US property and casualty insurer, RLI Corp., has improved its net earnings to $42.4 million in the third quarter of 2020, despite some deterioration in its combined ratio.
Net earnings were up from $32.3 million for the same period last year, but operating income fell to $19.0 million from $25.9 million previously.
This was due to a decline in underwriting income, which only just remained positive at $1.2 million, compared with $13.7 million in Q3 2019. Consequently, RLI’s combined ratio from 93.5% to 99.5%.
The company explained that losses from Hurricanes Hanna, Isaias, Laura and Sally caused a $33.2 million net decrease in underwriting income.
This was offset to some extent by net favorable development in prior years’ loss reserves resulting in a further $24.8 million net increase in underwriting income.
Looking at specific segments, RLI in fact reported an underwriting loss of $19.9 million for its property business, versus a $6.2 million profit in Q3 2019. The combined ratio similarly rose to 144.0% from 85.0% last year.
But casualty business fared much better, with underwriting income improving from $2.4 million to $14.0 million and the combined ratio moving from 98.3% to 90.2%.
Finally, RLI posted underwriting income of $7.1 million for its surety business, compared with $5.1 million last year, and a combined ratio of 74.8%, versus 82.4% previously.
The company’s net investment income for the quarter decreased 5.6% to $16.5 million, compared to the same period in 2019.
“We’ve faced a number of challenges in 2020, including an active hurricane season, which impacted our third quarter results,” said RLI Corp. Chairman & CEO Jonathan E. Michael.
“Despite an increase in our combined ratio due to natural catastrophes, we achieved underwriting profitability and grew book value. In particular, our casualty and surety product segments delivered strong results, which drove operating earnings to $0.42 per share,” Michael continued.
“Our financial performance is a testament to RLI’s long-term sustainability, which enables us to be there for customers in their times of need. As always, I want to thank all our associates for their proactive service to our customers during the quarter and throughout the year.”
