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Table of Contents

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​

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

​

FORM 10-Q

​

(Mark One)

​

☒ | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

​

For the quarterly period ended September 30, 2025

​

or

​

☐ | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

​

For the transition period from to

​

Commission File Number: 001-09463

​

RLI Corp.

(Exact name of registrant as specified in its charter)

​

Delaware | ​ | 37-0889946
(State or other jurisdiction of incorporation or organization) | ​ | (I.R.S. Employer Identification Number)
​ | ​ | ​
9025 North Lindbergh Drive, Peoria, IL | ​ | 61615
(Address of principal executive offices) | ​ | (Zip Code)

​

(309) 692-1000

(Registrant’s telephone number, including area code)

​

Securities registered pursuant to Section 12(b) of the Act:

​

​ | ​ | ​
Title of each class | Trading Symbol | Name of each exchange on which registered
Common Stock $0.01 par value | RLI | New York Stock Exchange

​

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

​

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

​

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

​

​ | ​ | ​ | ​
Large accelerated filer ☒ | Accelerated filer ☐ | Non-accelerated filer ☐ | Smaller reporting company ☐
​ | ​ | ​ | Emerging growth company ☐

​

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

​

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

​

APPLICABLE ONLY TO CORPORATE ISSUERS:

​

As of October 14, 2025, the number of shares outstanding of the registrant’s Common Stock was 91,837,835.

​

​

​

​

​

Table of Contents

Table of Contents

​

​ | ​ | ​
​ | ​ | Page
Part I - Financial Information | 3
Item 1. | Financial Statements | 3
​ | Condensed Consolidated Statements of Earnings and Comprehensive Earnings for the Three and Nine-Month Periods Ended September 30, 2025 and 2024 (unaudited) | 3
​ | Condensed Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024 (unaudited) | 4
​ | Condensed Consolidated Statements of Shareholders’ Equity for the Three and Nine-Month Periods Ended September 30, 2025 and 2024 (unaudited) | 5
​ | Condensed Consolidated Statements of Cash Flows for the Nine-Month Periods Ended September 30, 2025 and 2024 (unaudited) | 6
​ | Notes to Unaudited Condensed Consolidated Financial Statements | 7
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 23
Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 36
Item 4. | Controls and Procedures | 36
Part II - Other Information | 37
Item 1. | Legal Proceedings | 37
Item 1a. | Risk Factors | 37
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 37
Item 3. | Defaults upon Senior Securities | 37
Item 4. | Mine Safety Disclosures | 37
Item 5. | Other Information | 37
Item 6. | Exhibits | 37
Signatures | 38

​

​

​

Table of Contents

PART I - FINANCIAL INFORMATION

​

Item 1.Financial Statements

​

RLI Corp. and Subsidiaries

Condensed Consolidated Statements of Earnings and Comprehensive Earnings

(Unaudited)

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | For the Three Months | ​ | For the Nine Months
​ | ​ | Ended September 30, | ​ | Ended September 30,
(in thousands, except per share data) |  | 2025 |  | 2024 |  | 2025 |  | 2024
Net premiums earned | ​ | $ | 407,695 | ​ | $ | 389,489 | ​ | $ | 1,207,944 | ​ | $ | 1,129,230
Net investment income | ​ | ​ | 41,270 | ​ | ​ | 36,694 | ​ | ​ | 117,414 | ​ | ​ | 103,502
Net realized gains | ​ | ​ | 18,318 | ​ | ​ | 5,420 | ​ | ​ | 48,234 | ​ | ​ | 11,222
Net unrealized gains on equity securities | ​ | ​ | 41,981 | ​ | ​ | 38,392 | ​ | ​ | 43,163 | ​ | ​ | 87,314
Consolidated revenue | ​ | $ | 509,264 | ​ | $ | 469,995 | ​ | $ | 1,416,755 | ​ | $ | 1,331,268
Losses and settlement expenses | ​ | ​ | 187,998 | ​ | ​ | 202,118 | ​ | ​ | 549,814 | ​ | ​ | 513,741
Policy acquisition costs | ​ | ​ | 128,937 | ​ | ​ | 117,811 | ​ | ​ | 378,126 | ​ | ​ | 342,186
Insurance operating expenses | ​ | ​ | 30,215 | ​ | ​ | 28,868 | ​ | ​ | 86,683 | ​ | ​ | 84,892
Interest expense on debt | ​ | ​ | 1,364 | ​ | ​ | 1,617 | ​ | ​ | 4,049 | ​ | ​ | 4,839
General corporate expenses | ​ | ​ | 5,045 | ​ | ​ | 3,994 | ​ | ​ | 12,747 | ​ | ​ | 13,144
Total expenses | ​ | $ | 353,559 | ​ | $ | 354,408 | ​ | $ | 1,031,419 | ​ | $ | 958,802
Equity in earnings of unconsolidated investees | ​ | ​ | 1,540 | ​ | ​ | 1,238 | ​ | ​ | 7,055 | ​ | ​ | 7,653
Earnings before income taxes | ​ | $ | 157,245 | ​ | $ | 116,825 | ​ | $ | 392,391 | ​ | $ | 380,119
Income tax expense | ​ | ​ | 32,635 | ​ | ​ | 21,798 | ​ | ​ | 80,231 | ​ | ​ | 75,200
Net earnings | ​ | $ | 124,610 | ​ | $ | 95,027 | ​ | $ | 312,160 | ​ | $ | 304,919
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Other comprehensive earnings (loss), net of tax | ​ | ​ | 27,674 | ​ | ​ | 80,293 | ​ | ​ | 76,405 | ​ | ​ | 59,779
Comprehensive earnings | ​ | $ | 152,284 | ​ | $ | 175,320 | ​ | $ | 388,565 | ​ | $ | 364,698
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Basic net earnings per share | ​ | $ | 1.36 | ​ | $ | 1.04 | ​ | $ | 3.40 | ​ | $ | 3.33
Diluted net earnings per share | ​ | $ | 1.35 | ​ | $ | 1.03 | ​ | $ | 3.38 | ​ | $ | 3.30
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Weighted average number of common shares outstanding: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Basic | ​ | ​ | 91,849 | ​ | ​ | 91,559 | ​ | ​ | 91,816 | ​ | ​ | 91,467
Diluted | ​ | ​ | 92,310 | ​ | ​ | 92,441 | ​ | ​ | 92,460 | ​ | ​ | 92,370

​

See accompanying notes to the unaudited condensed consolidated financial statements.

​

3

​

Table of Contents

RLI Corp. and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited)

​

​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | September 30, | ​ | December 31,
(in thousands, except share and per share data) |  | 2025 |  | 2024
ASSETS | ​ | ​ | ​ | ​ | ​ | ​
Investments and cash: | ​ | ​ | ​ | ​ | ​ | ​
Fixed income: | ​ | ​ | ​ | ​ | ​ | ​
Available-for-sale, at fair value | ​ | $ | 3,536,484 | ​ | $ | 3,175,796
(amortized cost of $3,655,954 and allowance for credit losses of $899 at 9/30/25) | ​ | ​ | ​ | ​ | ​ | ​
(amortized cost of $3,391,159 and allowance for credit losses of $197 at 12/31/24) | ​ | ​ | ​ | ​ | ​ | ​
Equity securities, at fair value (cost - $513,255 at 9/30/25 and $417,897 at 12/31/24) | ​ | ​ | 878,872 | ​ | ​ | 736,191
Short-term investments, at cost which approximates fair value | ​ | ​ | 165,706 | ​ | ​ | 74,915
Other invested assets | ​ | ​ | 56,494 | ​ | ​ | 57,939
Cash | ​ | ​ | 52,621 | ​ | ​ | 39,790
Total investments and cash | ​ | $ | 4,690,177 | ​ | $ | 4,084,631
Accrued investment income | ​ | ​ | 29,584 | ​ | ​ | 28,319
Premiums and reinsurance balances receivable, net of allowances for uncollectible amounts of $23,452 at 9/30/25 and $22,932 at 12/31/24 | ​ | ​ | 231,530 | ​ | ​ | 230,534
Ceded unearned premium | ​ | ​ | 123,039 | ​ | ​ | 124,955
Reinsurance balances recoverable on unpaid losses and settlement expenses, net of allowances for uncollectible amounts of $11,063 at 9/30/25 and $9,580 at 12/31/24 | ​ | ​ | 769,611 | ​ | ​ | 755,425
Deferred policy acquisition costs | ​ | ​ | 181,488 | ​ | ​ | 166,214
Property and equipment, at cost, net of accumulated depreciation of $82,340 at 9/30/25 and $76,330 at 12/31/24 | ​ | ​ | 41,094 | ​ | ​ | 43,172
Investment in unconsolidated investees | ​ | ​ | 63,652 | ​ | ​ | 56,477
Goodwill and intangibles | ​ | ​ | 53,562 | ​ | ​ | 53,562
Income taxes-deferred | ​ | ​ | - | ​ | ​ | 7,793
Other assets | ​ | ​ | 63,263 | ​ | ​ | 77,720
TOTAL ASSETS | ​ | $ | 6,247,000 | ​ | $ | 5,628,802
​ | ​ | ​ | ​ | ​ | ​ | ​
LIABILITIES AND SHAREHOLDERS’ EQUITY | ​ | ​ | ​ | ​ | ​ | ​
Liabilities | ​ | ​ | ​ | ​ | ​ | ​
Unpaid losses and settlement expenses | ​ | $ | 2,873,054 | ​ | $ | 2,693,470
Unearned premiums | ​ | ​ | 1,035,756 | ​ | ​ | 984,140
Reinsurance balances payable | ​ | ​ | 35,951 | ​ | ​ | 44,681
Funds held | ​ | ​ | 113,753 | ​ | ​ | 97,380
Income taxes-current | ​ | ​ | 9,792 | ​ | ​ | 749
Income taxes-deferred | ​ | ​ | 23,157 | ​ | ​ | —
Debt | ​ | ​ | 100,000 | ​ | ​ | 100,000
Accrued expenses | ​ | ​ | 110,660 | ​ | ​ | 124,242
Other liabilities | ​ | ​ | 70,701 | ​ | ​ | 62,173
TOTAL LIABILITIES | ​ | $ | 4,372,824 | ​ | $ | 4,106,835
​ | ​ | ​ | ​ | ​ | ​ | ​
Shareholders’ Equity | ​ | ​ | ​ | ​ | ​ | ​
Common stock ($0.01 par value) | ​ | ​ | ​ | ​ | ​ | ​
(Shares authorized - 400,000,000) | ​ | ​ | ​ | ​ | ​ | ​
(137,698,263 shares issued, 91,837,835 shares outstanding at 9/30/25) | ​ | ​ | ​ | ​ | ​ | ​
(137,598,560 shares issued, 91,738,132 shares outstanding at 12/31/24) | ​ | $ | 1,377 | ​ | $ | 1,376
Paid-in capital | ​ | ​ | 374,468 | ​ | ​ | 367,645
Accumulated other comprehensive earnings (loss) | ​ | ​ | (97,318) | ​ | ​ | (173,723)
Retained earnings | ​ | ​ | 1,988,648 | ​ | ​ | 1,719,668
Deferred compensation | ​ | ​ | 12,713 | ​ | ​ | 13,498
Less: Treasury shares, at cost (45,860,428 shares at 9/30/25 and 12/31/24) | ​ | ​ | (405,712) | ​ | ​ | (406,497)
TOTAL SHAREHOLDERS’ EQUITY | ​ | $ | 1,874,176 | ​ | $ | 1,521,967
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | ​ | $ | 6,247,000 | ​ | $ | 5,628,802

​

See accompanying notes to the unaudited condensed consolidated financial statements.

​

4

​

Table of Contents

RLI Corp. and Subsidiaries

Condensed Consolidated Statements of Shareholders’ Equity

(Unaudited)

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ |  | ​ | ​ |  | ​ | ​ |  | ​ | ​ | Accumulated | ​ |  | ​ | ​ |  | ​ | ​ |  | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Other | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | Total | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Comprehensive | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Treasury
​ | ​ | Common | ​ | Shareholders’ | ​ | Common | ​ | Paid-in | ​ | Earnings | ​ | Retained | ​ | Deferred | ​ | Shares
(in thousands, except share and per share data) |  | Shares |  | Equity |  | Stock |  | Capital |  | (Loss) |  | Earnings |  | Compensation |  | at Cost
Balance, January 1, 2024 | ​ | 91,280,094 | ​ | $ | 1,413,514 | ​ | $ | 1,371 | ​ | $ | 361,660 | ​ | $ | (166,303) | ​ | $ | 1,609,785 | ​ | $ | 13,539 | ​ | $ | (406,538)
Net earnings | ​ | — | ​ | ​ | 127,900 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 127,900 | ​ | ​ | — | ​ | ​ | —
Other comprehensive earnings (loss), net of tax | ​ | — | ​ | ​ | (12,671) | ​ | ​ | — | ​ | ​ | — | ​ | ​ | (12,671) | ​ | ​ | — | ​ | ​ | — | ​ | ​ | —
Deferred compensation | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | (790) | ​ | ​ | 790
Share-based compensation | ​ | 139,668 | ​ | ​ | 4,357 | ​ | ​ | 2 | ​ | ​ | 4,355 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | —
Dividends and dividend equivalents ($0.14 per share) | ​ | — | ​ | ​ | (12,348) | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | (12,348) | ​ | ​ | — | ​ | ​ | —
Balance, March 31, 2024 | ​ | 91,419,762 | ​ | $ | 1,520,752 | ​ | $ | 1,373 | ​ | $ | 366,015 | ​ | $ | (178,974) | ​ | $ | 1,725,337 | ​ | $ | 12,749 | ​ | $ | (405,748)
Net earnings | ​ | — | ​ | ​ | 81,992 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 81,992 | ​ | ​ | — | ​ | ​ | —
Other comprehensive earnings (loss), net of tax | ​ | — | ​ | ​ | (7,843) | ​ | ​ | — | ​ | ​ | — | ​ | ​ | (7,843) | ​ | ​ | — | ​ | ​ | — | ​ | ​ | —
Deferred compensation | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 434 | ​ | ​ | (434)
Share-based compensation | ​ | 72,346 | ​ | ​ | 3,084 | ​ | ​ | 1 | ​ | ​ | 3,083 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | —
Dividends and dividend equivalents ($0.15 per share) | ​ | — | ​ | ​ | (13,278) | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | (13,278) | ​ | ​ | — | ​ | ​ | —
Balance, June 30, 2024 | ​ | 91,492,108 | ​ | $ | 1,584,707 | ​ | $ | 1,374 | ​ | $ | 369,098 | ​ | $ | (186,817) | ​ | $ | 1,794,051 | ​ | $ | 13,183 | ​ | $ | (406,182)
Net earnings | ​ | — | ​ | ​ | 95,027 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 95,027 | ​ | ​ | — | ​ | ​ | —
Other comprehensive earnings (loss), net of tax | ​ | — | ​ | ​ | 80,293 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 80,293 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | —
Deferred compensation | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | (1,266) | ​ | ​ | 1,266
Share-based compensation | ​ | 127,732 | ​ | ​ | 1,613 | ​ | ​ | 1 | ​ | ​ | 1,612 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | —
Dividends and dividend equivalents ($0.15 per share) | ​ | — | ​ | ​ | (13,290) | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | (13,290) | ​ | ​ | — | ​ | ​ | —
Balance, September 30, 2024 | ​ | 91,619,840 | ​ | $ | 1,748,350 | ​ | $ | 1,375 | ​ | $ | 370,710 | ​ | $ | (106,524) | ​ | $ | 1,875,788 | ​ | $ | 11,917 | ​ | $ | (404,916)
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Accumulated | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Other | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | Total | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Comprehensive | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Treasury
​ | ​ | Common | ​ | Shareholders’ | ​ | Common | ​ | Paid-in | ​ | Earnings | ​ | Retained | ​ | Deferred | ​ | Shares
(in thousands, except share and per share data) | ​ | Shares | ​ | Equity | ​ | Stock | ​ | Capital | ​ | (Loss) | ​ | Earnings | ​ | Compensation | ​ | at Cost
Balance, January 1, 2025 | ​ | 91,738,132 | ​ | $ | 1,521,967 | ​ | $ | 1,376 | ​ | $ | 367,645 | ​ | $ | (173,723) | ​ | $ | 1,719,668 | ​ | $ | 13,498 | ​ | $ | (406,497)
Net earnings | ​ | — | ​ | ​ | 63,214 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 63,214 | ​ | ​ | — | ​ | ​ | —
Other comprehensive earnings (loss), net of tax | ​ | — | ​ | ​ | 30,030 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 30,030 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | —
Deferred compensation | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | (1,686) | ​ | ​ | 1,686
Share-based compensation | ​ | 34,602 | ​ | ​ | 2,777 | ​ | ​ | — | ​ | ​ | 2,777 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | —
Dividends and dividend equivalents ($0.15 per share) | ​ | — | ​ | ​ | (13,776) | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | (13,776) | ​ | ​ | — | ​ | ​ | —
Balance, March 31, 2025 | ​ | 91,772,734 | ​ | $ | 1,604,212 | ​ | $ | 1,376 | ​ | $ | 370,422 | ​ | $ | (143,693) | ​ | $ | 1,769,106 | ​ | $ | 11,812 | ​ | $ | (404,811)
Net earnings | ​ | — | ​ | ​ | 124,336 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 124,336 | ​ | ​ | — | ​ | ​ | —
Other comprehensive earnings (loss), net of tax | ​ | — | ​ | ​ | 18,701 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 18,701 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | —
Deferred compensation | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 799 | ​ | ​ | (799)
Share-based compensation | ​ | 56,736 | ​ | ​ | 2,118 | ​ | ​ | 1 | ​ | ​ | 2,117 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | —
Dividends and dividend equivalents ($0.16 per share) | ​ | — | ​ | ​ | (14,706) | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | (14,706) | ​ | ​ | — | ​ | ​ | —
Balance, June 30, 2025 | ​ | 91,829,470 | ​ | $ | 1,734,661 | ​ | $ | 1,377 | ​ | $ | 372,539 | ​ | $ | (124,992) | ​ | $ | 1,878,736 | ​ | $ | 12,611 | ​ | $ | (405,610)
Net earnings | ​ | — | ​ | ​ | 124,610 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 124,610 | ​ | ​ | — | ​ | ​ | —
Other comprehensive earnings (loss), net of tax | ​ | — | ​ | ​ | 27,674 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 27,674 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | —
Deferred compensation | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 102 | ​ | ​ | (102)
Share-based compensation | ​ | 8,365 | ​ | ​ | 1,929 | ​ | ​ | — | ​ | ​ | 1,929 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | —
Dividends and dividend equivalents ($0.16 per share) | ​ | — | ​ | ​ | (14,698) | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | (14,698) | ​ | ​ | — | ​ | ​ | —
Balance, September 30, 2025 | ​ | 91,837,835 | ​ | $ | 1,874,176 | ​ | $ | 1,377 | ​ | $ | 374,468 | ​ | $ | (97,318) | ​ | $ | 1,988,648 | ​ | $ | 12,713 | ​ | $ | (405,712)

​

See accompanying notes to the unaudited condensed consolidated financial statements.

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RLI Corp. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

​

​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | For the Nine Months
​ | ​ | Ended September 30,
(in thousands) |  | 2025 |  | 2024
Net cash provided by operating activities | ​ | $ | 457,453 | ​ | $ | 432,139
Cash Flows from Investing Activities | ​ | ​ | ​ | ​ | ​ | ​
Purchase of: | ​ | ​ | ​ | ​ | ​ | ​
Fixed income securities, available-for-sale | ​ | $ | (982,958) | ​ | $ | (591,291)
Equity securities | ​ | ​ | (137,744) | ​ | ​ | (76,568)
Property and equipment | ​ | ​ | (3,736) | ​ | ​ | (4,187)
Other | ​ | ​ | (4,453) | ​ | ​ | (4,356)
Proceeds from sale of: | ​ | ​ | ​ | ​ | ​ | ​
Fixed income securities, available-for-sale | ​ | ​ | 383,181 | ​ | ​ | 80,245
Equity securities | ​ | ​ | 87,874 | ​ | ​ | 44,863
Other | ​ | ​ | 2,790 | ​ | ​ | 4,624
Proceeds from call or maturity of: | ​ | ​ | ​ | ​ | ​ | ​
Fixed income securities, available-for-sale | ​ | ​ | 343,319 | ​ | ​ | 242,955
Net proceeds from sale (purchase) of short-term investments | ​ | ​ | (90,791) | ​ | ​ | (68,373)
Net cash used in investing activities | ​ | $ | (402,518) | ​ | $ | (372,088)
Cash Flows from Financing Activities | ​ | ​ | ​ | ​ | ​ | ​
Cash dividends paid | ​ | $ | (43,146) | ​ | $ | (38,882)
Proceeds from stock option exercises | ​ | ​ | 1,042 | ​ | ​ | 3,041
Net cash used in financing activities | ​ | $ | (42,104) | ​ | $ | (35,841)
Net increase in cash | ​ | $ | 12,831 | ​ | $ | 24,210
Cash at the beginning of the period | ​ | ​ | 39,790 | ​ | ​ | 36,424
Cash at September 30, | ​ | $ | 52,621 | ​ | $ | 60,634

​

See accompanying notes to the unaudited condensed consolidated financial statements.

​

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

​

1. | BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

​

A. BASIS OF PRESENTATION

​

The unaudited interim condensed consolidated financial statements of RLI Corp. (the Company) and subsidiaries have been prepared in accordance with generally accepted accounting principles in the United States of America (GAAP). These condensed consolidated financial statements do not include all the disclosures required by GAAP for annual financial statements and should be read in conjunction with our 2024 Annual Report on Form 10-K. In the opinion of the Company’s management, the condensed consolidated financial statements reflect all adjustments, of a normal and recurring nature, that are necessary for fair financial statement presentation. The results of operations for any interim period are not necessarily indicative of the operating results for a full year.

​

The preparation of the unaudited condensed consolidated financial statements requires management to make estimates and assumptions relating to the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenue and expenses during the period. These estimates are inherently subject to change and actual results could differ significantly from these estimates.

​

On January 15, 2025, RLI Corp. effected a two-for-one split of its common stock and a proportionate increase in the number of authorized shares. All share and per share information throughout this report has been retroactively adjusted to reflect the stock split. The shares of common stock retain a par value of $0.01 per share.

​

B. ADOPTED ACCOUNTING STANDARDS

​

No new accounting standards applicable in 2025 materially impact our financial statements.

​

C. PROSPECTIVE ACCOUNTING STANDARDS

​

2023-09—Income Taxes (Topic 740): Improvements to Income Tax Disclosures

​

The guidance in ASU 2023-09 is designed to increase transparency about income tax information through improvements to the tax rate reconciliation and disclosure of income taxes paid, disaggregated by federal, state and foreign jurisdictions. This ASU is effective for fiscal years beginning after December 15, 2024. Although the Company continues to evaluate the impact of adopting this new accounting standard, the amendments are disclosure-related and should not have a material impact on our financial statements.

​

2024-03—Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses

​

The guidance in ASU 2024-03 requires disaggregation of certain expenses into specified categories in the notes to the financial statements. Each relevant expense caption on the face of the statement of earnings that includes specific expenses, such as employee compensation, depreciation and intangible asset amortization, are required to be separately disclosed in a tabular presentation. Additionally, a separate total of selling expenses is required to be disclosed, along with a definition of what is included in selling expenses.

​

This ASU is effective for fiscal years beginning after December 15, 2026 and interim periods beginning after December 15, 2027. Although the Company continues to evaluate the impact of adopting this new accounting standard, the amendments are disclosure-related and should not have a material impact on our financial statements.

​

2025-06—Intangibles-Goodwill and Other – Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal -Use Software

​

The guidance in ASU 2025-06 removes the concept of project stages and requires the capitalization of software costs when management has committed to funding the software project and it is probable that the project will be completed. This ASU is effective for fiscal years beginning after December 15, 2027, but early adoption is permitted as of the beginning of an

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annual reporting period. The Company continues to evaluate the impact of adopting this new accounting standard, but does not expect the standard will have a material impact on our financial statements.

​

D. REINSURANCE

​

Ceded unearned premiums and reinsurance balances recoverable on unpaid losses and settlement expenses are reported separately as an asset, rather than being netted with the related liability, since reinsurance does not relieve the Company of our liability to policyholders. Such balances are subject to the credit risk associated with the individual reinsurer. We continually monitor the financial condition of our reinsurers and actively follow up on any past due or disputed amounts. As part of our monitoring efforts, we review reinsurers’ annual financial statements and Securities and Exchange Commission filings for those that are publicly traded. We also review insurance industry developments that may impact the financial condition of our reinsurers. We analyze the credit risk associated with our reinsurance balances recoverable by monitoring the AM Best and Standard & Poor’s (S&P) ratings of our reinsurers. We subject our reinsurance balances recoverable to detailed recoverability tests, including a segment-based analysis using the average default rating percentage by S&P rating, which assists the Company in assessing the sufficiency of its allowance. Additionally, we perform an in-depth reinsurer financial condition analysis prior to the renewal of our reinsurance placements.

​

Our policy is to charge to earnings, in the form of an allowance, an estimate of unrecoverable amounts from reinsurers. This allowance is reviewed on an ongoing basis to ensure that the amount makes a reasonable provision for reinsurance balances that we may be unable to recover. Once regulatory action (such as receivership, finding of insolvency, order of conservation or order of liquidation) is taken against a reinsurer, the paid and unpaid recoverable balances for the reinsurer are specifically identified and written off through the use of our allowance for estimated unrecoverable amounts from reinsurers. When we write-off such a balance, it is done in full. We then re-evaluate the overall allowance and determine whether the balance is sufficient and, if needed, an additional allowance is recognized.

​

The allowances for uncollectible amounts on paid and unpaid reinsurance balances recoverable were $17 million and $11 million, respectively, at September 30, 2025 and $17 million and $10 million, respectively, at December 31, 2024. Changes in the allowances were due to changes in the amount of reinsurance balances outstanding, the composition of reinsurers from whom the balances were recoverable and their associated S&P default ratings. No write-offs were applied to the allowances in the first nine months of 2025 and less than $1 million was recovered.

​

E. INTANGIBLE ASSETS

​

The composition of goodwill and intangible assets at September 30, 2025 and December 31, 2024 is detailed in the following table:

​

​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | September 30, | ​ | December 31,
(in thousands) |  | 2025 |  | 2024
Goodwill | ​ | ​ | ​ | ​ | ​ | ​
Surety | ​ | $ | 40,816 | ​ | $ | 40,816
Casualty | ​ | ​ | 5,246 | ​ | ​ | 5,246
Total goodwill | ​ | $ | 46,062 | ​ | $ | 46,062
Indefinite-lived intangibles | ​ | ​ | 7,500 | ​ | ​ | 7,500
Total goodwill and intangibles | ​ | $ | 53,562 | ​ | $ | 53,562

​

Annual impairment assessments were performed on our goodwill and state insurance license indefinite-lived intangible assets during the second quarter of 2025. Based upon these reviews, none of the assets were impaired. In addition, there were no triggering events as of September 30, 2025 that would suggest an updated impairment test would be needed for our goodwill and intangible assets.

​

F. EARNINGS PER SHARE

​

Basic earnings per share (EPS) is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the dilution that could occur if securities or other contracts to issue common stock or common stock equivalents were exercised or converted into common stock. When inclusion of these items increases the earnings per share or reduces the loss per share, the effect on earnings is anti-dilutive. Under these circumstances, the diluted net earnings or net loss per share is computed excluding these items. The following

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represents a reconciliation of the numerator and denominator of the basic and diluted EPS computations contained in the unaudited condensed consolidated financial statements:

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | For the Three Months | ​ | For the Three Months
​ | ​ | Ended September 30, 2025 | ​ | Ended September 30, 2024
​ | ​ | Income | ​ | Shares | ​ | Per Share | ​ | Income | ​ | Shares | ​ | Per Share
(in thousands, except per share data) |  | (Numerator) |  | (Denominator) |  | Amount |  | (Numerator) |  | (Denominator) |  | Amount
Basic EPS | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Earnings available to common shareholders | ​ | $ | 124,610 | ​ |  | 91,849 | ​ | $ | 1.36 | ​ | $ | 95,027 | ​ |  | 91,559 | ​ | $ | 1.04
Effect of Dilutive Securities | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Stock options and restricted stock units | ​ | ​ | — | ​ |  | 461 | ​ | ​ | ​ | ​ | ​ | — | ​ |  | 882 | ​ | ​ | ​
Diluted EPS | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Earnings available to common shareholders | ​ | $ | 124,610 | ​ |  | 92,310 | ​ | $ | 1.35 | ​ | $ | 95,027 | ​ |  | 92,441 | ​ | $ | 1.03
Anti-dilutive securities excluded from diluted EPS | ​ | ​ | ​ | ​ | ​ | 819 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | 48 | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | For the Nine Months | ​ | For the Nine Months
​ | ​ | Ended September 30, 2025 | ​ | Ended September 30, 2024
​ | ​ | Income | ​ | Shares | ​ | Per Share | ​ | Income | ​ | Shares | ​ | Per Share
(in thousands, except per share data) |  | (Numerator) |  | (Denominator) |  | Amount |  | (Numerator) |  | (Denominator) |  | Amount
Basic EPS | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Earnings available to common shareholders | ​ | $ | 312,160 | ​ |  | 91,816 | ​ | $ | 3.40 | ​ | $ | 304,919 | ​ |  | 91,467 | ​ | $ | 3.33
Effect of Dilutive Securities | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Stock options and restricted stock units | ​ | ​ | — | ​ |  | 644 | ​ | ​ | ​ | ​ | ​ | — | ​ |  | 903 | ​ | ​ | ​
Diluted EPS | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Earnings available to common shareholders | ​ | $ | 312,160 | ​ |  | 92,460 | ​ | $ | 3.38 | ​ | $ | 304,919 | ​ |  | 92,370 | ​ | $ | 3.30
Anti-dilutive securities excluded from diluted EPS | ​ | ​ | ​ | ​ | ​ | 209 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | 48 | ​ | ​ | ​

​

G. COMPREHENSIVE EARNINGS

​

Our comprehensive earnings include net earnings plus after-tax unrealized gains and losses on our available-for-sale fixed income portfolio. In reporting the components of comprehensive earnings, we used the federal statutory tax rate of 21 percent. Other comprehensive earnings (loss), as shown in the consolidated statements of earnings and comprehensive earnings, is net of tax expense of $7 million for the third quarter of 2025, compared to $21 million for the same period in 2024. For the nine-month period ended September 30, 2025, other comprehensive earnings (loss) is net of tax expense of $20 million, compared to $16 million for the same period in 2024.

​

Unrealized gains, net of tax, recognized in other comprehensive earnings (loss) were $76 million for the first nine months of 2025, compared to $60 million in the first nine months of 2024. The unrealized gains were attributable to a decrease in interest rates, which increased the fair value of securities held in the fixed income portfolio.

​

The following table illustrates the changes in the balance of each component of accumulated other comprehensive earnings (loss) for each period presented in the unaudited condensed consolidated financial statements:

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
(in thousands) | ​ | For the Three Months | ​ | For the Nine Months
​ | ​ | Ended September 30, | ​ | Ended September 30,
Unrealized Gains (Losses) on Available-for-Sale Securities |  | 2025 |  | 2024 |  | 2025 |  | 2024
Beginning balance | ​ | $ | (124,992) | ​ | $ | (186,817) | ​ | $ | (173,723) | ​ | $ | (166,303)
Other comprehensive earnings (loss) before reclassifications | ​ | ​ | 29,431 | ​ | ​ | 79,210 | ​ | ​ | 77,253 | ​ | ​ | 57,364
Amounts reclassified from accumulated other comprehensive earnings | ​ | ​ | (1,757) | ​ | ​ | 1,083 | ​ | ​ | (848) | ​ | ​ | 2,415
Net current-period other comprehensive earnings (loss) | ​ | $ | 27,674 | ​ | $ | 80,293 | ​ | $ | 76,405 | ​ | $ | 59,779
Ending balance | ​ | $ | (97,318) | ​ | $ | (106,524) | ​ | $ | (97,318) | ​ | $ | (106,524)
Balance of securities for which an allowance for credit losses has been recognized in net earnings | ​ | ​ | ​ | ​ | ​ | ​ | ​ | $ | 1,715 | ​ | $ | 1,813

​

Credit losses on or the sale of an available-for-sale security results in amounts being reclassified from accumulated other comprehensive earnings (loss) to current period net earnings. The effects of reclassifications out of accumulated other comprehensive earnings (loss) by the respective line items of net earnings are presented in the following table:

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​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Amount Reclassified from Accumulated Other | ​ | ​ | ​
(in thousands) | ​ | Comprehensive Earnings (Loss) | ​ | ​ | ​
​ | ​ | For the Three Months | ​ | For the Nine Months | ​ | ​ | ​
Component of Accumulated | ​ | Ended September 30, | ​ | Ended September 30, | ​ | ​ | Affected line item in the
Other Comprehensive Earnings (Loss) |  | 2025 |  | 2024 |  | 2025 |  | 2024 |  |  | Statement of Earnings
Unrealized gains and losses on available-for-sale securities | ​ | $ | 2,878 | ​ | $ | (1,365) | ​ | $ | 1,775 | ​ | $ | (3,129) | ​ | ​ | Net realized gains (losses)
​ | ​ | ​ | (654) | ​ | ​ | (6) | ​ | ​ | (702) | ​ | ​ | 72 | ​ | ​ | Credit gains (losses) presented within net realized gains
​ | ​ | $ | 2,224 | ​ | $ | (1,371) | ​ | $ | 1,073 | ​ | $ | (3,057) | ​ | ​ | Earnings (loss) before income taxes
​ | ​ | ​ | (467) | ​ | ​ | 288 | ​ | ​ | (225) | ​ | ​ | 642 | ​ | ​ | Income tax (expense) benefit
​ | ​ | $ | 1,757 | ​ | $ | (1,083) | ​ | $ | 848 | ​ | $ | (2,415) | ​ | ​ | Net earnings (loss)

​

H. FAIR VALUE MEASUREMENTS

​

Fair value is defined as the price in the principal market that would be received for an asset to facilitate an orderly transaction between market participants on the measurement date. We determined the fair value of certain financial instruments based on their underlying characteristics and relevant transactions in the marketplace. We maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

​

The following are the levels of the fair value hierarchy and a brief description of the type of valuation inputs that are used to establish each level. Financial assets are classified based upon the lowest level of significant input that is used to determine fair value.

​

Level 1 is applied to valuations based on readily available, unadjusted quoted prices in active markets for identical assets.

​

Level 2 is applied to valuations based upon quoted prices for similar assets in active markets, quoted prices for identical or similar assets in inactive markets; or valuations based on models where the significant inputs are observable (e.g. interest rates, yield curves, prepayment speeds, default rates, loss severities) or can be corroborated by observable market data.

​

Level 3 is applied to valuations that are derived from techniques in which one or more of the significant inputs are unobservable.

​

As a part of management’s process to determine fair value, we utilize widely recognized, third-party pricing sources to determine our fair values. We have obtained an understanding of the third-party pricing sources’ valuation methodologies and inputs. The following is a description of the valuation techniques used for financial assets that are measured at fair value, including the general classification of such assets pursuant to the fair value hierarchy.

​

Corporate, Agencies, Government and Municipal Bonds: The pricing vendor employs a multi-dimensional model which uses standard inputs including (listed in approximate order of priority for use) benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, market bids/offers and other reference data. The pricing vendor also monitors market indicators, as well as industry and economic events. All bonds valued using these techniques are classified as Level 2. All corporate, agency, government and municipal securities are deemed Level 2.

​

Mortgage-backed Securities (MBS)/Commercial Mortgage-backed Securities (CMBS) and Asset-backed Securities (ABS): The pricing vendor evaluation methodology primarily includes interest rate movements and new issue data. Evaluation of the tranches (non-volatile, volatile or credit sensitivity) is based on the pricing vendors’ interpretation of accepted modeling and pricing conventions. This information is then used to determine the cash flows for each tranche, benchmark yields, pre-payment assumptions and to incorporate collateral performance. To evaluate MBS and CMBS volatility, an option adjusted spread model is used in combination with models that simulate interest rate paths to determine market price information. This process allows the pricing vendor to obtain evaluations of a broad universe of securities in a way that reflects changes in yield curve, index rates, implied volatility, mortgage rates and recent trade activity. MBS/CMBS and ABS with corroborated, observable inputs are classified as Level 2. All of our MBS/CMBS and ABS are deemed Level 2.

​

Regulation D Private Placement Securities: All Regulation D privately-placed bonds are classified as corporate securities and deemed Level 3. The pricing vendor evaluation methodology for these securities includes a combination of

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observable and unobservable inputs. Observable inputs include public corporate spread matrices classified by sector, rating and average life, as well as investment and non-investment grade matrices created from fixed income indices. Unobservable inputs include a liquidity spread premium calculated based on public corporate spread and private corporate spread matrices. The quantitative detail of the liquidity spread premium is neither provided nor reasonably available to the Company. An increase to the credit spread assumptions would result in a lower fair value.

​

For all of our fixed income securities classified as Level 2, we periodically conduct a review to assess the reasonableness of the fair values provided by our pricing services. Our review consists of a two-pronged approach. First, we compare prices provided by our pricing services to those provided by an additional source. In some cases, we obtain prices from securities brokers and compare them to the prices provided by our pricing services. If discrepancies are found in our comparisons, we compare our prices to actual reported trade data for like securities. No changes to the fair values supplied by our pricing services have occurred as a result of our reviews. Based on these assessments, we have determined that the fair values of our Level 2 fixed income securities provided by our pricing services are reasonable.

​

Equity Securities: As of September 30, 2025, nearly all of our equity holdings were traded on an exchange. Exchange traded equities have readily observable price levels and are classified as Level 1 (fair value based on quoted market prices). Pricing for the equity securities not traded on an exchange is provided by a third-party pricing source using observable inputs and are classified as Level 2. Pricing for equity securities not traded on an exchange rely on one or more unobservable inputs and are classified as Level 3.

​

Due to the relatively short-term nature of cash, short-term investments, accounts receivable and accounts payable, their carrying amounts are reasonable estimates of fair value. Our investments in private funds, classified as other invested assets, are measured using the investments’ net asset value per share and are not categorized within the fair value hierarchy.

​

​

2. INVESTMENTS

​

Our investments are primarily composed of fixed income debt securities and common stock equity securities. We carry our equity securities at fair value and categorize all of our debt securities as available-for-sale, which are carried at fair value.

​

Realized gains and losses on disposition of investments are based on the specific identification of the investments sold on the settlement date. The following is a summary of the disposition of fixed income and equity securities for the nine-month periods ended September 30, 2025 and 2024:

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Sales | ​ | Proceeds | ​ | Gross Realized | ​ | Net Realized
(in thousands) |  | From Sales |  | Gains |  | Losses |  | Gain (Loss)
2025 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Fixed income securities - available-for-sale | ​ | $ | 383,956 | ​ | $ | 5,076 | ​ | $ | (3,219) | ​ | $ | 1,857
Equity securities | ​ | ​ | 87,874 | ​ | ​ | 46,478 | ​ | ​ | (991) | ​ | ​ | 45,487
2024 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Fixed income securities - available-for-sale | ​ | $ | 98,696 | ​ | $ | 538 | ​ | $ | (2,489) | ​ | $ | (1,951)
Equity securities | ​ | ​ | 44,863 | ​ | ​ | 20,276 | ​ | ​ | (340) | ​ | ​ | 19,936
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Calls/Maturities | ​ | ​ | ​ | ​ | Gross Realized | ​ | Net Realized
(in thousands) |  | Proceeds |  | Gains |  | Losses |  | Gain (Loss)
2025 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Fixed income securities - available-for-sale | ​ | $ | 344,629 | ​ | $ | 271 | ​ | $ | (72) | ​ | $ | 199
2024 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Fixed income securities - available-for-sale | ​ | $ | 240,200 | ​ | $ | 89 | ​ | $ | (1,062) | ​ | $ | (973)

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FAIR VALUE MEASUREMENTS

​

Assets measured at fair value on a recurring basis as of September 30, 2025 and December 31, 2024 are summarized below:

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | As of September 30, 2025
​ | ​ | Quoted Prices in | ​ | Significant Other | ​ | Significant | ​ | ​ | ​
​ | ​ | Active Markets for | ​ | Observable | ​ | Unobservable | ​ | ​ | ​
​ | ​ | Identical Assets | ​ | Inputs | ​ | Inputs | ​ | ​ | ​
(in thousands) |  | (Level 1) |  | (Level 2) |  | (Level 3) |  | Total
Fixed income securities - available-for-sale | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
U.S. government | ​ | $ | — | ​ | $ | 399,593 | ​ | $ | — | ​ | $ | 399,593
U.S. agency | ​ | ​ | — | ​ | ​ | 55,483 | ​ | ​ | — | ​ | ​ | 55,483
Non-U.S. government & agency | ​ | ​ | — | ​ | ​ | 11,376 | ​ | ​ | 1,001 | ​ | ​ | 12,377
Agency MBS | ​ | ​ | — | ​ | ​ | 604,351 | ​ | ​ | — | ​ | ​ | 604,351
ABS/CMBS/MBS* | ​ | ​ | — | ​ | ​ | 563,754 | ​ | ​ | — | ​ | ​ | 563,754
Corporate | ​ | ​ | — | ​ | ​ | 1,393,777 | ​ | ​ | 96,258 | ​ | ​ | 1,490,035
Municipal | ​ | ​ | — | ​ | ​ | 410,891 | ​ | ​ | — | ​ | ​ | 410,891
Total fixed income securities - available-for-sale | ​ | $ | — | ​ | $ | 3,439,225 | ​ | $ | 97,259 | ​ | $ | 3,536,484
Equity securities | ​ | ​ | 874,621 | ​ | ​ | — | ​ | ​ | 4,251 | ​ | ​ | 878,872
Total | ​ | $ | 874,621 | ​ | $ | 3,439,225 | ​ | $ | 101,510 | ​ | $ | 4,415,356

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | As of December 31, 2024
​ | ​ | Quoted Prices in | ​ | Significant Other | ​ | Significant | ​ | ​ | ​
​ | ​ | Active Markets for | ​ | Observable | ​ | Unobservable | ​ | ​ | ​
​ | ​ | Identical Assets | ​ | Inputs | ​ | Inputs | ​ | ​ | ​
(in thousands) |  | (Level 1) |  | (Level 2) |  | (Level 3) |  | Total
Fixed income securities - available-for-sale | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
U.S. government | ​ | $ | — | ​ | $ | 515,635 | ​ | $ | — | ​ | $ | 515,635
U.S. agency | ​ | ​ | — | ​ | ​ | 54,338 | ​ | ​ | — | ​ | ​ | 54,338
Non-U.S. government & agency | ​ | ​ | — | ​ | ​ | 6,898 | ​ | ​ | 973 | ​ | ​ | 7,871
Agency MBS | ​ | ​ | — | ​ | ​ | 396,223 | ​ | ​ | — | ​ | ​ | 396,223
ABS/CMBS/MBS* | ​ | ​ | — | ​ | ​ | 410,248 | ​ | ​ | — | ​ | ​ | 410,248
Corporate | ​ | ​ | — | ​ | ​ | 1,256,991 | ​ | ​ | 89,530 | ​ | ​ | 1,346,521
Municipal | ​ | ​ | — | ​ | ​ | 444,960 | ​ | ​ | — | ​ | ​ | 444,960
Total fixed income securities - available-for-sale | ​ | $ | — | ​ | $ | 3,085,293 | ​ | $ | 90,503 | ​ | $ | 3,175,796
Equity securities | ​ | ​ | 731,569 | ​ | ​ | — | ​ | ​ | 4,622 | ​ | ​ | 736,191
Total | ​ | $ | 731,569 | ​ | $ | 3,085,293 | ​ | $ | 95,125 | ​ | $ | 3,911,987

* | Non-agency asset-backed, commercial mortgage-backed and mortgage-backed securities

​

The following table summarizes changes in the balance of securities whose fair value was measured using significant unobservable inputs (Level 3).

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Three Months Ended September 30, | ​ | Nine Months Ended September 30,
(in thousands) | ​ | 2025 |  | 2024 |  | 2025 |  | 2024
Beginning balance | ​ | $ | 101,534 | ​ | $ | 72,680 | ​ | $ | 95,125 | ​ | $ | 62,096
Net realized and unrealized gains (losses) | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Included in other comprehensive earnings (loss) | ​ | ​ | 1,130 | ​ | ​ | 3,104 | ​ | ​ | 2,922 | ​ | ​ | 2,789
Purchases | ​ | ​ | 6,995 | ​ | ​ | 16,069 | ​ | ​ | 15,093 | ​ | ​ | 28,379
Sales / Calls / Maturities | ​ | ​ | (8,149) | ​ | ​ | (326) | ​ | ​ | (11,630) | ​ | ​ | (1,737)
Transfers into Level 3 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | —
Transfers out of Level 3 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | —
Balance as of September 30, | ​ | $ | 101,510 | ​ | $ | 91,527 | ​ | $ | 101,510 | ​ | $ | 91,527
Change in unrealized gains (losses) during the period for Level 3 assets held at period-end - included in other comprehensive earnings (loss) | ​ | $ | 1,244 | ​ | $ | 3,104 | ​ | $ | 2,899 | ​ | $ | 2,789

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The amortized cost and fair value of available-for-sale fixed income securities by contractual maturity as of September 30, 2025 were as follows:

​

​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | September 30, 2025
(in thousands) |  | Amortized Cost |  | Fair Value
Due in one year or less | ​ | $ | 263,214 | ​ | $ | 262,065
Due after one year through five years | ​ | ​ | 743,950 | ​ | ​ | 739,290
Due after five years through 10 years | ​ | ​ | 890,177 | ​ | ​ | 891,802
Due after 10 years | ​ | ​ | 548,742 | ​ | ​ | 475,222
ABS/CMBS/MBS* | ​ | ​ | 1,209,871 | ​ | ​ | 1,168,105
Total available-for-sale | ​ | $ | 3,655,954 | ​ | $ | 3,536,484

* | Asset-backed, commercial mortgage-backed and mortgage-backed securities

​

The amortized cost and fair value of available-for-sale securities at September 30, 2025 and December 31, 2024 are presented in the tables below. Amortized cost does not include accrued interest receivable of $28 million as of September 30, 2025 and $27 million as of December 31, 2024.

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | September 30, 2025
​ | ​ | Cost or | ​ | Allowance | ​ | Gross | ​ | Gross | ​ | ​ | ​
​ | ​ | Amortized | ​ | for Credit | ​ | Unrealized | ​ | Unrealized | ​ | Fair
(in thousands) |  | Cost |  | Losses |  | Gains |  | Losses |  | Value
U.S. government | ​ | $ | 395,751 | ​ | $ | — | ​ | $ | 5,165 | ​ | $ | (1,323) | ​ | $ | 399,593
U.S. agency | ​ | ​ | 55,268 | ​ | ​ | — | ​ | ​ | 850 | ​ | ​ | (635) | ​ | ​ | 55,483
Non-U.S. government & agency | ​ | ​ | 12,730 | ​ | ​ | — | ​ | ​ | 261 | ​ | ​ | (614) | ​ | ​ | 12,377
Agency MBS | ​ | ​ | 632,284 | ​ | ​ | — | ​ | ​ | 3,532 | ​ | ​ | (31,465) | ​ | ​ | 604,351
ABS/CMBS/MBS* | ​ | ​ | 577,587 | ​ | ​ | (614) | ​ | ​ | 3,570 | ​ | ​ | (16,789) | ​ | ​ | 563,754
Corporate | ​ | ​ | 1,501,345 | ​ | ​ | (285) | ​ | ​ | 17,536 | ​ | ​ | (28,561) | ​ | ​ | 1,490,035
Municipal | ​ | ​ | 480,989 | ​ | ​ | — | ​ | ​ | 883 | ​ | ​ | (70,981) | ​ | ​ | 410,891
Total Fixed Income | ​ | $ | 3,655,954 | ​ | $ | (899) | ​ | $ | 31,797 | ​ | $ | (150,368) | ​ | $ | 3,536,484
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | December 31, 2024
​ | ​ | Cost or | ​ | Allowance | ​ | Gross | ​ | Gross | ​ | ​ | ​
​ | ​ | Amortized | ​ | for Credit | ​ | Unrealized | ​ | Unrealized | ​ | Fair
(in thousands) |  | Cost |  | Losses |  | Gains |  | Losses |  | Value
U.S. government | ​ | $ | 525,608 | ​ | $ | — | ​ | $ | 309 | ​ | $ | (10,282) | ​ | $ | 515,635
U.S. agency | ​ | ​ | 55,921 | ​ | ​ | — | ​ | ​ | 261 | ​ | ​ | (1,844) | ​ | ​ | 54,338
Non-U.S. government & agency | ​ | ​ | 8,959 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | (1,088) | ​ | ​ | 7,871
Agency MBS | ​ | ​ | 438,545 | ​ | ​ | — | ​ | ​ | 927 | ​ | ​ | (43,249) | ​ | ​ | 396,223
ABS/CMBS/MBS* | ​ | ​ | 430,973 | ​ | ​ | (8) | ​ | ​ | 2,208 | ​ | ​ | (22,925) | ​ | ​ | 410,248
Corporate | ​ | ​ | 1,397,676 | ​ | ​ | (189) | ​ | ​ | 4,737 | ​ | ​ | (55,703) | ​ | ​ | 1,346,521
Municipal | ​ | ​ | 533,477 | ​ | ​ | — | ​ | ​ | 1,003 | ​ | ​ | (89,520) | ​ | ​ | 444,960
Total Fixed Income | ​ | $ | 3,391,159 | ​ | $ | (197) | ​ | $ | 9,445 | ​ | $ | (224,611) | ​ | $ | 3,175,796

* | Non-agency asset-backed, commercial mortgage-backed and mortgage-backed securities

​

Allowance for Credit Losses and Unrealized Losses on Fixed Income Securities

​

A reversible allowance for credit losses is recognized on available-for-sale fixed income securities, if applicable. Several criteria are reviewed to determine if securities in the fixed income portfolio should be included in the allowance for expected credit loss evaluation, including:

​

| ● | Changes in technology that may impair the earnings potential of the investment,

​

| ● | The discontinuance of a segment of business that may affect future earnings potential,

​

| ● | Reduction of or non-payment of interest and/or principal,

​

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| ● | Specific concerns related to the issuer’s industry or geographic area of operation,

​

| ● | Significant or recurring operating losses, poor cash flows and/or deteriorating liquidity ratios and

​

| ● | Downgrades in credit quality by a major rating agency.

​

If changes in interest rates and credit spreads do not reasonably explain the unrealized loss for an available-for-sale security, or if any of the criteria above indicate a potential credit loss, the security is subjected to a discounted cash flow analysis. Inputs into the discounted cash flow analysis include prepayment assumptions for structured securities, default rates and recoverability rates based on credit rating. The allowance for any security is limited to the amount that the security’s fair value is below amortized cost. As of September 30, 2025, the discounted cash flow analysis resulted in an allowance for credit losses on 12 securities. The following table presents changes in the allowance for expected credit losses on available-for-sale securities:

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three Months Ended September 30, | ​ | Nine Months Ended September 30,
(in thousands) |  | 2025 |  | 2024 |  | 2025 |  | 2024
Beginning balance | ​ | $ | 245 | ​ | $ | 228 | ​ | $ | 197 | ​ | $ | 306
Increase to allowance from securities for which credit losses were not previously recorded | ​ | ​ | 717 | ​ | ​ | 30 | ​ | ​ | 720 | ​ | ​ | 30
Reduction from securities sold during the period | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | (89)
Net increase (decrease) from securities that had an allowance at the beginning of the period | ​ | ​ | (63) | ​ | ​ | (24) | ​ | ​ | (18) | ​ | ​ | (13)
Balance as of September 30, | ​ | $ | 899 | ​ | $ | 234 | ​ | $ | 899 | ​ | $ | 234

​

We recognized less than $1 million of losses on securities for which we no longer had the intent to hold until recovery during the first nine months of 2025. No such losses were recognized during the first nine months of 2024.

​

As of September 30, 2025, in addition to the securities included in the allowance for credit losses, the fixed income portfolio contained 1,077 securities with an unrealized loss position for which an allowance for credit losses had not been recorded. The $150 million in associated unrealized losses represents 4 percent of the fixed income portfolio’s cost basis and 3 percent of total invested assets. Isolated to these securities, unrealized losses decreased through the first nine months of 2025, as bonds rallied on falling interest rates. Of the total 1,077 securities, 926 have been in an unrealized loss position for 12 consecutive months or longer. The following table illustrates the total value of fixed income securities that were in an unrealized loss position as of September 30, 2025 and December 31, 2024 after factoring in the allowance for credit losses. All fixed income securities continue to pay the expected coupon payments and we believe we will recover the amortized cost basis of available-for-sale securities that remain in an unrealized loss position.

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​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | September 30, 2025 | ​ | December 31, 2024
(in thousands) |  | < 12 Mos. |  | 12 Mos. & Greater |  | Total |  | < 12 Mos. |  | 12 Mos. & Greater |  | Total
U.S. government | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Fair value | ​ | $ | 11,055 | ​ | $ | 105,375 | ​ | $ | 116,430 | ​ | $ | 303,226 | ​ | $ | 157,418 | ​ | $ | 460,644
Amortized cost | ​ | ​ | 11,078 | ​ | ​ | 106,675 | ​ | ​ | 117,753 | ​ | ​ | 309,836 | ​ | ​ | 161,090 | ​ | ​ | 470,926
Unrealized loss | ​ | $ | (23) | ​ | $ | (1,300) | ​ | $ | (1,323) | ​ | $ | (6,610) | ​ | $ | (3,672) | ​ | $ | (10,282)
U.S. agency | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Fair value | ​ | $ | — | ​ | $ | 30,621 | ​ | $ | 30,621 | ​ | $ | 24,024 | ​ | $ | 18,330 | ​ | $ | 42,354
Amortized cost | ​ | ​ | — | ​ | ​ | 31,256 | ​ | ​ | 31,256 | ​ | ​ | 24,910 | ​ | ​ | 19,288 | ​ | ​ | 44,198
Unrealized loss | ​ | $ | — | ​ | $ | (635) | ​ | $ | (635) | ​ | $ | (886) | ​ | $ | (958) | ​ | $ | (1,844)
Non-U.S. government | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Fair value | ​ | $ | — | ​ | $ | 4,188 | ​ | $ | 4,188 | ​ | $ | 4,075 | ​ | $ | 3,796 | ​ | $ | 7,871
Amortized cost | ​ | ​ | — | ​ | ​ | 4,802 | ​ | ​ | 4,802 | ​ | ​ | 4,158 | ​ | ​ | 4,801 | ​ | ​ | 8,959
Unrealized Loss | ​ | $ | — | ​ | $ | (614) | ​ | $ | (614) | ​ | $ | (83) | ​ | $ | (1,005) | ​ | $ | (1,088)
Agency MBS | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Fair value | ​ | $ | 149,151 | ​ | $ | 273,022 | ​ | $ | 422,173 | ​ | $ | 108,772 | ​ | $ | 233,625 | ​ | $ | 342,397
Amortized cost | ​ | ​ | 149,737 | ​ | ​ | 303,901 | ​ | ​ | 453,638 | ​ | ​ | 111,674 | ​ | ​ | 273,972 | ​ | ​ | 385,646
Unrealized loss | ​ | $ | (586) | ​ | $ | (30,879) | ​ | $ | (31,465) | ​ | $ | (2,902) | ​ | $ | (40,347) | ​ | $ | (43,249)
ABS/CMBS/MBS* | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Fair value | ​ | $ | 72,227 | ​ | $ | 149,479 | ​ | $ | 221,706 | ​ | $ | 43,027 | ​ | $ | 164,433 | ​ | $ | 207,460
Amortized cost | ​ | ​ | 72,333 | ​ | ​ | 166,162 | ​ | ​ | 238,495 | ​ | ​ | 43,395 | ​ | ​ | 186,990 | ​ | ​ | 230,385
Unrealized loss | ​ | $ | (106) | ​ | $ | (16,683) | ​ | $ | (16,789) | ​ | $ | (368) | ​ | $ | (22,557) | ​ | $ | (22,925)
Corporate | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Fair value | ​ | $ | 141,450 | ​ | $ | 622,539 | ​ | $ | 763,989 | ​ | $ | 378,305 | ​ | $ | 700,574 | ​ | $ | 1,078,879
Amortized cost | ​ | ​ | 142,776 | ​ | ​ | 649,774 | ​ | ​ | 792,550 | ​ | ​ | 389,299 | ​ | ​ | 745,283 | ​ | ​ | 1,134,582
Unrealized loss | ​ | $ | (1,326) | ​ | $ | (27,235) | ​ | $ | (28,561) | ​ | $ | (10,994) | ​ | $ | (44,709) | ​ | $ | (55,703)
Municipal | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Fair value | ​ | $ | 8,179 | ​ | $ | 349,045 | ​ | $ | 357,224 | ​ | $ | 48,514 | ​ | $ | 355,475 | ​ | $ | 403,989
Amortized cost | ​ | ​ | 8,462 | ​ | ​ | 419,743 | ​ | ​ | 428,205 | ​ | ​ | 49,491 | ​ | ​ | 444,018 | ​ | ​ | 493,509
Unrealized loss | ​ | $ | (283) | ​ | $ | (70,698) | ​ | $ | (70,981) | ​ | $ | (977) | ​ | $ | (88,543) | ​ | $ | (89,520)
Total fixed income | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Fair value | ​ | $ | 382,062 | ​ | $ | 1,534,269 | ​ | $ | 1,916,331 | ​ | $ | 909,943 | ​ | $ | 1,633,651 | ​ | $ | 2,543,594
Amortized cost | ​ | ​ | 384,386 | ​ | ​ | 1,682,313 | ​ | ​ | 2,066,699 | ​ | ​ | 932,763 | ​ | ​ | 1,835,442 | ​ | ​ | 2,768,205
Unrealized loss | ​ | $ | (2,324) | ​ | $ | (148,044) | ​ | $ | (150,368) | ​ | $ | (22,820) | ​ | $ | (201,791) | ​ | $ | (224,611)

* | Non-agency asset-backed, commercial mortgage-backed and mortgage-backed securities

​

The following table shows the composition of the fixed income securities in unrealized loss positions, after factoring in the allowance for credit losses, at September 30, 2025 by the National Association of Insurance Commissioners (NAIC) rating and the generally equivalent Standard & Poor’s (S&P) and Moody’s ratings. The vast majority of the securities are rated by S&P and/or Moody’s.

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Equivalent | ​ | Equivalent | ​ | (dollars in thousands) | ​ | ​ | ​
NAIC |  | S&P |  | Moody’s | ​ | Amortized | ​ | ​ | ​ | ​ | Unrealized | ​ | Percent | ​
Rating |  | Rating |  | Rating |  | Cost |  | Fair Value |  | Loss |  | to Total | ​
1 | ​ | AAA/AA/A | ​ | Aaa/Aa/A | ​ | $ | 1,675,642 | ​ | $ | 1,539,255 | ​ | $ | (136,387) | ​ | 90.7 | %
2 | ​ | BBB | ​ | Baa | ​ | ​ | 327,018 | ​ | ​ | 315,660 | ​ | ​ | (11,358) | ​ | 7.6 | %
3 | ​ | BB | ​ | Ba | ​ | ​ | 32,804 | ​ | ​ | 32,154 | ​ | ​ | (650) | ​ | 0.4 | %
4 | ​ | B | ​ | B | ​ | ​ | 26,763 | ​ | ​ | 25,279 | ​ | ​ | (1,484) | ​ | 1.0 | %
5 | ​ | CCC | ​ | Caa | ​ | ​ | 3,652 | ​ | ​ | 3,330 | ​ | ​ | (322) | ​ | 0.2 | %
6 | ​ | CC or lower | ​ | Ca or lower | ​ | ​ | 820 | ​ | ​ | 653 | ​ | ​ | (167) | ​ | 0.1 | %
​ | ​ | ​ | ​ | Total | ​ | $ | 2,066,699 | ​ | $ | 1,916,331 | ​ | $ | (150,368) | ​ | 100.0 | %

​

Other Invested Assets

​

We had $56 million of other invested assets at September 30, 2025, compared to $58 million at December 31, 2024. Other invested assets include investments in low-income housing tax credit partnerships (LIHTC) and historic tax credit partnerships (HTC), membership in the Federal Home Loan Bank of Chicago (FHLBC), and investments in private funds. Our

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LIHTC and HTC investments are carried at amortized cost and our investment in FHLBC stock is carried at cost. Due to the nature of the LIHTC, HTC and our membership in the FHLBC, their carrying amounts approximate fair value. The private funds are carried at fair value, using each investment’s net asset value.

​

Our LIHTC interests increased to $10 million at September 30, 2025, compared to $7 million at December 31, 2024, as additional investments were made. Our LIHTC interests recognized amortization of $1 million as a component of income tax expense and a total tax benefit of $1 million during the third quarter of 2025 and 2024. For the nine-months ended September 30, 2025 and 2024, our LIHTC interests recognized amortization of $2 million and a total tax benefit of $2 million. Our unfunded commitment for our LIHTC investments was $4 million at September 30, 2025 and will be paid out in installments through 2039.

​

Our HTC investment had a balance of $12 million at September 30, 2025, compared to $15 million at December 31, 2024. Our HTC investment recognized $1 million of amortization as a component of income tax expense and a total tax benefit of $1 million during the third quarter of 2025, compared to $1 million of amortization and $2 million of tax benefit for the same period in 2024. For the nine-months ended September 30, 2025, our HTC investment recognized amortization of $3 million and a total tax benefit of $3 million, compared to $3 million of amortization and a total tax benefit of $4 million for the same period in 2024. Our unfunded commitment for our HTC investments was $4 million at September 30, 2025 and will be paid out in installments through 2027.

​

At September 30, 2025, $55 million of investments were pledged as collateral with the FHLBC to ensure timely access to the secured lending facility that ownership of FHLBC stock provides. At September 30, 2025, $50 million of borrowings were outstanding with the FHLBC.

​

Our investments in private funds totaled $18 million at September 30, 2025, down from $24 million at December 31, 2024, and had $3 million of associated unfunded commitments at September 30, 2025. Our interest in private funds is generally restricted from being transferred or otherwise redeemed without prior consent by the respective entities, and the timed dissolution of the partnerships would trigger redemption.

​

Investments in Unconsolidated Investees

​

We had $64 million of investments in unconsolidated investees at September 30, 2025, compared to $56 million at December 31, 2024. At September 30, 2025, our investment in Prime Holdings Insurance Services, Inc. (Prime) was $63 million and other investments in unconsolidated investees totaled less than $1 million.

​

Cash and Short-Term Investments

​

Cash consists of uninvested balances in bank accounts. Short-term investments consist of investments with original maturities of 90 days or less, primarily AAA-rated government money market funds. Short-term investments are carried at cost. We had a cash and short-term investment balance of $53 million and $166 million, respectively, at September 30, 2025, compared to $40 million and $75 million, respectively, at December 31, 2024.

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3. HISTORICAL LOSS AND LAE DEVELOPMENT

​

The following table is a reconciliation of our unpaid losses and settlement expenses (LAE) for the first nine months of 2025 and 2024:

​

​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | For the Nine Months
​ | ​ | Ended September 30,
(in thousands) |  | 2025 |  | 2024
Unpaid losses and LAE at beginning of year | ​ | ​ | ​ | ​ | ​ | ​
Gross | ​ | $ | 2,693,470 | ​ | $ | 2,446,025
Ceded | ​ | ​ | (755,425) | ​ | ​ | (757,349)
Net | ​ | $ | 1,938,045 | ​ | $ | 1,688,676
​ | ​ | ​ | ​ | ​ | ​ | ​
Increase (decrease) in incurred losses and LAE | ​ | ​ | ​ | ​ | ​ | ​
Current accident year | ​ | $ | 623,926 | ​ | $ | 599,183
Prior accident years | ​ | ​ | (74,112) | ​ | ​ | (85,442)
Total incurred | ​ | $ | 549,814 | ​ | $ | 513,741
​ | ​ | ​ | ​ | ​ | ​ | ​
Loss and LAE payments for claims incurred | ​ | ​ | ​ | ​ | ​ | ​
Current accident year | ​ | $ | (74,868) | ​ | $ | (76,148)
Prior accident years | ​ | ​ | (309,548) | ​ | ​ | (273,868)
Total paid | ​ | $ | (384,416) | ​ | $ | (350,016)
​ | ​ | ​ | ​ | ​ | ​ | ​
Net unpaid losses and LAE at September 30, | ​ | $ | 2,103,443 | ​ | $ | 1,852,401
​ | ​ | ​ | ​ | ​ | ​ | ​
Unpaid losses and LAE at September 30, | ​ | ​ | ​ | ​ | ​ | ​
Gross | ​ | $ | 2,873,054 | ​ | $ | 2,611,941
Ceded | ​ | ​ | (769,611) | ​ | ​ | (759,540)
Net | ​ | $ | 2,103,443 | ​ | $ | 1,852,401

​

For the first nine months of 2025, incurred losses and LAE included $74 million of favorable development on prior years’ loss reserves, largely from accident years 2019 through 2022 and 2024. Commercial excess liability, marine, surety, commercial property, general liability and our mortgage reinsurance program were drivers of the favorable development. While no products experienced significant adverse development, auto liability exposures developed adversely for some products, most notably in commercial transportation.

​

For the first nine months of 2024, incurred losses and LAE included $85 million of favorable development on prior years’ loss reserves, largely from accident years 2016, 2017, 2019, 2020, 2022 and 2023. Marine, surety, commercial property, commercial excess liability, general liability, professional services, executive products and personal umbrella were drivers of the favorable development. No products experienced significant adverse development.

​

4. INCOME TAXES

​

Our effective tax rate for the three and nine months ended September 30, 2025 was 20.8 percent and 20.4 percent, compared to 18.7 percent and 19.8 percent for the same periods in 2024. Effective rates are dependent upon components of pretax earnings and the related tax effects. The effective tax rate was higher for the three and nine month periods in 2025 due to lower levels of tax-favored adjustments and higher levels of pretax income, which decreased the percentage impact of the tax-favored adjustments.

​

Income tax expense attributable to income from operations for the three and nine-month periods ended September 30, 2025 and 2024 differed from the amounts computed by applying the U.S. federal tax rate of 21 percent to pretax income by the items detailed in the table below. In interim periods, income taxes are adjusted to reflect the effective tax rate we anticipate for the year, with adjustments flowing through the other items, net line.

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​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | For the Three Months Ended September 30, | ​ | For the Nine Months Ended September 30, 2025 | ​
​ | ​ | 2025 | ​ | 2024 | ​ | 2025 | ​ | 2024 | ​
(in thousands) |  | Amount |  | % |  | Amount |  | % |  | Amount |  | % |  | Amount |  | % | ​
Provision for income taxes at the statutory rate of 21% | ​ | $ | 33,021 | ​ | 21.0 | % | $ | 24,533 | ​ | 21.0 | % | $ | 82,402 | ​ | 21.0 | % | $ | 79,825 | ​ | 21.0 | %
Increase (reduction) in taxes resulting from: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Excess tax benefit on share-based compensation | ​ | ​ | (50) | ​ | (0.0) | % | ​ | (1,967) | ​ | (1.7) | % | ​ | (3,208) | ​ | (0.8) | % | ​ | (4,264) | ​ | (1.1) | %
Tax exempt interest income | ​ | ​ | (144) | ​ | (0.1) | % | ​ | (216) | ​ | (0.2) | % | ​ | (476) | ​ | (0.1) | % | ​ | (725) | ​ | (0.2) | %
Dividends received deduction | ​ | ​ | (253) | ​ | (0.2) | % | ​ | (588) | ​ | (0.5) | % | ​ | (752) | ​ | (0.2) | % | ​ | (1,056) | ​ | (0.3) | %
Tax credit | ​ | ​ | (645) | ​ | (0.4) | % | ​ | (1,093) | ​ | (0.9) | % | ​ | (1,935) | ​ | (0.5) | % | ​ | (2,629) | ​ | (0.7) | %
ESOP dividends paid deduction | ​ | ​ | (158) | ​ | (0.1) | % | ​ | (149) | ​ | (0.1) | % | ​ | (466) | ​ | (0.1) | % | ​ | (439) | ​ | (0.1) | %
Nondeductible expenses | ​ | ​ | 1,367 | ​ | 0.9 | % | ​ | 1,160 | ​ | 1.0 | % | ​ | 2,933 | ​ | 0.7 | % | ​ | 2,819 | ​ | 0.7 | %
Other items, net | ​ | ​ | (503) | ​ | (0.3) | % | ​ | 118 | ​ | 0.1 | % | ​ | 1,733 | ​ | 0.4 | % | ​ | 1,669 | ​ | 0.5 | %
Total tax expense | ​ | $ | 32,635 | ​ | 20.8 | % | $ | 21,798 | ​ | 18.7 | % | $ | 80,231 | ​ | 20.4 | % | $ | 75,200 | ​ | 19.8 | %

​

We have recorded our deferred tax assets and liabilities using the statutory federal tax rate of 21 percent. We believe it is more likely than not that all deferred tax assets will be recovered, given the carry back availability as well as the result of future operations, which we believe will generate sufficient taxable income to realize the deferred tax asset.

​

The One Big Beautiful Bill Act (OBBBA) was signed into law on July 4, 2025. The primary implications to the Company include the timing of when depreciation and other capitalized costs can be deducted for tax purposes. Adopting the tax provisions in the OBBBA did not have a material impact on our financial statements.

​

​

5. STOCK BASED COMPENSATION

​

Our RLI Corp. Long-Term Incentive Plan (2015 LTIP) was in place from 2015 to 2023. The 2015 LTIP provided for equity-based compensation, including stock options and restricted stock units, up to a maximum of 8,000,000 shares of common stock (subject to adjustment for changes in our capitalization and other events). Between 2015 and 2023, we granted 6,582,776 awards under the 2015 LTIP. The 2015 LTIP was replaced in 2023.

​

In 2023, our shareholders approved the 2023 RLI Corp. Long-Term Incentive Plan (2023, LTIP), which provides for equity-based compensation. In conjunction with the adoption of the 2023 LTIP, effective May 4, 2023, awards are no longer granted under the 2015 LTIP. Awards under the 2023 LTIP may be in the form of restricted stock, restricted stock units, stock options (incentive or non-qualified), stock appreciation rights, performance units as well as other stock-based awards. Eligibility under the 2023 LTIP is limited to employees, directors, consultants and independent contractors of the Company or any affiliate. The granting of awards under the 2023 LTIP is solely at the discretion of the Human Capital and Compensation Committee of the board of directors or its delegate. The maximum number of shares of common stock available for distribution under the 2023 LTIP is 8,009,782 shares (subject to adjustment for changes in our capitalization and other events). Since the plan’s approval in 2023, we have granted 1,130,763 awards under the 2023 LTIP, including 317,581 thus far in 2025.

​

Compensation expense is based on the probable number of awards expected to vest. The total compensation expense related to equity awards was $2 million and $6 million in the three and nine-month periods ended September 30, 2025 and 2024. The total income tax benefit was less than $1 million for the three and nine-month periods ended September 30, 2025 and 2024. Total unrecognized compensation expense relating to outstanding and unvested awards was $7 million, which will be recognized over the weighted average vesting period of 2.53 years.

​

Stock Options

​

Under the 2023 LTIP, as under the 2015 LTIP, we grant stock options for shares with an exercise price equal to the fair market value of the shares at the date of grant (subject to adjustments for changes in our capitalization, special dividends and other events as set forth in such plans). Options generally vest and become exercisable over a five-year period and expire eight years after grant.

​

For most participants, the requisite service period and vesting period will be the same. For participants who are retirement eligible, defined by the plan as those individuals whose age and years of service equals 75 or greater, the requisite service period is deemed to be met and options are immediately expensed on the date of grant. For participants who will

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become retirement eligible during the vesting period, the requisite service period over which expense is recognized is the period between the grant date and the attainment of retirement eligibility. Shares issued upon option exercise are newly issued shares.

​

The following tables summarize option activity for the nine-month period ended September 30, 2025:

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | Weighted | ​ | Aggregate
​ | ​ | ​ | ​ | Weighted | ​ | Average | ​ | Intrinsic
​ | ​ | ​ | ​ | Average | ​ | Remaining | ​ | Value
​ |  | Options |  | Exercise Price |  | Contractual Life |  | (in 000’s)
Outstanding options at January 1, 2025 | ​ | 2,837,938 | ​ | $ | 52.80 | ​ | ​ | ​ | ​ | ​
Options granted | ​ | 280,680 | ​ | ​ | 72.98 | ​ | ​ | ​ | ​ | ​
Options exercised | ​ | (81,518) | ​ | ​ | 29.47 | ​ | ​ | ​ | ​ | ​
Options canceled/forfeited | ​ | (36,150) | ​ | ​ | 64.51 | ​ | ​ | ​ | ​ | ​
Outstanding options at September 30, 2025 | ​ | 3,000,950 | ​ | $ | 55.18 | ​ | 4.13 | ​ | $ | 35,782
Exercisable options at September 30, 2025 | ​ | 1,909,058 | ​ | $ | 48.94 | ​ | 3.05 | ​ | $ | 32,086

​

The intrinsic value of options exercised, which is the difference between the fair value and the exercise price, was $4 million and $19 million during the first nine months of 2025 and 2024, respectively.

​

The fair value of options was estimated using a Black-Scholes based option pricing model with the following weighted average grant-date assumptions and weighted average fair values as of September 30:

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | 2025 |  | 2024 | ​
Weighted-average fair value of grants | ​ | $ | 15.02 | ​ | $ | 15.65 | ​
Risk-free interest rates | ​ | ​ | 4.10 | % | ​ | 4.92 | %
Dividend yield | ​ | ​ | 2.53 | % | ​ | 2.30 | %
Expected volatility | ​ | ​ | 23.18 | % | ​ | 23.08 | %
Expected option life | ​ | ​ | 5.03 | years | ​ | 5.00 | years

​

The risk-free rate was determined based on U.S. treasury yields that most closely approximated the options’ expected life. The dividend yield was determined based on the average annualized quarterly dividends paid during the most recent five-year period and incorporated a consideration for special dividends paid in recent history. The expected volatility was calculated based on the median of the rolling volatilities for the expected life of the options. The expected option life was determined based on historical exercise behavior and the assumption that all outstanding options will be exercised at the midpoint of the current date and remaining contractual term, adjusted for the demographics of the current year’s grant.

​

Restricted Stock Units

​

In addition to stock options, restricted stock units (RSUs) are granted with a value equal to the closing stock price of the Company’s stock on the dates the units are granted. For employees, these units generally have a three-year cliff vesting, but have an accelerated vesting feature for participants who are retirement eligible, defined by the plan as those individuals whose age and years of service equals 75 or greater. For directors, these units vest on the earlier of one year from the date of grant or the next annual shareholders meeting. In addition, the RSUs have dividend participation, which accrue as additional units and are settled with granted stock units at the end of the vesting period. The total fair value of restricted stock units that vested was $3 million and $2 million during the first nine months of 2025 and 2024, respectively.

​

​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | Weighted
​ | ​ | ​ | ​ | Average
​ | ​ | ​ | ​ | Grant Date
​ |  | RSUs |  | Fair Value
Nonvested at January 1, 2025 | ​ | 99,095 | ​ | $ | 67.54
Granted | ​ | 36,901 | ​ | ​ | 74.40
Reinvested | ​ | 657 | ​ | ​ | 70.61
Vested | ​ | (36,821) | ​ | ​ | 64.77
Forfeited | ​ | (3,406) | ​ | ​ | 67.14
Nonvested at September 30, 2025 | ​ | 96,426 | ​ | $ | 71.10

​

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6. OPERATING SEGMENT INFORMATION

The Company’s chief operating decision maker (CODM) is the chief executive officer. The Company’s CODM assesses the segments’ performance by using earnings before income taxes (underwriting income) and the combined ratio. Underwriting income and combined ratio are analyzed at the segment level and influence how resources are allocated. Decisions are made based on what is likely to provide the best long-term return to the Company.

​

Amortization of deferred acquisition costs represents the recognition of commission and premium taxes over the life of insurance polices, in proportion to premium revenue recognized. The other policy acquisition costs line item includes other expenses associated with underwriting, but that cannot be specifically associated with the successful acquisition of a policy, including, but not limited to, employment costs for underwriters and underwriting support as well as costs for policy acquisition systems. Insurance operating expenses reflect allocated costs from various support departments, such as corporate technology, accounting, human resources and facilities, among others.

​

Net investment income consists of the interest and dividend income streams from our investments in fixed income and equity securities. Interest expense represents the cost of debt and lines of credit. General corporate expenses include director and shareholder relation costs and other compensation-related expenses incurred for the benefit of the corporation, but not attributable to the operations of our insurance segments. Investee earnings primarily represents our 23 percent share in earnings of Prime Holdings Insurance Services, Inc., a privately held insurance company which specializes in hard-to-place risks. Assets, and the revenues and expenses associated with investing and financing activities, are not managed at the segment level and therefore are not allocated to segments.

​

All segment revenues are from external customers and all long-lived assets are held domestically. We have no material foreign operations or customer concentrations and have no intersegment revenues.

​

The following table summarizes revenues by major product type within each operating segment:

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | For the Three Months | ​ | For the Nine Months
Net Premiums Earned | ​ | Ended September 30, | ​ | Ended September 30,
(in thousands) |  | 2025 |  | 2024 |  | 2025 |  | 2024
Casualty | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Commercial excess and personal umbrella | ​ | $ | 115,132 | ​ | $ | 91,434 | ​ | $ | 327,252 | ​ | $ | 257,455
Commercial transportation | ​ | ​ | 31,190 | ​ | ​ | 32,067 | ​ | ​ | 91,464 | ​ | ​ | 88,691
General liability | ​ | ​ | 28,690 | ​ | ​ | 26,316 | ​ | ​ | 82,997 | ​ | ​ | 77,832
Professional services | ​ | ​ | 27,431 | ​ | ​ | 26,281 | ​ | ​ | 80,641 | ​ | ​ | 77,366
Small commercial | ​ | ​ | 19,627 | ​ | ​ | 20,074 | ​ | ​ | 59,542 | ​ | ​ | 57,870
Executive products | ​ | ​ | 6,043 | ​ | ​ | 6,261 | ​ | ​ | 17,507 | ​ | ​ | 17,624
Other casualty | ​ | ​ | 15,395 | ​ | ​ | 17,205 | ​ | ​ | 47,791 | ​ | ​ | 50,176
Total | ​ | $ | 243,508 | ​ | $ | 219,638 | ​ | $ | 707,194 | ​ | $ | 627,014
Property | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Commercial property | ​ | $ | 72,853 | ​ | $ | 85,814 | ​ | $ | 232,541 | ​ | $ | 260,819
Marine | ​ | ​ | 40,058 | ​ | ​ | 37,618 | ​ | ​ | 118,784 | ​ | ​ | 107,255
Other property | ​ | ​ | 13,778 | ​ | ​ | 9,834 | ​ | ​ | 38,572 | ​ | ​ | 28,700
Total | ​ | $ | 126,689 | ​ | $ | 133,266 | ​ | $ | 389,897 | ​ | $ | 396,774
Surety | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Transactional | ​ | $ | 13,268 | ​ | $ | 12,488 | ​ | $ | 39,024 | ​ | $ | 36,904
Commercial | ​ | ​ | 12,700 | ​ | ​ | 12,477 | ​ | ​ | 37,898 | ​ | ​ | 35,802
Contract | ​ | ​ | 11,530 | ​ | ​ | 11,620 | ​ | ​ | 33,931 | ​ | ​ | 32,736
Total | ​ | $ | 37,498 | ​ | $ | 36,585 | ​ | $ | 110,853 | ​ | $ | 105,442
Grand Total | ​ | $ | 407,695 | ​ | $ | 389,489 | ​ | $ | 1,207,944 | ​ | $ | 1,129,230

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The following tables present our operating results by segment, as evaluated by the CODM.

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
For the Three Months Ended September 30, 2025
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
(in thousands) | ​ | ​ | Casualty | ​ | ​ | Property | ​ | ​ | Surety | ​ | ​ | Total
Revenue | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net premiums earned | ​ | $ | 243,508 | ​ | $ | 126,689 | ​ | $ | 37,498 | ​ | $ | 407,695
Net investment income | ​ | ​ | - | ​ | ​ | - | ​ | ​ | - | ​ | ​ | 41,270
Net realized gains | ​ | ​ | - | ​ | ​ | - | ​ | ​ | - | ​ | ​ | 18,318
Net unrealized gains on equity securities | ​ | ​ | - | ​ | ​ | - | ​ | ​ | - | ​ | ​ | 41,981
Consolidated revenue | ​ | $ | 243,508 | ​ | $ | 126,689 | ​ | $ | 37,498 | ​ | $ | 509,264
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Less: Expenses | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Losses and settlement expenses | ​ | $ | 150,912 | ​ | $ | 32,815 | ​ | $ | 4,271 | ​ | ​ | ​
Amortization of deferred acquisition costs | ​ | ​ | 47,335 | ​ | ​ | 26,311 | ​ | ​ | 13,103 | ​ | ​ | ​
Other policy acquisition costs | ​ | ​ | 23,199 | ​ | ​ | 8,219 | ​ | ​ | 10,770 | ​ | ​ | ​
Insurance operating expenses | ​ | ​ | 17,576 | ​ | ​ | 8,920 | ​ | ​ | 3,719 | ​ | ​ | ​
Segment earnings before income taxes | ​ | $ | 4,486 | ​ | $ | 50,424 | ​ | $ | 5,635 | ​ | $ | 60,545
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Depreciation and amortization expense | ​ | $ | 1,517 | ​ | $ | 534 | ​ | $ | 370 | ​ | ​ | ​

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
For the Three Months Ended September 30, 2024
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
(in thousands) | ​ | ​ | Casualty | ​ | ​ | Property | ​ | ​ | Surety | ​ | ​ | Total
Revenue | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net premiums earned | ​ | $ | 219,638 | ​ | $ | 133,266 | ​ | $ | 36,585 | ​ | $ | 389,489
Net investment income | ​ | ​ | - | ​ | ​ | - | ​ | ​ | - | ​ | ​ | 36,694
Net realized gains | ​ | ​ | - | ​ | ​ | - | ​ | ​ | - | ​ | ​ | 5,420
Net unrealized gains on equity securities | ​ | ​ | - | ​ | ​ | - | ​ | ​ | - | ​ | ​ | 38,392
Consolidated revenue | ​ | $ | 219,638 | ​ | $ | 133,266 | ​ | $ | 36,585 | ​ | $ | 469,995
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Less: Expenses | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Losses and settlement expenses | ​ | $ | 137,951 | ​ | $ | 60,991 | ​ | $ | 3,176 | ​ | ​ | ​
Amortization of deferred acquisition costs | ​ | ​ | 41,240 | ​ | ​ | 27,054 | ​ | ​ | 12,471 | ​ | ​ | ​
Other policy acquisition costs | ​ | ​ | 21,266 | ​ | ​ | 6,054 | ​ | ​ | 9,726 | ​ | ​ | ​
Insurance operating expenses | ​ | ​ | 16,632 | ​ | ​ | 8,765 | ​ | ​ | 3,471 | ​ | ​ | ​
Segment earnings before income taxes | ​ | $ | 2,549 | ​ | $ | 30,402 | ​ | $ | 7,741 | ​ | $ | 40,692
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Depreciation and amortization expense | ​ | $ | 1,428 | ​ | $ | 485 | ​ | $ | 243 | ​ | ​ | ​

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
For the Nine Months Ended September 30, 2025
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
(in thousands) | ​ | ​ | Casualty | ​ | ​ | Property | ​ | ​ | Surety | ​ | ​ | Total
Revenue | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net premiums earned | ​ | $ | 707,194 | ​ | $ | 389,897 | ​ | $ | 110,853 | ​ | $ | 1,207,944
Net investment income | ​ | ​ | - | ​ | ​ | - | ​ | ​ | - | ​ | ​ | 117,414
Net realized gains | ​ | ​ | - | ​ | ​ | - | ​ | ​ | - | ​ | ​ | 48,234
Net unrealized gains on equity securities | ​ | ​ | - | ​ | ​ | - | ​ | ​ | - | ​ | ​ | 43,163
Consolidated revenue | ​ | $ | 707,194 | ​ | $ | 389,897 | ​ | $ | 110,853 | ​ | $ | 1,416,755
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Less: Expenses | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Losses and settlement expenses | ​ | $ | 438,007 | ​ | $ | 103,999 | ​ | $ | 7,808 | ​ | ​ | ​
Amortization of deferred acquisition costs | ​ | ​ | 135,999 | ​ | ​ | 79,985 | ​ | ​ | 38,361 | ​ | ​ | ​
Other policy acquisition costs | ​ | ​ | 67,935 | ​ | ​ | 23,496 | ​ | ​ | 32,350 | ​ | ​ | ​
Insurance operating expenses | ​ | ​ | 50,407 | ​ | ​ | 25,567 | ​ | ​ | 10,709 | ​ | ​ | ​
Segment earnings before income taxes | ​ | $ | 14,846 | ​ | $ | 156,850 | ​ | $ | 21,625 | ​ | $ | 193,321
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Depreciation and amortization expense | ​ | $ | 4,556 | ​ | $ | 1,553 | ​ | $ | 1,039 | ​ | ​ | ​

​

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​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
For the Nine Months Ended September 30, 2024
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
(in thousands) | ​ | ​ | Casualty | ​ | ​ | Property | ​ | ​ | Surety | ​ | ​ | Total
Revenue | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net premiums earned | ​ | $ | 627,014 | ​ | $ | 396,774 | ​ | $ | 105,442 | ​ | $ | 1,129,230
Net investment income | ​ | ​ | - | ​ | ​ | - | ​ | ​ | - | ​ | ​ | 103,502
Net realized gains | ​ | ​ | - | ​ | ​ | - | ​ | ​ | - | ​ | ​ | 11,222
Net unrealized gains on equity securities | ​ | ​ | - | ​ | ​ | - | ​ | ​ | - | ​ | ​ | 87,314
Consolidated revenue | ​ | $ | 627,014 | ​ | $ | 396,774 | ​ | $ | 105,442 | ​ | $ | 1,331,268
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Less: Expenses | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Losses and settlement expenses | ​ | $ | 369,273 | ​ | $ | 134,950 | ​ | $ | 9,518 | ​ | ​ | ​
Amortization of deferred acquisition costs | ​ | ​ | 117,979 | ​ | ​ | 80,319 | ​ | ​ | 35,574 | ​ | ​ | ​
Other policy acquisition costs | ​ | ​ | 64,121 | ​ | ​ | 14,696 | ​ | ​ | 29,497 | ​ | ​ | ​
Insurance operating expenses | ​ | ​ | 49,103 | ​ | ​ | 25,511 | ​ | ​ | 10,278 | ​ | ​ | ​
Segment earnings before income taxes | ​ | $ | 26,538 | ​ | $ | 141,298 | ​ | $ | 20,575 | ​ | $ | 188,411
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Depreciation and amortization expense | ​ | $ | 4,228 | ​ | $ | 1,406 | ​ | $ | 755 | ​ | ​ | ​

​

The following table reconciles segment earnings before income taxes to earnings before income taxes.

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | For the Three Months | ​ | For the Nine Months
​ | ​ | Ended September 30, | ​ | Ended September 30,
(in thousands) |  | 2025 |  | 2024 |  | 2025 |  | 2024
Reconciliation of earnings before income taxes | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Segment earnings before income taxes | ​ | $ | 60,545 | ​ | $ | 40,692 | ​ | $ | 193,321 | ​ | $ | 188,411
Net investment income | ​ | ​ | 41,270 | ​ | ​ | 36,694 | ​ | ​ | 117,414 | ​ | ​ | 103,502
Net realized gains | ​ | ​ | 18,318 | ​ | ​ | 5,420 | ​ | ​ | 48,234 | ​ | ​ | 11,222
Net unrealized gains on equity securities | ​ | ​ | 41,981 | ​ | ​ | 38,392 | ​ | ​ | 43,163 | ​ | ​ | 87,314
Interest expense on debt | ​ | ​ | (1,364) | ​ | ​ | (1,617) | ​ | ​ | (4,049) | ​ | ​ | (4,839)
General corporate expenses | ​ | ​ | (5,045) | ​ | ​ | (3,994) | ​ | ​ | (12,747) | ​ | ​ | (13,144)
Equity in earnings of unconsolidated investees | ​ | ​ | 1,540 | ​ | ​ | 1,238 | ​ | ​ | 7,055 | ​ | ​ | 7,653
Earnings before income taxes | ​ | $ | 157,245 | ​ | $ | 116,825 | ​ | $ | 392,391 | ​ | $ | 380,119

​

​

​

​

7. LEASES

​

Right-of-use (ROU) assets are included in the other assets line item and lease liabilities are included in the other liabilities line item of the consolidated balance sheet. We determine if a contract contains a lease at inception and recognize operating lease ROU assets and operating lease liabilities based on the present value of the future minimum lease payments at the commencement date. As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. Lease agreements may include options to extend or terminate. The options are exercised at our discretion and are included in operating lease liabilities if it is reasonably certain the option will be exercised. Lease agreements have lease and non-lease components, which are accounted for as a single lease component. Operating lease costs for future minimum lease payments are recognized on a straight-line basis over the lease terms. Variable lease costs are expensed in the period in which the obligations are incurred. Sublease income is recognized on a straight-line basis over the sublease term.

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The Company’s operating lease obligations are for branch office facilities. The components of lease expense and other lease-related information, as of and during the three and nine-month periods ended September 30, 2025 and 2024, were as follows:

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | For the Three Months | ​ | For the Nine Months
​ | ​ | Ended September 30, | ​ | Ended September 30,
(in thousands) |  | 2025 |  | 2024 |  | 2025 |  | 2024
Operating lease cost | ​ | $ | 1,040 | ​ | $ | 1,149 | ​ | $ | 3,270 | ​ | $ | 3,483
Variable lease cost | ​ | ​ | 323 | ​ | ​ | 351 | ​ | ​ | 1,112 | ​ | ​ | 966
Sublease income | ​ | ​ | (42) | ​ | ​ | (42) | ​ | ​ | (127) | ​ | ​ | (127)
Total lease cost | ​ | $ | 1,321 | ​ | $ | 1,458 | ​ | $ | 4,255 | ​ | $ | 4,322
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Cash paid for amounts included in measurement of lease liabilities | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Operating cash outflows from operating leases | ​ | $ | 1,027 | ​ | $ | 845 | ​ | $ | 3,273 | ​ | $ | 3,013
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
ROU assets obtained in exchange for new operating lease liabilities | ​ | $ | — | ​ | $ | 351 | ​ | $ | 480 | ​ | $ | 4,140

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
(in thousands) |  | September 30, 2025 |  | December 31, 2024 | ​
Operating lease ROU assets | ​ | $ | 11,629 | ​ | $ | 14,016 | ​
Operating lease liabilities | ​ | $ | 13,320 | ​ | $ | 15,711 | ​
Weighted-average remaining lease term - operating leases | ​ | ​ | 5.91 | years | ​ | 6.01 | years
Weighted-average discount rate - operating leases | ​ | ​ | 3.76 | % | ​ | 3.63 | %

​

Future minimum lease payments under non-cancellable leases as of September 30, 2025 were as follows:

​

​ | ​ | ​ | ​
(in thousands) |  | September 30, 2025
2025 | ​ | $ | 1,116
2026 | ​ | ​ | 3,947
2027 | ​ | ​ | 2,529
2028 | ​ | ​ | 1,617
2029 | ​ | ​ | 1,470
2030 | ​ | ​ | 887
Thereafter | ​ | ​ | 3,602
Total future minimum lease payments | ​ | $ | 15,168
Less imputed interest | ​ | ​ | (1,848)
Total operating lease liability | ​ | $ | 13,320

​

​

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

​

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. These forward looking statements generally include words such as “expect,” “predict,” “estimate,” “will,” “should,” “anticipate,” “believe” and similar expressions. 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. These assumptions are subject to various risks, uncertainties and other factors, including, without limitation those set forth in “Item 1A. Risk Factors” within the Annual Report on Form 10-K for the year ended December 31, 2024 and Part II within this report. Actual results could differ materially from those expressed in, or implied by, these forward looking statements. Forward looking statements reflect the Company’s expectations, plans or forecasts of future events and views as of the date of this report. While the Company may elect to update these forward looking statements at some point in the future, the Company specifically disclaims any obligation to do so. You should review the various risks, uncertainties and other factors listed from time to time in our Securities and Exchange Commission filings.

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OVERVIEW

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RLI Corp. is a U.S.-based, specialty insurance company that underwrites select property, casualty and surety products through three major subsidiaries. Our focus is on niche markets and developing unique products that are tailored to customers’

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needs. 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. This drives our ability to provide shareholder returns in three different ways: the underwriting income itself, net investment income from our investment portfolio and long-term appreciation in our equity portfolio.

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We measure the results of our insurance operations by monitoring growth and profitability across three distinct business segments: property, casualty and surety. Growth is measured in terms of gross premiums written, and profitability is analyzed through underwriting income and combined ratios.

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The property and casualty insurance business is cyclical and influenced by many factors, including price competition, economic conditions, natural or man-made disasters (for example, earthquakes, hurricanes, pandemics and terrorism), interest rates, state regulations, court decisions and changes in the law. One of the unique and challenging features of the property and casualty insurance business is that coverages must be priced before costs have fully developed, because premiums are charged before claims are incurred. This requires that liabilities be estimated and recorded in recognition of future loss and settlement obligations. Due to the inherent uncertainty in estimating these liabilities, there can be no assurance that actual liabilities will equal recorded amounts. If actual liabilities differ from recorded amounts, there will either be an adverse or favorable effect on net earnings.

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The casualty portion of our business consists largely of commercial excess, personal umbrella, general liability, transportation and management liability coverages, as well as package business and other specialty coverages, such as professional liability and workers’ compensation for office-based professionals. We also assume a limited amount of risks through quota share and excess of loss reinsurance agreements. The casualty business is subject to the risk of estimating losses and related loss reserves because the ultimate settlement of a casualty claim may take several years to fully develop.

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Our property segment is comprised primarily of commercial fire, hurricane, earthquake, difference in conditions and marine coverages. We also offer homeowners’ coverages in Hawaii. Property insurance results are subject to the variability introduced by perils such as earthquakes, fires, hurricanes and other storms. Our major catastrophe exposure is to losses caused by windstorms, affecting commercial properties in coastal regions of the United States, and earthquakes, primarily on the West Coast. We limit our net aggregate exposure to a catastrophic event by managing the total policy limits written in a particular region, purchasing reinsurance and maintaining policy terms and conditions throughout all insurance cycles. We also use computer-assisted modeling techniques to provide estimates that help the Company carefully manage the concentration of risks exposed to catastrophic events.

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The surety segment specializes in writing small to medium-sized contract surety coverages, including payment and performance bonds. We offer a variety of commercial surety bonds for medium to large-sized businesses across a broad spectrum of industries, including the financial, healthcare, energy and renewable energy industries. We also offer a variety of transactional bonds, including but not limited to license and permit, notary and court bonds. Often, our surety coverages involve a statutory requirement for bonds. While these bonds typically maintain a relatively low loss ratio, losses may fluctuate due to adverse economic conditions affecting the financial viability of our insureds. The contract surety product guarantees commercial contractors’ contractual obligations for a specific construction project. Generally, losses occur due to the deterioration of a contractor’s financial condition.

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The insurance marketplace is competitive across all of our segments. However, we believe that our business model is built to create underwriting income by focusing on sound risk selection and discipline. Our primary focus will continue to be on underwriting profitability, with a secondary focus on premium growth where we believe underwriting profit exists, as opposed to general premium growth or market share measurements.

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Key Performance Measures

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The 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.

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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. Each of these components are presented in the statements of

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earnings but are not subtotaled. However, this information is available in total and by segment in note 6 to the unaudited condensed consolidated financial statements in this quarterly report on Form 10-Q, and in note 11 to the consolidated financial statements in our 2024 Annual Report on Form 10-K, regarding operating segment information. The nearest comparable GAAP measure is earnings before income taxes which, in addition to underwriting income, includes net investment income, net realized gains or losses, net unrealized gains or losses on equity securities, general corporate expenses, debt costs and our portion of earnings from unconsolidated investees. A reconciliation of net earnings to underwriting income follows:

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​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | For the Three Months | ​ | For the Nine Months
​ | ​ | Ended September 30, | ​ | Ended September 30,
(in thousands) |  | 2025 |  | 2024 |  | 2025 |  | 2024
Net earnings | ​ | $ | 124,610 | ​ | $ | 95,027 | ​ | $ | 312,160 | ​ | $ | 304,919
Income tax expense | ​ | ​ | 32,635 | ​ | ​ | 21,798 | ​ | ​ | 80,231 | ​ | ​ | 75,200
Earnings before income taxes | ​ | $ | 157,245 | ​ | $ | 116,825 | ​ | $ | 392,391 | ​ | $ | 380,119
Equity in earnings of unconsolidated investees | ​ | ​ | (1,540) | ​ | ​ | (1,238) | ​ | ​ | (7,055) | ​ | ​ | (7,653)
General corporate expenses | ​ | ​ | 5,045 | ​ | ​ | 3,994 | ​ | ​ | 12,747 | ​ | ​ | 13,144
Interest expense on debt | ​ | ​ | 1,364 | ​ | ​ | 1,617 | ​ | ​ | 4,049 | ​ | ​ | 4,839
Net unrealized gains on equity securities | ​ | ​ | (41,981) | ​ | ​ | (38,392) | ​ | ​ | (43,163) | ​ | ​ | (87,314)
Net realized (gains) losses | ​ | ​ | (18,318) | ​ | ​ | (5,420) | ​ | ​ | (48,234) | ​ | ​ | (11,222)
Net investment income | ​ | ​ | (41,270) | ​ | ​ | (36,694) | ​ | ​ | (117,414) | ​ | ​ | (103,502)
Net underwriting income | ​ | $ | 60,545 | ​ | $ | 40,692 | ​ | $ | 193,321 | ​ | $ | 188,411

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Combined Ratio

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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. First, the loss ratio is losses and settlement expenses divided by net premiums earned. The second component, the expense ratio, reflects the sum of policy acquisition costs and insurance operating expenses divided by net premiums earned. All items included in these components of the combined ratio are presented in our GAAP consolidated financial statements. The sum of the loss and expense ratios is the combined ratio. The difference between the combined ratio and 100 reflects the per-dollar rate of underwriting income or loss.

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Critical Accounting Policies

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In preparing the unaudited condensed consolidated financial statements, we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses for the reporting period. Actual results could differ significantly from those estimates.

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The most critical accounting policies involve significant estimates and include those used in determining the liability for unpaid losses and settlement expenses, investment valuation, recoverability of reinsurance balances, deferred policy acquisition costs and deferred taxes. For a detailed discussion of each of these policies, refer to our 2024 Annual Report on Form 10-K.

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There have been no significant changes to critical accounting policies during the year.

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RESULTS OF OPERATIONS

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Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024

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Net premiums earned increased 7 percent, driven primarily by products in our casualty and surety segments. Investment income was up 13 percent, due to an increased average asset base and higher reinvestment rates. Positive market performance resulted in $43 million of unrealized gains on equity securities in the first nine months of 2025, compared to $87 million in 2024. Realized gains during the first nine months of 2025 were comprised of $45 million of realized gains on equity securities, primarily due to rebalancing within our equity strategies, $2 million of realized gains on the fixed income portfolio and $1 million of other realized gains. This compares to $20 million of realized gains on the equity portfolio, $3 million of realized losses on the fixed income portfolio and $6 million of other realized losses during the first nine months of 2024.

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​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | For the Nine Months
​ | ​ | Ended September 30,
Consolidated Revenues (in thousands) |  | 2025 |  | 2024
Net premiums earned | ​ | $ | 1,207,944 | ​ | $ | 1,129,230
Net investment income | ​ | ​ | 117,414 | ​ | ​ | 103,502
Net realized gains | ​ | ​ | 48,234 | ​ | ​ | 11,222
Net unrealized gains on equity securities | ​ | ​ | 43,163 | ​ | ​ | 87,314
Total consolidated revenue | ​ | $ | 1,416,755 | ​ | $ | 1,331,268

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Underwriting income was $193 million on an 84.0 combined ratio for the first nine months of 2025, compared to $188 million on an 83.3 combined ratio in the same period of 2024. Underwriting results for 2025 were impacted by $26 million of pretax losses from catastrophe events, compared to $67 million in 2024. Results for each period benefited from favorable development on prior years’ loss reserves, which provided additional pretax earnings of $74 million in the first nine months of 2025, compared to $85 million in 2024.

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The loss ratio was 45.5 for the first nine months of 2025 and 2024. The benefit of lower catastrophe losses was offset by lower levels of favorable development on prior years’ loss reserves and a shift in the mix of business towards casualty lines, which tend to have higher non-catastrophe loss ratios than our property and surety products. The expense ratio increased to 38.5 from 37.8. Increased expenses were driven by continued investments in people and technology, as well as higher acquisition-related costs, which can fluctuate between periods.

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Bonus and profit-sharing amounts earned by executives, managers and associates are predominantly influenced by corporate performance, including operating earnings, combined ratio and return on capital. Favorable development and other drivers of growth in book value will increase bonus and profit-sharing expenses, while catastrophe losses, adverse development and decreased investment portfolio returns would lead to expense reductions. These performance-related expenses affect policy acquisition, insurance operating and general corporate expenses.

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Our equity in earnings of unconsolidated investees primarily relates to our investment in Prime Holdings Insurance Services, Inc. (Prime), a specialty insurance company. We recognized $7 million of investee earnings from Prime in the first nine months of 2025 and $8 million in 2024.

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Net earnings for the first nine months of 2025 totaled $312 million, compared to $305 million for the same period in 2024. Higher levels of underwriting income, investment income and realized gains all contributed to the improved results.

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Comprehensive earnings totaled $389 million for the first nine months of 2025, compared to $365 million for the first nine months of 2024. Other comprehensive earnings primarily included net after-tax unrealized gains (losses) from the fixed income portfolio. Other comprehensive earnings of $76 million in the first nine months of 2025 was primarily attributable to lower interest rates, which increased the fair value of securities held in the fixed income portfolio. Comparatively, $60 million of other comprehensive earnings was recognized in 2024.

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Premiums

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Gross premiums written increased $24 million for the first nine months of 2025, compared to the same period of 2024, primarily from our casualty segment. Net premiums earned increased $79 million, also driven by our casualty segment.

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​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Gross Premiums Written | ​ | ​ | Net Premiums Earned | ​
​ | ​ | For the Nine Months | ​ | ​ | ​ | ​ | For the Nine Months | ​ | ​ | ​
​ | ​ | Ended September 30, | ​ | ​ | ​ | ​ | Ended September 30, | ​ | ​ | ​
(in thousands) |  | 2025 |  | 2024 |  | % Change |  | ​ | 2025 |  | 2024 |  | % Change | ​
Casualty | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Commercial excess and personal umbrella | ​ | $ | 438,858 | ​ | $ | 352,073 | ​ | 25 | % | ​ | $ | 327,252 | ​ | $ | 257,455 | ​ | 27 | %
Commercial transportation | ​ | ​ | 108,342 | ​ | ​ | 111,008 | ​ | (2) | % | ​ | ​ | 91,464 | ​ | ​ | 88,691 | ​ | 3 | %
General liability | ​ | ​ | 91,009 | ​ | ​ | 82,510 | ​ | 10 | % | ​ | ​ | 82,997 | ​ | ​ | 77,832 | ​ | 7 | %
Professional services | ​ | ​ | 91,042 | ​ | ​ | 87,763 | ​ | 4 | % | ​ | ​ | 80,641 | ​ | ​ | 77,366 | ​ | 4 | %
Small commercial | ​ | ​ | 63,320 | ​ | ​ | 66,147 | ​ | (4) | % | ​ | ​ | 59,542 | ​ | ​ | 57,870 | ​ | 3 | %
Executive products | ​ | ​ | 63,700 | ​ | ​ | 63,123 | ​ | 1 | % | ​ | ​ | 17,507 | ​ | ​ | 17,624 | ​ | (1) | %
Other casualty | ​ | ​ | 45,856 | ​ | ​ | 63,528 | ​ | (28) | % | ​ | ​ | 47,791 | ​ | ​ | 50,176 | ​ | (5) | %
Total | ​ | $ | 902,127 | ​ | $ | 826,152 | ​ | 9 | % | ​ | $ | 707,194 | ​ | $ | 627,014 | ​ | 13 | %
Property | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Commercial property | ​ | $ | 353,311 | ​ | $ | 422,326 | ​ | (16) | % | ​ | $ | 232,541 | ​ | $ | 260,819 | ​ | (11) | %
Marine | ​ | ​ | 134,752 | ​ | ​ | 129,934 | ​ | 4 | % | ​ | ​ | 118,784 | ​ | ​ | 107,255 | ​ | 11 | %
Other property | ​ | ​ | 48,437 | ​ | ​ | 37,931 | ​ | 28 | % | ​ | ​ | 38,572 | ​ | ​ | 28,700 | ​ | 34 | %
Total | ​ | $ | 536,500 | ​ | $ | 590,191 | ​ | (9) | % | ​ | $ | 389,897 | ​ | $ | 396,774 | ​ | (2) | %
Surety | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Transactional | ​ | $ | 42,142 | ​ | $ | 40,789 | ​ | 3 | % | ​ | $ | 39,024 | ​ | $ | 36,904 | ​ | 6 | %
Commercial | ​ | ​ | 46,034 | ​ | ​ | 44,031 | ​ | 5 | % | ​ | ​ | 37,898 | ​ | ​ | 35,802 | ​ | 6 | %
Contract | ​ | ​ | 36,805 | ​ | ​ | 38,675 | ​ | (5) | % | ​ | ​ | 33,931 | ​ | ​ | 32,736 | ​ | 4 | %
Total | ​ | $ | 124,981 | ​ | $ | 123,495 | ​ | 1 | % | ​ | $ | 110,853 | ​ | $ | 105,442 | ​ | 5 | %
Grand Total | ​ | $ | 1,563,608 | ​ | $ | 1,539,838 | ​ | 2 | % | ​ | $ | 1,207,944 | ​ | $ | 1,129,230 | ​ | 7 | %

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Casualty

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Gross premiums written for the casualty segment increased $76 million in the first nine months of 2025. We continued to benefit from positive rate movement across a large portion of our casualty segment, as well as from new business growth within our personal umbrella distribution channels. Premium growth for commercial excess and general liability was driven by expanded marketing efforts, while some of our competitors pulled back from the construction market, and increased construction spending in targeted markets. Other casualty premium was down for the first nine months of 2025, as we exited from various captive programs and reduced our participation on the reinsurance agreement with Prime.

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Property

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Gross premiums written for the property segment decreased $54 million in the first nine months of 2025. After several consecutive years of rate increases, rates on commercial property exposures declined in 2025, driven by more intense competition. However, new opportunities, rate increases and strong sections of the construction market led to $5 million of premium growth for our marine product. Additionally, some competitors have reduced their appetite for select Hawaii homeowner coverages, which, along with rate increases, has allowed our other property premium to grow.

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Surety

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Gross premiums written for the surety segment increased $1 million in the first nine months of 2025. Transactional and commercial surety grew as result of continued marketing efforts and new regional bonding requirements. However, a slowdown in construction spending resulted in a decline in contract surety premium.

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Underwriting Income

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​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | For the Nine Months
​ | ​ | Ended September 30,
​ |  | 2025 |  | 2024
Underwriting Income (in thousands) | ​ | ​ | ​ | ​ | ​ | ​
Casualty | ​ | $ | 14,846 | ​ | $ | 26,538
Property | ​ | ​ | 156,850 | ​ | ​ | 141,298
Surety | ​ | ​ | 21,625 | ​ | ​ | 20,575
Total | ​ | $ | 193,321 | ​ | $ | 188,411
​ | ​ | ​ | ​ | ​ | ​ | ​
Combined Ratio | ​ | ​ | ​ | ​ | ​ | ​
Casualty | ​ | ​ | 97.9 | ​ | ​ | 95.8
Property | ​ | ​ | 59.8 | ​ | ​ | 64.4
Surety | ​ | ​ | 80.5 | ​ | ​ | 80.5
Total | ​ | ​ | 84.0 | ​ | ​ | 83.3

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Casualty

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The casualty segment recorded underwriting income of $15 million in the first nine months of 2025, compared to $27 million for the same period last year. Prior accident years’ reserve releases reduced loss and settlement expenses for the casualty segment by $28 million in 2025, primarily on accident years 2019 through 2022 and 2024. Larger drivers of the favorable development were commercial excess, general liability and subsegments within professional liability, while auto liability exposures developed adversely for some products, most notably in commercial transportation. In comparison, $42 million of prior accident years’ reserves were released in the first nine months of 2024. Commercial excess, general liability, professional services, executive products and personal umbrella drove the favorable development in 2024. Storm losses on casualty-oriented package policies that include property coverage resulted in $2 million of losses in 2025 and $3 million in 2024.

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The combined ratio for the casualty segment was 97.9 in 2025, compared to 95.8 in 2024. The segment’s loss ratio was 61.9 in 2025, up from 58.9 in 2024. Lower levels of reserve releases on prior accident years and higher current year loss reserves, primarily in auto exposed lines, resulted in the higher loss ratio in 2025. The expense ratio for the casualty segment was 36.0, down from 36.9 for the same period last year, as the growth in the earned premium base exceeded the growth in expense.

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Property

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The property segment recorded underwriting income of $157 million for the first nine months of 2025, compared to $141 million for the same period last year. Underwriting results for 2025 included $32 million of favorable development on prior years’ loss and catastrophe reserves, offset by $24 million of storm and other catastrophe losses. Comparatively, the 2024 underwriting results included $33 million of favorable development on prior years’ loss and catastrophe reserves, $35 million of losses from Hurricanes Beryl and Helene, as well as $28 million of other storm losses.

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Underwriting results for the first nine months of 2025 translated into a combined ratio of 59.8, compared to 64.4 for the same period last year. The segment’s loss ratio was 26.7 in 2025, down from 34.0 in 2024, as a result of lower current accident year catastrophe losses. The segment’s expense ratio increased to 33.1 in 2025 from 30.4 in the prior year, as a result of continued investments in people and technology, as well as higher acquisition-related expenses, which can fluctuate between periods.

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Surety

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The surety segment recorded underwriting income of $22 million for the first nine months of 2025, compared to $21 million for the same period last year. Both periods reflected positive current accident year underwriting performance and benefited from favorable development on prior years’ loss reserves. Results for 2025 included favorable development on prior accident years’ reserves, which decreased loss and settlement expenses for the segment by $13 million. Results for 2024 included $11 million of favorable development on prior accident years’ reserves. Additionally, $2 million of reinsurance reinstatement premium was recorded in 2024 on a prior year loss, which reduced net premiums earned and underwriting income.

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The combined ratio for the surety segment totaled 80.5 for the first nine months of 2025 and 2024. The segment’s loss ratio was 7.0 in 2025, down from 9.0 in 2024, due to higher levels of favorable prior accident years’ reserve development. The expense ratio was 73.5, up from 71.5 in the prior year, due to continued investments in people and technology, higher acquisition expenses, as well as differences in our reinsurance costs.

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Investment Income

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Our investment portfolio generated net investment income of $117 million during the first nine months of 2025, an increase of 13 percent from the same period in 2024. The increase in investment income was due to higher reinvestment rates, as well as an increased average asset base relative to the prior year.

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Yields on our fixed income investments for the first nine months of 2025 and 2024 were as follows:

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​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | 2025 |  |  | 2024 | ​
Pretax Yield | ​ | ​ | ​ | ​ | ​ | ​
Taxable | ​ | 4.10 | % | ​ | 3.79 | %
Tax-Exempt | ​ | 2.83 | % | ​ | 2.88 | %
After-Tax Yield | ​ | ​ | ​ | ​ | ​ | ​
Taxable | ​ | 3.24 | % | ​ | 2.99 | %
Tax-Exempt | ​ | 2.68 | % | ​ | 2.73 | %

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The following table depicts the composition of our investment portfolio at September 30, 2025 as compared to December 31, 2024:

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​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
(in thousands) |  | September 30, 2025 |  | December 31, 2024 | ​
Fixed income | ​ | $ | 3,536,484 |  | 75.4 | % | $ | 3,175,796 |  | 77.8 | %
Equity securities | ​ | ​ | 878,872 | ​ | 18.8 | % | ​ | 736,191 | ​ | 18.0 | %
Short-term investments | ​ | ​ | 165,706 | ​ | 3.5 | % | ​ | 74,915 | ​ | 1.8 | %
Other invested assets | ​ | ​ | 56,494 | ​ | 1.2 | % | ​ | 57,939 | ​ | 1.4 | %
Cash | ​ | ​ | 52,621 | ​ | 1.1 | % | ​ | 39,790 | ​ | 1.0 | %
Total investments and cash | ​ | $ | 4,690,177 | ​ | 100.0 | % | $ | 4,084,631 | ​ | 100.0 | %

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We believe our overall asset allocation supports our strategy to preserve capital for policyholders, provide sufficient income to support our insurance operations and effectively grow book value over a long-term investment horizon.

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The fixed income portfolio increased by $361 million in the first nine months of 2025, as bonds rallied and cash flows were largely allocated to the fixed income portfolio. Average fixed income duration was 4.8 years at September 30, 2025, reflecting our liability structure and sound capital position. The equity portfolio increased by $143 million during the first nine months of 2025, primarily due to strength in the equity markets. Short-term investments increased by $91 million, as yields on AAA-rated government money market funds remained relatively attractive.

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Income Taxes

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Our effective tax rate for the first nine months of 2025 was 20.4 percent, compared to 19.8 percent for the same period in 2024. Effective rates are dependent upon components of pretax earnings or losses and the related tax effects. The effective tax rate was higher for the nine-month period in 2025 due to lower levels of tax-favored adjustments, such as tax credits and excess tax benefits on share-based compensation, and higher levels of pretax income, which decreased the percentage impact of the tax-favored adjustments.

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Three Months Ended September 30, 2025 Compared to Three Months Ended September 30, 2024

​

Net premiums earned increased 5 percent, driven primarily by products in our casualty and surety segments. Investment income was up 12 percent, due to an increased average asset base and higher reinvestment rates. Positive market performance resulted in $42 million of unrealized gains on equity securities in the third quarter of 2025, compared to $38 million in 2024. Realized gains during the third quarter of 2025 were comprised of $16 million of realized gains on equity securities, primarily due to rebalancing within our equity strategies, $3 million of realized gains on the fixed income portfolio and $1 million of

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other realized losses. This compares to $7 million of realized gains on the equity portfolio, $1 million of realized losses on the fixed income portfolio and less than $1 million of other realized losses during the third quarter of 2024.

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​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | For the Three Months
​ | ​ | Ended September 30,
Consolidated Revenues (in thousands) |  | 2025 |  | 2024
Net premiums earned | ​ | $ | 407,695 | ​ | $ | 389,489
Net investment income | ​ | ​ | 41,270 | ​ | ​ | 36,694
Net realized gains | ​ | ​ | 18,318 | ​ | ​ | 5,420
Net unrealized gains on equity securities | ​ | ​ | 41,981 | ​ | ​ | 38,392
Total consolidated revenue | ​ | $ | 509,264 | ​ | $ | 469,995

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Underwriting income was $61 million on an 85.1 combined ratio for the third quarter of 2025, compared to $41 million on an 89.6 combined ratio in the same period of 2024. Underwriting results for 2024 were impacted by $37 million of pretax losses from Hurricanes Beryl and Helene, as well as $2 million of pretax storm losses, while minimal catastrophe losses were incurred in the third quarter of 2025. Results for each period benefited from favorable development on prior years’ loss reserves, which provided additional pretax earnings of $15 million in the third quarter of 2025, compared to $21 million in 2024.

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The loss ratio decreased to 46.1 from 51.9 due to lower catastrophe losses. The expense ratio increased to 39.0 from 37.7. Improved equity market returns resulted in more book value growth in 2025 and a corresponding increase in bonus expense accruals when compared to 2024. Increased expenses were also driven by continued investments in people and technology, as well as higher acquisition-related costs, which can fluctuate between periods.

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Bonus and profit-sharing amounts earned by executives, managers and associates are predominantly influenced by corporate performance, including operating earnings, combined ratio and return on capital. Favorable development and other drivers of growth in book value will increase bonus and profit-sharing expenses, while catastrophe losses, adverse development and decreased investment portfolio returns would lead to expense reductions. These performance-related expenses affect policy acquisition, insurance operating and general corporate expenses.

​

Our equity in earnings of unconsolidated investees primarily relates to our investment in Prime. We recognized $2 million of investee earnings from Prime in the third quarter of 2025 and $1 million in 2024.

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Net earnings for the third quarter of 2025 totaled $125 million, compared to $95 million for the same period in 2024. Higher levels of underwriting income, investment income, realized gains and unrealized gains on equity securities all contributed to the improved results.

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Comprehensive earnings totaled $152 million for the third quarter of 2025, compared to $175 million for the third quarter of 2024. Other comprehensive earnings primarily included net after-tax unrealized gains (losses) from the fixed income portfolio. Other comprehensive earnings of $28 million in the third quarter of 2025 was primarily attributable to lower interest rates, which increased the fair value of securities held in the fixed income portfolio. Comparatively, $80 million of other comprehensive earnings was recognized in 2024.

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Premiums

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Gross premiums written increased $2 million for the third quarter of 2025, compared to the same period of 2024. Growth in our casualty segment offset declines in the property and surety segments. Net premiums earned increased $18 million, driven by the casualty segment.

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​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Gross Premiums Written | ​ | ​ | Net Premiums Earned | ​
​ | ​ | For the Three Months | ​ | ​ | ​ | ​ | For the Three Months | ​ | ​ | ​
​ | ​ | Ended September 30, | ​ | ​ | ​ | ​ | Ended September 30, | ​ | ​ | ​
(in thousands) |  | 2025 |  | 2024 |  | % Change |  | ​ | 2025 |  | 2024 |  | % Change | ​
Casualty | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Commercial excess and personal umbrella | ​ | $ | 153,896 | ​ | $ | 126,854 | ​ | 21 | % | ​ | $ | 115,132 | ​ | $ | 91,434 | ​ | 26 | %
Commercial transportation | ​ | ​ | 42,644 | ​ | ​ | 43,133 | ​ | (1) | % | ​ | ​ | 31,190 | ​ | ​ | 32,067 | ​ | (3) | %
General liability | ​ | ​ | 28,974 | ​ | ​ | 26,942 | ​ | 8 | % | ​ | ​ | 28,690 | ​ | ​ | 26,316 | ​ | 9 | %
Professional services | ​ | ​ | 31,310 | ​ | ​ | 30,163 | ​ | 4 | % | ​ | ​ | 27,431 | ​ | ​ | 26,281 | ​ | 4 | %
Small commercial | ​ | ​ | 20,078 | ​ | ​ | 21,378 | ​ | (6) | % | ​ | ​ | 19,627 | ​ | ​ | 20,074 | ​ | (2) | %
Executive products | ​ | ​ | 25,337 | ​ | ​ | 25,030 | ​ | 1 | % | ​ | ​ | 6,043 | ​ | ​ | 6,261 | ​ | (3) | %
Other casualty | ​ | ​ | 14,824 | ​ | ​ | 20,767 | ​ | (29) | % | ​ | ​ | 15,395 | ​ | ​ | 17,205 | ​ | (11) | %
Total | ​ | $ | 317,063 | ​ | $ | 294,267 | ​ | 8 | % | ​ | $ | 243,508 | ​ | $ | 219,638 | ​ | 11 | %
Property | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Commercial property | ​ | $ | 93,895 | ​ | $ | 116,655 | ​ | (20) | % | ​ | $ | 72,853 | ​ | $ | 85,814 | ​ | (15) | %
Marine | ​ | ​ | 43,814 | ​ | ​ | 43,938 | ​ | (0) | % | ​ | ​ | 40,058 | ​ | ​ | 37,618 | ​ | 6 | %
Other property | ​ | ​ | 16,922 | ​ | ​ | 13,220 | ​ | 28 | % | ​ | ​ | 13,778 | ​ | ​ | 9,834 | ​ | 40 | %
Total | ​ | $ | 154,631 | ​ | $ | 173,813 | ​ | (11) | % | ​ | $ | 126,689 | ​ | $ | 133,266 | ​ | (5) | %
Surety | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Transactional | ​ | $ | 13,291 | ​ | $ | 13,399 | ​ | (1) | % | ​ | $ | 13,268 | ​ | $ | 12,488 | ​ | 6 | %
Commercial | ​ | ​ | 13,677 | ​ | ​ | 14,125 | ​ | (3) | % | ​ | ​ | 12,700 | ​ | ​ | 12,477 | ​ | 2 | %
Contract | ​ | ​ | 11,559 | ​ | ​ | 12,186 | ​ | (5) | % | ​ | ​ | 11,530 | ​ | ​ | 11,620 | ​ | (1) | %
Total | ​ | $ | 38,527 | ​ | $ | 39,710 | ​ | (3) | % | ​ | $ | 37,498 | ​ | $ | 36,585 | ​ | 2 | %
Grand Total | ​ | $ | 510,221 | ​ | $ | 507,790 | ​ | 0 | % | ​ | $ | 407,695 | ​ | $ | 389,489 | ​ | 5 | %

​

Casualty

​

Gross premiums written for the casualty segment increased $23 million in the third quarter of 2025. We continued to benefit from positive rate movement across a large portion of our casualty segment, as well as from new business growth within our personal umbrella distribution channels. Premium growth for commercial excess and general liability was driven by expanded marketing efforts, while some of our competitors pulled back from the construction market, and increased construction spending in targeted markets. Other casualty premium was down for the quarter as we exited from various captive programs and reduced our participation on the reinsurance agreement with Prime.

​

Property

​

Gross premiums written for the property segment decreased $19 million in the third quarter of 2025. After several consecutive years of rate increases, rates on commercial property exposures declined in the third quarter of 2025, driven by more intense competition. However, some competitors have reduced their appetite for select Hawaii homeowner coverages, which, along with rate increases, has allowed our other property premium to grow.

​

Surety

​

Gross premiums written for the surety segment decreased $1 million for the third quarter of 2025. A decrease in construction spending and soft market conditions drove the decline.

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Underwriting Income

​

​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | For the Three Months
​ | ​ | Ended September 30,
​ |  | 2025 |  | 2024
Underwriting Income (in thousands) | ​ | ​ | ​ | ​ | ​ | ​
Casualty | ​ | $ | 4,486 | ​ | $ | 2,549
Property | ​ | ​ | 50,424 | ​ | ​ | 30,402
Surety | ​ | ​ | 5,635 | ​ | ​ | 7,741
Total | ​ | $ | 60,545 | ​ | $ | 40,692
​ | ​ | ​ | ​ | ​ | ​ | ​
Combined Ratio | ​ | ​ | ​ | ​ | ​ | ​
Casualty | ​ | ​ | 98.2 | ​ | ​ | 98.8
Property | ​ | ​ | 60.2 | ​ | ​ | 77.2
Surety | ​ | ​ | 85.0 | ​ | ​ | 78.8
Total | ​ | ​ | 85.1 | ​ | ​ | 89.6

​

Casualty

​

The casualty segment recorded underwriting income of $4 million in the third quarter of 2025, compared to $3 million for the same period last year. Prior accident years’ reserve releases reduced loss and settlement expenses for the casualty segment by $8 million in 2025, primarily on accident years 2020 through 2022 and 2024. Larger drivers of the favorable development were commercial excess, general liability, executive products and personal umbrella. In comparison, $10 million of prior accident years’ reserves were released in the third quarter of 2024. Commercial excess, professional services, general liability, personal umbrella and executive products were drivers of the favorable development in 2024. In addition, underwriting results for 2024 included $2 million of hurricane and storm losses on casualty-oriented package policies that include property coverage.

​

The combined ratio for the casualty segment was 98.2 in 2025, compared to 98.8 in 2024. The segment’s loss ratio was 62.0 in 2025, down from 62.8 in 2024, due to improved current accident year losses. The expense ratio for the casualty segment was 36.2, up from 36.0 for the same period last year.

​

Property

​

The property segment recorded underwriting income of $50 million for the third quarter of 2025, compared to $30 million for the same period last year. Underwriting results for 2025 included $5 million of favorable development on prior years’ loss reserves. Comparatively, the 2024 underwriting results included $8 million of favorable development on prior years’ loss and catastrophe reserves, $35 million of losses from Hurricanes Beryl and Helen, as well as $2 million of storm losses.

​

Underwriting results for the third quarter of 2025 translated into a combined ratio of 60.2, compared to 77.2 for the same period last year. The segment’s loss ratio was 25.9 in 2025, down from 45.8 in 2024, as a result of lower catastrophe losses. The segment’s expense ratio increased to 34.3 in 2025, up from 31.4 in the prior year, driven by continued investments in people and technology, along with higher acquisition-related expenses, which can fluctuate between periods.

​

Surety

​

The surety segment recorded underwriting income of $6 million for the third quarter of 2025, compared to $8 million for the same period last year. Results for 2025 and 2024 included favorable development on prior accident years’ reserves, which decreased loss and settlement expenses for the segment by $3 million in each period.

​

The combined ratio for the surety segment totaled 85.0 for the third quarter of 2025, compared to 78.8 for the same period in 2024. The segment’s loss ratio was 11.4 in 2025, up from 8.7 in 2024, due to slightly lower favorable development on prior accident years and a higher earned premium base. The expense ratio was 73.6, up from 70.1 in the prior year, due to continued investments in people and technology, as well as higher acquisition expenses.

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Investment Income

​

Our investment portfolio generated net investment income of $41 million during the third quarter of 2025, an increase of 12 percent from the same period in 2024. The increase in investment income was due to higher reinvestment rates, as well as an increased average asset base relative to the prior year.

​

Yields on our fixed income investments for the third quarter of 2025 and 2024 were as follows:

​

​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | 2025 | ​ |  | 2024 | ​
Pretax Yield | ​ | ​ | ​ | ​ | ​ | ​
Taxable | ​ | 4.19 | % | ​ | 3.86 | %
Tax-Exempt | ​ | 2.69 | % | ​ | 2.98 | %
After-Tax Yield | ​ | ​ | ​ | ​ | ​ | ​
Taxable | ​ | 3.31 | % | ​ | 3.05 | %
Tax-Exempt | ​ | 2.55 | % | ​ | 2.82 | %

​

Income Taxes

​

Our effective tax rate for the third quarter of 2025 was 20.8 percent, compared to 18.7 percent for the same period in 2024. Effective rates are dependent upon components of pretax earnings or losses and the related tax effects. The effective tax rate was higher for the third quarter of 2025 due to lower levels of tax-favored adjustments, such as tax credits and excess tax benefits on share-based compensation, and higher levels of pretax income, which decreased the percentage impact of the tax-favored adjustments.

​

LIQUIDITY AND CAPITAL RESOURCES

​

We have three primary types of cash flows: (1) cash flows from operating activities, which consist mainly of cash generated by our underwriting operations and income earned on our investment portfolio, (2) cash flows from investing activities related to the purchase, sale and maturity of investments and (3) cash flows from financing activities that impact our capital structure, such as shareholder dividend payments and changes in debt and shares outstanding.

​

The following table summarizes cash flows provided by (used in) our activities for the nine-month periods ended September 30, 2025 and 2024:

​

​ | ​ | ​ | ​ | ​ | ​ | ​
(in thousands) |  | 2025 |  | 2024
Operating cash flows | ​ | $ | 457,453 | ​ | $ | 432,139
Investing cash flows | ​ | ​ | (402,518) | ​ | ​ | (372,088)
Financing cash flows | ​ | ​ | (42,104) | ​ | ​ | (35,841)
Total | ​ | $ | 12,831 | ​ | $ | 24,210

​

Premiums received from customers are our largest source of cash and claim payments on insured losses represent our largest use of cash. Cash flows from operating activities can vary among periods due to the timing in which these payments are made or received. Operating cash flows in the first nine months of 2025 benefited from increased premium and investment income receipts relative to the first nine months of 2024.

​

As of September 30, 2025, we had $100 million in debt outstanding. On September 15, 2023, we accessed $50 million from our revolving line of credit with PNC Bank, N.A. (PNC). The borrowing may be repaid at any time and carries an adjustable interest rate of 5.76 percent, which will reset during the fourth quarter of 2025. The credit facility with PNC was entered into during the first quarter of 2023 and replaced the previous $60 million facility with Bank of Montreal, Chicago Branch, which expired on March 27, 2023. The line of credit 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. Further, RLI Insurance Company borrowed $50 million from the Federal Home Loan Bank of Chicago (FHLBC) on November 12, 2024. The borrowing matures on November 12, 2025. Interest is paid monthly at an annualized rate of 4.44 percent.

​

Two of our insurance companies, RLI Insurance Company (RLI Ins.) and Mt. Hawley Insurance Company, are members of the FHLBC. Membership in the Federal Home Loan Bank system provides both companies access to an additional source of

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liquidity via a secured lending facility. Our membership allows each insurance subsidiary to determine tenor and structure at the time of borrowing. As of September 30, 2025, $55 million of investments were pledged as collateral with the FHLBC to ensure timely access to the secured lending facility.

​

As of September 30, 2025, we had cash and other investments maturing within one year of approximately $485 million and an additional $765 million maturing between one to five years. Whereas our strategy is to be fully invested at all times, short-term investments in excess of demand deposit balances are considered a component of investment activities, and thus are classified as investments in our consolidated balance sheets.

​

We believe that cash generated by operations and investments will provide sufficient sources of liquidity to meet our anticipated needs over the next 12 to 24 months. In the event they are not sufficient, we believe cash available from financing activities and other sources will provide sufficient additional liquidity.

​

We maintain a diversified investment portfolio representing policyholder funds that have not yet been paid out as claims, as well as the capital we hold for our shareholders. Invested assets at September 30, 2025 have increased $606 million from December 31, 2024. As of September 30, 2025, our investment portfolio had the following asset allocation breakdown:

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Cost or | ​ | Fair | ​ | Unrealized | ​ | % of Total | ​ | ​ | ​
(in thousands) |  | Amortized Cost |  | Value |  | Gain/(Loss) |  | Fair Value |  |  | Quality*
U.S. government | ​ | $ | 395,751 | ​ | $ | 399,593 | ​ | $ | 3,842 | ​ | 8.5 | % | ​ | AA+
U.S. agency | ​ | ​ | 55,268 | ​ | ​ | 55,483 | ​ | ​ | 215 | ​ | 1.2 | % | ​ | AA+
Non-U.S. government & agency | ​ | ​ | 12,730 | ​ | ​ | 12,377 | ​ | ​ | (353) | ​ | 0.3 | % | ​ | A-
Agency MBS | ​ | ​ | 632,284 | ​ | ​ | 604,351 | ​ | ​ | (27,933) | ​ | 12.9 | % | ​ | AA+
ABS/CMBS/MBS** | ​ | ​ | 577,587 | ​ | ​ | 563,754 | ​ | ​ | (13,833) | ​ | 12.0 | % | ​ | AA
Corporate | ​ | ​ | 1,501,345 | ​ | ​ | 1,490,035 | ​ | ​ | (11,310) | ​ | 31.8 | % | ​ | A-
Municipal | ​ | ​ | 480,989 | ​ | ​ | 410,891 | ​ | ​ | (70,098) | ​ | 8.7 | % | ​ | AA+
Total fixed income | ​ | $ | 3,655,954 | ​ | $ | 3,536,484 | ​ | $ | (119,470) | ​ | 75.4 | % | ​ | AA-
Equity | ​ | ​ | 513,255 | ​ | ​ | 878,872 | ​ | ​ | 365,617 | ​ | 18.8 | % | ​ | ​
Short-term investments | ​ | ​ | 165,706 | ​ | ​ | 165,706 | ​ | ​ | — | ​ | 3.5 | % | ​ | ​
Other invested assets | ​ | ​ | 58,123 | ​ | ​ | 56,494 | ​ | ​ | (1,629) | ​ | 1.2 | % | ​ | ​
Cash | ​ | ​ | 52,621 | ​ | ​ | 52,621 | ​ | ​ | — | ​ | 1.1 | % | ​ | ​
Total portfolio | ​ | $ | 4,445,659 | ​ | $ | 4,690,177 | ​ | $ | 244,518 | ​ | 100.0 | % | ​ | ​

* | Quality ratings provided by Moody’s, S&P and Fitch

** | Non-agency asset-backed, commercial mortgage-backed and mortgage-backed securities

​

Quality is an average of each bond’s credit rating, adjusted for its relative weighting in the portfolio. As of September 30, 2025, our fixed income portfolio had the following rating distribution:

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ |  | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Below | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Investment | ​ | ​ | ​ | ​
​ | ​ | AAA | ​ | AA | ​ | A | ​ | BBB | ​ | Grade | ​ | No Rating | ​ | Fair Value
U.S. government | ​ | - | ​ | 399,593 | ​ | - | ​ | - | ​ | - | ​ | - | ​ | 399,593
U.S. agency | ​ | - | ​ | 55,483 | ​ | - | ​ | - | ​ | - | ​ | - | ​ | 55,483
Non-U.S. government & agency | ​ | - | ​ | 1,403 | ​ | 4,415 | ​ | 5,558 | ​ | - | ​ | 1,001 | ​ | 12,377
Agency MBS | ​ | - | ​ | 604,351 | ​ | - | ​ | - | ​ | - | ​ | - | ​ | 604,351
ABS/CMBS/MBS* | ​ | 354,527 | ​ | 48,113 | ​ | 110,967 | ​ | 1,006 | ​ | 8,875 | ​ | 40,266 | ​ | 563,754
Corporate | ​ | 23,769 | ​ | 174,402 | ​ | 618,248 | ​ | 413,004 | ​ | 163,271 | ​ | 97,341 | ​ | 1,490,035
Municipal | ​ | 117,068 | ​ | 263,726 | ​ | 28,294 | ​ | - | ​ | - | ​ | 1,803 | ​ | 410,891
Total | ​ | 495,364 | ​ | 1,547,071 | ​ | 761,924 | ​ | 419,568 | ​ | 172,146 | ​ | 140,411 | ​ | 3,536,484

* | Non-agency asset-backed, commercial mortgage-backed and mortgage-backed securities

​

As of September 30, 2025, our fixed income portfolio remained well diversified, with 1,929 individual issues.

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Our investment portfolio has limited exposure to structured asset-backed securities. As of September 30, 2025, we had $304 million in ABS, which are pools of assets collateralized by cash flows from several types of loans, including home equity, credit cards, autos and structured bank loans in the form of collateralized loan obligations (CLOs).

​

As of September 30, 2025, we had $258 million in commercial and non-agency MBS and $604 million in MBS backed by government sponsored enterprises (GSEs - Freddie Mac, Fannie Mae and Ginnie Mae). Excluding the GSE-backed MBS, our exposure to ABS and CMBS was 12.0 percent of our investment portfolio at quarter end.

​

We had $1,490 million in corporate fixed income securities as of September 30, 2025, which includes $140 million invested in a high-yield credit strategy. This high-yield portfolio consists of floating rate bank loans and bonds that are below investment grade in credit quality and offer incremental yield over our core fixed income portfolio.

​

The municipal portfolio includes approximately 72 percent taxable securities and 28 percent tax-exempt securities. Approximately 93 percent of our municipal bond portfolio maintains an ‘AA’ or better rating, while 100 percent of the municipal bond portfolio is rated ‘A’ or better.

​

Securities within the equity portfolio are well diversified and are primarily invested in broad index exchange traded funds (ETFs). Our actively managed equity strategy has a preference for dividend income and value oriented security selection with low turnover, which minimizes transaction costs and taxes throughout our long investment horizon.

​

As of September 30, 2025, our equity portfolio had a dividend yield of 1.5 percent, compared to 1.2 percent for the S&P 500 index. Because of the corporate dividend-received-deduction applicable to our dividend income, we pay an effective tax rate of 13.1 percent on dividends, compared to 21.0 percent on taxable interest and 5.3 percent on municipal bond interest income. The equity portfolio is managed in a diversified and granular manner, with 78 individual securities and five ETF positions. No single company exposure in the equity portfolio represents more than 1 percent of invested assets.

​

Other invested assets include investments in low-income housing tax credit and historic tax credit partnerships, membership in the FHLBC and investments in private funds.

​

We had $64 million of investments in unconsolidated investees at September 30, 2025, compared to $56 million at December 31, 2024.

​

Our investment portfolio does not have any exposure to derivatives.

​

As of September 30, 2025, our capital structure consisted of $100 million in debt and $1.9 billion of shareholders’ equity. Debt outstanding comprised 5 percent of total capital as of September 30, 2025. Interest and fees on debt obligations totaled $4 million for the first nine months of 2025 and $5 million during the same period in 2024. We incurred interest expense on debt at an average annual interest rate of 5.18 percent during the first nine months of 2025, compared to 6.20 percent during the same period last year.

​

We paid a regular quarterly cash dividend of $0.16 per share on September 19, 2025, the same amount as the prior quarter. We have increased dividends in each of the last 50 years.

​

Our three insurance companies are subsidiaries of RLI Corp, with RLI Ins. as the first-level, or principal, insurance company. At the holding company (RLI Corp.) level, we rely largely on dividends from our insurance subsidiaries to meet our obligations for paying principal and interest on outstanding debt, corporate expenses and dividends to RLI Corp. shareholders. As discussed further below, dividend payments to RLI Corp. from our principal insurance subsidiary are restricted by state insurance laws as to the amount that may be paid without prior approval of the insurance regulatory authorities of Illinois. 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 September 30, 2025, our holding company had $1.9 billion in equity. 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 $134 million in liquid assets. Unrestricted funds at the holding company are available to fund debt interest, general corporate obligations and dividend payments to our shareholders. If necessary, the holding company also has other potential sources of liquidity that could provide for additional funding to meet corporate obligations or pay shareholder dividends, which include a revolving line of credit, as well as access to capital markets.

​

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Ordinary dividends, which may be paid by our principal insurance subsidiary without prior regulatory approval, are subject to certain limitations based upon statutory income, surplus and earned surplus. The maximum ordinary dividend distribution from our principal insurance subsidiary in a rolling 12-month period is limited by Illinois law to the greater of 10 percent of RLI Ins. policyholder surplus, as of December 31 of the preceding year, or the net income of RLI Ins. for the 12-month period ending December 31 of the preceding year. Ordinary dividends are further restricted by the requirement that they be paid from earned surplus. Any dividend distribution in excess of the ordinary dividend limits is deemed extraordinary and requires prior approval from the Illinois Department of Insurance (IDOI). In the first nine months of 2025, RLI Ins. paid $139 million in ordinary dividends to RLI Corp. In 2024, RLI Ins. paid ordinary dividends totaling $152 million. As of September 30, 2025, $1 million of the net assets of our principal insurance subsidiary were not restricted and could be distributed to RLI Corp. as ordinary dividends without prior approval from the IDOI. Because the limitations are based upon a rolling 12-month period, the amount and impact of these restrictions vary over time. 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.

​

Item 3.Quantitative and Qualitative Disclosures about Market Risk

​

There have been no material changes to our exposure to market risk from that reported in our 2024 Annual Report on Form 10-K.

​

Historically, our primary market risks have been equity price risk associated with investments in equity securities and interest rate risk associated with investments in fixed income securities. We have consistently invested in high credit quality, investment grade securities. See “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” of our 2024 Annual Report on Form 10-K for more information.

​

Item 4.Controls and Procedures

​

We maintain a system of controls and procedures designed to provide reasonable assurance as to the reliability of the financial statements and other disclosures included in this report, as well as to safeguard assets from unauthorized use or disposition. An evaluation of the effectiveness of the design and operation of our disclosure controls and procedures was performed, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures are effective, as of the end of the period covered by this report.

​

In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurances of achieving the desired control objective, and management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. We believe that our disclosure controls and procedures provide such reasonable assurance.

​

No changes were made to our internal control over financial reporting during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

​

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PART II - OTHER INFORMATION

Item 1.Legal Proceedings – There were no material changes to report.

​

Item 1A. Risk Factors – There were no material changes to report.

​

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds - not applicable.

​

Item 3.Defaults Upon Senior Securities - Not applicable.

​

Item 4.Mine Safety Disclosures - Not applicable.

​

Item 5.Other Information –

​

Securities Trading Plans of Executive Officers and Directors

​

Rule 10b5-1 under the Exchange Act provides an affirmative defense that enables prearranged transactions in Company securities in a manner that avoids concerns about initiating transactions at a future date while possibly in possession of material nonpublic information. Our Insider Trading Policy permits our executive officers and directors to enter into trading plans designed to comply with Rule 10b5-1.

​

During the three months ended September 30, 2025, no director or officer of the Company adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement, as each term is defined in Item 408(a) of Regulation S-K.

​

Item 6.Exhibits

​

Exhibit | ​ | ​ | ​ | Incorporated by Reference | ​ | Filed or Furnished
Number |  | Description of Document |  | Form | Filing Date |  | Herewith
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
31.1 | ​ | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ​ | ​ | ​ | ​ | X
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
31.2 | ​ | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ​ | ​ | ​ | ​ | X
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
32.1 | ​ | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | ​ | ​ | ​ | ​ | X
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
32.2 | ​ | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | ​ | ​ | ​ | ​ | X
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
101.INS | ​ | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | ​ | ​ | ​ | ​ | X
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
101.SCH | ​ | Inline XBRL Taxonomy Extension Schema | ​ | ​ | ​ | ​ | X
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
101.CAL | ​ | Inline XBRL Taxonomy Extension Calculation Linkbase | ​ | ​ | ​ | ​ | X
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
101.DEF | ​ | Inline XBRL Taxonomy Definition Linkbase | ​ | ​ | ​ | ​ | X
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
101.LAB | ​ | Inline XBRL Taxonomy Extension Label Linkbase | ​ | ​ | ​ | ​ | X
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
101.PRE | ​ | Inline XBRL Taxonomy Extension Presentation Linkbase | ​ | ​ | ​ | ​ | X
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
104 | ​ | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | ​ | ​ | ​ | ​ | X

* Management contract or compensatory plan

​

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

​ | ​ | ​
​ | ​ | RLI Corp.
​ | ​ | ​
​ | ​ | ​
​ | ​ | /s/ Todd W. Bryant
​ | ​ | Todd W. Bryant
​ | ​ | Chief Financial Officer
​ | ​ | (Principal Financial and Chief Accounting Officer)
​ | ​ | ​
Date: October 22, 2025 | ​ | ​

​

​

​

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