US property and casualty insurer RLI Corp. has reported net earnings of $73 million for the first-quarter of 2021 and underwriting income of $29.9 million, aided by an uptick in net favourable prior year reserve development.
Net earnings improved significantly for the firm in the opening quarter of the year, hitting $73 million against a net loss of $61.3 million for the same period in 2020.
At the same time, operating earnings also improved year-on-year, from $29.8 million in Q1 2020 to $39.6 million in Q1 2021.
Underwriting income also improved for the insurer during the period, reaching $29.9 million in Q1 2021 compared with $17.2 million a year earlier.
RLI attributes the stronger underwriting result to net favourable development in prior years’ loss reserves of $31.4 million in 2021, against $12.9 million for 2020.
The impacts of winter storm Uri and Viola in the U.S. dented the underwriting performance by $13.6 million during the period.
Overall, the company has announced a strengthened combined ratio of 86.9% for the first-quarter of 2021, versus 92% for the prior year quarter.
Looking at the underwriting result in more detail, RLI’s casualty segment produced underwriting income of $24.9 million in 2021 against a loss of $1.3 million in 2020.
At the same time, RLI’s surety business saw its underwriting income fall from $8.6 million in 2020 to $6 million in 2021. While the company’s property segment actually fell to a $1 million underwriting loss in Q1 2021 compared with a gain of $9.9 million in the prior year.
Net investment income for Q1 2021 fell by more than 7% to $16.4 million. While the investment portfolio produced a total return of 0.2% for the quarter.
Gross written premiums increased by a significant 20% for RLI in Q1 2021, or up by 10% when adjusting for the return of premium to transportation customers impacted by the pandemic in 2020.
The company’s Chairman and Chief Executive Officer (CEO), Jonathan Michael, commented: “Despite an active winter storm season, we achieved an 87 combined ratio while continuing to find growth opportunities across our portfolio. Premium volume was up over last year in all three segments, primarily driven by rate increases and expanded distribution.
“Looking ahead, we will continue to build on our 25 consecutive years of underwriting profitability and focus on growing book value, which is possible through the dedication of our employee owners.”
