NU Online News Service, July 20, 2:10 p.m. EDT

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Specialty insurer RLI Corp. reported second-quarter net incomeof nearly $40 million this year, a 2.7 percent increase compared tothe same period last year.

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Favorable reserve development on prior accident years in thecasualty and surety segments positively affected second-quarterresults, the company said.

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The market remains soft, with the industry having "too muchcapital chasing too little premium," said Jonathan E. Michael,president and chief executive officer, in a statement.

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Results include $3.5 million in catastrophe losses due toflooding in the Southeast and severe storms in the Midwest, thePeoria, Ill.-based insurer said.

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Underwriting income increased to $30.8 million in the 2010second quarter compared to $25.1 million the prior year, and thecombined ratio improved to 74.7 from 79.5.

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RLI's expansion to crop and other assumed property reinsuranceincreased written premiums in the property segment during thequarter, Mr. Michael said. Written premiums in the casualtybusiness decreased due to difficult economic conditions in theconstruction and transportation-related sectors, he added.

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For the first six months of 2010, RLI's net income is up 83.5percent to about $59.2 million, compared to about $32.3 million atthe end of June last year.

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Net income at the end of the first quarter was about $24.2million.

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