RLI Corp. posted a 6.2 percent increase in net earnings for2012's third quarter compared to the same period a year ago despitereporting lower underwriting income and a reduced benefit fromfavorable prior-year reserves.

The Peoria, Ill. based specialty insurer says net earnings inthe quarter were $25.5 million, up from $24 million in 2011's thirdquarter. While net investment income declined by 10.9 percent, thecompany saw $5.5 million in net realized investment gains for theperiod, compared to net realized losses of $177,000 a year ago.That, combined with a 2.3 increase in net-premiums earned, helpedto push RLI's consolidated revenue up by 4.5 percent relative to2011's third quarter.

While the company saw underwriting income for its casualtysegment decline to $10.8 million in the quarter, compared to $22.2million last year, RLI reduced underwriting losses in its propertysegment for the period to $300,000 from $1.8 million a year ago.Underwriting income for its surety segment was up to $8 million forthe quarter compared to $1.1 million last year. The three segmentstogether produced underwriting income of $18.5 million in 2012'sthird quarter, down from $21.5 million for the same period lastyear.

The combined ratio for the property segment improved to 100.6 inthe quarter, compared to 103 a year ago. For surety, the combinedratio dropped to 70.3 compared to 96. But for casualty, thecombined ratio jumped to 84.2 compared to 63.2 in 2011's thirdquarter. In total, RLI posted a 2012 third-quarter combined ratioof 87.7, compared to 85.3 in 2011's third quarter.

RLI says its results include $18.1 million in favorableloss-reserve development for prior years, down from $28 million ayear ago.

The company says it suffered $4.4 million in third-quarterlosses from Hurricane Isaac, compared to $5.9 million in 2011third-quarter losses from Hurricane Irene.

RLI Chairman and CEO Jonathan E. Michael says in a statement,“We commend our talented underwriters, whose contributions onceagain created an excellent result. We remain focused on deliveringsuperior products and service to our customers and continuing ouroutstanding financial track record.”

He adds, “I'm proud of our performance thus far this year. Bookvalue has grown more than $100 million and book value per share isup 12.5 percent. This growth can be attributed to a combination ofstrong underwriting and investment results. RLI is well positionedto capitalize on improving market conditions.”

For the first nine months of the year, RLI reports net earningsof $78.2 million, down 19.1 percent from $96.7 million in the firstnine months of 2011. While the company has seen a 7.5 percentincrease in consolidated revenues for the year through September,it has also endured a 20.4 percent increase in total expensescompared to the same period last year.