RLI Corp

We also purchased specialty insurer RLI Corp. (RLI). RLI is among the industry’s top underwriters, having generated underwriting profits for thirty consecutive years across multiple economic cycles. The company’s expertise in niche areas of the market and their unique compensation program tied to underwriting profits that are paid over the life of an insurance product sets them apart from peers. Near-term results face headwinds as growth slows in a softening property market while casualty loss trends remain elevated due to inflation. However, we believe RLI’s proven underwriting discipline and long-term orientation will allow the company to navigate the current cycle and sustain attractive earnings growth over time.

RLI Corp (RLI) is a specialty property and casualty insurer known for its selective business writing and diversified lines, including niche areas such as school buses and Hawaii homeowners. The company's unique culture and incentive structures, along with its historical willingness to walk away from unprofitable business, have led to exceptional financial performance. From 2015 through 2024, RLI's combined ratio averaged 89.3% and its ROE averaged 16.6%, despite being weighed down by excess capital. We were pleased to add to our position at roughly 20x this year’s earnings, as RLI usually commands a premium valuation.

RLI Corp (RLI) is a specialty property and casualty insurer known for its selective business writing and diversified lines, including niche areas such as school buses and Hawaii homeowners. The company's unique culture and incentive structures, along with a historical willingness to walk away from unprofitable business, have led to exceptional financial performance. From 2015 through 2024, RLI's combined ratio averaged 89.3% and its ROE averaged 16.6%. We have owned RLI since 2011 and were pleased to add to our position at roughly 20x this year’s earnings, as the stock usually commands a premium valuation.

RLI Corp. stands as a premier specialty insurance company, distinguished by its exceptional underwriting discipline and a focus on generating consistent underwriting profits. This unique approach allows RLI to build a formidable competitive moat, navigating complex and specialized risks where it can accurately price policies. The company's culture of employee ownership aligns interests towards long-term value creation, while its prudent capital allocation strategy has resulted in a history of returning excess capital to shareholders through regular and special dividends. This combination solidifies RLI's position as an elite operator in the specialty insurance industry.

RLI Corp. stands as a premier specialty insurance company, distinguished by its exceptional underwriting discipline and a focus on generating consistent underwriting profits. This unique approach allows RLI to build a formidable competitive moat, navigating complex and specialized risks where it can accurately price policies. The company's culture of employee ownership aligns interests towards long-term value creation, while its prudent capital allocation strategy has led to a history of returning excess capital to shareholders through regular and special dividends. RLI's disciplined model positions it as an elite operator in the specialty insurance industry.

RLI Corp is a high-quality insurer with strong Combined Ratios and Return on Equity (ROE) that has been owned by the Fund since 2011. We generally like investing in insurers because they take minimal credit risk and are able to pass through cost inflation (with a lag) and are pleased to add to RLI at an attractive price. RLI’s unique culture, incentive structures, and willingness to walk away from unprofitable business have historically led to exceptional financial performance. From 2015 through 2024, the company’s combined ratio has averaged 89.3% and its ROE has averaged 16.6% despite being weighed down by excess capital.