RLI Corp.

SEC filings, including an annual report on Form 10-K, are supplemented in Forms 10-Q, all of which should be reviewed carefully. The company has filed a Form 8-K with the Securities and Exchange Commission that contains the press release announcing fourth quarter results. During the call, RLI management may refer to operating earnings and earnings per share from operations, which are non-GAAP measures of financial results. RLI's operating earnings and earnings per share from operations consist of net earnings after the elimination of after-tax realized gains or losses and after-tax unrealized gains or losses on equity securities. RLI's management believes these measures are useful in gauging core operating performance across reporting periods, but may not be comparable to other companies' definitions of operating earnings. The Form 8 contains a reconciliation between operating earnings and net earnings. The form 8K and press release are available at the company's website at www.rlicorp.com. I will now turn the conference over to RLI's Chief Investment Officer and Treasurer, Mr. Aaron Deventala. Please go ahead.

Thank you, Adam, and good morning.

We'll start again. Thank you, Adam. And good morning, everyone. Welcome to RLI's first quarter earnings call of 2025. We'll be following our typical agenda today with opening remarks from Craig Cleathermus, President and CEO, followed by a summary of the financial results from Todd Bryant, Chief Financial Officer, and an update on the insurance market landscape and our product portfolio from Jen Klobnoch, our Chief Operating Officer. After prepared commentary, the operator will queue up Any questions? And Craig will close with some final observations. Craig? Thank you, Aaron, and good morning, everyone. I'm pleased to report that we begin our 61st year of business with continued growth in book value and top-line premiums while reporting a combined ratio of 82%. A very good start and something to build on as we move through 2025. ROI is a unique franchise built on a foundation of customer service, ownership, and talented people who value making a difference. Our narrow and deep underwriting and claim expertise, combined with a very diverse portfolio of specialty products, give our underwriters the license to lean into disrupted markets, underwrite with discipline, select risks discerningly, and take remedial action in underpriced or underperforming markets if needed. We have a healthy balance sheet that enables us to navigate and thrive through periods of market disruption. As respected coaches often advise their teams, act like you've been here before. In our case, we have. Whether it was the soft market years at the turn of this millennium, the financial stress and credit crunch of 2008, or the economic supply chain and contract uncertainty we faced during the COVID pandemic, RLI continued to grow profitably while delivering exceptional service to our customers. The insurance industry is now faced with the rising challenges of legal system abuse, trade disruption, and economic uncertainty. We have owners who are empowered to execute and competently manage through whatever the market presents. As Todd and Jen will go into in a minute, we remain focused on opportunities where we have the expertise to differentiate ourselves and the market supports adequate returns. It is never easy, and there's always room for improvement. What sets ROI apart is that in our ownership culture, there is no place to hide. We tackle our challenges with a sense of urgency and try to keep them from becoming outsized. and we are committed to pushing ourselves by raising the bar in pursuit of excellence and continuously building on our strengths. We are playing the long game. I will let Todd and Jen share more detail on the financials and the market in general. Todd, you're up. Thanks, Craig. Good morning, everyone. Last evening, our first quarter release reflected operating earnings of 92 cents per share, supported by solid underwriting performance and a 12% increase in investment income. As a reminder, per share data reflects the two-for-one stock split that was due to shareholders at the end of 2024 and payable in January. Underwriting income benefited from continued growth in earned premium and favorable prior year's reserve development across all three segments. The total combined ratio of 82.3 was up from last year's 78.5, on lower levels of favorable prior year's reserve releases and a slight increase in the underlying combined ratio. Although top line growth was mixed across segments, total growth premiums written increased 5% when compared to last year. On a gap basis, the first quarter net earnings totaled 68 cents per share versus $1.39 in Q1 2024. This comparison is heavily influenced by the relative price performance of equity securities between periods and saw $45 million of unrealized equity gains of last year turn to $42 million of unrealized losses this quarter. The property segment experienced a 6% decline in gross premium due largely to rate decreases in E&S properties, which were modestly offset by continued growth in marine and Hawaii homeowners. Jim will have some additional color on sub-segment market conditions. Contributing to property's bottom line was $17.6 million of favorable prior year's reserve development, largely attributable to marine, E&S fire, and Hawaii homeowners, offering a 13-point loss ratio benefit. Storm losses and catastrophe events totaled $12 million, which was comparable to last year. Losses from the California wildfires account for about half of that total. This quarter's catastrophe losses are almost entirely captured in this segment with very little attributable to package business and casualty. While property loss ratio declined modestly, the expense ratio increased two points driven by changes in our reinsurance compared to Q1 2024 and a higher amount of acquisition-related expenses. That influenced the comparison between periods. All in, property had a great start to the year with a 57 combined ratio. For the casualty segment, we posted a 99 combined ratio for Q1 and remained cautious regarding wheels-based businesses, including commercial transportation and auto exposure in personal umbrella, something we discussed at length during the four-quarter call. Although growth continues, with gross premium up 14% over last year, Our measured reserve approach influenced the level of overall favorable development in the segment, which totaled $5.1 million during Q1, compared to $18.1 million last year. General liability, commercial excess, and subsegments within professional liability were the strongest contributors to favorable prior years' experience. Now, this was partially offset by an increase in our real business reserves I referenced previously. We continue to approach more challenged coverages with rate increases and underwriting action to address casualties current loss environment. Surety's gross premium was relatively flat to last year, and the first quarter combined ratio came in at 68.5, below the 80.9 combined ratio in 2024. Underwriting profitability benefited from 8.3 million of favorable development, which had a significant influence on the loss ratio. As a reminder, we recorded $2 million in reinsurance reinstatement premiums last year, which weighed on an average premium in a comparable period. Operating cash flow for Q1 totaled $103 million, up $33 million from last year, and giving us a basis for portfolio activity that remains accreted. Although Treasury rates moderated during the quarter, fixed income purchases averaged 5.1%, or 120 basis points above our book yield. Recent market volatility has not dampened our focus on putting money to work in investment-grade fixed income, but the strength of our balance sheet allows us to also consider risk assets as valuations in . Bond price improvements through March 31st were enough to overcome the decline in equities, resulting in a positive 1.3% total return for the entire portfolio. Away from our traditional invested assets, our investee earnings turned positive again, totaling $3 million in the quarter as Prime's results were more stable than in the fourth quarter. Incorporating comprehensive earnings of $1.01 per share and adjusting for dividends, book value per share increased 6% from year-end 2024. Additionally, we announced an increase in our ordinary quarterly dividend to $0.15 per share our 50th year of paying and increasing dividends. All in, we are very pleased with the start to the year. And with that, I'll turn the call over to Jen.