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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2025

☐	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission File Number: 001-09463

RLI Corp.

(Exact name of registrant as specified in its charter)

Delaware		37-0889946
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

9025 North Lindbergh Drive, Peoria, IL		61615
(Address of principal executive offices)		(Zip Code)

(309) 692-1000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock $0.01 par value	RLI	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☒	Accelerated filer ☐	Non-accelerated filer ☐	Smaller reporting company ☐
			Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

APPLICABLE ONLY TO CORPORATE ISSUERS:

As of October 14, 2025, the number of shares outstanding of the registrant’s Common Stock was 91,837,835.

Table of Contents

Table of Contents


		Page
Part I - Financial Information		3
Item 1.	Financial Statements	3
	Condensed Consolidated Statements of Earnings and Comprehensive Earnings for the Three and Nine-Month Periods Ended September 30, 2025 and 2024 (unaudited)	3
	Condensed Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024 (unaudited)	4
	Condensed Consolidated Statements of Shareholders’ Equity for the Three and Nine-Month Periods Ended September 30, 2025 and 2024 (unaudited)	5
	Condensed Consolidated Statements of Cash Flows for the Nine-Month Periods Ended September 30, 2025 and 2024 (unaudited)	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	36
Item 4.	Controls and Procedures	36
Part II - Other Information		37
Item 1.	Legal Proceedings	37
Item 1a.	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 3.	Defaults upon Senior Securities	37
Item 4.	Mine Safety Disclosures	37
Item 5.	Other Information	37
Item 6.	Exhibits	37
Signatures		38

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1.Financial Statements

RLI Corp. and Subsidiaries

Condensed Consolidated Statements of Earnings and Comprehensive Earnings

(Unaudited)


	For the Three Months				For the Nine Months
	Ended September 30,				Ended September 30,
(in thousands, except per share data)	2025		2024		2025		2024
Net premiums earned	$	407,695	$	389,489	$	1,207,944	$	1,129,230
Net investment income		41,270		36,694		117,414		103,502
Net realized gains		18,318		5,420		48,234		11,222
Net unrealized gains on equity securities		41,981		38,392		43,163		87,314
Consolidated revenue	$	509,264	$	469,995	$	1,416,755	$	1,331,268
Losses and settlement expenses		187,998		202,118		549,814		513,741
Policy acquisition costs		128,937		117,811		378,126		342,186
Insurance operating expenses		30,215		28,868		86,683		84,892
Interest expense on debt		1,364		1,617		4,049		4,839
General corporate expenses		5,045		3,994		12,747		13,144
Total expenses	$	353,559	$	354,408	$	1,031,419	$	958,802
Equity in earnings of unconsolidated investees		1,540		1,238		7,055		7,653
Earnings before income taxes	$	157,245	$	116,825	$	392,391	$	380,119
Income tax expense		32,635		21,798		80,231		75,200
Net earnings	$	124,610	$	95,027	$	312,160	$	304,919

Other comprehensive earnings (loss), net of tax		27,674		80,293		76,405		59,779
Comprehensive earnings	$	152,284	$	175,320	$	388,565	$	364,698

Basic net earnings per share	$	1.36	$	1.04	$	3.40	$	3.33
Diluted net earnings per share	$	1.35	$	1.03	$	3.38	$	3.30

Weighted average number of common shares outstanding:
Basic		91,849		91,559		91,816		91,467
Diluted		92,310		92,441		92,460		92,370

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

RLI Corp. and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited)


	September 30,		December 31,
(in thousands, except share and per share data)	2025		2024
ASSETS
Investments and cash:
Fixed income:
Available-for-sale, at fair value	$	3,536,484	$	3,175,796
(amortized cost of $3,655,954 and allowance for credit losses of $899 at 9/30/25)
(amortized cost of $3,391,159 and allowance for credit losses of $197 at 12/31/24)
Equity securities, at fair value (cost - $513,255 at 9/30/25 and $417,897 at 12/31/24)		878,872		736,191
Short-term investments, at cost which approximates fair value		165,706		74,915
Other invested assets		56,494		57,939
Cash		52,621		39,790
Total investments and cash	$	4,690,177	$	4,084,631
Accrued investment income		29,584		28,319
Premiums and reinsurance balances receivable, net of allowances for uncollectible amounts of $23,452 at 9/30/25 and $22,932 at 12/31/24		231,530		230,534
Ceded unearned premium		123,039		124,955
Reinsurance balances recoverable on unpaid losses and settlement expenses, net of allowances for uncollectible amounts of $11,063 at 9/30/25 and $9,580 at 12/31/24		769,611		755,425
Deferred policy acquisition costs		181,488		166,214
Property and equipment, at cost, net of accumulated depreciation of $82,340 at 9/30/25 and $76,330 at 12/31/24		41,094		43,172
Investment in unconsolidated investees		63,652		56,477
Goodwill and intangibles		53,562		53,562
Income taxes-deferred		-		7,793
Other assets		63,263		77,720
TOTAL ASSETS	$	6,247,000	$	5,628,802

LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Unpaid losses and settlement expenses	$	2,873,054	$	2,693,470
Unearned premiums		1,035,756		984,140
Reinsurance balances payable		35,951		44,681
Funds held		113,753		97,380
Income taxes-current		9,792		749
Income taxes-deferred		23,157		—
Debt		100,000		100,000
Accrued expenses		110,660		124,242
Other liabilities		70,701		62,173
TOTAL LIABILITIES	$	4,372,824	$	4,106,835

Shareholders’ Equity
Common stock ($0.01 par value)
(Shares authorized - 400,000,000)
(137,698,263 shares issued, 91,837,835 shares outstanding at 9/30/25)
(137,598,560 shares issued, 91,738,132 shares outstanding at 12/31/24)	$	1,377	$	1,376
Paid-in capital		374,468		367,645
Accumulated other comprehensive earnings (loss)		(97,318)		(173,723)
Retained earnings		1,988,648		1,719,668
Deferred compensation		12,713		13,498
Less: Treasury shares, at cost (45,860,428 shares at 9/30/25 and 12/31/24)		(405,712)		(406,497)
TOTAL SHAREHOLDERS’ EQUITY	$	1,874,176	$	1,521,967
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	6,247,000	$	5,628,802

See accompanying notes to the unaudited condensed consolidated financial statements.

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RLI Corp. and Subsidiaries

Condensed Consolidated Statements of Shareholders’ Equity

(Unaudited)


								Accumulated
								Other
		Total						Comprehensive						Treasury
	Common	Shareholders’		Common		Paid-in		Earnings		Retained		Deferred		Shares
(in thousands, except share and per share data)	Shares	Equity		Stock		Capital		(Loss)		Earnings		Compensation		at Cost
Balance, January 1, 2024	91,280,094	$	1,413,514	$	1,371	$	361,660	$	(166,303)	$	1,609,785	$	13,539	$	(406,538)
Net earnings	—		127,900		—		—		—		127,900		—		—
Other comprehensive earnings (loss), net of tax	—		(12,671)		—		—		(12,671)		—		—		—
Deferred compensation	—		—		—		—		—		—		(790)		790
Share-based compensation	139,668		4,357		2		4,355		—		—		—		—
Dividends and dividend equivalents ($0.14 per share)	—		(12,348)		—		—		—		(12,348)		—		—
Balance, March 31, 2024	91,419,762	$	1,520,752	$	1,373	$	366,015	$	(178,974)	$	1,725,337	$	12,749	$	(405,748)
Net earnings	—		81,992		—		—		—		81,992		—		—
Other comprehensive earnings (loss), net of tax	—		(7,843)		—		—		(7,843)		—		—		—
Deferred compensation	—		—		—		—		—		—		434		(434)
Share-based compensation	72,346		3,084		1		3,083		—		—		—		—
Dividends and dividend equivalents ($0.15 per share)	—		(13,278)		—		—		—		(13,278)		—		—
Balance, June 30, 2024	91,492,108	$	1,584,707	$	1,374	$	369,098	$	(186,817)	$	1,794,051	$	13,183	$	(406,182)
Net earnings	—		95,027		—		—		—		95,027		—		—
Other comprehensive earnings (loss), net of tax	—		80,293		—		—		80,293		—		—		—
Deferred compensation	—		—		—		—		—		—		(1,266)		1,266
Share-based compensation	127,732		1,613		1		1,612		—		—		—		—
Dividends and dividend equivalents ($0.15 per share)	—		(13,290)		—		—		—		(13,290)		—		—
Balance, September 30, 2024	91,619,840	$	1,748,350	$	1,375	$	370,710	$	(106,524)	$	1,875,788	$	11,917	$	(404,916)

								Accumulated
								Other
		Total						Comprehensive						Treasury
	Common	Shareholders’		Common		Paid-in		Earnings		Retained		Deferred		Shares
(in thousands, except share and per share data)	Shares	Equity		Stock		Capital		(Loss)		Earnings		Compensation		at Cost
Balance, January 1, 2025	91,738,132	$	1,521,967	$	1,376	$	367,645	$	(173,723)	$	1,719,668	$	13,498	$	(406,497)
Net earnings	—		63,214		—		—		—		63,214		—		—
Other comprehensive earnings (loss), net of tax	—		30,030		—		—		30,030		—		—		—
Deferred compensation	—		—		—		—		—		—		(1,686)		1,686
Share-based compensation	34,602		2,777		—		2,777		—		—		—		—
Dividends and dividend equivalents ($0.15 per share)	—		(13,776)		—		—		—		(13,776)		—		—
Balance, March 31, 2025	91,772,734	$	1,604,212	$	1,376	$	370,422	$	(143,693)	$	1,769,106	$	11,812	$	(404,811)
Net earnings	—		124,336		—		—		—		124,336		—		—
Other comprehensive earnings (loss), net of tax	—		18,701		—		—		18,701		—		—		—
Deferred compensation	—		—		—		—		—		—		799		(799)
Share-based compensation	56,736		2,118		1		2,117		—		—		—		—
Dividends and dividend equivalents ($0.16 per share)	—		(14,706)		—		—		—		(14,706)		—		—
Balance, June 30, 2025	91,829,470	$	1,734,661	$	1,377	$	372,539	$	(124,992)	$	1,878,736	$	12,611	$	(405,610)
Net earnings	—		124,610		—		—		—		124,610		—		—
Other comprehensive earnings (loss), net of tax	—		27,674		—		—		27,674		—		—		—
Deferred compensation	—		—		—		—		—		—		102		(102)
Share-based compensation	8,365		1,929		—		1,929		—		—		—		—
Dividends and dividend equivalents ($0.16 per share)	—		(14,698)		—		—		—		(14,698)		—		—
Balance, September 30, 2025	91,837,835	$	1,874,176	$	1,377	$	374,468	$	(97,318)	$	1,988,648	$	12,713	$	(405,712)

See accompanying notes to the unaudited condensed consolidated financial statements.

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RLI Corp. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	For the Nine Months
	Ended September 30,
(in thousands)	2025		2024
Net cash provided by operating activities	$	457,453	$	432,139
Cash Flows from Investing Activities
Purchase of:
Fixed income securities, available-for-sale	$	(982,958)	$	(591,291)
Equity securities		(137,744)		(76,568)
Property and equipment		(3,736)		(4,187)
Other		(4,453)		(4,356)
Proceeds from sale of:
Fixed income securities, available-for-sale		383,181		80,245
Equity securities		87,874		44,863
Other		2,790		4,624
Proceeds from call or maturity of:
Fixed income securities, available-for-sale		343,319		242,955
Net proceeds from sale (purchase) of short-term investments		(90,791)		(68,373)
Net cash used in investing activities	$	(402,518)	$	(372,088)
Cash Flows from Financing Activities
Cash dividends paid	$	(43,146)	$	(38,882)
Proceeds from stock option exercises		1,042		3,041
Net cash used in financing activities	$	(42,104)	$	(35,841)
Net increase in cash	$	12,831	$	24,210
Cash at the beginning of the period		39,790		36,424
Cash at September 30,	$	52,621	$	60,634

See accompanying notes to the unaudited condensed consolidated financial statements.

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.	BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. BASIS OF PRESENTATION

The unaudited interim condensed consolidated financial statements of RLI Corp. (the Company) and subsidiaries have been prepared in accordance with generally accepted accounting principles in the United States of America (GAAP). These condensed consolidated financial statements do not include all the disclosures required by GAAP for annual financial statements and should be read in conjunction with our 2024 Annual Report on Form 10-K. In the opinion of the Company’s management, the condensed consolidated financial statements reflect all adjustments, of a normal and recurring nature, that are necessary for fair financial statement presentation. The results of operations for any interim period are not necessarily indicative of the operating results for a full year.

The preparation of the unaudited condensed consolidated financial statements requires management to make estimates and assumptions relating to the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenue and expenses during the period. These estimates are inherently subject to change and actual results could differ significantly from these estimates.

On January 15, 2025, RLI Corp. effected a two-for-one split of its common stock and a proportionate increase in the number of authorized shares. All share and per share information throughout this report has been retroactively adjusted to reflect the stock split. The shares of common stock retain a par value of $0.01 per share.

B. ADOPTED ACCOUNTING STANDARDS

No new accounting standards applicable in 2025 materially impact our financial statements.

C. PROSPECTIVE ACCOUNTING STANDARDS

2023-09—Income Taxes (Topic 740): Improvements to Income Tax Disclosures

The guidance in ASU 2023-09 is designed to increase transparency about income tax information through improvements to the tax rate reconciliation and disclosure of income taxes paid, disaggregated by federal, state and foreign jurisdictions. This ASU is effective for fiscal years beginning after December 15, 2024. Although the Company continues to evaluate the impact of adopting this new accounting standard, the amendments are disclosure-related and should not have a material impact on our financial statements.

2024-03—Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses

The guidance in ASU 2024-03 requires disaggregation of certain expenses into specified categories in the notes to the financial statements. Each relevant expense caption on the face of the statement of earnings that includes specific expenses, such as employee compensation, depreciation and intangible asset amortization, are required to be separately disclosed in a tabular presentation. Additionally, a separate total of selling expenses is required to be disclosed, along with a definition of what is included in selling expenses.

This ASU is effective for fiscal years beginning after December 15, 2026 and interim periods beginning after December 15, 2027. Although the Company continues to evaluate the impact of adopting this new accounting standard, the amendments are disclosure-related and should not have a material impact on our financial statements.

2025-06—Intangibles-Goodwill and Other – Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal -Use Software

The guidance in ASU 2025-06 removes the concept of project stages and requires the capitalization of software costs when management has committed to funding the software project and it is probable that the project will be completed. This ASU is effective for fiscal years beginning after December 15, 2027, but early adoption is permitted as of the beginning of an

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annual reporting period. The Company continues to evaluate the impact of adopting this new accounting standard, but does not expect the standard will have a material impact on our financial statements.

D. REINSURANCE

Ceded unearned premiums and reinsurance balances recoverable on unpaid losses and settlement expenses are reported separately as an asset, rather than being netted with the related liability, since reinsurance does not relieve the Company of our liability to policyholders. Such balances are subject to the credit risk associated with the individual reinsurer. We continually monitor the financial condition of our reinsurers and actively follow up on any past due or disputed amounts. As part of our monitoring efforts, we review reinsurers’ annual financial statements and Securities and Exchange Commission filings for those that are publicly traded. We also review insurance industry developments that may impact the financial condition of our reinsurers. We analyze the credit risk associated with our reinsurance balances recoverable by monitoring the AM Best and Standard & Poor’s (S&P) ratings of our reinsurers. We subject our reinsurance balances recoverable to detailed recoverability tests, including a segment-based analysis using the average default rating percentage by S&P rating, which assists the Company in assessing the sufficiency of its allowance. Additionally, we perform an in-depth reinsurer financial condition analysis prior to the renewal of our reinsurance placements.

Our policy is to charge to earnings, in the form of an allowance, an estimate of unrecoverable amounts from reinsurers. This allowance is reviewed on an ongoing basis to ensure that the amount makes a reasonable provision for reinsurance balances that we may be unable to recover. Once regulatory action (such as receivership, finding of insolvency, order of conservation or order of liquidation) is taken against a reinsurer, the paid and unpaid recoverable balances for the reinsurer are specifically identified and written off through the use of our allowance for estimated unrecoverable amounts from reinsurers. When we write-off such a balance, it is done in full. We then re-evaluate the overall allowance and determine whether the balance is sufficient and, if needed, an additional allowance is recognized.

The allowances for uncollectible amounts on paid and unpaid reinsurance balances recoverable were $17 million and $11 million, respectively, at September 30, 2025 and $17 million and $10 million, respectively, at December 31, 2024. Changes in the allowances were due to changes in the amount of reinsurance balances outstanding, the composition of reinsurers from whom the balances were recoverable and their associated S&P default ratings. No write-offs were applied to the allowances in the first nine months of 2025 and less than $1 million was recovered.

E. INTANGIBLE ASSETS

The composition of goodwill and intangible assets at September 30, 2025 and December 31, 2024 is detailed in the following table:


	September 30,		December 31,
(in thousands)	2025		2024
Goodwill
Surety	$	40,816	$	40,816
Casualty		5,246		5,246
Total goodwill	$	46,062	$	46,062
Indefinite-lived intangibles		7,500		7,500
Total goodwill and intangibles	$	53,562	$	53,562

Annual impairment assessments were performed on our goodwill and state insurance license indefinite-lived intangible assets during the second quarter of 2025. Based upon these reviews, none of the assets were impaired. In addition, there were no triggering events as of September 30, 2025 that would suggest an updated impairment test would be needed for our goodwill and intangible assets.

F. EARNINGS PER SHARE

Basic earnings per share (EPS) is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the dilution that could occur if securities or other contracts to issue common stock or common stock equivalents were exercised or converted into common stock. When inclusion of these items increases the earnings per share or reduces the loss per share, the effect on earnings is anti-dilutive. Under these circumstances, the diluted net earnings or net loss per share is computed excluding these items. The following

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represents a reconciliation of the numerator and denominator of the basic and diluted EPS computations contained in the unaudited condensed consolidated financial statements:


	For the Three Months						For the Three Months
	Ended September 30, 2025						Ended September 30, 2024
	Income		Shares		Per Share		Income		Shares		Per Share
(in thousands, except per share data)	(Numerator)		(Denominator)		Amount		(Numerator)		(Denominator)		Amount
Basic EPS
Earnings available to common shareholders	$	124,610		91,849	$	1.36	$	95,027		91,559	$	1.04
Effect of Dilutive Securities
Stock options and restricted stock units		—		461				—		882
Diluted EPS
Earnings available to common shareholders	$	124,610		92,310	$	1.35	$	95,027		92,441	$	1.03
Anti-dilutive securities excluded from diluted EPS				819						48

	For the Nine Months						For the Nine Months
	Ended September 30, 2025						Ended September 30, 2024
	Income		Shares		Per Share		Income		Shares		Per Share
(in thousands, except per share data)	(Numerator)		(Denominator)		Amount		(Numerator)		(Denominator)		Amount
Basic EPS
Earnings available to common shareholders	$	312,160		91,816	$	3.40	$	304,919		91,467	$	3.33
Effect of Dilutive Securities
Stock options and restricted stock units		—		644				—		903
Diluted EPS
Earnings available to common shareholders	$	312,160		92,460	$	3.38	$	304,919		92,370	$	3.30
Anti-dilutive securities excluded from diluted EPS				209						48

G. COMPREHENSIVE EARNINGS

Our comprehensive earnings include net earnings plus after-tax unrealized gains and losses on our available-for-sale fixed income portfolio. In reporting the components of comprehensive earnings, we used the federal statutory tax rate of 21 percent. Other comprehensive earnings (loss), as shown in the consolidated statements of earnings and comprehensive earnings, is net of tax expense of $7 million for the third quarter of 2025, compared to $21 million for the same period in 2024. For the nine-month period ended September 30, 2025, other comprehensive earnings (loss) is net of tax expense of $20 million, compared to $16 million for the same period in 2024.

Unrealized gains, net of tax, recognized in other comprehensive earnings (loss) were $76 million for the first nine months of 2025, compared to $60 million in the first nine months of 2024. The unrealized gains were attributable to a decrease in interest rates, which increased the fair value of securities held in the fixed income portfolio.

The following table illustrates the changes in the balance of each component of accumulated other comprehensive earnings (loss) for each period presented in the unaudited condensed consolidated financial statements:


(in thousands)	For the Three Months				For the Nine Months
	Ended September 30,				Ended September 30,
Unrealized Gains (Losses) on Available-for-Sale Securities	2025		2024		2025		2024
Beginning balance	$	(124,992)	$	(186,817)	$	(173,723)	$	(166,303)
Other comprehensive earnings (loss) before reclassifications		29,431		79,210		77,253		57,364
Amounts reclassified from accumulated other comprehensive earnings		(1,757)		1,083		(848)		2,415
Net current-period other comprehensive earnings (loss)	$	27,674	$	80,293	$	76,405	$	59,779
Ending balance	$	(97,318)	$	(106,524)	$	(97,318)	$	(106,524)
Balance of securities for which an allowance for credit losses has been recognized in net earnings					$	1,715	$	1,813

Credit losses on or the sale of an available-for-sale security results in amounts being reclassified from accumulated other comprehensive earnings (loss) to current period net earnings. The effects of reclassifications out of accumulated other comprehensive earnings (loss) by the respective line items of net earnings are presented in the following table:

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	Amount Reclassified from Accumulated Other
(in thousands)	Comprehensive Earnings (Loss)
	For the Three Months				For the Nine Months
Component of Accumulated	Ended September 30,				Ended September 30,				Affected line item in the
Other Comprehensive Earnings (Loss)	2025		2024		2025		2024		Statement of Earnings
Unrealized gains and losses on available-for-sale securities	$	2,878	$	(1,365)	$	1,775	$	(3,129)	Net realized gains (losses)
		(654)		(6)		(702)		72	Credit gains (losses) presented within net realized gains
	$	2,224	$	(1,371)	$	1,073	$	(3,057)	Earnings (loss) before income taxes
		(467)		288		(225)		642	Income tax (expense) benefit
	$	1,757	$	(1,083)	$	848	$	(2,415)	Net earnings (loss)

H. FAIR VALUE MEASUREMENTS

Fair value is defined as the price in the principal market that would be received for an asset to facilitate an orderly transaction between market participants on the measurement date. We determined the fair value of certain financial instruments based on their underlying characteristics and relevant transactions in the marketplace. We maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The following are the levels of the fair value hierarchy and a brief description of the type of valuation inputs that are used to establish each level. Financial assets are classified based upon the lowest level of significant input that is used to determine fair value.

Level 1 is applied to valuations based on readily available, unadjusted quoted prices in active markets for identical assets.

Level 2 is applied to valuations based upon quoted prices for similar assets in active markets, quoted prices for identical or similar assets in inactive markets; or valuations based on models where the significant inputs are observable (e.g. interest rates, yield curves, prepayment speeds, default rates, loss severities) or can be corroborated by observable market data.

Level 3 is applied to valuations that are derived from techniques in which one or more of the significant inputs are unobservable.

As a part of management’s process to determine fair value, we utilize widely recognized, third-party pricing sources to determine our fair values. We have obtained an understanding of the third-party pricing sources’ valuation methodologies and inputs. The following is a description of the valuation techniques used for financial assets that are measured at fair value, including the general classification of such assets pursuant to the fair value hierarchy.

Corporate, Agencies, Government and Municipal Bonds: The pricing vendor employs a multi-dimensional model which uses standard inputs including (listed in approximate order of priority for use) benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, market bids/offers and other reference data. The pricing vendor also monitors market indicators, as well as industry and economic events. All bonds valued using these techniques are classified as Level 2. All corporate, agency, government and municipal securities are deemed Level 2.

Mortgage-backed Securities (MBS)/Commercial Mortgage-backed Securities (CMBS) and Asset-backed Securities (ABS): The pricing vendor evaluation methodology primarily includes interest rate movements and new issue data. Evaluation of the tranches (non-volatile, volatile or credit sensitivity) is based on the pricing vendors’ interpretation of accepted modeling and pricing conventions. This information is then used to determine the cash flows for each tranche, benchmark yields, pre-payment assumptions and to incorporate collateral performance. To evaluate MBS and CMBS volatility, an option adjusted spread model is used in combination with models that simulate interest rate paths to determine market price information. This process allows the pricing vendor to obtain evaluations of a broad universe of securities in a way that reflects changes in yield curve, index rates, implied volatility, mortgage rates and recent trade activity. MBS/CMBS and ABS with corroborated, observable inputs are classified as Level 2. All of our MBS/CMBS and ABS are deemed Level 2.

Regulation D Private Placement Securities: All Regulation D privately-placed bonds are classified as corporate securities and deemed Level 3. The pricing vendor evaluation methodology for these securities includes a combination of

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observable and unobservable inputs. Observable inputs include public corporate spread matrices classified by sector, rating and average life, as well as investment and non-investment grade matrices created from fixed income indices. Unobservable inputs include a liquidity spread premium calculated based on public corporate spread and private corporate spread matrices. The quantitative detail of the liquidity spread premium is neither provided nor reasonably available to the Company. An increase to the credit spread assumptions would result in a lower fair value.

For all of our fixed income securities classified as Level 2, we periodically conduct a review to assess the reasonableness of the fair values provided by our pricing services. Our review consists of a two-pronged approach. First, we compare prices provided by our pricing services to those provided by an additional source. In some cases, we obtain prices from securities brokers and compare them to the prices provided by our pricing services. If discrepancies are found in our comparisons, we compare our prices to actual reported trade data for like securities. No changes to the fair values supplied by our pricing services have occurred as a result of our reviews. Based on these assessments, we have determined that the fair values of our Level 2 fixed income securities provided by our pricing services are reasonable.

Equity Securities: As of September 30, 2025, nearly all of our equity holdings were traded on an exchange. Exchange traded equities have readily observable price levels and are classified as Level 1 (fair value based on quoted market prices). Pricing for the equity securities not traded on an exchange is provided by a third-party pricing source using observable inputs and are classified as Level 2. Pricing for equity securities not traded on an exchange rely on one or more unobservable inputs and are classified as Level 3.

Due to the relatively short-term nature of cash, short-term investments, accounts receivable and accounts payable, their carrying amounts are reasonable estimates of fair value. Our investments in private funds, classified as other invested assets, are measured using the investments’ net asset value per share and are not categorized within the fair value hierarchy.

2. INVESTMENTS

Our investments are primarily composed of fixed income debt securities and common stock equity securities. We carry our equity securities at fair value and categorize all of our debt securities as available-for-sale, which are carried at fair value.

Realized gains and losses on disposition of investments are based on the specific identification of the investments sold on the settlement date. The following is a summary of the disposition of fixed income and equity securities for the nine-month periods ended September 30, 2025 and 2024:


Sales	Proceeds		Gross Realized				Net Realized
(in thousands)	From Sales		Gains		Losses		Gain (Loss)
2025
Fixed income securities - available-for-sale	$	383,956	$	5,076	$	(3,219)	$	1,857
Equity securities		87,874		46,478		(991)		45,487
2024
Fixed income securities - available-for-sale	$	98,696	$	538	$	(2,489)	$	(1,951)
Equity securities		44,863		20,276		(340)		19,936

Calls/Maturities			Gross Realized				Net Realized
(in thousands)	Proceeds		Gains		Losses		Gain (Loss)
2025
Fixed income securities - available-for-sale	$	344,629	$	271	$	(72)	$	199
2024
Fixed income securities - available-for-sale	$	240,200	$	89	$	(1,062)	$	(973)

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FAIR VALUE MEASUREMENTS

Assets measured at fair value on a recurring basis as of September 30, 2025 and December 31, 2024 are summarized below:


	As of September 30, 2025
	Quoted Prices in		Significant Other		Significant
	Active Markets for		Observable		Unobservable
	Identical Assets		Inputs		Inputs
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Total
Fixed income securities - available-for-sale
U.S. government	$	—	$	399,593	$	—	$	399,593
U.S. agency		—		55,483		—		55,483
Non-U.S. government & agency		—		11,376		1,001		12,377
Agency MBS		—		604,351		—		604,351
ABS/CMBS/MBS*		—		563,754		—		563,754
Corporate		—		1,393,777		96,258		1,490,035
Municipal		—		410,891		—		410,891
Total fixed income securities - available-for-sale	$	—	$	3,439,225	$	97,259	$	3,536,484
Equity securities		874,621		—		4,251		878,872
Total	$	874,621	$	3,439,225	$	101,510	$	4,415,356


	As of December 31, 2024
	Quoted Prices in		Significant Other		Significant
	Active Markets for		Observable		Unobservable
	Identical Assets		Inputs		Inputs
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Total
Fixed income securities - available-for-sale
U.S. government	$	—	$	515,635	$	—	$	515,635
U.S. agency		—		54,338		—		54,338
Non-U.S. government & agency		—		6,898		973		7,871
Agency MBS		—		396,223		—		396,223
ABS/CMBS/MBS*		—		410,248		—		410,248
Corporate		—		1,256,991		89,530		1,346,521
Municipal		—		444,960		—		444,960
Total fixed income securities - available-for-sale	$	—	$	3,085,293	$	90,503	$	3,175,796
Equity securities		731,569		—		4,622		736,191
Total	$	731,569	$	3,085,293	$	95,125	$	3,911,987

*	Non-agency asset-backed, commercial mortgage-backed and mortgage-backed securities

The following table summarizes changes in the balance of securities whose fair value was measured using significant unobservable inputs (Level 3).


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2025		2024		2025		2024
Beginning balance	$	101,534	$	72,680	$	95,125	$	62,096
Net realized and unrealized gains (losses)
Included in other comprehensive earnings (loss)		1,130		3,104		2,922		2,789
Purchases		6,995		16,069		15,093		28,379
Sales / Calls / Maturities		(8,149)		(326)		(11,630)		(1,737)
Transfers into Level 3		—		—		—		—
Transfers out of Level 3		—		—		—		—
Balance as of September 30,	$	101,510	$	91,527	$	101,510	$	91,527
Change in unrealized gains (losses) during the period for Level 3 assets held at period-end - included in other comprehensive earnings (loss)	$	1,244	$	3,104	$	2,899	$	2,789

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The amortized cost and fair value of available-for-sale fixed income securities by contractual maturity as of September 30, 2025 were as follows:


	September 30, 2025
(in thousands)	Amortized Cost		Fair Value
Due in one year or less	$	263,214	$	262,065
Due after one year through five years		743,950		739,290
Due after five years through 10 years		890,177		891,802
Due after 10 years		548,742		475,222
ABS/CMBS/MBS*		1,209,871		1,168,105
Total available-for-sale	$	3,655,954	$	3,536,484

*	Asset-backed, commercial mortgage-backed and mortgage-backed securities

The amortized cost and fair value of available-for-sale securities at September 30, 2025 and December 31, 2024 are presented in the tables below. Amortized cost does not include accrued interest receivable of $28 million as of September 30, 2025 and $27 million as of December 31, 2024.


	September 30, 2025
	Cost or		Allowance		Gross		Gross
	Amortized		for Credit		Unrealized		Unrealized		Fair
(in thousands)	Cost		Losses		Gains		Losses		Value
U.S. government	$	395,751	$	—	$	5,165	$	(1,323)	$	399,593
U.S. agency		55,268		—		850		(635)		55,483
Non-U.S. government & agency		12,730		—		261		(614)		12,377
Agency MBS		632,284		—		3,532		(31,465)		604,351
ABS/CMBS/MBS*		577,587		(614)		3,570		(16,789)		563,754
Corporate		1,501,345		(285)		17,536		(28,561)		1,490,035
Municipal		480,989		—		883		(70,981)		410,891
Total Fixed Income	$	3,655,954	$	(899)	$	31,797	$	(150,368)	$	3,536,484

	December 31, 2024
	Cost or		Allowance		Gross		Gross
	Amortized		for Credit		Unrealized		Unrealized		Fair
(in thousands)	Cost		Losses		Gains		Losses		Value
U.S. government	$	525,608	$	—	$	309	$	(10,282)	$	515,635
U.S. agency		55,921		—		261		(1,844)		54,338
Non-U.S. government & agency		8,959		—		—		(1,088)		7,871
Agency MBS		438,545		—		927		(43,249)		396,223
ABS/CMBS/MBS*		430,973		(8)		2,208		(22,925)		410,248
Corporate		1,397,676		(189)		4,737		(55,703)		1,346,521
Municipal		533,477		—		1,003		(89,520)		444,960
Total Fixed Income	$	3,391,159	$	(197)	$	9,445	$	(224,611)	$	3,175,796

*	Non-agency asset-backed, commercial mortgage-backed and mortgage-backed securities

Allowance for Credit Losses and Unrealized Losses on Fixed Income Securities

A reversible allowance for credit losses is recognized on available-for-sale fixed income securities, if applicable. Several criteria are reviewed to determine if securities in the fixed income portfolio should be included in the allowance for expected credit loss evaluation, including:

●

Changes in technology that may impair the earnings potential of the investment,

●

The discontinuance of a segment of business that may affect future earnings potential,

●

Reduction of or non-payment of interest and/or principal,

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●

Specific concerns related to the issuer’s industry or geographic area of operation,

●

Significant or recurring operating losses, poor cash flows and/or deteriorating liquidity ratios and

●

Downgrades in credit quality by a major rating agency.

If changes in interest rates and credit spreads do not reasonably explain the unrealized loss for an available-for-sale security, or if any of the criteria above indicate a potential credit loss, the security is subjected to a discounted cash flow analysis. Inputs into the discounted cash flow analysis include prepayment assumptions for structured securities, default rates and recoverability rates based on credit rating. The allowance for any security is limited to the amount that the security’s fair value is below amortized cost. As of September 30, 2025, the discounted cash flow analysis resulted in an allowance for credit losses on 12 securities. The following table presents changes in the allowance for expected credit losses on available-for-sale securities:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2025		2024		2025		2024
Beginning balance	$	245	$	228	$	197	$	306
Increase to allowance from securities for which credit losses were not previously recorded		717		30		720		30
Reduction from securities sold during the period		—		—		—		(89)
Net increase (decrease) from securities that had an allowance at the beginning of the period		(63)		(24)		(18)		(13)
Balance as of September 30,	$	899	$	234	$	899	$	234

We recognized less than $1 million of losses on securities for which we no longer had the intent to hold until recovery during the first nine months of 2025. No such losses were recognized during the first nine months of 2024.

As of September 30, 2025, in addition to the securities included in the allowance for credit losses, the fixed income portfolio contained 1,077 securities with an unrealized loss position for which an allowance for credit losses had not been recorded. The $150 million in associated unrealized losses represents 4 percent of the fixed income portfolio’s cost basis and 3 percent of total invested assets. Isolated to these securities, unrealized losses decreased through the first nine months of 2025, as bonds rallied on falling interest rates. Of the total 1,077 securities, 926 have been in an unrealized loss position for 12 consecutive months or longer. The following table illustrates the total value of fixed income securities that were in an unrealized loss position as of September 30, 2025 and December 31, 2024 after factoring in the allowance for credit losses. All fixed income securities continue to pay the expected coupon payments and we believe we will recover the amortized cost basis of available-for-sale securities that remain in an unrealized loss position.

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	September 30, 2025						December 31, 2024
(in thousands)	< 12 Mos.		12 Mos. & Greater		Total		< 12 Mos.		12 Mos. & Greater		Total
U.S. government
Fair value	$	11,055	$	105,375	$	116,430	$	303,226	$	157,418	$	460,644
Amortized cost		11,078		106,675		117,753		309,836		161,090		470,926
Unrealized loss	$	(23)	$	(1,300)	$	(1,323)	$	(6,610)	$	(3,672)	$	(10,282)
U.S. agency
Fair value	$	—	$	30,621	$	30,621	$	24,024	$	18,330	$	42,354
Amortized cost		—		31,256		31,256		24,910		19,288		44,198
Unrealized loss	$	—	$	(635)	$	(635)	$	(886)	$	(958)	$	(1,844)
Non-U.S. government
Fair value	$	—	$	4,188	$	4,188	$	4,075	$	3,796	$	7,871
Amortized cost		—		4,802		4,802		4,158		4,801		8,959
Unrealized Loss	$	—	$	(614)	$	(614)	$	(83)	$	(1,005)	$	(1,088)
Agency MBS
Fair value	$	149,151	$	273,022	$	422,173	$	108,772	$	233,625	$	342,397
Amortized cost		149,737		303,901		453,638		111,674		273,972		385,646
Unrealized loss	$	(586)	$	(30,879)	$	(31,465)	$	(2,902)	$	(40,347)	$	(43,249)
ABS/CMBS/MBS*
Fair value	$	72,227	$	149,479	$	221,706	$	43,027	$	164,433	$	207,460
Amortized cost		72,333		166,162		238,495		43,395		186,990		230,385
Unrealized loss	$	(106)	$	(16,683)	$	(16,789)	$	(368)	$	(22,557)	$	(22,925)
Corporate
Fair value	$	141,450	$	622,539	$	763,989	$	378,305	$	700,574	$	1,078,879
Amortized cost		142,776		649,774		792,550		389,299		745,283		1,134,582
Unrealized loss	$	(1,326)	$	(27,235)	$	(28,561)	$	(10,994)	$	(44,709)	$	(55,703)
Municipal
Fair value	$	8,179	$	349,045	$	357,224	$	48,514	$	355,475	$	403,989
Amortized cost		8,462		419,743		428,205		49,491		444,018		493,509
Unrealized loss	$	(283)	$	(70,698)	$	(70,981)	$	(977)	$	(88,543)	$	(89,520)
Total fixed income
Fair value	$	382,062	$	1,534,269	$	1,916,331	$	909,943	$	1,633,651	$	2,543,594
Amortized cost		384,386		1,682,313		2,066,699		932,763		1,835,442		2,768,205
Unrealized loss	$	(2,324)	$	(148,044)	$	(150,368)	$	(22,820)	$	(201,791)	$	(224,611)

*	Non-agency asset-backed, commercial mortgage-backed and mortgage-backed securities

The following table shows the composition of the fixed income securities in unrealized loss positions, after factoring in the allowance for credit losses, at September 30, 2025 by the National Association of Insurance Commissioners (NAIC) rating and the generally equivalent Standard & Poor’s (S&P) and Moody’s ratings. The vast majority of the securities are rated by S&P and/or Moody’s.


	Equivalent	Equivalent	(dollars in thousands)
NAIC	S&P	Moody’s	Amortized				Unrealized		Percent
Rating	Rating	Rating	Cost		Fair Value		Loss		to Total
1	AAA/AA/A	Aaa/Aa/A	$	1,675,642	$	1,539,255	$	(136,387)	90.7	%
2	BBB	Baa		327,018		315,660		(11,358)	7.6	%
3	BB	Ba		32,804		32,154		(650)	0.4	%
4	B	B		26,763		25,279		(1,484)	1.0	%
5	CCC	Caa		3,652		3,330		(322)	0.2	%
6	CC or lower	Ca or lower		820		653		(167)	0.1	%
		Total	$	2,066,699	$	1,916,331	$	(150,368)	100.0	%

Other Invested Assets

We had $56 million of other invested assets at September 30, 2025, compared to $58 million at December 31, 2024. Other invested assets include investments in low-income housing tax credit partnerships (LIHTC) and historic tax credit partnerships (HTC), membership in the Federal Home Loan Bank of Chicago (FHLBC), and investments in private funds. Our

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LIHTC and HTC investments are carried at amortized cost and our investment in FHLBC stock is carried at cost. Due to the nature of the LIHTC, HTC and our membership in the FHLBC, their carrying amounts approximate fair value. The private funds are carried at fair value, using each investment’s net asset value.

Our LIHTC interests increased to $10 million at September 30, 2025, compared to $7 million at December 31, 2024, as additional investments were made. Our LIHTC interests recognized amortization of $1 million as a component of income tax expense and a total tax benefit of $1 million during the third quarter of 2025 and 2024. For the nine-months ended September 30, 2025 and 2024, our LIHTC interests recognized amortization of $2 million and a total tax benefit of $2 million. Our unfunded commitment for our LIHTC investments was $4 million at September 30, 2025 and will be paid out in installments through 2039.

Our HTC investment had a balance of $12 million at September 30, 2025, compared to $15 million at December 31, 2024. Our HTC investment recognized $1 million of amortization as a component of income tax expense and a total tax benefit of $1 million during the third quarter of 2025, compared to $1 million of amortization and $2 million of tax benefit for the same period in 2024. For the nine-months ended September 30, 2025, our HTC investment recognized amortization of $3 million and a total tax benefit of $3 million, compared to $3 million of amortization and a total tax benefit of $4 million for the same period in 2024. Our unfunded commitment for our HTC investments was $4 million at September 30, 2025 and will be paid out in installments through 2027.

At September 30, 2025, $55 million of investments were pledged as collateral with the FHLBC to ensure timely access to the secured lending facility that ownership of FHLBC stock provides. At September 30, 2025, $50 million of borrowings were outstanding with the FHLBC.

Our investments in private funds totaled $18 million at September 30, 2025, down from $24 million at December 31, 2024, and had $3 million of associated unfunded commitments at September 30, 2025. Our interest in private funds is generally restricted from being transferred or otherwise redeemed without prior consent by the respective entities, and the timed dissolution of the partnerships would trigger redemption.

Investments in Unconsolidated Investees

We had $64 million of investments in unconsolidated investees at September 30, 2025, compared to $56 million at December 31, 2024. At September 30, 2025, our investment in Prime Holdings Insurance Services, Inc. (Prime) was $63 million and other investments in unconsolidated investees totaled less than $1 million.

Cash and Short-Term Investments

Cash consists of uninvested balances in bank accounts. Short-term investments consist of investments with original maturities of 90 days or less, primarily AAA-rated government money market funds. Short-term investments are carried at cost. We had a cash and short-term investment balance of $53 million and $166 million, respectively, at September 30, 2025, compared to $40 million and $75 million, respectively, at December 31, 2024.

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3. HISTORICAL LOSS AND LAE DEVELOPMENT

The following table is a reconciliation of our unpaid losses and settlement expenses (LAE) for the first nine months of 2025 and 2024:


	For the Nine Months
	Ended September 30,
(in thousands)	2025		2024
Unpaid losses and LAE at beginning of year
Gross	$	2,693,470	$	2,446,025
Ceded		(755,425)		(757,349)
Net	$	1,938,045	$	1,688,676

Increase (decrease) in incurred losses and LAE
Current accident year	$	623,926	$	599,183
Prior accident years		(74,112)		(85,442)
Total incurred	$	549,814	$	513,741

Loss and LAE payments for claims incurred
Current accident year	$	(74,868)	$	(76,148)
Prior accident years		(309,548)		(273,868)
Total paid	$	(384,416)	$	(350,016)

Net unpaid losses and LAE at September 30,	$	2,103,443	$	1,852,401

Unpaid losses and LAE at September 30,
Gross	$	2,873,054	$	2,611,941
Ceded		(769,611)

RLI CORP 10-Q