US property and casualty insurer RLI Corp has reported substantial improvements in its underwriting income and combined ratio for the first quarter of 2022, despite falling to a comprehensive loss for the period due to a negative portfolio performance.
Underwriting income increased from $29.9 million in Q1 of 2021 to $59.5 million this year, with improvement across RLI’s three major business segments – casualty, property and surety.
The company’s combined ratio similarly improved from 86.9% to 77.9%, with property business in particular contributing to the change with a Q1 combined ratio of 66.7%, versus 101.9% last year.
Results for both years include favorable development in prior years’ loss reserves, which resulted in a $39.6 million and $31.4 million net increase to underwriting income for 2022 and 2021, respectively.
Other notable results included a 22% increase in gross premiums written and a 9% increase in net investment income.
However, these positive factors were all offset by unrealized losses from RLI’s fixed income portfolio due to rising interest rates.
This meant the company posted a comprehensive loss of $67.7 million for Q1, compared to comprehensive earnings of $28.3 million for the same quarter in 2021.
“We started the year with positive momentum, achieving a 22% increase in gross premiums written and an excellent 78 combined ratio,” said RLI Corp. President & CEO Craig Kliethermes.
“All three product segments were solid contributors in the quarter, as market conditions continue to be favorable. Strong underwriting and investment income produced operating earnings of $1.43 per share,” Kliethermes explained.
“However, these positive earnings were offset by negative portfolio returns in the quarter, resulting in a decline in book value of 5%, inclusive of dividends.”
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