Investment Losses Sour 1Q Underwriting Gains For RLI

NU Online News Service, April 22, 8:56 a.m. EDT

Specialty insurer RLI Corp. reported a first-quarter 2009 net loss of $1.8 million, compared to the period last year when it posted a $25.5 million profit.

RLI reported 2009 first-quarter net realized investment losses of $33.5 million, compared to 2008 first-quarter net realized investment gains of $3.7 million. The losses, according to the company, were primarily due to other-than-temporary impairment charges.

Net investment income declined 8.1 percent in the 2009 first quarter to $17.7 million from $19.3 million in 2008. RLI said the decline is due to changes in asset allocation and a lower interest rate environment.

"Given the current economic environment and continued market volatility, we have reduced our equity exposures and are currently holding more short-term investments," RLI said.

While investments hurt the Peoria, Ill.-based company, RLI President and CEO Jonathan E. Michael stressed the company's underwriting results. RLI saw its underwriting income climb to $15.2 million in the quarter, up from $14.7 million in 2008's first quarter.

"In this environment, we had another excellent underwriting result," said Mr. Michael. "Maintaining underwriting discipline in this market is of the utmost importance."

RLI reported a combined ratio of 87.9 for the quarter, down from 89.2 in 2008's first quarter.

Net premiums earned declined 7.6 percent to $125.7 million in the quarter, compared to a 2008 first-quarter figure of $136 million.