Credit ratings agency AM Best has upgraded the financial strength rating of the insurance subsidiaries of specialty insurer RLI Corp., namely RLI Insurance Company, Mt. Hawley Insurance Company, and Contractors Bonding and Insurance Company, to A++ (Superior) from A+ (Superior).
Additionally, the ratings agency has also upgraded the Long-Term Issuer Credit Ratings for the aforementioned companies to “aa+” (Superior) from “aa” (Superior).
Driven by this, AM Best has upgraded the Long-Term ICR to “a+” (Excellent) from “a” (Excellent) of RLI’s publicly traded parent holding company, RLI Corp. The outlook of all these ratings has been revised to stable from positive.
According to AM Best, the ratings reflect RLI’s “strongest” balance sheet strength, strong operating performance, favourable business profile, and very strong enterprise risk management.
The ratings agency explained, “The upgrades reflect RLI’s exceptional balance sheet strength fundamentals, buttressed by the group’s effective capital management strategies, historically positive reserve development, strong underwriting controls and RLI’s quality reinsurance program.
“RLI’s overall liquidity ratios outperform the industry benchmarks, despite the group’s elevated level of common stock leverage and significant earthquake exposure.”
AM Best expects that RLI’s risk-adjusted capitalisation will remain at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), with favourable operating performance trends benefiting from management’s niche specialty market expertise and robust risk management program.
Additionally, RLI’s consistent underwriting results are driven by rigorous pricing discipline and diversification, augmented by solid investment returns, says AM Best.
The credit ratings agency emphasised, “The perpetual internal capital generation has enabled RLI to grow its capital size over the past five years (albeit the return of substantial capital in the form of stockholder dividends to RLI Corp.), with policyholder surplus reaching $1.9 billion as of the third quarter of 2025.”
The ratings are supported by the strong financial flexibility that RLI Corp. provides, as demonstrated by its modest financial leverage and very strong fixed-charge coverage.
