For Sale Securities [Line Items]
Cost or Amortized Cost	325,893		462,884
Gross Unrealized Gains			8
Gross Unrealized Losses	(9,917)		(8,871)
Fair Value	315,976		454,021
U.S. Agency
Schedule Of Available For Sale Securities [Line Items]
Cost or Amortized Cost	45,937		75,074
Gross Unrealized Gains			26
Gross Unrealized Losses	(2,218)		(2,037)
Fair Value	43,719		73,063
Non-U.S. government & agency
Schedule Of Available For Sale Securities [Line Items]
Cost or Amortized Cost	4,799		6,798
Gross Unrealized Losses	(839)		(951)
Fair Value	3,960		5,847
Agency MBS
Schedule Of Available For Sale Securities [Line Items]
Cost or Amortized Cost	414,503		373,687
Gross Unrealized Gains	206		336
Gross Unrealized Losses	(42,679)		(42,217)
Fair Value	372,030		331,806
ABS/CMBS/MBS
Schedule Of Available For Sale Securities [Line Items]
Cost or Amortized Cost	285,855		276,126
Allowance for Credit Losses	(5)		(8)
Gross Unrealized Gains	78		62
Gross Unrealized Losses	(33,598)		(35,444)
Fair Value	252,330		240,736
Corporate Debt
Schedule Of Available For Sale Securities [Line Items]
Cost or Amortized Cost	1,227,628		1,122,097
Allowance for Credit Losses	(429)		(331)
Gross Unrealized Gains	1,872		541
Gross Unrealized Losses	(81,567)		(87,977)
Fair Value	1,147,504		1,034,330
Municipal
Schedule Of Available For Sale Securities [Line Items]
Cost or Amortized Cost	642,305		628,607
Gross Unrealized Gains	1,397		1,265
Gross Unrealized Losses	(90,121)		(102,725)
Fair Value	$ 553,581		$ 527,147

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Investments - Schedule of Debt Securities Available-for-sale Allowance for Credit Loss (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Investments Debt And Equity Securities [Abstract]
Beginning balance	$ 465	$ 594	$ 339	$ 441
Increase to allowance from securities for which credit losses were not previously recorded	2	149	25	223
Reduction from securities sold during the period		(433)		(433)
Reductions from intent to sell securities				(17)
Net increase (decrease) from securities that had an allowance at the beginning of the period	(33)	(18)	70	78
Ending balance	$ 434	$ 292	$ 434	$ 292

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Investments - Schedule of Securities in an Unrealized Loss Position Segregated by Type and Length of Time in an Unrealized Loss Position (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Fair value
Less than 12 months	$ 977,565	$ 1,619,637
12 months and greater	1,515,435	794,880
Total Fair Value	2,493,000	2,414,517
Amortized Cost
Amortized cost, less than 12 months	1,004,025	1,715,942
12 months and greater	1,749,914	978,797
Total Cost or Amortized Cost	2,753,939	2,694,739
Unrealized Loss
Less than 12 months	(26,460)	(96,305)
12 months and greater	(234,479)	(183,917)
Total Unrealized Loss	(260,939)	(280,222)
U.S. government
Fair value
Less than 12 months	220,227	399,361
12 months and greater	95,748	8,828
Total Fair Value	315,975	408,189
Amortized Cost
Amortized cost, less than 12 months	225,987	407,340
12 months and greater	99,905	9,720
Total Cost or Amortized Cost	325,892	417,060
Unrealized Loss
Less than 12 months	(5,760)	(7,979)
12 months and greater	(4,157)	(892)
Total Unrealized Loss	(9,917)	(8,871)
U.S. Agency
Fair value
Less than 12 months	33,951	32,987
12 months and greater	9,768	2,170
Total Fair Value	43,719	35,157
Amortized Cost
Amortized cost, less than 12 months	34,975	34,627
12 months and greater	10,962	2,567
Total Cost or Amortized Cost	45,937	37,194
Unrealized Loss
Less than 12 months	(1,024)	(1,640)
12 months and greater	(1,194)	(397)
Total Unrealized Loss	(2,218)	(2,037)
Non-U.S. government & agency
Fair value
Less than 12 months	658	3,626
12 months and greater	3,302	2,221
Total Fair Value	3,960	5,847
Amortized Cost
Amortized cost, less than 12 months	702	3,798
12 months and greater	4,097	3,000
Total Cost or Amortized Cost	4,799	6,798
Unrealized Loss
Less than 12 months	(44)	(172)
12 months and greater	(795)	(779)
Total Unrealized Loss	(839)	(951)
Agency MBS
Fair value
Less than 12 months	141,545	197,252
12 months and greater	216,878	117,851
Total Fair Value	358,423	315,103
Amortized Cost
Amortized cost, less than 12 months	146,150	212,776
12 months and greater	254,952	144,544
Total Cost or Amortized Cost	401,102	357,320
Unrealized Loss
Less than 12 months	(4,605)	(15,524)
12 months and greater	(38,074)	(26,693)
Total Unrealized Loss	(42,679)	(42,217)
ABS/CMBS/MBS
Fair value
Less than 12 months	20,483	96,754
12 months and greater	219,639	136,149
Total Fair Value	240,122	232,903
Amortized Cost
Amortized cost, less than 12 months	21,028	104,724
12 months and greater	252,692	163,623
Total Cost or Amortized Cost	273,720	268,347
Unrealized Loss
Less than 12 months	(545)	(7,970)
12 months and greater	(33,053)	(27,474)
Total Unrealized Loss	(33,598)	(35,444)
Corporate Debt
Fair value
Less than 12 months	429,215	660,830
12 months and greater	607,324	323,337
Total Fair Value	1,036,539	984,167
Amortized Cost
Amortized cost, less than 12 months	441,843	697,437
12 months and greater	676,263	374,707
Total Cost or Amortized Cost	1,118,106	1,072,144
Unrealized Loss
Less than 12 months	(12,628)	(36,607)
12 months and greater	(68,939)	(51,370)
Total Unrealized Loss	(81,567)	(87,977)
Municipal
Fair value
Less than 12 months	131,486	228,827
12 months and greater	362,776	204,324
Total Fair Value	494,262	433,151
Amortized Cost
Amortized cost, less than 12 months	133,340	255,240
12 months and greater	451,043	280,636
Total Cost or Amortized Cost	584,383	535,876
Unrealized Loss
Less than 12 months	(1,854)	(26,413)
12 months and greater	(88,267)	(76,312)
Total Unrealized Loss	$ (90,121)	$ (102,725)

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Investments - Unrealized Losses (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Cost or amortized Cost
Total Cost or Amortized Cost	$ 2,753,939	$ 2,694,739
Fair value
Total Fair Value	2,493,000	2,414,517
Unrealized Loss
Total Unrealized Loss	$ (260,939)	$ (280,222)
Percent to Total	100.00%
NAIC Rating 1 | AAA/AA/A | Aaa/Aa/A
Cost or amortized Cost
Total Cost or Amortized Cost	$ 2,269,819
Fair value
Total Fair Value	2,052,151
Unrealized Loss
Total Unrealized Loss	$ (217,668)
Percent to Total	83.40%
NAIC Rating 2 | BBB | Baa
Cost or amortized Cost
Total Cost or Amortized Cost	$ 404,162
Fair value
Total Fair Value	366,729
Unrealized Loss
Total Unrealized Loss	$ (37,433)
Percent to Total	14.40%
NAIC Rating 3 | BB | Ba
Cost or amortized Cost
Total Cost or Amortized Cost	$ 45,298
Fair value
Total Fair Value	41,464
Unrealized Loss
Total Unrealized Loss	$ (3,834)
Percent to Total	1.50%
NAIC Rating 4 | B | B
Cost or amortized Cost
Total Cost or Amortized Cost	$ 32,264
Fair value
Total Fair Value	30,844
Unrealized Loss
Total Unrealized Loss	$ (1,420)
Percent to Total	0.50%
NAIC Rating 5 | CCC | Caa
Cost or amortized Cost
Total Cost or Amortized Cost	$ 2,396
Fair value
Total Fair Value	1,812
Unrealized Loss
Total Unrealized Loss	$ (584)
Percent to Total	0.20%
NAIC Rating 6 | CC Or Lower | Ca or lower
Unrealized Loss
Percent to Total	0.00%

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Investments - Debt and Short-term Investments (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Investment Holdings [Line Items]
Other investments	$ 60,907		$ 60,907		$ 47,922
Investment in federal home loan bank stock	us-gaap:AssetPledgedAsCollateralMember		us-gaap:AssetPledgedAsCollateralMember		us-gaap:AssetPledgedAsCollateralMember
Cash and Short-term Investments
Investment in unconsolidated investees	$ 55,250		$ 55,250		$ 58,275
Cash	16,707		16,707		22,818
Short-term investments	271,296		271,296		36,229
Prime Holdings Insurance Services, Inc. (Prime)
Cash and Short-term Investments
Investment in unconsolidated investees	55,000		55,000
Other Unconsolidated Investees | Maximum
Cash and Short-term Investments
Investment in unconsolidated investees	1,000		1,000
FHLBC
Investment Holdings [Line Items]
Investments pledged as collateral	56,000		56,000
Federal home loan bank borrowings fair value disclosure	50,000		50,000
Investment In Low Income Housing Tax Credit Partnerships (LIHTC)
Investment Holdings [Line Items]
Other investments	12,000		12,000		13,000
Amortization on low income housing investments	800	$ 800	1,600	$ 1,700
Total tax benefit on investments in housing tax credit partnership	800	900	1,600	1,700
Qualified affordable housing project investments, unfunded commitment	1,000		1,000
Historic tax credit partnerships (HTC)
Investment Holdings [Line Items]
Other investments	15,000		15,000
Amortization on qualifying equity investments	1,100		2,300
Total tax benefit on investments in housing tax credit partnership	1,500	$ 1,300	2,900	$ 2,600
Equity investments in tax credit structures, unfunded commitment	4,000		4,000
Cash and Short-term Investments
Investment in unconsolidated investees					11,000
Investment in Private Funds
Investment Holdings [Line Items]
Other investments	27,000		27,000		$ 28,000
Fair value investments entities that calculate net asset value per share, unfunded commitments	$ 5,000		$ 5,000

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Historical Loss and LAE Development - Schedule of Reconciliation of Unpaid Losses and Settlement Expenses (LAE) (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Unpaid losses and LAE at beginning of year
Gross	$ 2,315,637	$ 2,043,555
Ceded	(740,089)	(608,086)
Net	1,575,548	1,435,469
Increase (decrease) in incurred losses and LAE
Current accident year	339,951	293,158
Prior accident years	(71,520)	(69,720)
Total incurred	268,431	223,438
Loss and LAE payments for claims incurred
Current accident year	(30,978)	(21,628)
Prior accident years	(172,282)	(153,490)
Total paid	(203,260)	(175,118)
Net unpaid losses and LAE at end of year	1,640,719	1,483,789
Unpaid losses and LAE at end of year
Gross	2,361,577	2,150,519
Ceded	(720,858)	(666,730)
Net unpaid losses and LAE at end of year	$ 1,640,719	$ 1,483,789

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Income Taxes - Additional Information (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Income Tax Disclosure [Abstract]
U.S. federal tax rate	21.00%	21.00%	21.00%	21.00%
Effective income tax rate reconciliation, percent, total	19.10%	65.80%	19.40%	12.10%

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Income Taxes - Schedule of Reconciliation of Income Tax Expense (Benefit) Attributable to Income from Operations with Amounts Computed by Applying U.S. Federal Tax Rate to Pretax Income from Continuing Operations (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Reconciliation of income tax expense reported to amount computed by applying the U.S. federal tax rate
Provision for income taxes at the statutory rate	$ 20,167	$ (1,376)	$ 45,953	$ 10,914
Increase (reduction) in taxes resulting from:
Excess tax benefit on share-based compensation	(878)	(761)	(2,868)	(2,175)
Tax exempt interest income	(274)	(288)	(557)	(570)
Dividends received deduction	(209)	(163)	(433)	(434)
Tax credit	(780)	(1,461)	(1,559)	(2,922)
ESOP dividends paid deduction	(144)	(138)	(281)	(268)
Nondeductible expenses	745	258	1,346	574
Other items, net	(248)	(386)	758	1,168
Total tax expense	$ 18,379	$ (4,315)	$ 42,359	$ 6,287
Reconciliation of income tax expense rate to the U.S. federal tax rate
Tax rate used (as a percent)	21.00%	21.00%	21.00%	21.00%
Excess tax benefit on share-based compensation (as a percent)	(0.90%)	11.60%	(1.30%)	(4.20%)
Effective rate reduction due to tax exempt interest income (as a percent)	(0.30%)	4.40%	(0.30%)	(1.10%)
Effective rate reduction due to dividend received (as a percent)	(0.20%)	2.50%	(0.20%)	(0.80%)
Effective rate reduction due to tax credit (as a percent)	(0.80%)	22.30%	(0.70%)	(5.60%)
Effective rate reduction due to dividend paid to ESOP (as a percent)	(0.20%)	2.10%	(0.10%)	(0.50%)
Effective rate reduction due to nondeductible expenses (as a percent)	0.80%	(3.90%)	0.60%	1.10%
Effective rate reduction due to other items, net (as a percent)	(0.30%)	5.80%	0.40%	2.20%
Total tax expense	19.10%	65.80%	19.40%	12.10%

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Stock Based Compensation - Stock Plans - Additional Information (Details) - USD ($) $ in Millions	2 Months Ended	3 Months Ended		6 Months Ended		96 Months Ended
	Jun. 30, 2023	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	May 03, 2023	May 04, 2023
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Options granted (in shares)				144,375
Intrinsic value of options				$ 16.0	$ 5.0
RLI Corp. Long-Term Incentive Plans
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expenses		$ 2.2	$ 2.3	4.7	3.7
Income tax benefit from stock-based compensation		0.3	$ 0.4	0.8	$ 0.6
Unrecognized stock-based compensation expense	$ 8.0	$ 8.0		$ 8.0
Stock-based compensation expenses, recognition period				2 years 9 months 7 days
RLI Corp. Long-Term Incentive Plans | Employee Stock Option
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Award vesting period				5 years
Term of options				8 years
RLI Corp. Long-Term Incentive Plans | Employee Stock Option | Minimum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Age and period of service of the participant to be eligible for retirement				75 years
RLI Corp. Long-Term Incentive Plan (2015 LTIP)
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares authorized for grant						4,000,000
Options granted (in shares)						3,291,388
RLI Corp. Long-Term Incentive Plan (2023 LTIP)
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares authorized for grant							4,004,891
Options granted (in shares)	135,838

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Stock Based Compensation - Summary of Option Activity (Details) $ / shares in Units, $ in Thousands	6 Months Ended
	Jun. 30, 2023 USD ($) $ / shares shares	Jun. 30, 2022 USD ($)
Weighted Number of Options Outstanding
Outstanding options, Beginning Balance | shares	1,695,660
Options granted (in shares) | shares	144,375
Options exercised | shares	(199,145)
Options canceled/forfeited | shares	(1,000)
Outstanding options, Ending Balance | shares	1,639,890
Exercisable options, Ending Balance | shares	806,436
Weighted Average Exercise Price
Weighted Average Exercise Price, Outstanding options, Beginning Balance | $ / shares	$ 82.42
Weighted Average Exercise Price, Options granted | $ / shares	135.72
Weighted Average Exercise Price, Options exercised | $ / shares	56.17
Weighted Average Exercise Price, Options canceled/forfeited | $ / shares	40.61
Weighted Average Exercise Price, Outstanding options, Ending Balance | $ / shares	90.33
Weighted Average Exercise Price, Exercisable options | $ / shares	$ 75.52
Weighted Average Remaining Contractual Life
Weighted Average Remaining Contractual Life, Outstanding options	5 years 3 days
Weighted Average Remaining Contractual Life, Exercisable options	3 years 9 months 10 days
Aggregate Intrinsic Value, Options exercised | $	$ 16,000	$ 5,000
Aggregate Intrinsic Value, Outstanding options | $	75,687
Aggregate Intrinsic Value, Exercisable options | $	$ 49,154

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Stock Based Compensation - Summary of Weighted Average Grant-date Assumptions and Weighted Average Fair Values (Details) - $ / shares	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Weighted average grant date assumptions and weighted average fair value
Weighted-average fair value of grants	$ 26.79	$ 21.05
Risk-free interest rates	3.44%	2.84%
Dividend yield	2.29%	2.50%
Expected volatility	22.95%	22.89%
Expected option life	4 years 11 months 8 days	5 years 21 days

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Stock Based Compensation - Restricted Stock Units - Additional Information (Details) - Restricted Stock Units (RSUs) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Fair value of restricted stock units vested	$ 1	$ 2
Minimum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Age and period of service of the participant to be eligible for retirement	75 years
Employees
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Award vesting period	3 years
Directors
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Award vesting period	1 year

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Stock Based Compensation - Schedule of Restricted Stock Units Activity (Details)	6 Months Ended
	Jun. 30, 2023 $ / shares shares
Number of RSUs
RSUs Nonvested, Beginning Balance | shares	44,208
RSUs Granted | shares	19,063
RSUs Reinvested | shares	206
RSUs Vested | shares	(6,748)
RSUs Forfeited | shares	(732)
RSUs Nonvested, Ending Balance | shares	55,997
Weighted Average Grant Date Fair Value
Weighted Average Grant Date Fair Value, Nonvested, Beginning Balance | $ / shares	$ 109.51
Weighted Average Grant Date Fair Value, Granted | $ / shares	136.33
Weighted Average Grant Date Fair Value, Reinvested | $ / shares	129.72
Weighted Average Grant Date Fair Value, Vested | $ / shares	118.66
Weighted Average Grant Date Fair Value, Forfeited | $ / shares	136.58
Weighted Average Grant Date Fair Value, Nonvested, Ending Balance | $ / shares	$ 117.49

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Operating Segment Information - Summary of Selected Information by Operating Segment (Details) - USD ($) $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2023	Jun. 30, 2022
Revenues
Net premiums earned	$ 322,280		$ 282,810		$ 630,003	$ 551,962
Net investment income	28,788		18,472		55,872	36,355
Net realized gains	5,580		12,804		20,200	18,392
Net unrealized gains (losses) on equity securities	25,214		(100,994)		40,710	(128,804)
Consolidated revenue	381,862		213,092		746,785	477,905
Net Earnings
Net underwriting income	41,201		55,956		109,091	115,434
Net investment income	28,788		18,472		55,872	36,355
Net realized gains	5,580		12,804		20,200	18,392
Net unrealized gains (losses) on equity securities	25,214		(100,994)		40,710	(128,804)
General corporate expense and interest on debt	(6,266)		(4,446)		(12,488)	(9,819)
Equity in earnings of unconsolidated investees	1,514		11,654		5,437	20,413
Earnings (loss) before income taxes	96,031		(6,554)		218,822	51,971
Income tax expense (benefit)	18,379		(4,315)		42,359	6,287
Net earnings (loss)	77,652	$ 98,811	(2,239)	$ 47,923	176,463	45,684
Casualty Segment
Revenues
Net premiums earned	187,048		177,123		373,079	348,879
Net Earnings
Net underwriting income	6,977		21,442		38,808	49,089
Property Segment
Revenues
Net premiums earned	101,841		74,690		190,608	142,130
Net Earnings
Net underwriting income	25,877		26,105		54,260	48,581
Surety Segment
Revenues
Net premiums earned	33,391		30,997		66,316	60,953
Net Earnings
Net underwriting income	$ 8,347		$ 8,409		$ 16,023	$ 17,764

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Operating Segment Information - Summary of Revenue by Major Product Type (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Segment Reporting Information [Line Items]
Net premiums earned	$ 322,280	$ 282,810	$ 630,003	$ 551,962
Casualty Segment
Segment Reporting Information [Line Items]
Net premiums earned	187,048	177,123	373,079	348,879
Casualty Segment | Commercial excess and personal umbrella
Segment Reporting Information [Line Items]
Net premiums earned	69,261	62,463	136,843	122,535
Casualty Segment | General liability
Segment Reporting Information [Line Items]
Net premiums earned	26,016	25,106	51,916	48,846
Casualty Segment | Commercial transportation
Segment Reporting Information [Line Items]
Net premiums earned	25,398	23,941	50,630	47,569
Casualty Segment | Professional services
Segment Reporting Information [Line Items]
Net premiums earned	24,602	23,861	48,959	47,416
Casualty Segment | Small commercial
Segment Reporting Information [Line Items]
Net premiums earned	18,455	16,813	36,396	33,458
Casualty Segment | Executive products
Segment Reporting Information [Line Items]
Net premiums earned	6,153	7,075	12,506	13,652
Casualty Segment | Other casualty
Segment Reporting Information [Line Items]
Net premiums earned	17,163	17,864	35,829	35,403
Property Segment
Segment Reporting Information [Line Items]
Net premiums earned	101,841	74,690	190,608	142,130
Property Segment | Commercial property
Segment Reporting Information [Line Items]
Net premiums earned	60,219	38,929	109,481	72,218
Property Segment | Marine
Segment Reporting Information [Line Items]
Net premiums earned	32,412	28,178	63,048	54,907
Property Segment | Other property
Segment Reporting Information [Line Items]
Net premiums earned	9,210	7,583	18,079	15,005
Surety Segment
Segment Reporting Information [Line Items]
Net premiums earned	33,391	30,997	66,316	60,953
Surety Segment | Commercial
Segment Reporting Information [Line Items]
Net premiums earned	12,505	11,663	24,923	23,366
Surety Segment | Miscellaneous
Segment Reporting Information [Line Items]
Net premiums earned	11,887	11,587	23,934	22,940
Surety Segment | Contract
Segment Reporting Information [Line Items]
Net premiums earned	$ 8,999	$ 7,747	$ 17,459	$ 14,647

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Leases - Schedule of Components of Lease Expense and Other lease Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Leases [Abstract]
Operating lease cost	$ 1,239	$ 1,256	$ 2,508	$ 2,414
Variable lease cost	444	349	882	695
Sublease income	(139)	(139)	(277)	(277)
Total lease cost	1,544	1,466	3,113	2,832
Cash paid for amounts included in measurement of lease liabilities
Operating cash outflows from operating leases	1,357	1,278	2,755	2,600
ROU assets obtained in exchange for new operating lease liabilities	943	$ 2,431	984	2,431
Reduction to ROU assets resulting from reduction to lease liabilities			200
Other non-cash reductions to ROU assets				$ 73
Operating lease ROU assets	$ 11,185		$ 11,185		$ 12,766
Operating Lease, Right-of-Use Asset, Statement of Financial Position	Other assets		Other assets		Other assets
Operating lease liabilities	$ 12,635		$ 12,635		$ 14,499
Operating Lease, Liability, Statement of Financial Position	Other liabilities		Other liabilities		Other liabilities
Weighted-average remaining lease term - operating leases	4 years 2 months 4 days		4 years 2 months 4 days		4 years 2 months 15 days
Weighted-average discount rate - operating leases	1.97%		1.97%		2.11%

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Leases - Schedule of Future Minimum Lease Payments under Non-cancellable Leases (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Future minimum lease payments under non-cancellable leases
2023	$ 2,636
2024	3,827
2025	2,551
2026	1,646
2027	997
2028	704
Thereafter	883
Total future minimum lease payments	13,244
Less imputed interest	(609)
Operating lease liabilities	$ 12,635	$ 14,499

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Acquisitions and Dispositions (Details) - USD ($) $ in Thousands		3 Months Ended	6 Months Ended	12 Months Ended
	Sep. 30, 2022	Mar. 31, 2023	Jun. 30, 2023	Dec. 31, 2022
Dispositions
Cash proceeds from sale			$ 14,134
Maui Jim Inc.
Dispositions
Cash proceeds from sale	$ 687,000
Maui Jim Inc. | Net Realized Gain (Loss)
Dispositions
Recognized gain on sale		$ 14,000		$ 571,000

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Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2023	Jun. 30, 2022
Pay vs Performance Disclosure
Net Income (Loss)	$ 77,652	$ 98,811	$ (2,239)	$ 47,923	$ 176,463	$ 45,684

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Insider Trading Arrangements	3 Months Ended
	Jun. 30, 2023
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false