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What changed in RLI CORP's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of RLI CORP's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+217 added−229 removedSource: 10-K (2026-02-20) vs 10-K (2025-02-21)

Top changes in RLI CORP's 2025 10-K

217 paragraphs added · 229 removed · 193 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

57 edited+3 added−8 removed103 unchanged
Biggest changeThe table below summarizes the composition of net premiums earned by major product. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, (in thousands) 2024 2023 2022 CASUALTY ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial excess and personal umbrella ​ $ 354,847 ​ 23 % ​ $ 286,178 ​ 22 % ​ $ 253,921 ​ 22 % Commercial transportation ​ ​ 120,650 ​ 8 % ​ ​ 103,719 ​ 8 % ​ ​ 96,992 ​ 8 % General liability ​ ​ 104,423 ​ 7 % ​ ​ 103,066 ​ 8 % ​ ​ 100,374 ​ 9 % Professional services ​ ​ 103,794 ​ 7 % ​ ​ 99,596 ​ 8 % ​ ​ 95,187 ​ 9 % Small commercial ​ ​ 78,308 ​ 5 % ​ ​ 72,920 ​ 6 % ​ ​ 67,673 ​ 6 % Executive products ​ ​ 23,555 ​ 2 % ​ ​ 24,687 ​ 2 % ​ ​ 26,606 ​ 2 % Other casualty ​ ​ 67,260 ​ 4 % ​ ​ 68,180 ​ 5 % ​ ​ 71,079 ​ 6 % Total ​ $ 852,837 ​ 56 % ​ $ 758,346 ​ 59 % ​ $ 711,832 ​ 62 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ PROPERTY ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial property ​ $ 345,554 ​ 23 % ​ $ 244,798 ​ 19 % ​ $ 163,078 ​ 14 % Marine ​ ​ 145,706 ​ 10 % ​ ​ 129,428 ​ 10 % ​ ​ 113,208 ​ 10 % Other property ​ ​ 40,124 ​ 2 % ​ ​ 27,304 ​ 2 % ​ ​ 31,600 ​ 3 % Total ​ $ 531,384 ​ 35 % ​ $ 401,530 ​ 31 % ​ $ 307,886 ​ 27 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ SURETY ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Transactional ​ $ 49,460 ​ 3 % ​ $ 47,983 ​ 3 % ​ $ 45,826 ​ 4 % Commercial ​ ​ 48,533 ​ 3 % ​ ​ 49,707 ​ 4 % ​ ​ 47,652 ​ 4 % Contract ​ ​ 44,192 ​ 3 % ​ ​ 36,740 ​ 3 % ​ ​ 31,240 ​ 3 % Total ​ $ 142,185 ​ 9 % ​ $ 134,430 ​ 10 % ​ $ 124,718 ​ 11 % Grand total ​ $ 1,526,406 ​ 100 % ​ $ 1,294,306 ​ 100 % ​ $ 1,144,436 ​ 100 % ​ CASUALTY SEGMENT ​ Commercial Excess and Personal Umbrella ​ Our commercial excess coverage is written in excess of primary liability insurance provided by other carriers and, in some cases, in excess of primary liability written by the Company.
Biggest changeThe table below summarizes the composition of net premiums earned by major product. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, (in thousands) 2025 2024 2023 CASUALTY ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial excess and personal umbrella ​ $ 447,361 ​ 28 % ​ $ 354,847 ​ 23 % ​ $ 286,178 ​ 22 % Commercial transportation ​ ​ 123,413 ​ 8 % ​ ​ 120,650 ​ 8 % ​ ​ 103,719 ​ 8 % General liability ​ ​ 110,891 ​ 7 % ​ ​ 104,423 ​ 7 % ​ ​ 103,066 ​ 8 % Professional services ​ ​ 108,090 ​ 7 % ​ ​ 103,794 ​ 7 % ​ ​ 99,596 ​ 8 % Small commercial ​ ​ 79,064 ​ 5 % ​ ​ 78,308 ​ 5 % ​ ​ 72,920 ​ 6 % Executive products ​ ​ 22,942 ​ 1 % ​ ​ 23,555 ​ 2 % ​ ​ 24,687 ​ 2 % Other casualty ​ ​ 62,220 ​ 4 % ​ ​ 67,260 ​ 4 % ​ ​ 68,180 ​ 5 % Total ​ $ 953,981 ​ 60 % ​ $ 852,837 ​ 56 % ​ $ 758,346 ​ 59 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ PROPERTY ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial property ​ $ 301,659 ​ 19 % ​ $ 345,554 ​ 23 % ​ $ 244,798 ​ 19 % Marine ​ ​ 158,904 ​ 10 % ​ ​ 145,706 ​ 10 % ​ ​ 129,428 ​ 10 % Other property ​ ​ 51,841 ​ 2 % ​ ​ 40,124 ​ 2 % ​ ​ 27,304 ​ 2 % Total ​ $ 512,404 ​ 31 % ​ $ 531,384 ​ 35 % ​ $ 401,530 ​ 31 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ SURETY ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Transactional ​ $ 52,418 ​ 3 % ​ $ 49,460 ​ 3 % ​ $ 47,983 ​ 3 % Commercial ​ ​ 50,690 ​ 3 % ​ ​ 48,533 ​ 3 % ​ ​ 49,707 ​ 4 % Contract ​ ​ 44,853 ​ 3 % ​ ​ 44,192 ​ 3 % ​ ​ 36,740 ​ 3 % Total ​ $ 147,961 ​ 9 % ​ $ 142,185 ​ 9 % ​ $ 134,430 ​ 10 % Grand total ​ $ 1,614,346 ​ 100 % ​ $ 1,526,406 ​ 100 % ​ $ 1,294,306 ​ 100 % ​ CASUALTY SEGMENT ​ Commercial Excess and Personal Umbrella ​ Our commercial excess coverage is written in excess of primary liability insurance provided by other carriers and, in some cases, in excess of primary liability written by the Company.
We also offer general liability and package coverages through a binding authority group, a program in which select surplus lines producers are granted limited underwriting authority through our online system to bind business on behalf of the Company. ​ PROPERTY SEGMENT ​ Commercial Property ​ Our commercial property coverage consists primarily of excess and surplus lines and specialty insurance such as fire, earthquake, wind and difference in conditions (DIC), which can include earthquake, flood and collapse coverages.
We also offer general liability and package coverages through a binding authority group, a program in which select surplus lines producers are granted limited underwriting authority to bind business on behalf of the Company through our online system. ​ PROPERTY SEGMENT ​ Commercial Property ​ Our commercial property coverage consists primarily of excess and surplus lines and specialty insurance such as fire, earthquake, wind and difference in conditions (DIC), which can include earthquake, flood and collapse coverages.
Hawley A2 * CBIC is only rated by AM Best ​ REINSURANCE ​ In the ordinary course of business, we rely on other insurance companies to share risks through reinsurance, paying or ceding to the reinsurer a portion of the premiums received on such policies.
Hawley A2 * CBIC is only rated by AM Best ​ REINSURANCE ​ In the ordinary course of business, we rely on other insurance companies to share risks through reinsurance by paying or ceding to the reinsurer a portion of the premiums received on such policies.
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 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 and are subject to various risks, uncertainties and other factors, including, without limitation those set forth below in “Item 1A Risk Factors.” Actual results could differ materially from those expressed in, or implied by, these forward looking statements.
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, reinsurance and surety 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 and are subject to various risks, uncertainties and other factors, including, without limitation those set forth below in “Item 1A Risk Factors.” Actual results could differ materially from those expressed in, or implied by, these forward looking statements.
From time to time, we also write a limited amount of business under agreements with managing general agents under the direction of our product leadership. ​ We make our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed with or furnished to the Securities and Exchange Commission (SEC) available free of charge on our website (http://www.rlicorp.com).
We also write a limited amount of business under agreements with managing general agents under the direction of our product leadership. ​ We make our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed with or furnished to the Securities and Exchange Commission (SEC) available free of charge on our website (http://www.rlicorp.com).
We may purchase facultative coverage in addition to the treaty coverages shown below. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Per Risk ​ ​ (in millions) ​ ​ ​ Renewal ​ Attachment ​ Limit ​ Maximum Product Line(s) Covered ​ Contract Type ​ Date ​ Point ​ Purchased ​ Retention * ​ General liability Excess of Loss 1/1 ​ $ 1.0 ​ $ 9.0 ​ $ 2.8 ​ Commercial excess Excess of Loss 1/1 ​ ​ 1.0 ​ ​ 9.0 ​ ​ 2.8 ​ Personal umbrella Excess of Loss 1/1 ​ ​ 1.0 ​ ​ 9.0 ​ ​ 2.8 ​ Commercial transportation Excess of Loss 1/1 ​ ​ 1.0 ​ ​ 9.0 ​ ​ 2.8 ​ Package - liability and workers' compensation Excess of Loss 1/1 ​ ​ 1.0 ​ ​ 10.0 ​ ​ 4.2 ​ Workers' compensation catastrophe ​ Excess of Loss ​ 1/1 ​ ​ 11.0 ​ ​ 14.0 ​ ​ — ** Professional services - professional liability Excess of Loss 4/1 ​ ​ 1.0 ​ ​ 9.0 ​ ​ 3.3 ​ Executive products Quota Share 7/1 ​ ​ N/A ​ ​ 25.0 ​ ​ 6.3 ​ Property - risk cover Excess of Loss 1/1 ​ ​ 2.0 ​ ​ 23.0 ​ ​ 4.9 ​ Marine Excess of Loss 6/1 ​ ​ 3.0 ​ ​ 27.0 ​ ​ 3.0 ​ Surety Excess of Loss 4/1 ​ ​ 5.0 ​ ​ 70.0 ​ ​ 12.0 *** * Maximum retention includes first-dollar retention plus any co-participation we retain through the reinsurance tower. ** The workers’ compensation catastrophe treaty responds after our package liability and workers’ compensation excess of loss treaty with no additional retention. *** A limited number of commercial surety accounts are permitted to exceed the $75 million limit.
We may purchase facultative coverage in addition to the treaty coverages shown below. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Per Risk ​ ​ (in millions) ​ ​ ​ Renewal ​ Attachment ​ Limit ​ Maximum Product Line(s) Covered ​ Contract Type ​ Date ​ Point ​ Purchased ​ Retention * ​ General liability Excess of Loss 1/1 ​ $ 1.0 ​ $ 9.0 ​ $ 2.8 ​ Commercial excess Excess of Loss 1/1 ​ ​ 1.0 ​ ​ 9.0 ​ ​ 2.8 ​ Personal umbrella Excess of Loss 1/1 ​ ​ 1.0 ​ ​ 9.0 ​ ​ 2.8 ​ Commercial transportation Excess of Loss 1/1 ​ ​ 1.0 ​ ​ 9.0 ​ ​ 2.8 ​ Package - liability and workers' compensation Excess of Loss 1/1 ​ ​ 1.0 ​ ​ 10.0 ​ ​ 3.7 ​ Workers' compensation catastrophe ​ Excess of Loss ​ 1/1 ​ ​ 11.0 ​ ​ 14.0 ​ ​ — ** Professional services - professional liability Excess of Loss 7/1 ​ ​ 1.0 ​ ​ 9.0 ​ ​ 3.3 ​ Executive products Quota Share 7/1 ​ ​ N/A ​ ​ 25.0 ​ ​ 6.3 ​ Property - risk cover Excess of Loss 1/1 ​ ​ 2.0 ​ ​ 23.0 ​ ​ 3.9 ​ Marine Excess of Loss 6/1 ​ ​ 3.0 ​ ​ 27.0 ​ ​ 3.0 ​ Surety Excess of Loss 4/1 ​ ​ 5.0 ​ ​ 95.0 ​ ​ 14.5 *** * Maximum retention includes first-dollar retention plus any co-participation we retain through the reinsurance tower. ** The workers’ compensation catastrophe treaty responds after our package liability and workers’ compensation excess of loss treaty, with no additional retention. *** A limited number of commercial surety accounts are permitted to exceed the $100 million limit.
Other invested assets represented 1 percent of the total portfolio and include investments in low-income housing tax credit and historic tax credit partnerships, membership stock in the Federal Home Loan Bank of Chicago and investments in private funds. The remaining 3 percent was made up of cash and short-term investments.
Other invested assets represented 1 percent of the total portfolio and include investments in low-income housing tax credit and historic tax credit partnerships, membership stock in the Federal Home Loan Bank of Chicago and investments in private funds. The remaining 4 percent was made up of cash and short-term investments.
Although the predominant exposures are located within the United States, there is some incidental international exposure written within these coverages. ​ Other Property ​ We offer specialized homeowners’ and dwelling fire insurance in Hawaii, as well as property coverages packaged through our binding authority group. ​ 5 Table of Contents SURETY SEGMENT ​ Transactional ​ Our transactional surety coverage includes small bonds for businesses and individuals.
Although the predominant exposures are located within the United States, there is some incidental international exposure written within these coverages. ​ Other Property ​ We offer specialized homeowners’ and dwelling fire insurance in Hawaii, as well as property coverages packaged through our binding authority group. ​ 5 Table of Contents SURETY SEGMENT ​ Transactional ​ Our transactional surety coverage is primarily comprised of small bonds for businesses and individuals.
This total represented 9 percent of cash and investments, which was the same as 2023. ​ REGULATION ​ STATE REGULATION ​ As an insurance holding company, we and our insurance company subsidiaries, are subject to regulation by the states and territories in which the insurance subsidiaries are domiciled or transact business.
This total represented 9 percent of cash and investments, which was the same as 2024. ​ REGULATION ​ STATE REGULATION ​ As an insurance holding company, we and our insurance company subsidiaries, are subject to regulation by the states and territories in which the insurance subsidiaries are domiciled or transact business.
The Company’s 2024 survey response, for calendar year 2023, can be accessed on the California Department of Insurance website. ​ The rates, policy terms and conditions of reinsurance agreements generally are not subject to regulation by any regulatory authority.
The Company’s 2025 survey response, for calendar year 2024, can be accessed on the California Department of Insurance website. ​ The rates, policy terms and conditions of reinsurance agreements generally are not subject to regulation by any regulatory authority.
We also offer coverages for security guards and environmental liability coverages for underground storage tanks, contractors and asbestos and environmental remediation specialists. ​ Professional Services ​ We offer professional liability coverages focused on providing errors and omission coverage for small to medium-sized design, technical, computer and other miscellaneous professionals.
We also offer environmental liability coverages for underground storage tanks, contractors and asbestos and environmental remediation specialists. ​ Professional Services ​ We offer professional liability coverages focused on providing errors and omission coverage for small to medium-sized design, technical, computer and other miscellaneous professionals.
As of December 31, 2024, each of our insurance company subsidiaries had RBC levels significantly in excess of the company action level RBC, defined as being 200 percent of the authorized control level RBC, which would prompt corrective action under Illinois law.
As of December 31, 2025, each of our insurance company subsidiaries had RBC levels significantly in excess of the company action level RBC, defined as being 200 percent of the authorized control level RBC, which would prompt corrective action under Illinois law.
In addition, we use third-party catastrophe exposure models and an internally developed analysis to assess each risk to ensure we include an appropriate charge for assumed catastrophe risks. ​ 9 Table of Contents Catastrophe exposure modeling is inherently uncertain due to the model’s reliance on an infrequent observation of actual events, increasing the importance of capturing accurate policy coverage data.
In addition, we use third-party catastrophe exposure models and an internally developed analysis to assess each risk to ensure we include an appropriate charge for assumed catastrophe risks. ​ Catastrophe exposure modeling is inherently uncertain due to the model’s reliance on an infrequent observation of actual events, increasing the importance of capturing accurate policy coverage data.
In calculating potential losses, we use assumptions including, but not limited to, loss amplification and loss adjustment expense. We establish risk tolerances at the portfolio level based on market conditions, the level of reinsurance available, changes to the assumptions in the catastrophe models, rating agency capital constraints, underwriting guidelines and coverages and internal preferences.
In calculating potential losses, we use assumptions including, but not limited to, loss amplification and loss adjustment expense. We establish risk tolerances at the portfolio level based on market conditions, the level of reinsurance available, changes to the assumptions in the catastrophe models, rating agency capital constraints, underwriting guidelines and coverages and internal 9 Table of Contents preferences.
Based on the catastrophe reinsurance treaty purchased on January 1, 2025, there is a 99.6 percent likelihood that the net loss will be less than 2.6 percent of policyholders’ statutory surplus as of December 31, 2024. The exposure levels continue to be within our tolerances for this risk.
Based on the catastrophe reinsurance treaty purchased on January 1, 2026, there is a 99.6 percent likelihood that the net loss will be less than 2.8 percent of policyholders’ statutory surplus as of December 31, 2025. The exposure levels continue to be within our tolerances for this risk.
Our investment strategy is based on preservation of capital as the first priority, with a secondary focus on growing book value through total return. Investments of the highest quality and marketability are critical for preserving our claims-paying ability.
Our investment strategy is based on preservation of capital as the first priority, with a secondary focus on growing book value through total return. Investments of the highest quality and marketability are critical for preserving our ability to pay claims.
Losses were modeled based on our exposure as of December 31, 2024, utilizing the reinsurance treaty structure in place as of January 1, 2025.
Losses were modeled based on our exposure as of December 31, 2025, utilizing the reinsurance treaty structure in place as of January 1, 2026.
Property-Casualty Forecast & Analysis: By Line of Business, Fourth Quarter 2024. Estimated for the year ended December 31, 2024. ** Source: AM Best (2024). Aggregate & Averages – Property/Casualty, United States & Canada . 2020 – 2023. ​ INVESTMENTS ​ Our investment portfolio serves as a resource for loss payments and secondarily as a source of income to support operations.
Property-Casualty Forecast & Analysis: By Line of Business, Fourth Quarter 2025. Estimated for the year ended December 31, 2025. ** Source: AM Best (2025). Aggregate & Averages – Property/Casualty, United States & Canada . 2021 – 2024. ​ INVESTMENTS ​ Our investment portfolio serves as a resource for loss payments and secondarily as a source of income to support operations.
The difference between the combined ratio and 100 reflects the per dollar rate of underwriting income or loss, with ratios below 100 indicating underwriting profit and ratios above 100 indicating underwriting loss. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2024 2023 2022 2021 2020 Loss ratio 48.4 46.7 44.9 46.5 51.2 Expense ratio 37.8 39.9 39.5 40.3 40.8 Combined ratio 86.2 86.6 84.4 86.8 92.0 ​ We also calculate the statutory combined ratio, which is not indicative of underwriting income due to accounting for policy acquisition costs differently for statutory accounting purposes, but is a standardized industry measure.
The difference between the combined ratio and 100 reflects the per dollar rate of underwriting income or loss, with ratios below 100 indicating underwriting profit and ratios above 100 indicating underwriting loss. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2025 2024 2023 2022 2021 Loss ratio 45.0 48.4 46.7 44.9 46.5 Expense ratio 38.6 37.8 39.9 39.5 40.3 Combined ratio 83.6 86.2 86.6 84.4 86.8 ​ We also calculate the statutory combined ratio, which is not indicative of underwriting income due to accounting for policy acquisition costs differently for statutory accounting purposes, but is a standardized industry measure.
RLI Ins., our principal insurance company subsidiary, had an authorized control level RBC of $296 million compared to actual statutory capital and surplus of $1.8 billion as of December 31, 2024, resulting in statutory capital that is more than six times the authorized control level.
RLI Ins., our principal insurance company subsidiary, had an authorized control level RBC of $306 million compared to actual statutory capital and surplus of $1.8 billion as of December 31, 2025, resulting in statutory capital that is more than six times the authorized control level.
Patent and Trademark Office. Such registrations protect our intellectual property nationwide from deceptively similar use. The duration of these registrations is 10 years, unless renewed. We monitor our trademarks and service marks and protect them from unauthorized use as necessary. ​ HUMAN CAPITAL ​ RLI is a specialty underwriting company whose achievement emanates from our entrepreneurial, ownership culture.
Patent and Trademark Office. Such registrations protect our intellectual property nationwide from deceptively similar use. The duration of these registrations is 10 years, unless renewed. We monitor our trademarks and service marks and protect them from unauthorized use as necessary. ​ HUMAN CAPITAL ​ RLI is a specialty underwriting company whose success is driven by our entrepreneurial, ownership culture.
Additionally, we have coverages that may reduce first-dollar retentions for multiple events within an established period of time. ​ The following table shows the likelihood that a loss from a single event would be less than the amount shown.
Additionally, we have coverages that may reduce first-dollar retentions and additional aggregate protections for multiple events within an established period of time. ​ The following table shows the likelihood that a loss from a single event would be less than the amount shown.
For 2024, our specialty reinsurance operations wrote gross premiums of $27 million, representing approximately 1 percent of our total gross premiums written for the year. ​ BUSINESS SEGMENT OVERVIEW ​ Our insurance operations consist of three segments: property, casualty and surety. For additional information, see note 11 to the consolidated financial statements within Item 8, Financial Statements and Supplementary Data.
For 2025, our specialty reinsurance operations wrote gross premiums of $23 million, representing 1 percent of our total gross premiums written for the year. ​ BUSINESS SEGMENT OVERVIEW ​ Our insurance operations consist of three segments: property, casualty and surety. For additional information, see note 11 to the consolidated financial statements within Item 8, Financial Statements and Supplementary Data.
As of December 31, 2024, 79 percent of the fixed income portfolio was rated A or better and 57 percent was rated AA or better. ​ We classify all the securities in our fixed income portfolio as available-for-sale, which are carried at fair value.
As of December 31, 2025, 78 percent of the fixed income portfolio was rated A or better and 57 percent was rated AA or better. ​ We classify all the securities in our fixed income portfolio as available-for-sale, which are carried at fair value.
While the NAIC provides this general guideline, rating agencies often require a more conservative ratio to maintain strong or superior ratings. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (dollars in thousands) 2024 2023 2022 2021 2020 Statutory net premiums written ​ $ 1,605,521 ​ $ 1,427,747 ​ $ 1,241,536 ​ $ 1,057,533 ​ $ 892,088 Policyholders’ surplus ​ ​ 1,787,312 ​ 1,520,135 ​ 1,407,925 ​ 1,240,649 ​ 1,121,592 Ratio ​ ​ 0.90 to 1 ​ 0.94 to 1 ​ 0.88 to 1 ​ 0.85 to 1 ​ 0.80 to 1 ​ COMBINED RATIO AND STATUTORY COMBINED RATIO ​ Our underwriting experience is best indicated by our combined ratio, which is the sum of (a) the ratio of incurred loss and settlement expenses to net premiums earned (loss ratio) and (b) the ratio of policy acquisition costs and insurance operating expenses to net premiums earned (expense ratio).
While the NAIC provides this general guideline, rating agencies often require a more conservative ratio to maintain strong or superior ratings. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (dollars in thousands) 2025 2024 2023 2022 2021 Statutory net premiums written ​ $ 1,622,129 ​ $ 1,605,521 ​ $ 1,427,747 ​ $ 1,241,536 ​ $ 1,057,533 Policyholders’ surplus ​ ​ 1,846,615 ​ 1,787,312 ​ 1,520,135 ​ 1,407,925 ​ 1,240,649 Ratio ​ ​ 0.88 to 1 ​ 0.90 to 1 ​ 0.94 to 1 ​ 0.88 to 1 ​ 0.85 to 1 ​ COMBINED RATIO AND STATUTORY COMBINED RATIO ​ Our underwriting experience is best indicated by our combined ratio, which is the sum of (a) the ratio of incurred loss and settlement expenses to net premiums earned (loss ratio) and (b) the ratio of policy acquisition costs and insurance operating expenses to net premiums earned (expense ratio).
These accounts are subject to additional levels of review and are monitored regularly. ​ At each renewal, we consider any plans to change the underlying insurance coverage we offer, as well as updated loss activity, the level of RLI Insurance Group’s surplus, changes in our risk appetite and the cost and availability of reinsurance. ​ 8 Table of Contents PROPERTY REINSURANCE — CATASTROPHE COVERAGE ​ Our property catastrophe reinsurance reduces the financial impact of a catastrophe event involving multiple claims and policyholders, including earthquakes, hurricanes, floods, wildfires, convective storms and certain other aggregating events.
These accounts are subject to additional levels of review and are monitored regularly. ​ At each renewal, we consider any plans to change the underlying insurance coverage we offer, as well as updated loss activity, the level of RLI Insurance Group’s surplus, changes in our risk appetite and the cost and availability of reinsurance. ​ PROPERTY REINSURANCE — CATASTROPHE COVERAGE ​ Our property catastrophe reinsurance reduces the financial impact of a catastrophe event involving multiple claims and policyholders, including earthquakes, hurricanes, floods, wildfires, convective storms and certain other aggregating events. 8 Table of Contents Reinsurance limits purchased fluctuate due to changes in the amount of exposure we insure, reinsurance costs, insurance company surplus levels and our risk appetite.
Comparatively, based on the catastrophe reinsurance treaty purchased on January 1, 2024, there was a 99.6 percent likelihood that the net loss would have been less than 8.0 percent of policyholders’ statutory surplus as of December 31, 2023.
Comparatively, based on the catastrophe reinsurance treaty purchased on January 1, 2025, there was a 99.6 percent likelihood that the net loss would have been less than 2.6 percent of policyholders’ statutory surplus as of December 31, 2024.
Our goal is to attract, develop and retain the best talent from diverse backgrounds, while promoting a culture where different viewpoints are valued and individuals feel respected, are treated fairly and have an opportunity to excel in their chosen careers. ​ FORWARD LOOKING STATEMENTS ​ 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.
Our goal is to attract, develop and retain the best talent with a variety of experiences, perspectives and skillsets, while promoting a culture where different viewpoints are valued and individuals feel respected, are treated fairly and have an opportunity to excel in their chosen careers. ​ FORWARD LOOKING STATEMENTS ​ 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.
The statutory combined ratio is the sum of (a) the ratio of statutory loss and loss adjustment expenses incurred to statutory net premiums earned (loss ratio), (b) the ratio of statutory other underwriting expenses incurred to statutory net premiums written (expense ratio) and (c) the ratio of policyholder dividends to statutory net premiums earned (policyholder dividend ratio). ​ 10 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, Statutory 2024 2023 2022 2021 2020 Statutory loss ratio 48.4 ​ 46.7 ​ 44.9 ​ 46.5 ​ 51.0 ​ Statutory expense ratio 37.5 ​ 37.7 ​ 38.3 ​ 38.8 ​ 40.8 ​ Statutory combined ratio 85.9 ​ 84.4 ​ 83.2 ​ 85.3 ​ 91.8 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ P&C industry combined ratio 98.3 * 101.5 ** 102.7 ** 99.7 ** 98.8 ** * Source: Conning (2024).
The statutory combined ratio is the sum of (a) the ratio of statutory loss and loss adjustment expenses incurred to statutory net premiums earned (loss ratio), (b) the ratio of statutory other underwriting expenses incurred to statutory net premiums written (expense ratio) and (c) the ratio of policyholder dividends to statutory net premiums earned (policyholder dividend ratio). ​ 10 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, Statutory 2025 2024 2023 2022 2021 Statutory loss ratio 45.0 ​ 48.4 ​ 46.7 ​ 44.9 ​ 46.5 ​ Statutory expense ratio 39.3 ​ 37.5 ​ 37.7 ​ 38.3 ​ 38.8 ​ Statutory combined ratio 84.3 ​ 85.9 ​ 84.4 ​ 83.2 ​ 85.3 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ P&C industry combined ratio 92.6 * 96.8 ** 101.7 ** 102.7 ** 99.7 ** * Source: Conning (2025).
Our excess and surplus operations wrote gross premiums of $848 million, or 42 percent, of our total gross premiums written in 2024. ​ SPECIALTY REINSURANCE MARKET ​ The business we write in the specialty reinsurance market is generally written on a portfolio basis. We write contracts on an excess of loss and a proportional basis.
Our excess and surplus operations wrote gross premiums of $783 million, or 39 percent, of our total gross premiums written in 2025. ​ SPECIALTY REINSURANCE MARKET ​ The business we write in the specialty reinsurance market is generally written on a portfolio basis. We write contracts on an excess of loss and a proportional basis.
Our participation has varied over time based on price and the amount of risk transferred by each layer. For 2025, the program was 100 percent placed, with a portion of the first layer expiring on May 31, 2025. All layers of the treaty include one reinstatement, some being prepaid reinstatements, while others require the payment of additional reinstatement premium.
Our participation has varied over time based on price and the amount of risk transferred by each layer. For 2026, the program was 100 percent placed. All layers of the treaty include one reinstatement, some being prepaid reinstatements, while others require the payment of additional reinstatement premium.
We solicit employee feedback to help ensure employees are engaged, feel valued and are contributing to our success. ​ The Company employed 1,147 associates throughout the United States as of December 31, 2024, compared to 1,099 as of December 31, 2023, and the average employee tenure was 8.6 years.
We solicit employee feedback to help ensure employees are engaged, feel valued and are contributing to our success. ​ The Company employed 1,193 associates throughout the United States as of December 31, 2025, compared to 1,147 as of December 31, 2024, with an average employee tenure of 8.1 years.
Within the United States alone, approximately 2,600 companies actively market property and casualty coverages. 6 Table of Contents ​ Our primary competitors in the casualty segment include AIG, Allianz, Arch, Aspen, AXA/IL, Beazley, Berkley, Berkshire/National Indemnity, Chubb, CNA, Great American, Great West, Hartford, Hudson, James River, Kinsale, Lancer, Liberty, Markel, Nationwide, Progressive, RSUI, Sompo, Tokio Marine/HCC, Travelers, USLI, Westchester and Zurich. ​ Our primary competitors in the property segment include AmRisc, Arch, Arrowhead, CNA, Golden Bear, Lexington, Liberty Mutual, Markel, Palomar, RSUI, Special Risk Underwriters, Travelers, Velocity and Westchester. ​ Our primary competitors in the surety segment are AIG, Arch, Beazley, Berkley, Chubb, CNA, Great American, Hartford, Intact, Liberty Mutual, Markel, Merchants, Philadelphia, Sompo, Swiss Re, Travelers and Zurich. ​ Capacity from managing general agents also increases competition in the property and casualty markets.
Within the United States alone, approximately 2,600 companies actively market property and casualty coverages. ​ Our primary competitors in the casualty segment include AIG, Allianz, Arch, Aspen, AXA/XL, Beazley, Berkley, Berkshire/National Indemnity, Chubb, CNA, Great American, Great West, Hartford, Hudson, James River, Kinsale, Lancer, Liberty, Markel, Nationwide, Progressive, RSUI, Sompo, Tokio Marine/HCC, Travelers, USLI, Westchester and Zurich. ​ Our primary competitors in the property segment include AmRisc, Arch, Arrowhead, CNA, Golden Bear, Lexington, Liberty Mutual, Markel, Palomar, RSUI, Special Risk Underwriters, Travelers, Velocity and Westchester. ​ Our primary competitors in the surety segment are AIG, Arch, Beazley, Berkley, Chubb, CNA, Great American, Hartford, Intact, Liberty Mutual, Markel, Merchants, Philadelphia, Sompo, Swiss Re, Travelers and Zurich. ​ Capacity from managing general agents increases competition across the property and casualty markets, with competitive dynamics, such as coverage, service and pricing, varying by line of business.
As of December 31, 2024, 7 percent of RLI Corp. shares were owned by insiders. ​ Diversity and Inclusion ​ We strive to cultivate an exceptional workforce to perpetuate our ownership culture, deliver excellent customer service and continue to achieve superior business results.
As of December 31, 2025, 7 percent of RLI Corp. shares were owned by insiders. ​ Talented Workforce ​ We strive to cultivate a talented workforce to perpetuate our ownership culture, deliver excellent customer service and continue to achieve superior business results.
For an expanded discussion of the impact of reinsurance on our operations, see note 4 to the consolidated financial statements within Item 8, Financial Statements and Supplementary Data. 7 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (in thousands) 2024 2023 2022 PREMIUMS WRITTEN ​ ​ ​ ​ ​ ​ ​ ​ ​ Direct and Assumed ​ $ 2,013,048 ​ $ 1,806,660 ​ $ 1,565,486 Reinsurance ceded ​ ​ (407,527) ​ ​ (378,913) ​ ​ (323,950) Net ​ $ 1,605,521 ​ $ 1,427,747 ​ $ 1,241,536 PREMIUMS EARNED ​ ​ ​ ​ ​ ​ ​ ​ ​ Direct and Assumed ​ $ 1,921,235 ​ $ 1,699,419 ​ $ 1,460,845 Reinsurance ceded ​ ​ (394,829) ​ ​ (405,113) ​ ​ (316,409) Net ​ $ 1,526,406 ​ $ 1,294,306 ​ $ 1,144,436 ​ Reinsurance is subject to certain risks, including market risk, which affects the cost and ability to secure reinsurance contracts.
For an expanded discussion of the impact of reinsurance on our operations, see note 4 to the consolidated financial statements within Item 8, Financial Statements and Supplementary Data. ​ 7 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (in thousands) 2025 2024 2023 PREMIUMS WRITTEN ​ ​ ​ ​ ​ ​ ​ ​ ​ Direct and Assumed ​ $ 2,026,846 ​ $ 2,013,048 ​ $ 1,806,660 Reinsurance ceded ​ ​ (404,717) ​ ​ (407,527) ​ ​ (378,913) Net ​ $ 1,622,129 ​ $ 1,605,521 ​ $ 1,427,747 PREMIUMS EARNED ​ ​ ​ ​ ​ ​ ​ ​ ​ Direct and Assumed ​ $ 2,019,349 ​ $ 1,921,235 ​ $ 1,699,419 Reinsurance ceded ​ ​ (405,003) ​ ​ (394,829) ​ ​ (405,113) Net ​ $ 1,614,346 ​ $ 1,526,406 ​ $ 1,294,306 ​ Reinsurance is subject to certain risks, including market risk, which affects the cost and ability to secure reinsurance contracts.
The underwriting agreements include strict guidelines, and the agents are subject to regular audits. ​ DIRECT ​ We utilize digital platforms to efficiently produce, process and service select business, including home business, binding authority, small commercial, personal umbrella and surety. ​ COMPETITION ​ Our specialty property and casualty insurance subsidiaries are part of a very competitive industry that is cyclical and historically characterized by periods of high premium rates and shortages of underwriting capacity followed by periods of severe competition and excess underwriting capacity.
These relationships operate under strict underwriting guidelines and are subject to regular audits to ensure compliance. ​ DIRECT ​ We leverage digital platforms to efficiently produce, process and service select lines of business, including home business, binding authority, small commercial, personal umbrella and surety products. ​ COMPETITION ​ Our specialty property and casualty insurance subsidiaries operate in a very competitive industry that is cyclical and historically characterized by periods of high premium rates and shortages of underwriting capacity followed by periods of severe competition and 6 Table of Contents excess underwriting capacity.
These arrangements allow the Company to pursue greater diversification of business and serve to limit the maximum net loss on catastrophes and large risks. We use reinsurance as an alternative to using our own capital to take risks and reduce volatility.
These arrangements allow the Company to pursue greater business diversification and limit the maximum net loss on catastrophes and large risks. We use reinsurance as an alternative to using our own capital to take risks and reduce volatility. Retention levels are evaluated each year to maintain a balance between our capital position and the cost of reinsurance.
We prefer to utilize our own underwriting, claims and support staff, given the complex nature of our products. The niche markets we operate within require unique experience and deep knowledge to select appropriate risks and serve our customers.
Given the complex nature of our products and the niche markets in which we operate, we prefer to utilize our own underwriting, claims and support staff, as these businesses require specialized experience and deep industry knowledge to appropriately select risks and effectively serve customers.
Publications of AM Best, Standard & Poor’s and Moody’s indicate that A and A+ ratings are assigned to those companies that, in their opinion, have a superior ability to meet ongoing insurance obligations, a strong capacity to meet financial commitments or a low credit risk, respectively. ​ At December 31, 2024, the following ratings were assigned to our insurance companies and represent affirmations of previously assigned ratings: ​ ​ ​ ​ AM Best ​ RLI Ins., Mt.
According to publications from AM Best, Standard & Poor’s, and Moody’s, A and A+ ratings are assigned to insurers viewed as having a superior ability to meet insurance obligations, a strong capacity to fulfill financial commitments or a low level of credit risk, respectively. ​ At December 31, 2025, the following ratings were assigned to our insurance companies and represent affirmations of previously assigned ratings: ​ ​ ​ ​ AM Best ​ RLI Ins., Mt.
The fixed income portfolio was 78 percent of the total portfolio, the same as the prior year, while the equity allocation was 18 percent of the overall portfolio, up 2 percent from the previous year.
The fixed income portfolio was 76 percent of the total portfolio, down 2 percent from the prior year, while the equity allocation was 19 percent of the overall portfolio, up 1 percent from the previous year.
The excess and surplus lines environment and 3 Table of Contents production model effectively filter submission flow and match market opportunities to our expertise and appetite. The excess and surplus market represented less than 10 percent of the entire domestic property and casualty industry as of December 31, 2024, according to AM Best and as measured by direct premiums written.
The excess and surplus market represented less than 10 percent of the entire domestic property and casualty industry as of December 31, 2025, 3 Table of Contents according to AM Best and as measured by direct premiums written.
The independent agent cannot bind the risk unless they receive approval from either our underwriters or automated systems. ​ CARRIER PARTNERS ​ We partner with other insurance carriers for home business and personal umbrella coverage.
Each risk is prequalified through systems accessible to the independent agent, and the agent cannot bind the risk unless approval is received from our underwriters or automated underwriting platforms. ​ CARRIER PARTNERS ​ We partner with other insurance carriers to offer home business and personal umbrella coverage.
Ensuring a seamless transfer of knowledge as employees retire and developing 14 Table of Contents newer talent continues to be a focus of the Company. We enable employees to maintain and expand their industry knowledge and technical expertise through education and training, as well as through memberships in industry and trade associations.
Accordingly, ensuring a 14 Table of Contents seamless transfer of knowledge as employees retire and developing new talent remain key areas of focus. We support these efforts by enabling employees to maintain and expand their industry knowledge and technical expertise through education and training programs, as well as memberships in industry and trade associations.
The loss amounts are pre-tax and include the impact of additional reinsurance reinstatement premium, if any. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Losses in millions) ​ ​ ​ ​ Hurricane ​ ​ California Earthquake ​ ​ Non-California Earthquake Probability ​ Return Period ​ Gross Loss ​ Net Loss ​ Gross Loss ​ Net Loss ​ Gross Loss ​ Net Loss 90.0% ​ 10 Year ​ $ 94 ​ $ 42 ​ $ 14 ​ $ 10 ​ $ 2 ​ $ 2 96.0% ​ 25 Year ​ ​ 209 ​ ​ 47 ​ ​ 78 ​ ​ 26 ​ ​ 15 ​ ​ 9 98.0% ​ 50 Year ​ ​ 331 ​ ​ 49 ​ ​ 186 ​ ​ 26 ​ ​ 53 ​ ​ 26 99.0% ​ 100 Year ​ ​ 484 ​ ​ 50 ​ ​ 332 ​ ​ 33 ​ ​ 128 ​ ​ 32 99.6% ​ 250 Year ​ ​ 740 ​ ​ 50 ​ ​ 581 ​ ​ 42 ​ ​ 243 ​ ​ 39 ​ Actual results could vary significantly from these modeled losses as the actual nature or severity of a particular event cannot be accurately predicted.
The loss amounts are pre-tax and include the impact of additional reinsurance reinstatement premium, if any. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Losses in millions) ​ ​ ​ ​ Hurricane ​ ​ California Earthquake ​ ​ Non-California Earthquake Probability ​ Return Period ​ Gross Loss ​ Net Loss ​ Gross Loss ​ Net Loss ​ Gross Loss ​ Net Loss 90.0% ​ 10 Year ​ $ 83 ​ $ 39 ​ $ 12 ​ $ 9 ​ $ 3 ​ $ 2 96.0% ​ 25 Year ​ ​ 184 ​ ​ 46 ​ ​ 70 ​ ​ 26 ​ ​ 15 ​ ​ 9 98.0% ​ 50 Year ​ ​ 288 ​ ​ 49 ​ ​ 166 ​ ​ 26 ​ ​ 48 ​ ​ 22 99.0% ​ 100 Year ​ ​ 416 ​ ​ 50 ​ ​ 295 ​ ​ 31 ​ ​ 117 ​ ​ 30 99.6% ​ 250 Year ​ ​ 627 ​ ​ 50 ​ ​ 516 ​ ​ 41 ​ ​ 229 ​ ​ 37 ​ Actual results could vary significantly from these modeled losses as the actual nature or severity of a particular event cannot be accurately predicted.
The ratings are independent opinions of an insurer’s financial strength and ability to meet ongoing insurance policy and contract obligations, based on a comprehensive quantitative and qualitative analysis of balance sheet strength, operating performance, business profile and enterprise risk management.
These independent assessments evaluate an insurer’s ability to meet ongoing policy and contract obligations, based on a comprehensive quantitative and qualitative analysis of balance sheet strength, operating performance, business profile and enterprise risk management. The ratings focus on factors most relevant to policyholders, agents, insurance brokers and intermediaries and are not intended to assess securities issued by the company.
At high rates of return, we grow the book of business and may purchase additional reinsurance to increase our capacity. As the rate of return decreases, we may reduce exposure and may purchase less reinsurance as this capacity becomes unnecessary. Our reinsurance coverages for 2023 through 2025 are shown in the table below.
In addition, we monitor the expected rate of return for each of our catastrophe lines of business. At high rates of return, we grow the book of business and may purchase additional reinsurance to increase our capacity. As the rate of return decreases, we may reduce exposure and may purchase less reinsurance.
We leverage the services of a limited number of third-party contractors when it is difficult to hire employees that address a needed skill set outside of our core insurance functions or when efficiencies can be gained. ​ Human Capital Oversight ​ At the board of directors level, oversight of human capital is provided by the Human Capital and Compensation Committee (HCCC).
In limited circumstances, we leverage third-party contractors when specialized skill sets outside our core insurance functions are required or when operational efficiencies can be achieved. ​ Human Capital Oversight ​ At the board of directors level, oversight of human capital is provided by the Human Capital and Compensation Committee (HCCC).
Amounts for 2023 reflect additional catastrophe reinsurance protection that was purchased mid-year to support growth in our catastrophe-exposed business. ​ Catastrophe Coverages (in millions) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 ​ 2024 ​ 2023 ​ ​ First-Dollar ​ ​ ​ ​ First-Dollar ​ ​ ​ ​ First-Dollar ​ ​ ​ ​ Retention Limit Retention Limit Retention Limit California earthquake ​ $ 25 $ 850 ​ $ 25 $ 850 ​ $ 25 $ 850 Non-California earthquake ​ ​ 50 ​ 850 ​ ​ 50 ​ 850 ​ ​ 50 ​ 850 Other perils, including hurricane ​ ​ 50 ​ 750 ​ ​ 50 ​ 750 ​ ​ 50 ​ 750 ​ Our property catastrophe program continues to be applied on an excess of loss basis.
Our reinsurance coverages for 2024 through 2026 are shown in the table below. ​ Catastrophe Coverages (in millions) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2026 ​ 2025 ​ 2024 ​ ​ First-Dollar ​ ​ ​ ​ First-Dollar ​ ​ ​ ​ First-Dollar ​ ​ ​ ​ Retention Limit Retention Limit Retention Limit California earthquake ​ $ 25 $ 700 ​ $ 25 $ 850 ​ $ 25 $ 850 Non-California earthquake ​ ​ 50 ​ 700 ​ ​ 50 ​ 850 ​ ​ 50 ​ 850 Other perils, including hurricane ​ ​ 50 ​ 600 ​ ​ 50 ​ 750 ​ ​ 50 ​ 750 ​ Our property catastrophe program continues to be applied on an excess of loss basis.
The carriers place this business with us through their associated agencies when the underlying risk does not meet their underwriting appetite. ​ UNDERWRITING AGENTS ​ We contract with select underwriting agencies that have limited authority to bind or underwrite business on our behalf.
These partners place business with us through their affiliated agencies when the underlying risk falls outside of their underwriting appetite. ​ UNDERWRITING AGENTS ​ We contract with specialist underwriting agencies that are granted limited authority to underwrite or bind business on our behalf.
We have a history of withdrawing from markets when conditions become overly adverse and offering new coverages and programs where the opportunity exists to provide needed risk transfer with exceptional service on a profitable basis. ​ FINANCIAL STRENGTH RATINGS ​ Financial strength ratings are an important factor in establishing the relative competitive position of insurance companies.
Consistent with this approach, we have a history of exiting markets when conditions become overly adverse and introducing new coverages and programs when opportunities exist to deliver needed risk transfer with exceptional service on a profitable basis. ​ FINANCIAL STRENGTH RATINGS ​ Financial strength ratings play a key role in establishing the competitive position of insurance companies.
Through our reinsurance agreement with Prime, we assume general liability, excess, commercial auto, property and professional liability coverages on hard-to-place risks that are written in the excess and surplus and admitted insurance markets. Separately, we assume mortgage reinsurance, which provides credit risk transfer on pools of mortgages.
We had a quota share reinsurance agreement with Prime Insurance Company and Prime Property and Casualty Insurance Inc., the two insurance subsidiaries of Prime Holdings Insurance Services, Inc. (Prime). Through our agreement with Prime, we assumed general liability, excess, commercial auto, property and professional liability coverages. Separately, we assume mortgage reinsurance, which provides credit risk transfer on pools of mortgages.
For 2024, our specialty admitted operations produced gross premiums written of $1.1 billion, representing approximately 57 percent of our total gross premiums for the year. ​ EXCESS AND SURPLUS INSURANCE MARKET ​ The excess and surplus market focuses on hard-to-place risks.
For 2025, our specialty admitted operations produced gross premiums written of $1.2 billion, representing 60 percent of our total gross premiums for the year. ​ EXCESS AND SURPLUS INSURANCE MARKET ​ The excess and surplus market focuses on hard-to-place risks. Participating in this market allows the Company to underwrite non-standard risks with more flexible policy forms and unregulated premium rates.
Retention levels are evaluated each year to maintain a balance between the growth in surplus and the cost of reinsurance. Although reinsurance does not legally discharge an insurer from its primary liability for the full amount of the policies, it does make the assuming reinsurer liable to the insurer to the extent of the insurance ceded.
Although reinsurance does not legally discharge an insurer from its primary liability for the full amount of the policies, it does make the assuming reinsurer liable to the insurer to the extent of the insurance ceded. The following table illustrates the degree to which we have utilized reinsurance during the past three years.
Aggregate maturities for the fixed income portfolio as of December 31, 2024, were as follows: ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) Amortized Cost Fair Value Due in one year or less ​ $ 256,711 ​ $ 255,017 Due after one year through five years ​ ​ 742,187 ​ ​ 723,476 Due after five years through 10 years ​ ​ 948,340 ​ ​ 914,770 Due after 10 years ​ ​ 574,403 ​ ​ 476,062 ABS/CMBS/MBS* ​ ​ 869,518 ​ ​ 806,471 Total available-for-sale ​ $ 3,391,159 ​ $ 3,175,796 * Asset-backed, commercial mortgage-backed and mortgage-backed securities ​ We had cash and fixed income securities maturing within one year of $372 million at year-end 2024.
Aggregate maturities for the fixed income portfolio as of December 31, 2025, were as follows: ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) Amortized Cost Fair Value Due in one year or less ​ $ 239,131 ​ $ 238,034 Due after one year through five years ​ ​ 708,254 ​ ​ 704,534 Due after five years through 10 years ​ ​ 828,257 ​ ​ 831,432 Due after 10 years ​ ​ 547,245 ​ ​ 475,677 ABS/CMBS/MBS* ​ ​ 1,319,475 ​ ​ 1,283,659 Total available-for-sale ​ $ 3,642,362 ​ $ 3,533,336 * Asset-backed, commercial mortgage-backed and mortgage-backed securities ​ We had cash and fixed income securities maturing within one year of $414 million at year-end 2025.
We also offer bonds for small and emerging contractors that are reinsured through the Federal Small Business Administration. ​ MARKETING AND DISTRIBUTION ​ We distribute our coverages across the country, primarily through wholesale and retail brokers, independent agents and carrier partners. ​ BROKERS ​ Our commercial property, general liability, commercial surety, executive products, commercial excess, marine and commercial transportation coverages are sold through independent wholesale and retail brokers. ​ INDEPENDENT AGENTS ​ We distribute products such as homeowners’ and dwelling fire, home business, surety, commercial transportation, professional services, small commercial and personal umbrella through independent agents.
We also offer bonds for small and emerging contractors that are reinsured through the Federal Small Business Administration. ​ MARKETING AND DISTRIBUTION ​ We distribute our insurance and surety products nationwide through a diverse network of wholesale and retail brokers, independent agents, carrier partners, underwriting agents and direct digital platforms.
The combination of coverages, service, pricing and other methods of competition vary from line to line. Our principal methods of winning business are innovative coverages, quality and consistent service to the agents and policyholders, and fair pricing.
We win business through innovative coverages, consistent high-quality service to agents and policyholders and fair pricing.
Participating in this market allows the Company to underwrite non-standard risks with more flexible policy forms and unregulated premium rates. This typically results in coverages that are more restrictive and, in many cases, more expensive than in the standard admitted market.
This typically results in coverages that are more restrictive and, in many cases, more expensive than in the standard admitted market. The excess and surplus lines environment and production model effectively filter submission flow and match market opportunities to our expertise and appetite.
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We have a quota share reinsurance agreement with Prime Insurance Company and Prime Property and Casualty Insurance Inc., the two insurance subsidiaries of Prime Holdings Insurance Services, Inc. (Prime).
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This multi-channel approach allows us to align specialized products with the most effective distribution partner while maintaining disciplined underwriting standards. ​ BROKERS ​ Our commercial property, general liability, commercial surety, executive products, commercial excess, marine and commercial transportation coverages are distributed primarily through independent wholesale and retail brokers. ​ INDEPENDENT AGENTS ​ We distribute a range of products, including homeowners’ and dwelling fire, home business, surety, commercial transportation, professional services, small commercial and personal umbrella coverages through independent agents.
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Several of these products require detailed eligibility criteria, which are incorporated into strict underwriting guidelines, and each risk is prequalified through a system that is accessible to the independent agent.
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Many of these products are subject to detailed eligibility requirements embedded within strict underwriting guidelines.
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We compete favorably, in part, because of the value we add in relationships, the level of service we provide, the quality of our associate-owners, our sound financial condition and reputation, as well as our geographic footprint. In all segments, we have experienced underwriting and claim specialists.
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Our competitive position is further strengthened by the value we bring to our relationships, the expertise of our associate-owners, our strong financial condition and reputation and our broad geographic footprint. ​ Across all segments, we have experienced underwriting and claims teams and adhere to disciplined underwriting standards. We do not pursue market share at the expense of underwriting profitability.
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We continue to maintain our underwriting standards by not seeking market share at the expense of underwriting profit.
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These ratings are based on factors relevant to policyholders, agents, insurance brokers and intermediaries and are not specifically related to securities issued by the company.
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The following table illustrates the degree to which we have utilized reinsurance during the past three years.
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Reinsurance limits purchased fluctuate due to changes in the amount of exposure we insure, reinsurance costs, insurance company surplus levels and our risk appetite. In addition, we monitor the expected rate of return for each of our catastrophe lines of business.
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With the renewal effective January 1, 2025, the number of layers with prepaid reinstatement premium increased, which reduces the net loss impact on catastrophe events.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf one or more of our vendors fail to protect personal information of our customers, claimants or employees, we may incur operational impairments, or could be exposed to litigation, compliance costs or reputational damage.
Biggest changeIf one or more of our vendors experience a cybersecurity breach; fail to use artificial intelligence reliably and in compliance with applicable laws; or fail to protect personal information of our customers, claimants or employees, we may incur operational impairments, or could be exposed to litigation, compliance costs or reputational damage.
The cumulative effects on the Company could include, without limitation: ​ ● Reduced demand for our insurance policies due to reduced economic activity, which could negatively impact our revenues, ​ 23 Table of Contents ● Reduced cash flows from our policyholders, delaying premium payments, ​ ● Increased costs and disruption of operations due to employees working remotely or unavailability of our employees, ​ ● Increased claims, losses, litigation and related expenses, ​ ● Legislative, regulatory and judicial actions in response to the public health outbreak, including, but not limited to, actions prohibiting us from cancelling insurance policies in accordance with our policy terms, requiring us to cover losses when our underwriting intent in those policies was not to provide coverage or was to exclude coverage, ordering us to provide premium refunds, granting extended grace periods for payment of premiums and providing for extended periods of time to pay premiums that are past due, ​ ● Policyholder losses from pandemic-related claims could be greater than our reserves for those losses, ​ ● Volatility and declines in financial markets could reduce the fair market value, or result in the impairment, of invested assets held by the Company and ​ ● Changes in interest rates, which could reduce future investment results. ​ Although we have investigated and closed a substantial number of COVID-19-related claims without payment, state and federal courts could rule that such claims are covered under our policies.
The cumulative effects on the Company could include, without limitation: ​ ● Reduced demand for our insurance policies due to reduced economic activity, which could negatively impact our revenues, 23 Table of Contents ​ ● Reduced cash flows from our policyholders, delaying premium payments, ​ ● Increased costs and disruption of operations due to employees working remotely or unavailability of our employees, ​ ● Increased claims, losses, litigation and related expenses, ​ ● Legislative, regulatory and judicial actions in response to the public health outbreak, including, but not limited to, actions prohibiting us from cancelling insurance policies in accordance with our policy terms, requiring us to cover losses when our underwriting intent in those policies was not to provide coverage or was to exclude coverage, ordering us to provide premium refunds, granting extended grace periods for payment of premiums and providing for extended periods of time to pay premiums that are past due, ​ ● Policyholder losses from pandemic-related claims could be greater than our reserves for those losses, ​ ● Volatility and declines in financial markets could reduce the fair market value, or result in the impairment, of invested assets held by the Company and ​ ● Changes in interest rates, which could reduce future investment results. ​ Although we have investigated and closed a majority of COVID-19-related claims without payment, state and federal courts could rule that such claims are covered under our policies.
These provisions could: ​ ● Have the effect of delaying, deferring or preventing a change in control of the Company, ​ ● Discourage bids for our securities at a premium over the market price, ​ ● Adversely affect the market price, the voting and other rights of the holders of our securities or ​ ● Impede the ability of the holders of our securities to change our management. ​ In particular, we are subject to Section 203 of the Delaware General Corporation Law which, under certain circumstances, restricts our ability to engage in a business combination, such as a merger or sale of assets, with any shareholder that, together with affiliates, owns 15 percent or more of our common stock, which similarly could prohibit or delay the accomplishment of a change of control transaction. ​ Item 1 B.
These provisions could: ​ ● Have the effect of delaying, deferring or preventing a change in control of the Company, ​ ● Discourage bids for our securities at a premium over the market price, ​ ● Adversely affect the market price, the voting and other rights of the holders of our securities or ​ ● Impede the ability of the holders of our securities to change our management. ​ In particular, we are subject to Section 203 of the Delaware General Corporation Law which, under certain circumstances, restricts our ability to engage in a business combination, such as a merger or sale of assets, with any shareholder that, together with affiliates, owns 15 percent or more of our common stock, which similarly could prohibit or delay the accomplishment of a change of control transaction. ​ 24 Table of Contents Item 1 B.
Either of these events would increase our costs and could have a material adverse effect on our business. ​ 20 Table of Contents Financial and Investment ​ Adverse changes in the economy could lower the demand for our insurance products and could have an adverse effect on the revenue and profitability of our operations. ​ Factors such as business revenue, construction spending, government spending, the volatility and strength of the capital markets and inflation can all affect the business and economic environment.
Either of these events would increase our costs and could have a material adverse effect on our business. ​ 20 Table of Contents Financial and Investment ​ Adverse changes in the economy could lower the demand for our insurance products and could have an adverse effect on the revenue and profitability of our operations. ​ Factors such as business revenue, construction spending, government spending and policies, tariffs, the volatility and strength of the capital markets and inflation can all affect the business and economic environment.
These same factors affect our ability to generate revenue and profits. Insurance premiums in our markets are heavily dependent on our customer revenues, payroll, value of goods transported, miles traveled and number of new projects initiated. In an economic downturn characterized by higher unemployment, declines in construction spending and reduced corporate revenues, the demand for insurance products is adversely affected.
These same factors affect our ability to generate revenue and profits. Insurance premiums in our markets are heavily dependent on our customers’ revenues, payroll, value of goods transported, miles traveled and number of new projects initiated. In an economic downturn characterized by higher unemployment, declines in construction spending and reduced corporate revenues, the demand for insurance products is adversely affected.
In addition, as approximately a third of our business relates to the construction industry, our results of operations could be significantly impacted in an economic downturn if the construction industry is affected disproportionally. ​ Access to capital and market liquidity may adversely affect our ability to take advantage of business opportunities as they arise. ​ Our ability to grow our business depends, in part, on our ability to access capital when needed.
In addition, as approximately a third of our business relates to the construction industry, our results of operations could be significantly impacted in an economic downturn if the construction industry is affected disproportionately. ​ Access to capital and market liquidity may adversely affect our ability to take advantage of business opportunities as they arise. ​ Our ability to grow our business depends, in part, on our ability to access capital when needed.
Our ratings are subject to periodic review by such firms, and the criteria used in the rating methodologies is subject to change. As such, we cannot assure we will continue to maintain our current ratings. ​ All our ratings were reviewed during 2024. AM Best reaffirmed its A+, Superior rating for the combined entity of RLI Ins., Mt.
Our ratings are subject to periodic review by such firms, and the criteria used in the rating methodologies is subject to change. As such, we cannot assure we will continue to maintain our current ratings. ​ All our ratings were reviewed during 2025. AM Best reaffirmed its A+, Superior rating for the combined entity of RLI Ins., Mt.
Any of these systems may be exposed to unplanned interruption, unreliability or intrusion from a variety of causes, including among others, storms and other natural disasters, terrorist attacks, cyber attacks, utility outages or complications encountered as existing systems are replaced or upgraded. ​ Any such issues could materially impact our company, including the impairment of information availability, compromise of system integrity/accuracy, misappropriation of confidential information, reduction of our volume of transactions and interruption of our general business.
Any of these systems may be exposed to unplanned interruption, unreliability or intrusion from a variety of causes, including among others, storms and other natural disasters, terrorist attacks, cyber attacks, errors or inaccuracies in artificial intelligence systems, utility outages or complications encountered as existing systems are replaced or upgraded. ​ Any such issues could materially impact our company, including the impairment of information availability, compromise of system integrity/accuracy, misappropriation of confidential information, reduction of our volume of transactions and interruption of our general business.
Loss of all or a substantial portion of the business written through these parties could have a material adverse effect on our business. ​ Our business is concentrated in several key states and a change in our business in one of those states could disproportionately affect our financial condition or results of operations. ​ Although we operate in all 50 states, 57 percent of our direct premiums earned were generated in four states in 2024: Florida – 20 percent; California – 18 percent; Texas – 11 percent; and New York – 8 percent.
Loss of all or a substantial portion of the business written through these parties could have a material adverse effect on our business. ​ Our business is concentrated in several key states and a change in our business in one of those states could disproportionately affect our financial condition or results of operations. ​ Although we operate in all 50 states, 56 percent of our direct premiums earned were generated in four states in 2025: Florida – 18 percent; California – 18 percent; Texas – 11 percent; and New York – 9 percent.
In 2024, 46 percent of our gross premiums written were produced through eight producer entities, while no other entity’s production exceeded 2 percent of our gross premiums written.
In 2025, 49 percent of our gross premiums written were produced through ten producer entities, while no other entity’s production exceeded 2 percent of our gross premiums written.
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Unresolved Staff Comments ​ None . 24 Table of Contents ​

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe Risk Committee meets quarterly and reviews the Technology Committee’s current assessment of cybersecurity risks. ​ Through 2024, the RLI Corp. Board of Directors provided oversight for cybersecurity risks primarily through its Audit Committee. In February 2025, the charter of the Finance & Investments Committee was revised to include overall enterprise risk management oversight, including oversight of cybersecurity risk.
Biggest changeThe Risk Committee meets quarterly and reviews the Technology Committee’s current assessment of cybersecurity risks. ​ The RLI Corp. Board of Directors provides oversight for cybersecurity risks primarily through its Finance & Risk Committee (FRC). The Company’s CISO presents quarterly to the designated committee on cybersecurity risks and the Company’s strategies to assess and manage those risks.
Additionally, the board receives periodic updates on emerging cybersecurity issues and developments through director education provided by the Company and third-party experts, detailed reviews provided by the CIO and the Company’s head of IT security on select cybersecurity topics, and periodic “table top” simulations of a cybersecurity event. ​ The Company maintains a Cybersecurity Incident Response Plan (CIRP) providing a framework for identifying, evaluating and escalating potential or actual cybersecurity events.
Additionally, the board receives periodic updates on emerging cybersecurity issues and developments through director education provided by the Company and third-party experts, detailed reviews provided by the CISO on select cybersecurity topics, and periodic “table top” simulations of a cybersecurity event. ​ The Company maintains a Cybersecurity Incident Response Plan (CIRP) providing a framework for identifying, evaluating and escalating potential or actual cybersecurity events.
See Item 1A, Risk Factors for more information. ​ The IT security department is responsible for the day-to-day assessment and management of cybersecurity risks, including efforts to prevent and, if necessary, mitigate the effects of a cybersecurity incident.
See Item 1A, Risk Factors for more information. ​ The IT security department is responsible for the day-to-day assessment and management of cybersecurity risks, including efforts to prevent and, if necessary, mitigate the effects of a cybersecurity incident. The head of the Company’s IT security department serves as the Company’s chief information security officer (CISO).
The head of the Company’s IT security department, who reports to the CIO, holds a Certified Information Systems Security Professional designation from the Information Security Certification Consortium, has 20 years of experience in the insurance industry and has served in IT security-related roles for 24 years. ​ Management oversight of cybersecurity risks is provided primarily through the Company’s Technology Committee, which is chaired by the Company’s CIO and comprised of members of senior management.
The CISO holds a Certified Information Systems Security Professional designation from the Information Security Certification Consortium, has 21 years of experience in the insurance industry and has served in IT security-related roles for 25 years. ​ Management oversight of cybersecurity risks is provided primarily through the Company’s Technology Committee, which is chaired by the Company’s Vice President of Operations and comprised of members of senior management.
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The Company’s IT security department operates under general oversight of the Company’s chief information officer (CIO), who also serves as the Company’s chief information security officer (CISO). The Company’s CIO has 27 years of technology and technology leadership experience, including 14 years serving as a CISO, in the insurance industry.
Removed
The committee was renamed the Finance & Risk Committee (FRC). The Company’s CIO, along with the head of the Company’s IT security department, presents quarterly to the designated committee on cybersecurity risks and the Company’s strategies to assess and manage those risks.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeManagement considers our office facilities suitable and adequate for our current levels of operations. ​ 25 Table of Contents RLI’s Peoria, Illinois campus includes a 1.8-megawatt solar field that is capable of producing annual electrical power equal to or exceeding the yearly electrical needs for all our office buildings in Peoria. ​
Biggest changeManagement considers our office facilities suitable and adequate for our current levels of operations. ​ RLI’s Peoria, Illinois campus includes a 1.8-megawatt solar field that is capable of producing annual electrical power equal to or exceeding the yearly electrical needs for all our office buildings in Peoria. ​ 25 Table of Contents

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeFinancial Statements and Supplementary Data 53 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 92 Item 9A. Controls and Procedures 92 Item 9B. Other Information 92
Biggest changeFinancial Statements and Supplementary Data 53 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 93 Item 9A. Controls and Procedures 93 Item 9B. Other Information 93
Item 4. Mine Safety Disclosures 26 ​ ​ ​ Part II ​ ​ Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 26 Item 6. Reserved 27 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 28 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 50 Item 8.
Item 4. Mine Safety Disclosures 26 ​ ​ ​ Part II ​ ​ Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 26 Item 6. Reserved 27 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 28 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 51 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeAlthough the Company currently intends to continue paying quarterly cash dividends to our shareholders, there can be no assurance as to the amount of such dividends or whether the Company will continue to pay such dividends. ​ Performance ​ The following graph provides a five-year comparison of RLI Corp.’s total return to shareholders compared to that of the S&P 500 and S&P 500 P&C Index: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2019 2020 2021 2022 2023 2024 RLI ​ -------------- ​ $ 100 $ 118 ​ $ 131 ​ $ 163 ​ $ 169 ​ $ 216 S&P 500 ​ •••••••••••••••• ​ ​ 100 ​ 118 ​ ​ 152 ​ ​ 125 ​ ​ 157 ​ ​ 197 S&P 500 P&C Index ​ — — — ​ ​ 100 ​ 106 ​ ​ 125 ​ ​ 149 ​ ​ 164 ​ ​ 222 ​ Assumes $100 invested on December 31, 2019, in RLI, S&P 500 and S&P 500 P&C Index, with reinvestment of dividends.
Biggest changeAlthough the Company currently intends to continue paying quarterly cash dividends to our shareholders, there can be no assurance as to the amount of such dividends or whether the Company will continue to pay such dividends. ​ Performance ​ The following graph provides a five-year comparison of RLI Corp.’s total return to shareholders compared to that of the S&P 500 and S&P 500 P&C Index: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2020 2021 2022 2023 2024 2025 RLI ​ -------------- ​ $ 100 $ 111 ​ $ 138 ​ $ 143 ​ $ 183 ​ $ 148 S&P 500 ​ •••••••••••••••• ​ ​ 100 ​ 129 ​ ​ 105 ​ ​ 133 ​ ​ 166 ​ ​ 196 S&P 500 P&C Index ​ — — — ​ ​ 100 ​ 118 ​ ​ 140 ​ ​ 155 ​ ​ 209 ​ ​ 229 ​ Assumes $100 invested on December 31, 2020, in RLI, S&P 500 and S&P 500 P&C Index, with reinvestment of dividends.
As of February 13, 2025, there were 1,103 registered holders of the Company’s common stock. ​ The payment of dividends to our shareholders is at the discretion of our board of directors and will depend on our results of operations, our financial condition, regulatory restrictions of our insurance subsidiaries and other factors deemed relevant by our board of directors.
As of February 13, 2026, there were 1,115 registered holders of the Company’s common stock. ​ The payment of dividends to our shareholders is at the discretion of our board of directors and will depend on our results of operations, our financial condition, regulatory restrictions of our insurance subsidiaries and other factors deemed relevant by our board of directors.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ​ RLI Corp. common stock trades on the New York Stock Exchange under the symbol “RLI”. RLI Corp. has paid dividends for 194 consecutive quarters and increased quarterly dividends in each of the last 49 years.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ​ RLI Corp. common stock trades on the New York Stock Exchange under the symbol “RLI”. RLI Corp. has paid dividends for 198 consecutive quarters and increased quarterly dividends in each of the last 50 years.
Comparison of five-year annualized total return — RLI: 16.6%, S&P 500: 14.5% and S&P 500 P&C Index: 17.3%. ​ 26 Table of Contents Securities Authorized for Issuance under Equity Compensation Plans ​ Information on securities authorized for issuance under our equity compensation plan is incorporated by reference to the “Share Ownership of Certain Beneficial Owners and Management” section of the Proxy Statement. ​ Recent Sales of Unregistered Securities; Uses of Proceeds from Registered Securities - Not applicable. ​ Issuer Purchases of Equity Securities - Not applicable. ​
Comparison of five-year annualized total return — RLI: 8.1%, S&P 500: 14.4% and S&P 500 P&C Index: 18.0%. ​ Securities Authorized for Issuance under Equity Compensation Plans ​ Information on securities authorized for issuance under our equity compensation plan is incorporated by reference to the “Share Ownership of Certain Beneficial Owners and Management” section of the Proxy Statement. ​ Recent Sales of Unregistered Securities; Uses of Proceeds from Registered Securities - Not applicable. 26 Table of Contents ​ Issuer Purchases of Equity Securities - Not applicable. ​
In December 2024 and 2023, RLI Corp. paid special cash dividends of $2.00 and $1.00 per share to shareholders, respectively.
In December 2025 and 2024, RLI Corp. paid special cash dividends of $2.00 per share to shareholders.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeOur investments in technology and specialized underwriting staff should put us in a position to take advantage of opportunities as we move forward. 38 Table of Contents ​ The following tables and narrative provide a more detailed look at individual segment performance over the last two years. ​ GROSS PREMIUMS WRITTEN AND NET PREMIUMS EARNED ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross Premiums Written ​ ​ Net Premiums Earned ​ (in thousands) 2024 2023 % Change 2024 2023 % Change ​ CASUALTY ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial excess and personal umbrella ​ $ 478,144 ​ $ 370,571 ​ 29 % ​ $ 354,847 ​ $ 286,178 ​ 24 % Commercial transportation ​ ​ 146,733 ​ ​ 125,434 ​ 17 % ​ ​ 120,650 ​ ​ 103,719 ​ 16 % General liability ​ ​ 110,984 ​ ​ 106,032 ​ 5 % ​ ​ 104,423 ​ ​ 103,066 ​ 1 % Professional services ​ ​ 114,163 ​ ​ 108,503 ​ 5 % ​ ​ 103,794 ​ ​ 99,596 ​ 4 % Small commercial ​ ​ 84,637 ​ ​ 76,644 ​ 10 % ​ ​ 78,308 ​ ​ 72,920 ​ 7 % Executive products ​ ​ 90,815 ​ ​ 95,356 ​ (5) % ​ ​ 23,555 ​ ​ 24,687 ​ (5) % Other casualty ​ ​ 82,880 ​ ​ 79,125 ​ 5 % ​ ​ 67,260 ​ ​ 68,180 ​ (1) % Total casualty ​ $ 1,108,356 ​ $ 961,665 ​ 15 % ​ $ 852,837 ​ $ 758,346 ​ 12 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ PROPERTY ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial property ​ $ 519,991 ​ $ 505,413 ​ 3 % ​ $ 345,554 ​ $ 244,798 ​ 41 % Marine ​ ​ 170,188 ​ ​ 148,829 ​ 14 % ​ ​ 145,706 ​ ​ 129,428 ​ 13 % Other property ​ ​ 53,307 ​ ​ 43,130 ​ 24 % ​ ​ 40,124 ​ ​ 27,304 ​ 47 % Total property ​ $ 743,486 ​ $ 697,372 ​ 7 % ​ $ 531,384 ​ $ 401,530 ​ 32 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ SURETY ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Transactional ​ $ 52,299 ​ $ 49,624 ​ 5 % ​ $ 49,460 ​ $ 47,983 ​ 3 % Commercial ​ ​ 59,008 ​ ​ 57,704 ​ 2 % ​ ​ 48,533 ​ ​ 49,707 ​ (2) % Contract ​ ​ 49,899 ​ ​ 40,295 ​ 24 % ​ ​ 44,192 ​ ​ 36,740 ​ 20 % Total surety ​ $ 161,206 ​ $ 147,623 ​ 9 % ​ $ 142,185 ​ $ 134,430 ​ 6 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Grand total ​ $ 2,013,048 ​ $ 1,806,660 ​ 11 % ​ $ 1,526,406 ​ $ 1,294,306 ​ 18 % ​ Casualty ​ Gross premiums written for casualty were up $147 million in 2024.
Biggest changeSupported by a diversified specialty portfolio, a strong balance sheet and disciplined execution, we are optimistic about our ability to navigate market cycles and pursue profitable underwriting opportunities as conditions evolve. ​ The following tables and narrative provide a more detailed look at individual segment performance over the last two years. ​ 38 Table of Contents GROSS PREMIUMS WRITTEN AND NET PREMIUMS EARNED ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross Premiums Written ​ ​ Net Premiums Earned ​ (in thousands) 2025 2024 % Change 2025 2024 % Change ​ CASUALTY ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial excess and personal umbrella ​ $ 584,536 ​ $ 478,144 ​ 22 % ​ $ 447,361 ​ $ 354,847 ​ 26 % Commercial transportation ​ ​ 140,389 ​ ​ 146,733 ​ (4) % ​ ​ 123,413 ​ ​ 120,650 ​ 2 % General liability ​ ​ 116,294 ​ ​ 110,984 ​ 5 % ​ ​ 110,891 ​ ​ 104,423 ​ 6 % Professional services ​ ​ 118,998 ​ ​ 114,163 ​ 4 % ​ ​ 108,090 ​ ​ 103,794 ​ 4 % Small commercial ​ ​ 80,161 ​ ​ 84,637 ​ (5) % ​ ​ 79,064 ​ ​ 78,308 ​ 1 % Executive products ​ ​ 90,898 ​ ​ 90,815 ​ 0 % ​ ​ 22,942 ​ ​ 23,555 ​ (3) % Other casualty ​ ​ 59,978 ​ ​ 82,880 ​ (28) % ​ ​ 62,220 ​ ​ 67,260 ​ (7) % Total casualty ​ $ 1,191,254 ​ $ 1,108,356 ​ 7 % ​ $ 953,981 ​ $ 852,837 ​ 12 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ PROPERTY ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial property ​ $ 433,239 ​ $ 519,991 ​ (17) % ​ $ 301,659 ​ $ 345,554 ​ (13) % Marine ​ ​ 175,914 ​ ​ 170,188 ​ 3 % ​ ​ 158,904 ​ ​ 145,706 ​ 9 % Other property ​ ​ 63,754 ​ ​ 53,307 ​ 20 % ​ ​ 51,841 ​ ​ 40,124 ​ 29 % Total property ​ $ 672,907 ​ $ 743,486 ​ (9) % ​ $ 512,404 ​ $ 531,384 ​ (4) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ SURETY ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Transactional ​ $ 54,083 ​ $ 52,299 ​ 3 % ​ $ 52,418 ​ $ 49,460 ​ 6 % Commercial ​ ​ 61,540 ​ ​ 59,008 ​ 4 % ​ ​ 50,690 ​ ​ 48,533 ​ 4 % Contract ​ ​ 47,062 ​ ​ 49,899 ​ (6) % ​ ​ 44,853 ​ ​ 44,192 ​ 1 % Total surety ​ $ 162,685 ​ $ 161,206 ​ 1 % ​ $ 147,961 ​ $ 142,185 ​ 4 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Grand total ​ $ 2,026,846 ​ $ 2,013,048 ​ 1 % ​ $ 1,614,346 ​ $ 1,526,406 ​ 6 % ​ Casualty ​ Gross premiums written for the casualty segment increased $83 million in 2025.
The difference between the combined ratio and 100 reflects the per-dollar rate of underwriting income or loss. ​ 28 Table of Contents CRITICAL ACCOUNTING POLICIES ​ In preparing the consolidated 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 consolidated financial statements and the reported amounts of revenues and expenses for the reporting period.
The difference between the combined ratio and 100 reflects the per-dollar rate of underwriting income or loss. ​ CRITICAL ACCOUNTING POLICIES ​ In preparing the consolidated 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 consolidated financial 28 Table of Contents statements and the reported amounts of revenues and expenses for the reporting period.
We rigorously attempt to consider all significant facts and circumstances known at the time loss reserves are established. ​ 29 Table of Contents Following is a table of significant risk factors involved in estimating losses grouped by major product line. We distinguish between loss ratio risk and reserve estimation risk.
We rigorously attempt to consider all significant facts and circumstances known at the time loss reserves are established. ​ 29 Table of Contents The following is a table of significant risk factors involved in estimating losses grouped by major product line. We distinguish between loss ratio risk and reserve estimation risk.
As an example, our property catastrophe business (included below in commercial and other property) has significant variance in year over year results; however, its reserving estimation risk is relatively moderate. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Expected loss Reserve ​ ​ Length of ​ Emergence ​ ​ ​ ratio ​ estimation Product line reserve tail patterns relied upon Other risk factors variability variability Commercial excess Long Internal Low frequency High High ​ ​ ​ ​ ​ High severity ​ ​ ​ ​ ​ ​ ​ ​ ​ Loss trend volatility ​ ​ ​ ​ ​ ​ ​ ​ ​ Exposure growth ​ ​ ​ ​ ​ ​ ​ ​ ​ Unforeseen tort potential ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Personal umbrella Medium Internal Low frequency Medium Medium ​ ​ ​ ​ ​ ​ High severity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loss trend volatility ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Exposure growth ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Unforeseen tort potential ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ General liability Long Internal Exposure changes/mix Medium High ​ ​ ​ ​ ​ ​ Unforeseen tort potential ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Professional services Medium Internal Highly varied exposures Medium Medium ​ ​ ​ ​ ​ Loss trend volatility ​ ​ ​ ​ ​ ​ ​ ​ ​ Unforeseen tort potential ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial transportation Medium Internal High severity Medium Medium ​ ​ ​ ​ ​ Exposure change/mix ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loss trend volatility ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Unforeseen tort potential ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Small commercial Medium Internal Exposure change/mix Medium Medium ​ ​ ​ ​ ​ Unforeseen tort potential ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Small volume ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Executive products Long Internal & external Low frequency High High ​ ​ ​ ​ ​ High severity ​ ​ ​ ​ ​ ​ ​ ​ ​ Loss trend volatility ​ ​ ​ ​ ​ ​ ​ ​ ​ Economic volatility ​ ​ ​ ​ ​ ​ ​ ​ ​ Unforeseen tort potential ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Exposure growth/mix ​ ​ ​ ​ ​ ​ ​ ​ ​ Heavily reinsured ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other casualty Medium Internal & external Small volume Medium Medium ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Marine Medium Internal & external Exposure growth/mix High Medium ​ ​ ​ ​ ​ ​ Aggregation exposure ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial and other property Short Internal Aggregation exposure High Medium ​ ​ ​ ​ ​ Low frequency ​ ​ ​ ​ ​ ​ ​ ​ ​ High severity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Surety Medium Internal Economic volatility Medium Medium ​ ​ ​ ​ ​ Unique exposures ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Runoff including asbestos & environmental Long Internal & external Loss trend volatility High High ​ ​ ​ ​ ​ ​ Mass tort/latent exposure ​ ​ ​ ​ ​ Due to inherent uncertainty underlying loss reserve estimates, including, but not limited to, the future settlement environment, final resolution of the estimated liability may be different from that anticipated at the reporting date.
As an example, our property catastrophe business (included below in commercial and other property) has significant variance in year over year results; however, its reserving estimation risk is relatively moderate. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Expected loss Reserve ​ ​ Length of ​ Emergence ​ ​ ​ ratio ​ estimation Product line reserve tail patterns relied upon Other risk factors variability variability Commercial excess Long Internal Low frequency High High ​ ​ ​ ​ ​ High severity ​ ​ ​ ​ ​ ​ ​ ​ ​ Loss trend volatility ​ ​ ​ ​ ​ ​ ​ ​ ​ Exposure growth ​ ​ ​ ​ ​ ​ ​ ​ ​ Unforeseen tort potential ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Personal umbrella Medium Internal Low frequency Medium Medium ​ ​ ​ ​ ​ ​ High severity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loss trend volatility ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Exposure growth ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Unforeseen tort potential ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ General liability Long Internal Exposure changes/mix Medium High ​ ​ ​ ​ ​ ​ Unforeseen tort potential ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Professional services Medium Internal Highly varied exposures Medium Medium ​ ​ ​ ​ ​ Loss trend volatility ​ ​ ​ ​ ​ ​ ​ ​ ​ Unforeseen tort potential ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial transportation Medium Internal High severity Medium Medium ​ ​ ​ ​ ​ Exposure change/mix ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loss trend volatility ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Unforeseen tort potential ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Small commercial Medium Internal Exposure change/mix Medium Medium ​ ​ ​ ​ ​ Unforeseen tort potential ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Small volume ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Executive products Long Internal & external Low frequency High High ​ ​ ​ ​ ​ High severity ​ ​ ​ ​ ​ ​ ​ ​ ​ Loss trend volatility ​ ​ ​ ​ ​ ​ ​ ​ ​ Economic volatility ​ ​ ​ ​ ​ ​ ​ ​ ​ Unforeseen tort potential ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Exposure growth/mix ​ ​ ​ ​ ​ ​ ​ ​ ​ Heavily reinsured ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other casualty Medium Internal & external Small volume Medium Medium ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Marine Medium Internal Exposure growth/mix High Medium ​ ​ ​ ​ ​ ​ Aggregation exposure ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial and other property Short Internal Aggregation exposure High Medium ​ ​ ​ ​ ​ Low frequency ​ ​ ​ ​ ​ ​ ​ ​ ​ High severity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Surety Medium Internal Economic volatility Medium Medium ​ ​ ​ ​ ​ Unique exposures ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Runoff including asbestos & environmental Long Internal & external Loss trend volatility High High ​ ​ ​ ​ ​ ​ Mass tort/latent exposure ​ ​ ​ ​ ​ Due to inherent uncertainty underlying loss reserve estimates, including, but not limited to, the future settlement environment, final resolution of the estimated liability may be different from that anticipated at the reporting date.
Additionally, based on qualifying assets and the $50 million borrowing outstanding with the FHLBC as of year-end, additional immediate borrowing capacity from the FHBLC is approximately $15 million. However, under certain circumstances, that capacity may be increased based on additional FHLBC stock purchased and available collateral.
Additionally, based on qualifying assets and the $50 million borrowing outstanding with the FHLBC as of year-end, additional immediate borrowing capacity from the FHLBC is approximately $15 million. However, under certain circumstances, that capacity may be increased based on additional FHLBC stock purchased and available collateral.
Our membership allows each insurance subsidiary to determine tenor and structure at the time of borrowing. ​ Our primary objective in managing our capital is to preserve and grow shareholders’ equity and statutory surplus to improve our competitive position and allow for expansion of our insurance operations.
Our membership allows each insurance subsidiary member to determine tenor and structure at the time of borrowing. ​ Our primary objective in managing our capital is to preserve and grow shareholders’ equity and statutory surplus to improve our competitive position and allow for expansion of our insurance operations.
Growth is measured in terms of gross premiums written, and profitability is analyzed through underwriting income and combined ratios. ​ KEY PERFORMANCE MEASURES ​ 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.
Growth is measured in terms of gross premiums written, and profitability is analyzed through underwriting income and combined ratios. ​ KEY PERFORMANCE MEASURES ​ The following is a list of key performance measures found throughout this report, including 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.
Since the inception of cash dividends in 1976, we have increased our annual dividend every year. ​ PROSPECTIVE ACCOUNTING STANDARDS ​ Prospective accounting standards are those which we have not implemented because the implementation date has not yet occurred.
Since the inception of cash dividends in 1976, we have increased our annual ordinary dividend every year. ​ PROSPECTIVE ACCOUNTING STANDARDS ​ Prospective accounting standards are those which we have not implemented because the implementation date has not yet occurred.
Penalties and interest related to income tax uncertainties, should they occur, would be included in income tax expense in the period in which they are incurred. ​ Additional discussion of other significant accounting policies may be found in note 1 to the consolidated financial statements within Item 8, Financial Statements and Supplementary Data. ​ RESULTS OF OPERATIONS ​ This section of this Form 10-K generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
Penalties and interest related to income tax uncertainties, should they occur, would be included in income tax expense in the period in which they are incurred. ​ Additional discussion of other significant accounting policies may be found in note 1 to the consolidated financial statements within Item 8, Financial Statements and Supplementary Data. ​ RESULTS OF OPERATIONS ​ This section of this Form 10-K generally discusses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024.
Favorable loss development and other drivers of growth in book value would increase bonus and profit-sharing expenses, while catastrophe losses, adverse loss development and negative equity portfolio returns would lead to expense reductions. These performance-related expenses impact policy acquisition, insurance operating and general corporate expenses. ​ A large portion of our reinsurance placements renewed on January 1, 2025.
Favorable loss development and other drivers of growth in book value would increase bonus and profit-sharing expenses, while catastrophe losses, adverse loss development and negative equity portfolio returns would lead to expense reductions. These performance-related expenses impact policy acquisition, insurance operating and general corporate expenses. ​ A large portion of our reinsurance placements renewed on January 1, 2026.
During 2024, the majority of cash outflows were associated with the net purchase of fixed income securities, classified as investing activities, and the payment of our regular quarterly dividends and $2.00 per share special dividend, classified as financing activities. ​ 47 Table of Contents We have entered into certain contractual obligations that require the Company to make recurring payments.
During 2025, the majority of cash outflows were associated with the net purchase of fixed income securities, classified as investing activities, and the payment of our regular quarterly dividends and $2.00 per share special dividend, classified as financing activities. ​ 47 Table of Contents We have entered into certain contractual obligations that require the Company to make recurring payments.
Our revolving line of credit with PNC permits us to borrow up to an aggregate principal amount of $100 million, but may be increased up to an aggregate principal amount of $130 million under certain conditions. The facility has a three-year term that expires on May 29, 2026. As of December 31, 2024, $50 million was outstanding on this facility.
Our revolving line of credit with PNC permits us to borrow up to an aggregate principal amount of $100 million, but may be increased up to an aggregate principal amount of $130 million under certain conditions. The facility has a three-year term that expires on May 29, 2026. As of December 31, 2025, $50 million was outstanding on this facility.
The primary factor in our ability to generate positive operating cash flow is underwriting profitability, which we have achieved for 29 consecutive years. ​ 48 Table of Contents OPERATING ACTIVITIES ​ The following list highlights some of the major sources and uses of cash flow from operating activities: ​ ​ ​ ​ Sources Uses Premiums received Claims Loss payments from reinsurers Ceded premium to reinsurers Investment income (interest and dividends) Commissions paid Funds held Operating expenses ​ Interest expense ​ ​ Income taxes ​ Funds held ​ Our largest source of cash is from premiums received from our customers, which we receive at the beginning of the coverage period for most policies.
The primary factor in our ability to generate positive operating cash flow is underwriting profitability, which we have achieved for 30 consecutive years. ​ 48 Table of Contents OPERATING ACTIVITIES ​ The following list highlights some of the major sources and uses of cash flow from operating activities: ​ ​ ​ ​ Sources Uses Premiums received Claims Loss payments from reinsurers Ceded premium to reinsurers Investment income (interest and dividends) Commissions paid Funds held Operating expenses ​ Interest expense ​ ​ Income taxes ​ Funds held ​ Premiums received from customers are our largest source of cash, which we receive at the beginning of the coverage period for most policies.
As of December 31, 2024, all the securities in our agency MBS portfolio were rated AA and issued by Government Sponsored Enterprises (GSEs) such as the Governmental National Mortgage Association, Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation. ​ Variability in the average life of principal repayment is an inherent risk of owning mortgage-related securities.
As of December 31, 2025, all the securities in our agency MBS portfolio were rated AA and issued by Government Sponsored Enterprises (GSEs) such as the Governmental National Mortgage Association, Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation. ​ Variability in the average life of principal repayment is an inherent risk of owning mortgage-related securities.
The assumptions used in estimating the payments due by periods are based on our historical claims payment experience. Due to the uncertainty inherent in the process of estimating the timing of such payments, there is a risk that the amounts paid in any period can be significantly different than the amounts disclosed above.
The assumptions used in estimating the payments due by periods are based on our historical claims payment experience. Due to the uncertainty inherent in the process of estimating the timing of such payments, there is a risk that the amounts paid in any period could be significantly different than the amounts disclosed above.
Our loss reserving processes reflect accepted actuarial practices and our methodologies result in a reasonable provision for reserves as of December 31, 2024. ​ Reserve Sensitivities ​ There are three major parameters that have significant influence on our actuarial estimates of ultimate liabilities by product.
Our loss reserving processes reflect accepted actuarial practices and our methodologies result in a reasonable provision for reserves as of December 31, 2025. ​ Reserve Sensitivities ​ There are three major parameters that have significant influence on our actuarial estimates of ultimate liabilities by product.
Our largest cash outflow is for claims that arise when a policyholder incurs an insured loss. Because the payment of claims occurs after the receipt of the premium, often years later, we invest the cash in various investment securities that earn interest and dividends.
Our largest cash outflow is for claim payments that arise when a policyholder incurs an insured loss. Because the payment of claims occurs after the receipt of the premium, often years later, we invest the cash in various investment securities that earn interest and dividends.
General corporate expenses include director and shareholder relation costs and other compensation-related expenses incurred for the benefit of the corporation. ​ INVESTEE EARNINGS ​ As of December 31, 2024, we had a 23 percent interest in the equity and earnings of Prime Holdings Insurance Services, Inc. (Prime).
General corporate expenses include director and shareholder relation costs and other compensation-related expenses incurred for the benefit of the corporation. ​ INVESTEE EARNINGS ​ As of December 31, 2025, we had a 23 percent interest in the equity and earnings of Prime Holdings Insurance Services, Inc. (Prime).
As of December 31, 2024, 48 percent of our shareholders’ equity was invested in equities versus 42 percent at year-end 2023. ​ The fixed income portfolio is structured to meet policyholder obligations and optimize the generation of after-tax investment income and total return. ​ 49 Table of Contents FINANCING ACTIVITIES ​ In addition to the previously discussed operating and investing activities, we also engage in financing activities to manage our capital structure.
As of December 31, 2025, 51 percent of our shareholders’ equity was invested in equities versus 48 percent at year-end 2024. ​ The fixed income portfolio is structured to meet policyholder obligations and optimize the generation of after-tax investment income and total return. ​ 49 Table of Contents FINANCING ACTIVITIES ​ In addition to the previously discussed operating and investing activities, we also engage in financing activities to manage our capital structure.
Total gross loss and LAE reserves increased to $2.7 billion at December 31, 2024, from $2.4 billion at December 31, 2023, while ceded loss and LAE reserves decreased to $755 million from $757 million over the same period. ​ LIQUIDITY AND CAPITAL RESOURCES ​ OVERVIEW ​ We have three primary types of cash flows: (1) operating cash flows, which consist mainly of cash generated by our underwriting operations and income earned on our investment portfolio, (2) investing cash flows related to the purchase, sale and maturity of investments and (3) financing cash flows that impact our capital structure, such as changes in debt, issuance of common stock and dividend payments.
Total gross loss and LAE reserves increased to $2.9 billion at December 31, 2025, from $2.7 billion at December 31, 2024, while ceded loss and LAE reserves decreased to $747 million from $755 million over the same period. ​ LIQUIDITY AND CAPITAL RESOURCES ​ OVERVIEW ​ We have three primary types of cash flows: (1) operating cash flows, which consist mainly of cash generated by our underwriting operations and income earned on our investment portfolio, (2) investing cash flows related to the purchase, sale and maturity of investments and (3) financing cash flows that impact our capital structure, such as changes in debt, issuance of common stock and dividend payments.
The numbers below are the changes in estimated ultimate loss and ALAE in millions of dollars as of December 31, 2024, resulting from the change in the parameters shown.
The numbers below are the changes in estimated ultimate loss and ALAE in millions of dollars as of December 31, 2025, resulting from the change in the parameters shown.
We believe that both liquidity and interest rate risk can be minimized by such asset/liability management. As of December 31, 2024, our fixed income portfolio’s duration was 4.9 years. ​ Consistent underwriting income allows a portion of our investment portfolio to be invested in equity securities and other risk asset classes.
We believe that both liquidity and interest rate risk can be minimized by such asset/liability management. As of December 31, 2025, our fixed income portfolio’s duration was 4.8 years. ​ Consistent underwriting income allows a portion of our investment portfolio to be invested in equity securities and other risk asset classes.
These asset pools can include items such as credit card payments, auto loans, structured bank loans in the form of collateralized loan obligations (CLOs) and residential or commercial mortgages. As of December 31, 2024, ABS/CMBS/RMBS investments were 13 percent of the fixed income portfolio, compared to 10 percent as of December 31, 2023.
These asset pools can include items such as credit card payments, auto loans, structured bank loans in the form of collateralized loan obligations (CLOs) and residential or commercial mortgages. As of December 31, 2025, ABS/CMBS/RMBS investments were 19 percent of the fixed income portfolio, compared to 13 percent as of December 31, 2024.
Reinsurance balances recoverable on unpaid loss and settlement reserves totaled $755 million at December 31, 2024, compared to $757 million in 2023. ​ The next largest contractual obligation relates to debt outstanding. On September 15, 2023, we accessed $50 million from our revolving line of credit with PNC Bank, N.A. (PNC).
Reinsurance balances recoverable on unpaid loss and settlement reserves totaled $747 million on December 31, 2025, compared to $755 million in 2024. ​ The next largest contractual obligation relates to debt outstanding. On September 15, 2023, we accessed $50 million from our revolving line of credit with PNC Bank, N.A. (PNC).
After discussion of these analyses, recommendations and all relevant risk factors among the LRC, our actuaries determine whether the reserve balances require further adjustment. ​ As a predominantly excess and surplus lines and specialty admitted insurer serving niche markets, we believe we are subject to above-average variation in estimates and that this variation is not symmetrical around the actuarial central estimate. ​ One reason for the variation is the above-average policyholder turnover and changes in the underlying mix of exposures typical of an excess and surplus lines business.
After discussing these analyses with the LRC and considering all relevant risk factors, our actuaries determine whether the reserve balances require further adjustment. ​ As a predominantly excess and surplus lines and specialty admitted insurer serving niche markets, we believe we are subject to above-average variation in estimates and that this variation is not symmetrical around the actuarial central estimate. ​ One reason for the variation is the above-average policyholder turnover and changes in the underlying mix of exposures typical of an excess and surplus lines business.
However, we reduce our portfolio’s exposure to prepayment risk by seeking characteristics that tighten the probable scenarios for expected cash 44 Table of Contents flows. As of December 31, 2024, the agency MBS portfolio contained 68 percent of pure pass-throughs, up from 65 percent as of December 31, 2023.
However, we reduce our portfolio’s exposure to prepayment risk by seeking characteristics that tighten the probable scenarios for expected cash 44 Table of Contents flows. As of December 31, 2025, the agency MBS portfolio contained 80 percent of pure pass-throughs, up from 68 percent as of December 31, 2024.
Ordinary dividends are further restricted by the requirement that they be paid from earned surplus. In 2024 and 2023, RLI Ins. paid ordinary dividends totaling $152 million and $145 million, respectively, to RLI Corp. Any dividend distribution in excess of the ordinary dividend limits is deemed extraordinary and requires prior approval from the IDOI.
Ordinary dividends are further restricted by the requirement that they be paid from earned surplus. ​ In 2025 and 2024, RLI Ins. paid ordinary dividends totaling $139 million and $152 million, respectively, to RLI Corp. Any dividend distribution in excess of the ordinary dividend limits is deemed extraordinary and requires prior approval from the IDOI.
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 December 31, 2024, our holding company had $1.5 billion in equity.
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 December 31, 2025, our holding company had $1.8 billion in equity.
Our gross liability for both case and IBNR reserves is reduced by reinsurance balances recoverable on unpaid losses and settlement expenses to calculate our net reserve balance. This net reserve balance increased to $1.9 billion at December 31, 2024, from $1.7 billion as of December 31, 2023.
Our gross liability for both case and IBNR reserves is reduced by reinsurance balances recoverable on unpaid losses and settlement expenses to calculate our net reserve balance. This net reserve balance increased to $2.1 billion at December 31, 2025, from $1.9 billion as of December 31, 2024.
Debt outstanding comprised 6 percent of total capital as of December 31, 2024. ​ At the holding company (RLI Corp.) level, we rely largely on dividends from our insurance company subsidiaries to meet our obligations for paying principal and interest on outstanding debt, corporate expenses and dividends to RLI Corp. shareholders.
Debt outstanding comprised 5 percent of total capital as of December 31, 2025. ​ At the holding company (RLI Corp.) level, we rely largely on dividends from our insurance company subsidiaries to meet our obligations for paying principal and interest on outstanding debt, corporate expenses and dividends to RLI Corp. shareholders.
Equities comprised 18 percent of our total 2024 portfolio, up from 16 percent at the end of 2023, as equity markets rose over the course of the year. Securities within the equity portfolio are well diversified and are primarily invested in broad index exchange traded funds (ETFs).
Equities comprised 19 percent of our total 2025 portfolio, up from 18 percent at the end of 2024, as equity markets rose over the course of the year. Securities within the equity portfolio are well diversified and are primarily invested in broad index exchange traded funds (ETFs).
The total benefit from favorable development on prior years’ reserves was $53 million for 2024, which was largely attributable to accident years 2019 through 2023. Favorable development was widespread, with notable amounts from commercial excess, general liability, executive products, professional services and our mortgage reinsurance program within other casualty.
The total benefit from favorable development on prior years’ reserves was $33 million for 2025, which was largely attributable to accident years 2019 through 2022 and 2024. Favorable development was widespread, with notable amounts from commercial excess, general liability, executive products, professional services and our mortgage reinsurance program within other casualty.
The increase was primarily due to higher interest rates and an increased asset base relative to the prior year.
The increase was primarily due to higher reinvestment rates and an increased asset base relative to the prior year.
While we have certain rights under our shareholder agreement and maintain a position on Prime’s board of directors, we are subject to the decisions of the controlling shareholder, which may impact the value of our investment. In 2024, we recorded $5 million in investee losses for Prime, compared to $10 million of investee earnings in 2023.
While we have certain rights under our shareholder agreement and maintain a position on Prime’s board of directors, we are subject to the decisions of the controlling shareholder, which may impact the value of our investment. ​ In 2025, we recorded $4 million in investee losses for Prime, compared to $5 million of investee losses in 2024.
For a discussion of relevant prospective accounting standards, see note 1.D. to the consolidated financial statements within Item 8, Financial Statements and Supplementary Data. ​
For a discussion of relevant prospective accounting standards, see note 1.D. to the consolidated financial statements within Item 8, Financial Statements and Supplementary Data. ​ 50 Table of Contents
The loss in 2024 is reflective of Prime strengthening loss reserves on a number of prior accident years.
The loss in 2024 was reflective of Prime strengthening loss reserves on a number of prior accident years.
Comparatively, at December 31, 2023, our debt consisted of $50 million from our revolving line of credit with PNC and carried a floating interest rate of 7.07 percent, as well as $50 million of borrowings from the FHLBC that matured on November 10, 2024 and paid interest monthly at an annualized rate of 5.44 percent. ​ We incurred $16 million of general corporate expense during 2024 and 2023.
Comparatively, on December 31, 2024, our debt consisted of $50 million from our revolving line of credit with PNC and carried a floating interest rate of 5.98 percent, as well as $50 million of borrowings from the FHLBC that matured on November 10, 2025 and paid interest monthly at an annualized rate of 4.44 percent. ​ We incurred $17 million of general corporate expense during 2025 and $16 million during 2024.
The average after-tax yield on the tax-exempt portfolio was 2.7 percent for both 2024 and 2023. ​ The fixed income portfolio increased by $320 million during the year, as we allocated the majority of available cash flow to investment grade bonds and experienced positive market performance throughout the year. The tax-adjusted total return on a mark-to-market basis was 3.4 percent.
The average after-tax yield on the tax-exempt portfolio was 2.7 percent for both 2025 and 2024. ​ The fixed income portfolio increased by $358 million during the year, as we allocated the majority of available cash flow to investment grade bonds and experienced positive market performance throughout the year. The tax-adjusted total return on a mark-to-market basis was 7.5 percent.
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. ​ Our 195th consecutive dividend payment was declared in February 2025 and will be paid on March 20, 2025, in the amount of $0.15 per share.
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. ​ Our 199th consecutive dividend payment was declared in February 2026 and will be paid on March 16, 2026, in the amount of $0.16 per share.
Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 that are not included in this Form 10-K can be found in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, incorporated herein by reference. ​ Consolidated revenue for 2024 totaled $1.8 billion, up $258 million from 2023.
Discussions of 2023 items and year-to-year comparisons between 2024 and 2023 are not included in this Form 10-K, but can be found in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, incorporated herein by reference. ​ Consolidated revenue for 2025 totaled $1.9 billion, up $112 million from 2024.
The revenue sources include sectors such as sewer and water, public improvement, school, transportation and colleges and universities. As of December 31, 2024, approximately 50 percent of the municipal fixed income securities in the investment portfolio were GO and the remaining 50 percent were revenue based.
The revenue sources include sectors such as sewer and water, public improvement, school, transportation and colleges and universities. As of December 31, 2025, approximately 49 percent of the municipal fixed income securities in the investment portfolio were GO and the remaining 51 percent were revenue based.
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 $39 million in liquid investment assets, which approximates two-thirds of our normal annual holding company expenditures.
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 $72 million in liquid investment assets, which exceeds our normal annual holding company expenditures.
Additionally, see note 2 to the consolidated financial statements within Item 8, Financial Statements and Supplementary Data for information on our obligations for other invested assets. ​ At December 31, 2024, we had cash, short-term investments and other investments maturing within one year of approximately $372 million and an additional $739 million of investments maturing between 1 to 5 years.
Additionally, see note 2 to the consolidated financial statements within Item 8, Financial Statements and Supplementary Data for information on our obligations for other invested assets. ​ On December 31, 2025, we had cash, short-term investments and other investments maturing within one year of approximately $414 million and an additional $752 million of investments maturing between 1 to 5 years.
Dividends from our equity method investees have been irregular in nature, and while they provide added liquidity when received, we do not rely on those dividends to meet our liquidity needs. ​ 46 Table of Contents INCOME TAXES ​ Our effective tax rates were 19.1 percent and 19.3 percent for 2024 and 2023, respectively.
Dividends from our equity method investees have been irregular in nature, and while they provide added liquidity when received, we do not rely on those dividends to meet our liquidity needs. ​ INCOME TAXES ​ Our effective tax rates were 20.3 percent and 19.1 percent for 2025 and 2024, respectively.
For example, our general liability calendar year emergence on prior accident years has ranged from 17 percent to 27 percent favorable and our transportation emergence has ranged from 30 percent adverse to 40 percent favorable over the last three calendar years, while our overall emergence for all products combined has ranged from 13 percent to 25 percent favorable.
For example, our general liability calendar year emergence on prior accident years has ranged from 12 percent to 27 percent favorable and our transportation emergence has ranged from 30 percent adverse to 40 percent favorable over the last three calendar years, while our overall emergence for all products combined has ranged from 11 percent to 16 percent favorable.
These parameters were applied to a general liability net loss and LAE reserve balance, which was $209 million at December 31, 2024. ​ ​ ​ ​ ​ ​ ​ ​ ​ Result from favorable Result from unfavorable (in millions) ​ change in parameter ​ change in parameter +/- 5 point change in expected loss ratio for all accident years ​ $ (18) ​ $ 18 +/- 10% change in expected emergence patterns ​ $ (5) ​ $ 6 +/- 30% change in actual loss emergence over a calendar year ​ $ (7) ​ $ 8 Simultaneous change in expected loss ratio (5pts), expected emergence patterns (10%) and actual loss emergence (30%). ​ $ (30) ​ $ 32 ​ There are often significant interrelationships between our reserving assumptions that have offsetting or compounding effects on the reserve estimate.
These parameters were applied to a general liability net loss and LAE reserve balance, which was $221 million at December 31, 2025. ​ ​ ​ ​ ​ ​ ​ ​ ​ Result from favorable Result from unfavorable (in millions) ​ change in parameter ​ change in parameter +/- 5 point change in expected loss ratio for all accident years ​ $ (20) ​ $ 21 +/- 10% change in expected emergence patterns ​ $ (6) ​ $ 6 +/- 30% change in actual loss emergence over a calendar year ​ $ (8) ​ $ 9 Simultaneous change in expected loss ratio (5pts), expected emergence patterns (10%) and actual loss emergence (30%). ​ $ (34) ​ $ 35 ​ There are often significant interrelationships between our reserving assumptions that have offsetting or compounding effects on the reserve estimate.
The corporate debt portfolio has an overall quality rating of A- diversified among 954 issues. ​ The table below illustrates our corporate debt exposure as of December 31, 2024.
The corporate debt portfolio has an overall quality rating of A- diversified among 981 issues. ​ The table below illustrates our corporate debt exposure as of December 31, 2025.
In total, the equity portfolio is comprised of 89 securities. ​ INTEREST AND GENERAL CORPORATE EXPENSE ​ We incurred $6 million of interest expense on outstanding debt during 2024 and $7 million in 2023. At December 31, 2024, our debt included $50 million from our revolving line of credit with PNC Bank, N.A. (PNC).
In total, the equity portfolio is comprised of 84 securities. ​ INTEREST AND GENERAL CORPORATE EXPENSE ​ We incurred $5 million of interest expense on outstanding debt during 2025 and $6 million in 2024. On December 31, 2025, our debt included $50 million from our revolving line of credit with PNC Bank, N.A. (PNC).
During 2024, the average after-tax yield on the taxable fixed income portfolio was 3.0 percent, an increase from 2.8 percent in the prior year.
During 2025, the average after-tax yield on the taxable fixed income portfolio was 3.3 percent, an increase from 3.0 percent in the prior year.
While these Regulation D securities are not rated by a traditional nationally recognized statistical rating organization, all but one carry an equivalent investment-grade rating from 45 Table of Contents the Securities Valuation Office of the NAIC.
Although these private placement securities are not rated by a traditional nationally recognized statistical rating organization, all but one carry an equivalent 45 Table of Contents investment-grade rating from the Securities Valuation Office of the NAIC.
Hurricane and storm losses on casualty-oriented package policies that include property coverage resulted in $5 million of losses in 2024, compared to $2 million of storm losses in 2023. ​ The segment’s loss ratio was 61.5 in 2024, compared to 55.1 in 2023.
Hurricane and storm losses on casualty-oriented package policies that include property coverage resulted in $2 million of losses in 2025, compared to $5 million of storm losses in 2024. ​ The segment’s loss ratio was 62.4 in 2025, compared to 61.5 in 2024.
As of December 31, 2024, our portfolio had a carrying value of $4.1 billion. Portfolio assets at December 31, 2024 increased by $408 million, or 11 percent, from December 31, 2023. ​ Our overall investment philosophy is designed to first protect policyholders by maintaining sufficient funds to meet corporate and policyholder obligations and then generate long-term growth in shareholders’ equity.
As of December 31, 2025, our portfolio had a carrying value of $4.7 billion. Portfolio assets on December 31, 2025 increased by $579 million, or 14 percent, from December 31, 2024. ​ Our overall investment philosophy is designed to first protect policyholders by maintaining sufficient funds to meet corporate and policyholder obligations and then generate long-term growth in shareholders’ equity.
We had $63 million in unrealized losses in these asset classes as of December 31, 2024. ​ Municipal Fixed Income Securities ​ As of December 31, 2024, municipal bonds comprised 14 percent of our fixed income portfolio, compared to 19 percent as of December 31, 2023.
We had $36 million in unrealized losses in these asset classes as of December 31, 2025. ​ Municipal Fixed Income Securities ​ As of December 31, 2025, municipal bonds comprised 11 percent of our fixed income portfolio, compared to 14 percent as of December 31, 2024.
As of December 31, 2024, our capital structure consisted of $100 million in debt and $1.5 billion of shareholders’ equity.
As of December 31, 2025, our capital structure consisted of $100 million in debt and $1.8 billion of shareholders’ equity.
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 2024, we achieved our 29th consecutive year of underwriting profitability. Over the 29-year period, we averaged an 88.1 combined ratio.
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 2025, we achieved our 30th consecutive year of underwriting profitability. Over the 30-year period, we averaged an 87.9 combined ratio.
The average annual yields on our investments were as follows for 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ 2024 2023 PRETAX YIELD ​ ​ ​ ​ ​ Taxable (on book value) 3.82 % 3.51 % Tax-exempt (on book value) 2.87 % 2.80 % Equities (on fair value) 1.97 % 2.27 % ​ ​ ​ ​ ​ ​ AFTER-TAX YIELD ​ ​ ​ ​ ​ Taxable (on book value) 3.02 % 2.77 % Tax-exempt (on book value) 2.72 % 2.65 % Equities (on fair value) 1.71 % 1.97 % ​ The after-tax yield reflects the different tax rates applicable to each category of investment.
The average annual yields on our investments were as follows for 2025 and 2024: ​ ​ ​ ​ ​ ​ ​ ​ 2025 2024 PRETAX YIELD ​ ​ ​ ​ ​ Taxable (on book value) 4.14 % 3.82 % Tax-exempt (on book value) 2.84 % 2.87 % Equities (on fair value) 1.71 % 1.97 % ​ ​ ​ ​ ​ ​ AFTER-TAX YIELD ​ ​ ​ ​ ​ Taxable (on book value) 3.27 % 3.02 % Tax-exempt (on book value) 2.69 % 2.72 % Equities (on fair value) 1.49 % 1.71 % ​ The after-tax yield reflects the different tax rates applicable to each category of investment.
Net premiums earned for the Group increased 18 percent, driven primarily by growth from our property and casualty segments. Positive equity market returns during 2024 resulted in $82 million of unrealized gains on equity securities, building on a rally that led to $65 million of unrealized gains in our equity portfolio during 2023.
Net premiums earned for the Group increased 6 percent, driven primarily by growth from our casualty segment. Positive equity market returns during 2025 resulted in $43 million of unrealized gains on equity securities, building on a rally that led to $82 million of unrealized gains in our equity portfolio during 2024.
The corporate allocation includes floating rate bank loans and bonds that are below investment grade in credit quality and offer incremental yield over our core fixed income portfolio. Non-investment grade bonds totaled $148 million while non-rated Regulation D securities totaled $90 million at the end of 2024.
The corporate allocation includes floating rate bank loans and bonds that are below investment grade in credit quality and offer incremental yield over our core fixed income portfolio. Non-investment grade bonds totaled $158 million while non-rated private placement securities totaled $108 million at the end of 2025.
The municipal portfolio is diversified amongst 282 issues. ​ Ninety-three percent of our municipal fixed income securities were rated AA or better, while 99 percent were rated A or better.
The municipal portfolio is diversified amongst 222 issues. ​ Ninety-two percent of our municipal fixed income securities were rated AA or better, while 100 percent were rated A or better.
Underwriting results for 2024 included $33 million of favorable development on prior years’ attritional and catastrophe loss reserves, largely from the marine and commercial property businesses; $73 million of losses from Hurricanes Beryl, Helene and Milton; as well as $28 million of other storm losses.
Underwriting results for 2025 included $50 million of favorable development on prior years’ attritional and catastrophe loss reserves, largely from the commercial property and marine businesses, as well as $28 million of storm and other catastrophe losses.
Additionally, we maintain a quota share reinsurance treaty with Prime, which contributed $9 million of gross premiums written and $8 million of net premiums earned during 2024, compared to $7 million of gross premiums written and $13 million of net premiums earned during 2023.
Additionally, we had a quota share reinsurance treaty with Prime, which contributed $3 million of gross premiums written and $6 million of net premiums earned during 2025, compared to $9 million of gross premiums written and $8 million of net premiums earned during 2024.
Our equity portfolio increased by $146 million to $736 million in 2024 as a result of strong equity market returns during the year.
Our equity portfolio increased by $163 million to $899 million in 2025 as a result of strong equity market returns during the year.
The borrowing may be repaid at any time and carries an adjustable interest rate of 5.98 percent as of the end of 2024. Additionally, we borrowed $50 million from the Federal Home Loan Bank of Chicago (FHLBC) that matures on November 12, 2025 and pays interest monthly at an annualized rate of 4.44 percent.
The borrowing may be repaid at any time and carries an adjustable interest rate of 5.33 percent as of the end of 2025. Additionally, we borrowed $50 million from the Federal Home Loan Bank of Chicago (FHLBC) and pay interest monthly at an annualized rate of 4.21 percent.
This reflects net incurred losses of $739 million in 2024 offset by paid losses of $490 million, compared to net incurred losses of $604 million offset by $491 million paid in 2023.
This reflects net incurred losses of $726 million in 2025 offset by paid losses of $524 million, compared to net incurred losses of $739 million offset by $490 million paid in 2024.
The following table summarizes these three cash flows over the last two years: ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) 2024 2023 Net cash provided by operating activities ​ $ 560,219 ​ $ 464,257 Net cash used in investing activities ​ ​ (318,870) ​ ​ (211,803) Net cash used in financing activities ​ ​ (237,983) ​ ​ (238,848) ​ We have posted positive operating cash flow in the last two years.
The following table summarizes these three cash flows over the last two years: ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) 2025 2024 Net cash provided by operating activities ​ $ 614,221 ​ $ 560,219 Net cash used in investing activities ​ ​ (362,128) ​ ​ (318,870) Net cash used in financing activities ​ ​ (240,318) ​ ​ (237,983) ​ We have posted positive operating cash flow in the last two years.
The total return for the year on the equity portfolio was 21.1 percent. ​ 41 Table of Contents Our investment results for the last five years are shown in the following table: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tax ​ ​ ​ ​ ​ ​ ​ ​ ​ Pre-tax Equivalent ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Annualized ​ Annualized ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Change in ​ Return on ​ Return on ​ ​ Average ​ Net ​ ​ ​ ​ Unrealized ​ Avg. ​ Avg. ​ ​ Invested ​ Investment ​ Net Realized ​ Appreciation ​ Invested ​ Invested (in thousands) Assets (1) Income (2)(3) Gains (3)(4) (3)(5) Assets Assets 2020 ​ 2,698,721 ​ 67,893 ​ 17,885 ​ 99,451 6.9 % 6.9 % 2021 ​ 3,000,025 ​ 68,862 ​ 64,222 ​ (6,280) 4.2 % 4.3 % 2022 ​ 3,217,635 ​ 86,078 ​ 588,515 ​ (462,981) 6.6 % 6.6 % 2023 ​ 3,474,310 ​ 120,383 ​ 32,518 ​ 144,569 8.6 % 8.6 % 2024 ​ 3,880,475 ​ 142,278 ​ 19,966 ​ 64,912 5.9 % 5.9 % 5-yr Avg. ​ $ 3,254,233 ​ $ 97,099 ​ $ 144,621 ​ $ (32,066) 6.4 % 6.5 % (1) Average market values at beginning and end of year (inclusive of cash and short-term investments).
The total return for the year on the equity portfolio was 16.7 percent. ​ 41 Table of Contents Our investment results for the last five years are shown in the following table: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pre-tax ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Annualized ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Change in ​ Return on ​ ​ ​ Average ​ Net ​ ​ ​ ​ Unrealized ​ Avg. ​ ​ ​ Invested ​ Investment ​ Net Realized ​ Appreciation ​ Invested ​ (in thousands) Assets (1) Income (2)(3) Gains (3)(4) (3)(5) Assets 2021 ​ 3,000,025 ​ 68,862 ​ 64,222 ​ (6,280) 4.2 % 2022 ​ 3,217,635 ​ 86,078 ​ 588,515 ​ (462,981) 6.6 % 2023 ​ 3,474,310 ​ 120,383 ​ 32,518 ​ 144,569 8.6 % 2024 ​ 3,880,475 ​ 142,278 ​ 19,966 ​ 64,912 5.9 % 2025 ​ 4,374,125 ​ 159,739 ​ 65,116 ​ 149,583 8.6 % 5-yr Avg. ​ $ 3,589,314 ​ $ 115,468 ​ $ 154,067 ​ $ (22,039) 6.8 % (1) Average market values at beginning and end of year (inclusive of cash and short-term investments).
Fifty-five percent of the securities in the ABS/CMBS/RMBS portfolio were rated AAA as of December 31, 2024, while 85 percent were rated A or better.
Sixty-eight percent of the securities in the ABS/CMBS/RMBS portfolio were rated AAA as of December 31, 2025, while 93 percent were rated A or better.
Net investment income increased by 18 percent in 2024, primarily due to higher reinvestment rates and a larger average asset base relative to the prior year. ​ ​ ​ ​ ​ ​ ​ ​ CONSOLIDATED REVENUE ​ Year ended December 31, (in thousands) 2024 2023 Net premiums earned ​ $ 1,526,406 ​ $ 1,294,306 Net investment income ​ ​ 142,278 ​ ​ 120,383 Net realized gains ​ ​ 19,966 ​ ​ 32,518 Net unrealized gains on equity securities ​ ​ 81,734 ​ ​ 64,787 Total consolidated revenue ​ $ 1,770,384 ​ $ 1,511,994 ​ Net earnings for 2024 totaled $346 million, up from $305 million in 2023.
Net investment income increased by 12 percent in 2025, primarily due to higher reinvestment rates and a larger average asset base relative to the prior year. ​ ​ ​ ​ ​ ​ ​ ​ CONSOLIDATED REVENUE ​ Year ended December 31, (in thousands) 2025 2024 Net premiums earned ​ $ 1,614,346 ​ $ 1,526,406 Net investment income ​ ​ 159,739 ​ ​ 142,278 Net realized gains ​ ​ 65,116 ​ ​ 19,966 Net unrealized gains on equity securities ​ ​ 43,247 ​ ​ 81,734 Total consolidated revenue ​ $ 1,882,448 ​ $ 1,770,384 ​ Net earnings for 2025 totaled $403 million, up from $346 million in 2024.
Commercial transportation and small commercial experienced adverse prior accident year development, largely related to auto exposures. Comparatively, results for the casualty segment in 2023 included favorable development of $78 million, with the majority attributable to commercial excess, general liability, personal umbrella, executive products and professional services across accident years 2015 through 2022.
Commercial transportation and small commercial experienced adverse prior accident year development. Comparatively, results for the casualty segment in 2024 included favorable development of $53 million, with the majority attributable to commercial excess, general liability, executive products, professional services and our mortgage reinsurance program across accident years 2019 through 2023.
(5) Relates to available-for-sale fixed income and equity securities. ​ In 2024, we recognized $31 million of net realized gains in the equity portfolio, $5 million of net realized losses in the fixed income portfolio and $6 million of other net realized losses.
(5) Relates to available-for-sale fixed income and equity securities. ​ In 2025, we recognized $61 million of net realized gains in the equity portfolio, less than $1 million of net realized gains in the fixed income portfolio and $4 million of other net realized gains.
The decrease in premiums earned is attributable to a reduction of our participation in the quota share reinsurance treaty, as well as the competitive market in which Prime operates. ​ We received dividends of $3 million from Prime in 2024, while no dividends were received from Prime in 2023.
The decrease in premiums earned is attributable to a reduction of our participation in the quota share reinsurance treaty, as well as the competitive market in which Prime operates.
The actuaries also present explanations supporting any changes to the underlying assumptions used to calculate the indicated central estimate. Our actuaries make a recommendation to management in regard to booked reserves that reflect both their analytical assessment and relevant qualitative factors, such as their view of estimation risk.
Our actuaries make a recommendation to management in regard to booked reserves that reflect both their analytical assessment and relevant qualitative factors, such as their view of estimation risk.
The expense ratio for the surety segment was 71.0 in 2024, up from 68.9 in 2023, due to increases in select policy acquisition costs, as well as continued investments in technology and people to support growth and improve the customer experience. ​ NET INVESTMENT INCOME AND REALIZED INVESTMENT GAINS ​ During 2024, net investment income increased by 18 percent.
The expense ratio for the surety segment was 73.1 in 2025, up from 71.0 in 2024, due to continued investments in people and technology, as well as higher policy acquisition expenses. ​ NET INVESTMENT INCOME AND REALIZED INVESTMENT GAINS ​ During 2025, net investment income increased by 12 percent.
An additional 10 percent of the MBS portfolio was invested in sequential payer, down from 13 percent in 2023. ​ The following table summarizes the distribution of our asset-backed and commercial mortgage-backed securities portfolio as of December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amortized ​ ​ ​ ​ ​ ​ (in thousands) Cost Fair Value % of Total 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ABS ​ $ 137,353 ​ $ 135,309 ​ 33.0 % Non-GSE RMBS ​ ​ 141,784 ​ ​ 127,930 ​ 31.2 % CMBS ​ 84,927 ​ ​ 79,959 ​ 19.5 % CLO ​ ​ 66,909 ​ ​ 67,050 ​ 16.3 % Total ​ $ 430,973 ​ $ 410,248 ​ 100.0 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ABS ​ $ 96,586 ​ $ 91,137 ​ 32.5 % Non-GSE RMBS ​ ​ 119,374 ​ ​ 104,887 ​ 37.3 % CMBS ​ ​ 61,878 ​ ​ 54,689 ​ 19.4 % CLO ​ ​ 30,620 ​ ​ 30,469 ​ 10.8 % Total ​ $ 308,458 ​ $ 281,182 ​ 100.0 % ​ An ABS, CMBS or non-agency residential mortgage-backed security (RMBS) is a securitization collateralized by the cash flows from a specific pool of underlying assets.
An additional 6 percent of the MBS portfolio was invested in sequential payer, down from 10 percent in 2024. ​ The following table summarizes the distribution of our asset-backed and commercial mortgage-backed securities portfolio as of December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amortized ​ ​ ​ ​ ​ ​ (in thousands) Cost Fair Value % of Total 2025 ​ ​ ​ ​ ​ ​ ​ ​ ​ ABS ​ $ 232,904 ​ $ 232,632 ​ 34.6 % Non-GSE RMBS ​ ​ 191,625 ​ ​ 182,201 ​ 27.1 % CMBS ​ 139,542 ​ ​ 136,894 ​ 20.3 % CLO ​ ​ 121,055 ​ ​ 121,257 ​ 18.0 % Total ​ $ 685,126 ​ $ 672,984 ​ 100.0 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ABS ​ $ 137,353 ​ $ 135,309 ​ 33.0 % Non-GSE RMBS ​ ​ 141,784 ​ ​ 127,930 ​ 31.2 % CMBS ​ ​ 84,927 ​ ​ 79,959 ​ 19.5 % CLO ​ ​ 66,909 ​ ​ 67,050 ​ 16.3 % Total ​ $ 430,973 ​ $ 410,248 ​ 100.0 % ​ An ABS, CMBS or non-agency residential mortgage-backed security (RMBS) is a securitization collateralized by the cash flows from a specific pool of underlying assets.
Comparatively, 2023 included $49 million of pretax losses and $12 million of reinsurance reinstatement premium from the Hawaiian wildfires, as well as $31 million of other storm losses. Results for each period benefited from favorable development on prior years’ loss reserves, which provided additional pretax earnings of $95 million in 2024, compared to $109 million in 2023.
Comparatively, 2024 included $76 million of pretax losses from Hurricanes Beryl, Helene and Milton, as well as $30 million of other storm losses. Results for each period benefited from favorable development on prior years’ loss reserves, which provided additional pretax earnings of $99 million in 2025, compared to $95 million in 2024.
A reconciliation of net earnings to underwriting income follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, (in thousands) 2024 2023 Net earnings ​ $ 345,779 ​ $ 304,611 Income tax expense ​ ​ 81,772 ​ ​ 72,654 Earnings before income taxes ​ $ 427,551 ​ $ 377,265 Equity in earnings of unconsolidated investees ​ ​ 4,869 ​ ​ (9,610) General corporate expenses ​ ​ 15,880 ​ ​ 15,917 Interest expense on debt ​ ​ 6,331 ​ ​ 7,301 Net unrealized gains on equity securities ​ ​ (81,734) ​ ​ (64,787) Net realized gains ​ ​ (19,966) ​ ​ (32,518) Net investment income ​ ​ (142,278) ​ ​ (120,383) Underwriting income ​ $ 210,653 ​ $ 173,185 ​ 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.
A reconciliation of net earnings to underwriting income follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, (in thousands) 2025 2024 Net earnings ​ $ 403,337 ​ $ 345,779 Income tax expense ​ ​ 102,644 ​ ​ 81,772 Earnings before income taxes ​ $ 505,981 ​ $ 427,551 Equity in earnings of unconsolidated investees ​ ​ 3,924 ​ ​ 4,869 General corporate expenses ​ ​ 17,028 ​ ​ 15,880 Interest expense on debt ​ ​ 5,358 ​ ​ 6,331 Net unrealized gains on equity securities ​ ​ (43,247) ​ ​ (81,734) Net realized gains ​ ​ (65,116) ​ ​ (19,966) Net investment income ​ ​ (159,739) ​ ​ (142,278) Underwriting income ​ $ 264,189 ​ $ 210,653 ​ 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.
Further discussion of reserve development can be found in note 5 to the consolidated financial statements within Item 8, Financial Statements and Supplementary Data. ​ The loss ratio was 48.4 in 2024, compared to 46.7 in 2023.
Further discussion of reserve development can be found in note 5 to the consolidated financial statements within Item 8, Financial Statements and Supplementary Data. ​ The loss ratio was 45.0 in 2025, compared to 48.4 in 2024. The decrease reflects lower net retained catastrophe losses in 2025 and higher prior period reserve releases.
The municipal portfolio includes 66 percent taxable and 34 percent tax-exempt securities. ​ Corporate Debt Securities ​ As of December 31, 2024, our corporate debt portfolio comprised 42 percent of the fixed income portfolio, compared to 43 percent as of December 31, 2023.
The municipal portfolio includes 73 percent taxable and 27 percent tax-exempt securities. ​ Corporate Debt Securities ​ As of December 31, 2025, our corporate debt portfolio comprised 42 percent of the fixed income portfolio, consistent with its 42 percent weight as of December 31, 2024.
Growth of net premiums earned allowed for improved leveraging of our expense base, despite continued investments in our people and technology, as well as higher levels of bonus and profit-sharing expense that resulted from improved operating performance. ​ Bonus and profit-sharing amounts earned by executives, managers and associates are predominately influenced by corporate performance including operating earnings, combined ratio and return on capital.
Additionally, higher levels of bonus and profit-sharing expense resulted from improved operating performance. ​ Bonus and profit-sharing amounts earned by executives, managers and associates are predominately influenced by corporate performance including operating earnings, combined ratio and return on capital.
The borrowing matures on November 12, 2025 and monthly interest is paid at an annualized rate of 4.44 percent. We are not party to any off-balance sheet arrangements. See note 3 to the consolidated financial statements within Item 8, Financial Statements and Supplementary Data for more information on our debt.
The borrowing matures on November 12, 2026, but may be repaid early at set quarterly dates. We are not party to any off-balance sheet arrangements. See note 3 to the consolidated financial statements within Item 8, Financial Statements and Supplementary Data for more information on our debt.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeComparatively, our equity portfolio had a fair value of $590 million as of December 31, 2023 and scenarios of the S&P 500 Index declining by 10 percent and 20 percent would have resulted in approximate decreases of $55 million and $110 million, respectively. ​ While the declines in market value outlined below are modeled as instantaneous changes, we would expect movements in capital markets to occur over time, with investment income offering an offset to any decrease in prices. ​ Under the assumptions of rising interest rates and a decreasing S&P 500 Index, the fair value of our assets will decrease from their present levels by the indicated amounts. ​ 51 Table of Contents Effect of a 100 basis-point increase in interest rates and a 10 percent decline in the S&P 500: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 12/31/24 Fair ​ Interest ​ Equity (in thousands) Value Rate Risk Risk Held for non-trading purposes: ​ ​ ​ ​ ​ ​ ​ ​ ​ Fixed income securities ​ $ 3,175,796 ​ $ (157,600) ​ $ — Equity securities ​ ​ 736,191 ​ ​ — ​ ​ (68,726) Total ​ $ 3,911,987 ​ $ (157,600) ​ $ (68,726) ​ Effect of a 200 basis-point increase in interest rates and a 20 percent decline in the S&P 500: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 12/31/24 Fair ​ Interest ​ Equity (in thousands) Value Rate Risk Risk Held for non-trading purposes: ​ ​ ​ ​ ​ ​ ​ ​ ​ Fixed income securities ​ $ 3,175,796 ​ $ (303,414) ​ $ — Equity securities ​ ​ 736,191 ​ ​ — ​ ​ (137,453) Total ​ $ 3,911,987 ​ $ (303,414) ​ $ (137,453) ​ Comparatively, under the assumptions of falling interest rates and an increasing S&P 500 Index, the fair value of our assets will increase from their present levels by the indicated amounts. ​ Effect of a 100 basis-point decrease in interest rates and a 10 percent increase in the S&P 500: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 12/31/24 Fair ​ Interest ​ Equity (in thousands) Value Rate Risk Risk Held for non-trading purposes: ​ ​ ​ ​ ​ ​ ​ ​ ​ Fixed income securities ​ $ 3,175,796 ​ $ 171,741 ​ $ — Equity securities ​ ​ 736,191 ​ ​ — ​ ​ 68,726 Total ​ $ 3,911,987 ​ $ 171,741 ​ $ 68,726 ​ Effect of a 200 basis-point decrease in interest rates and 20 percent increase in the S&P 500: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 12/31/24 Fair ​ Interest ​ Equity (in thousands) Value Rate Risk Risk Held for non-trading purposes: ​ ​ ​ ​ ​ ​ ​ ​ ​ Fixed income securities ​ $ 3,175,796 ​ $ 356,926 ​ $ — Equity securities ​ ​ 736,191 ​ ​ — ​ ​ 137,453 Total ​ $ 3,911,987 ​ $ 356,926 ​ $ 137,453 ​ ​ ​ ​ 52 Table of Contents ​
Biggest changeComparatively, our equity portfolio had a fair value of $736 million as of December 31, 2024 and scenarios of the S&P 500 Index declining by 10 percent and 20 percent would have resulted in approximate decreases of $69 million and $137 million, respectively. 51 Table of Contents ​ While the declines in market value outlined below are modeled as instantaneous changes, we would expect movements in capital markets to occur over time, with investment income offering an offset to any decrease in prices. ​ Under the assumptions of rising interest rates and a decreasing S&P 500 Index, the fair value of our assets will decrease from their present levels by the indicated amounts. ​ Effect of a 100 basis-point increase in interest rates and a 10 percent decline in the S&P 500: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 12/31/25 Fair ​ Interest ​ Equity (in thousands) Value Rate Risk Risk Held for non-trading purposes: ​ ​ ​ ​ ​ ​ ​ ​ ​ Fixed income securities ​ $ 3,533,336 ​ $ (183,717) ​ $ — Equity securities ​ ​ 898,876 ​ ​ — ​ ​ (84,541) Total ​ $ 4,432,212 ​ $ (183,717) ​ $ (84,541) ​ Effect of a 200 basis-point increase in interest rates and a 20 percent decline in the S&P 500: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 12/31/25 Fair ​ Interest ​ Equity (in thousands) Value Rate Risk Risk Held for non-trading purposes: ​ ​ ​ ​ ​ ​ ​ ​ ​ Fixed income securities ​ $ 3,533,336 ​ $ (352,117) ​ $ — Equity securities ​ ​ 898,876 ​ ​ — ​ ​ (169,082) Total ​ $ 4,432,212 ​ $ (352,117) ​ $ (169,082) ​ Comparatively, under the assumptions of falling interest rates and an increasing S&P 500 Index, the fair value of our assets will increase from their present levels by the indicated amounts. ​ Effect of a 100 basis-point decrease in interest rates and a 10 percent increase in the S&P 500: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 12/31/25 Fair ​ Interest ​ Equity (in thousands) Value Rate Risk Risk Held for non-trading purposes: ​ ​ ​ ​ ​ ​ ​ ​ ​ Fixed income securities ​ $ 3,533,336 ​ $ 200,899 ​ $ — Equity securities ​ ​ 898,876 ​ ​ — ​ ​ 84,541 Total ​ $ 4,432,212 ​ $ 200,899 ​ $ 84,541 ​ Effect of a 200 basis-point decrease in interest rates and 20 percent increase in the S&P 500: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 12/31/25 Fair ​ Interest ​ Equity (in thousands) Value Rate Risk Risk Held for non-trading purposes: ​ ​ ​ ​ ​ ​ ​ ​ ​ Fixed income securities ​ $ 3,533,336 ​ $ 421,488 ​ $ — Equity securities ​ ​ 898,876 ​ ​ — ​ ​ 169,082 Total ​ $ 4,432,212 ​ $ 421,488 ​ $ 169,082 ​ ​ ​ ​ 52 Table of Contents ​
Listed on each table is the December 31, 2024 fair value for our assets and the expected pretax reduction in fair value given the stated hypothetical events. This sensitivity analysis assumes the composition of our assets remains constant over the period being measured and also assumes interest rate changes are reflected uniformly across the yield curve.
Listed on each table is the December 31, 2025 fair value for our assets and the expected pretax reduction in fair value given the stated hypothetical events. This sensitivity analysis assumes the composition of our assets remains constant over the period being measured and also assumes interest rate changes are reflected uniformly across the yield curve.
This lower beta statistic reflects our long-term emphasis on maintaining a value-oriented, dividend-driven investment philosophy for our equity portfolio. ​ SENSITIVITY ANALYSIS ​ The tables that follow detail information on the market risk exposure for our financial investments as of December 31, 2024.
This lower beta statistic reflects our long-term emphasis on maintaining a value-oriented, dividend-driven investment philosophy for our equity portfolio. ​ SENSITIVITY ANALYSIS ​ The tables that follow detail information on the market risk exposure for our financial investments as of December 31, 2025.
We manage our exposure to market risk by using the following tools: ​ ● Monitoring the fair value of all financial assets on a constant basis, 50 Table of Contents ​ ● Changing the character of future investment purchases as needed and ​ ● Maintaining a balance between existing asset and liability portfolios. ​ FIXED INCOME AND INTEREST RATE RISK ​ The most significant short-term influence on our fixed income portfolio is a change in interest rates.
We manage our exposure to market risk by using the following tools: ​ ● Monitoring the fair value of all financial assets on a constant basis, ​ ● Changing the character of future investment purchases as needed and ​ ● Maintaining a balance between existing asset and liability portfolios. ​ FIXED INCOME AND INTEREST RATE RISK ​ The most significant short-term influence on our fixed income portfolio is a change in interest rates.
The examples given are not predictions of future market events, but rather illustrations of the effect such events may have on the fair value of our investment portfolio. ​ As of December 31, 2024, our fixed income portfolio had a fair value of $3.2 billion.
The examples given are not predictions of future market events, but rather illustrations of the effect such events may have on the fair value of our investment portfolio. ​ As of December 31, 2025, our fixed income portfolio had a fair value of $3.5 billion.
The base sensitivity analysis uses market scenarios of the S&P 500 Index declining both 10 percent and 20 percent. These scenarios would result in approximate decreases in the equity fair value of $69 million and $137 million, respectively.
The base sensitivity analysis uses market scenarios of the S&P 500 Index declining both 10 percent and 20 percent. These scenarios would result in approximate decreases in the equity fair value of $85 million and $169 million, respectively.
The sensitivity analysis uses scenarios of interest rates increasing 100 and 200 basis points from their December 31, 2024, levels with all other variables held constant. Such scenarios would result in modeled decreases in the fair value of the fixed income portfolio of $158 million and $303 million, respectively.
The sensitivity analysis uses scenarios of interest rates increasing 100 and 200 basis points from their December 31, 2025, levels with all other variables held constant. Such scenarios would result in modeled decreases in the fair value of the fixed income portfolio of $184 million and $352 million, respectively.
Comparatively, our fixed income portfolio had a fair value of $2.9 billion as of December 31, 2023 and scenarios of interest rates increasing 100 and 200 basis points would have resulted in modeled decreases of $132 million and $255 million, respectively. ​ As of December 31, 2024, our equity portfolio had a fair value of $736 million.
Comparatively, our fixed income portfolio had a fair value of $3.2 billion as of December 31, 2024 and scenarios of interest rates increasing 100 and 200 basis points would have resulted in modeled decreases of $158 million and $303 million, respectively. ​ As of December 31, 2025, our equity portfolio had a fair value of $899 million.

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