Investor Presentation

Similar documents
The Navigators Group, Inc. Insuring a World In Motion (NASDAQ: NAVG) Morgan Stanley Financials Conference June 12, 2013

AXIS Capital. Keefe, Bruyette and Woods 2009 Insurance Conference New York, NY. David Greenfield, CFO

Investor Presentation

INVESTOR PRESENTATION

Acquisition of Endurance Specialty Holdings. October 5, 2016

AmTrust Financial. KBW Insurance Conference. September 8, 2010

Investor Presentation March 2018

The Hartford Financial Services Group, Inc. May 2017 Overview of The Hartford

Specialty Property and Casualty Insurance Fixed and Fixed-Indexed Annuities

Specialty Property and Casualty Insurance Fixed and Fixed-Indexed Annuities

GAIC.com.sg. Strength Through Specialisation

Building a best-in-class global insurance and risk solutions provider

Bank of America Merrill Lynch Insurance Conference. The Hanover Insurance Group (THG) February 14, 2013

Specialty Property and Casualty Insurance Fixed and Fixed-Indexed Annuities

KEEP THE PROMISES. AT IRONSHORE, IRONSHORE

SELECTIVE INSURANCE GROUP, INC.

The Hartford Financial Services Group, Inc. May 2016 Overview of The Hartford

The Hanover Insurance Group, Inc. NYSE: THG

Maiden Holdings, Ltd.

SECOND QUARTER 2018 HIGHLIGHTS

Investor Presentation June 2018

Selective Insurance Group, Inc.

The Hanover Insurance Group

2015 Second Quarter Conference Call August 4, 2015

Delivering on our Commitments Today and Tomorrow. Investor Presentation

First American Financial KBW Mortgage Finance & Asset Management Conference June 1, 2017

Principal Global Investors. Investment expertise with a purpose

Guardian Life Global Funding: Funding Agreement-Backed Global Notes Program

BUSINESS UPDATE Through June 8, 2017

AIG Acquisition of Validus Holdings: A Step Forward in AIG s Profitable Growth Strategy. Investor Presentation January 22, 2018

Barclay s: Insurance Forum May 16, 2017

Building on our STRENGTHS. Investing in our FUTURE.

2017 Intellisight Conference. August 22, 2017

IGM FINANCIAL Scotia Capital Financials Summit. September 11, 2007

The Hartford Financial Services Group, Inc. March 2018 Overview of The Hartford

Chubb Limited Investor Presentation. December 2016

Affiliated Managers Group, Inc.

WILLIS GROUP HOLDINGS FACT BOOK FOR THE QUARTER ENDED JUNE 30, 2010

Fall 2018 Investor Briefing

Darwin Professional Underwriters, Inc.

Stifel Investor Conference

KEEP THE PROMISES. AT IRONSHORE, IRONSHORE

Sidoti s Seventeenth Annual Emerging Growth Conference. March 18, 2013

The Hartford Financial Services Group, Inc. November 2017 Overview of The Hartford

The Hartford to Acquire Navigators: Broadens and Deepens Commercial Lines Product Offerings and Underwriting Risk Appetite

Investor Presentation September 2016

Fixed Income Investor Presentation May 2018

Aspen Insurance Holdings Limited

AXIS Programs. A Winning Partnership for Success

Roper Technologies, Inc. EPG Annual Spring Conference

Corporate Presentation August 2013 NYSE:HCI

2018 Investor Presentation

2011 RLI CORP. ANNUAL REPORT

IGM FINANCIAL Scotia Capital Financials Summit. September 9, 2008

Corporate Overview. April 2017

Merrill Lynch Insurance Investor Conference

Morgan Stanley Financials Conference The Hanover Insurance Group (THG) June 2015

The Hartford Financial Services Group, Inc. May 2018 Investor Overview of The Hartford

2018 Investor Presentation

FINANCIAL SUPPLEMENT As of June 30, 2011

Third Quarter Ended September 30, 2016

Investor Presentation

Maiden Holdings, Ltd. Investor Presentation March 2014

Maiden Holdings, Ltd. Investor Presentation June 2015

FBR Fall Capital Markets Investor Conference. December 2, 2009

Specialty Property and Casualty Insurance Fixed and Fixed-Indexed Annuities

Commercial Insurance

MGA & Program Solutions

Investor Overview Q2 2017

KBW Insurance Conference

Selective Insurance Group, Inc.

Chubb Limited Bärengasse 32 CH-8001 Zurich Switzerland

RBC Capital Markets Financial Institutions Conference. March MGIC Investment Corporation (NYSE: MTG) 1

Selective Insurance Group, Inc.

INTELLIGENCE IS OUR BUSINESS

Company Overview. May 2018

UBS Swiss Equity Conference

Investor Presentation April 2018

2016 AmTrust Financial Conference

Maiden Holdings, Ltd. Investor Presentation March 2015

The Hartford Financial Services Group, Inc.

Commercial Insurance

What it Takes to Build a New Leasing Company Today

Maiden Holdings, Ltd. Investor Presentation May & June 2014

2012 Annual Meeting of Shareholders Building On Our Distinctive Position To Achieve Long Term Success

INVESTOR PRESENTATION

Smith Barney Citigroup Financial Services Conference New York, January 26, 2005

Keefe, Bruyette & Woods Insurance Conference. September 7, 2005

INVESTOR FINANCIAL SUPPLEMENT. September 30, 2012

Investor Presentation

RenaissanceRe Holdings Ltd.

3Q 2016 Investor Presentation. November 2016

INVESTOR FINANCIAL SUPPLEMENT. March 31, 2012

The Hartford Financial Services Group, Inc. December 2017 Overview of The Hartford

MANAGEMENT S DISCUSSION AND ANALYSIS

Caution re: Forward-looking Statements

J.P Morgan Fixed Income Conference. March 2004

/ Financial highlights (1)

Its inclusion in this document is not intended to be an update or reaffirmation of the forward-looking information as of any later date.

Sidoti & Company Fall 2018 Conference September 2018

Transcription:

Investor Presentation 2 nd Quarter, 2014

Agenda 1 2 3 4 INTRODUCTION STRATEGY FINANCIAL RESULTS THE FUTURE 2

INTRODUCTION 1

Strategy RLI will continue to: Be a premier specialty underwriting company that achieves long-term industry leading combined ratios and book value growth. Remain a destination for talented, entrepreneurial underwriters with narrow & deep expertise. Seek out difficult markets while maintaining a highly diverse product portfolio. Emphasize profit maximization and enhance our ability to grow over the long term, with a focus on organic opportunities and acquisitions that preserve the unique culture that has made RLI successful. 4

Select Market Information RLI has a rich history as a publicly traded company and consistently creates value for its shareholders Ticker / Exchange RLI / NYSE Share Price (06/30/14) $45.78 Annual Dividend / Yield $0.72 / 1.6% Market Cap Annual Gross Premium (Trailing 4 qtr.) $1.97 billion $855 million A.M. Best Rating A+ Employees 885 20 Year Annual Shareholder Return 17.4% 5

The RLI Story RLI has a rich 50 year history as a leading specialty P&C insurer. Founded contact lenses insurance agency, Replacement Lens Inc. Began underwriting specialty P&C coverages Continued expanding product offerings Licensed in all 50 states Acquired Contractors Bonding and Insurance Co. Increased dividends for 38 th consecutive year 61 71 77 96 04 11 12 13 RLI common stock first traded on NASDAQ Paid 1 st dividend Merged contact lens division with Hester Enterprises, maker of Maui Jim Sunglasses Received upgraded A.M. Best rating to A+ (Superior) Acquired Rockbridge Underwriting 6

Diversified Product Portfolio Continued start-ups and niche acquisitions have driven our growth and diversification. NEW PRODUCTS* $227 Million 26% ANNUAL GROSS PREMIUM $855 Million *Products new to RLI portfolio in previous 5 years 7

Diversified Product Portfolio Product diversification has fueled our growth & financial success CASUALTY (55%) SURETY (13%) PROPERTY (32%) Trailing 4 Quarters Gross Written Premium 8

SURETY PROPERTY CASUALTY Product Distribution Our strong customer relationships extend across a diverse distribution network Retail agent / broker Wholesale Broker General agency Reinsurance broker General liability Commercial & personal umbrella Transportation Executive products Professional services Commercial package Commercial property Marine Personal Lines Reinsurance Miscellaneous Energy Commercial Contract 9

RLI Locations Our offices are located in close proximity to our customers HAWAII 10

STRATEGY 2

RLI s Business Model RLI is a domestic, specialty insurance company that does its own underwriting Underwriting company We hire experienced, entrepreneurial underwriters We focus on difficult markets that require unique expertise Ownership culture and compensation Underwriter compensation tied directly to underwriting profit Diversified insurance product portfolio Our products are run as stand-alone businesses Diversification reduces corporate risk Growth by design Organic product growth Talent acquisition & start-ups Acquisitions 12

Gross Premium ($ millions) Market Cycle Management RLI s strong people, products & processes allow us to effectively manage through any kind of market Invest in new people, products & processes in all markets Empower underwriters to capitalize to the fullest during hard markets and pull back when necessary during soft markets Enforce strict underwriting discipline throughout Hard Market Maximize financial strength & flexibility 13

FINANCIAL RESULTS 3

Measurements Of Our Success Combined Ratio 18 consecutive years < 100 9 consecutive years < 90 16 margin (points) by which we beat the industry Book Value Growth 13% compound annual growth rate over last 10 years Return on Equity 15% average ROE over last 10 years Capital Management 38 consecutive years we have increased our dividend $600 million amount returned to shareholders in last 5 years Reserve Consistency $397 million reserve releases in last 5 years As of year-end 2013 15

Underwriting Profit RLI has achieved 18 straight years of a combined ratio below 100, and has beaten the industry ratio by an average of 16 points* 100 *Statutory Basis 16

$ Millions Book Value Growth RLI has achieved 15% compound growth in its book value since 2002 and has returned over $600 million to shareholders via buybacks and dividends since 2009. Cumulative Share Repurchase Cumulative Dividend Reported Book Value 17

Return on Equity RLI has achieved 15% return on equity over the past 10 years Net Earnings/Average Equity 18

Dividend Growth* RLI has a distinguished track record of success: 38 straight years of dividend increases and a 13% growth rate over the last 10 years Special Dividends* $3.50/share Dec 2010 $2.50/share Dec 2011 $2.50/share Dec 2012 $1.50/share Dec 2013 *all adjusted for 2-for-1 stock split in January 2014. 0.16 0.18 0.20 0.26 0.32 0.38 0.44 0.50 0.54 0.58 0.60 0.63 0.67 0.72 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Run Rate 19

Investment Portfolio Investing for the long term: A diversified, highly-rated bond portfolio complemented by diverse selection of value and dividend-oriented stocks. Target Asset Allocation $2.02 Billion Investment Portfolio 80% BONDS 20% EQUITIES Bonds: AA quality; 4.8 duration EQUITIES 21.6% AGENCY 0.5% CASH 2.3% Portfolio Allocation CORPORATE 28.7% GOVERNMENT 2.0% Equities: Large-Cap, Blue-Chip; Dividend yield of 2.8% Emphasis on consistency and low turnover, not market timing MUNICIPAL 25.9% ABS/CMBS 5.7% MORTGAGE BACKED 13.3% 20

Maui Jim Sunglasses A unique private-equity legacy investment from RLI s contact lens insurance business An industry leader in the high-end global sunglass market RLI owns 40%; carried at $59.2 million $12.1 million of income recognized trailing 4 quarters $27.7 million of dividends since 2010 Significant excess value not recognized on the balance sheet Long-term exit candidate 21

Total Shareholder Return Shareholder returns validate the RLI story $2,000 $1,000 $500 $200 $100 S&P S&P P&C RLI* 500* Index* 1 year 25.2% 24.4% 16.5% 5 year 24.7% 18.8% 18.1% 10 year 14.9% 7.8% 5.6% 20 year 17.4% 9.8% 8.6% 50 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 2Q14 *Returns as of 2 nd Qtr 2014 22

THE FUTURE 4

Value Creation Opportunities RLI is pursuing multiple initiatives designed to create value regardless of how the market evolves Start-ups via talent acquisition Traditional growth via hiring the best underwriters into the RLI model Acquisitions of niche P&C companies Capitalize on market opportunities in niche spaces Reduced reliance on reinsurance Long term goal to retain more of the attractive risks we write Process improvement Investing in technology to drive efficiency and leverage the platform Cycle management Maximizing margins throughout the cycle 24

Competitive Advantages RLI will capitalize on its competitive advantages to drive profitable growth Capital strength Underwriting expertise Ownership mentality & aligned compensation Product and distribution diversification Leveragable infrastructure to support existing and new product growth A reputation for excellence among customers built over many years A track record that attracts opportunity nothing succeeds like success 25

EXHIBITS

Selected Financial Data (amounts in millions) Operating Results 2Q14 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 Gross premiums written $461.6 843.2 784.8 702.1 636.3 631.2 681.2 739.3 799.0 756.0 752.6 742.5 Consolidated revenue $374.2 705.6 660.8 619.2 583.4 546.6 561.0 652.3 632.7 569.3 578.8 519.9 Net earnings $64.7 126.3 103.3 126.6 128.2 92.4 77.3 174.3 133.6 103.8 72.2 70.0 Comprehensive earnings (loss) $102.4 119.1 129.2 147.9 146.8 154.7 (3.2) 164.9 156.0 80.6 80.5 96.4 Financial Condition 2Q14 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 Total investments $2,017.5 1,922.1 1,840.9 1,900.3.0 1,803.0 1,852.5 1,658.8 1,839.8 1,828.2 1,697.8 1,569.7 1,333.4 Total assets $2,909.0 2,740.3 2,644.6 2,654.8 2,480.4 2,503.3 2,386.2 2,595.4 2,742.6 2,708.8 2,446.8 2,113.6 Unpaid losses and settlement expenses $1,127.1 1,129.4 1,158.5 1,150.7 1,173.9 1,146.5 1,159.3 1,192.2 1,318.8 1,331.9 1,132.6 903.4 Total debt $149.6 149.6 100.0 100.0 100.0 100.0 100.0 128.0 100.0 115.5 146.8 147.6 Total shareholders equity $919.4 829.0 796.4 792.6 769.2 809.3 686.6 754.2 737.8 675.3 609.4 540.7 Statutory surplus $903.0 859.2 684.1 710.2 732.4 784.2 678.0 752.0 749.9 690.5 606.0 546.6 27

Selected Financial Data (amounts in thousands, except per share data) Share Information 2Q14 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 Net earnings per share: Diluted Comprehensive earning (losses) per share: Diluted Cash dividends declared per share: Ordinary $1.48 2.90 2.39 2.95 3.02 2.13 1.77 3.62 2.61 1.97 1.38 1.35 $2.34 2.74 2.99 3.45 3.46 3.56 (0.07) 3.42 3.05 1.53 1.54 1.86 $0.35 0.67 0.63 0.60 0.58 0.54 0.50 0.44 0.38 0.32 0.26 0.20 Special 1.50 2.50 2.50 3.50 Book value per share $21.37 19.29 18.73 18.73 18.34 19.03 15.99 17.02 15.20 13.21 12.04 10.74 Closing stock price $45.78 48.69 32.33 36.43 26.29 26.63 30.58 28.40 28.21 24.94 20.79 18.73 Stock split 200% Weighted average shares outstanding: Diluted Common shares outstanding 43,669 43,514 43,160 42,869 42,482 43,461 43,696 48,170 51,142 52,648 52,187 51,693 43,024 42,982 42,525 42,324 41,929 42,529 42,949 44,310 48,546 51,103 50,632 50,331 Other Financial Information Net premiums written (T4Q) to statutory surplus 2Q14 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 76% 78% 87% 77% 66% 60% 76% 72% 74% 72% 84% 87% GAAP combined ratio 85.1 83.1 89.0 79.6 80.4 82.8 84.6 71.9 84.5 87.0 92.4 92.4 *all share info adjusted for Jan 2014 2-for-1 stock split 28