RLI (RLI), a specialty insurance provider known for covering unique and higher-risk areas, released its earnings for Q2 2025 on July 21, 2025. The most notable update in the report was that operating (Non-GAAP) earnings per share reached $0.84, surpassing the consensus non-GAAP EPS estimate of $0.79. Consolidated revenue hit $499.8 million. While profitability remained high, the company reported modest declines in operating returns and underwriting margins compared to the prior year. Overall, the quarter saw strong book value gains and resilient performance.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| Adjusted EPS | $0.84 | $0.79 | $0.86 | (2.3%) |
| Revenue | $499.8 million | $582.0 million | $416.4 million | 20% |
| Operating Earnings | $78.1 million | $79.3 million | -1.5% | |
| Underwriting Income | $62.2 million | $70.0 million | -11.1% | |
| Net Investment Income | $39.4 million | $33.96 million | 16.0% |
Source: Analyst estimates for the quarter provided by FactSet.
Business Overview and Strategic Focus
RLI (RLI) operates in the specialty insurance market, offering coverage for risks that typically fall outside what standard insurance carriers are willing to underwrite. By focusing on this space, it can tailor coverage to unique client needs that standard providers often avoid. The company runs three distinct segments: property, casualty, and surety insurance. This diversification helps even out performance, as each line reacts differently to changes in the broader economy and industry.
Recently, the company has sharpened focus on underwriting discipline amid rising competition, especially from Managing General Agents—firms that can quickly write and administer insurance policies on behalf of insurers. This discipline often means sacrificing short-term growth to protect long-term profitability. Risk control is further strengthened by RLI’s strict use of reinsurance, which involves transferring portions of its risk to other insurers, and its consistently high financial strength ratings. Strong investment management and a mix of fixed income and equities also support its financial health and claims-paying ability.
Quarter Highlights: Financial and Segment Performance
Consolidated revenue increased 20% compared to the second quarter of 2024, largely due to higher investment gains. Operating earnings (which exclude investment gains and losses) slipped 1.5% to $78.1 million. Non-GAAP earnings per share exceeded estimates by $0.05, totaling $0.84 (operating earnings per share, non-GAAP), while net income per share (GAAP) rose 50.6%, helped by realized investment gains. Net investment income also climbed 16.1%, as the company put more cash to work in a higher-yield environment.
Underwriting income, a core measure of insurance profitability that reflects the difference between premiums collected and claims plus expenses paid, declined to $62.2 million from $70.0 million in Q2 2024. This resulted in a combined ratio (GAAP) of 84.5, up from 81.5 in Q2 2024. A combined ratio below 100 means the insurer is making an underwriting profit, while a lower figure indicates higher profitability.
The property segment’s combined ratio (GAAP) rose slightly. The casualty segment saw a steeper drop in profitability, with GAAP underwriting income at $8.3 million and a higher combined ratio of 96.5 (GAAP), reflecting elevated claims in auto and transportation. The surety segment experienced volatile results, posting a smaller profit on a combined ratio of 87.9 (GAAP), due in part to a slowdown in contract surety premium in the first quarter—a line of business closely tied to construction activity and bid volumes.
Favorable reserve development—where prior periods’ claims ended up costing less than originally anticipated—added $24.4 million to underwriting income, offsetting $14.0 million in catastrophe-related losses from new events. Combined, these factors reveal that the underlying core business remains profitable, but that trends are moving toward tighter margins in a more competitive market.
Book value per share, which acts as a balance-sheet measure of shareholder equity divided by the number of shares outstanding, grew to $18.89, and increased by 16% when dividends are included, supported by strong investment returns. Return on equity, which measures how efficiently shareholder money is being used to generate profit, was 19.7% on a trailing twelve-month basis, down from 23.6 % a year earlier. Operating cash flow rose to $174.7 million, up 23.2%; total investments and cash finished the period at $4.43 billion, an 8.4% increase since year-end.
The company raised its regular quarterly dividend to $0.16 per share, up from $0.15 the previous quarter. This marks more than fifty years of consecutive regular dividend payments. The payment was made on June 20, 2025. The share price finished the quarter at $72.22, a 12.4% decrease from $82.42 at year-end.
Looking Ahead and Management’s Outlook
No formal financial guidance or outlook was provided by company management for the upcoming quarter or fiscal 2025. Leadership emphasized continued focus on underwriting discipline and risk management in the current competitive environment, but did not issue quantitative forecasts for earnings, revenue, or segment growth.
With gross premiums written flat and all segments showing higher combined ratios, investors may want to monitor trends in pricing, competition, and claims severity—especially in casualty lines connected to auto and transportation. Competitive moves by MGAs, shifts in construction demand, and further developments in property catastrophe coverage also stand out as key variables for the company’s future results.
Note: Revenue and net income are presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
