RLI: 3 Key Takeaways for Long-Term Investors
Key Points
RLI produced an 86% combined ratio in the third quarter.
Excess property premium fell 17% as competitors expanded market capacity.
Personal umbrella premium grew 22% with an 8% rate increase.
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On its third-quarter 2026 earnings call, held on Oct. 20, 2026, RLI (NYSE:RLI) reported an 86% combined ratio, which measures the percentage of earned premiums spent on losses and expenses. The specialty insurer maintained underwriting profitability despite softening property market prices and rate pressure in commercial lines. Three things management said stand out.
1. Pricing Discipline Trumps Retaining Unprofitable Property Business
Excess and surplus lines property premium fell 17% as standard insurance carriers returned to the market. Management refused to match competitor price cuts, opting instead to let underpriced policies walk away.
We continue to prioritize underwriting discipline over premium retention and are comfortable allowing business to move when pricing does not meet our return targets.
-- Jennifer Klobnak, Chief Operating Officer
2. Underwriters Lack Top-Line Growth Targets to Protect Profits
RLI avoids setting sales volume targets for its staff. This structure lets underwriters contract volume when market pricing degrades, which protects profitability over market share.
We do not enforce top line budgets with our underwriters, and they are empowered to pull back when market conditions do not support our profitability objectives.
-- Jennifer Klobnak, Chief Operating Officer
3. Personal Umbrella Cumulative Rate Hikes Exceed 50% Over Three Years
Personal umbrella policy premium grew 22% in the quarter, backed by steady rate increases to offset rising loss severity. Management expects additional double-digit rate hikes in 2027.
If you look at cumulatively over the last 3 years, rates overall on the book are up about 50%.
-- Jennifer Klobnak, Chief Operating Officer
Looking Ahead
Competitors are cutting rates across commercial lines, but RLI relies on niche product diversification and strict pricing discipline to stay profitable. Management focuses on underwriting margins and risk selection rather than on market share expansion.
In an overall softening market, the team was able to grow premium 2% in the quarter and produce an 86% combined ratio.
-- Jennifer Klobnak, Chief Operating Officer
The insurer relies on underwriting consistency to outlast soft pricing cycles.
There will always be something newer, faster or more exciting in this business. We're comfortable adapting to things that make sense and that improve our value proposition while remaining true to who we are.
-- Craig Kliethermes, President and Chief Executive Officer
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