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Basis of Presentation and Summary of Significant Accounting Policies | 9 Months Ended
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Sep. 30, 2025
Accounting Policies [Abstract] |
Basis of Presentation and Summary of Significant Accounting Policies | 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 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 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: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | 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 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. ​

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