AGM 2021

May 6, 2021

Good afternoon, everyone, and welcome to the RLI Shareholders Meeting. I'm John Michael, Chairman and CEO, and it's my pleasure to welcome all of you to the RLI Corp Annual Meeting and Proceedings. Thank you for your and attendance. Before we start, let me first discuss our company disclaimer. During this annual shareholders meeting, we may make comments that reflect our intentions, beliefs, and expectations for the future of ROI. As with any forward looking statements, these comments are subject to certain risk factors which could cause our actual results to vary materially, including the ongoing impact of the novel coronavirus COVID nineteen global pandemic. For a more comprehensive list of these factors and the text of our forward looking statement disclaimer, please refer to our SEC filings, including our 2020 Form 10 k and annual report. All of this information should be reviewed carefully. I'd like to welcoming all of our ROI leadership team members and associates throughout the country listening to our webcast. Thanks for your efforts. We were able to deliver strong results again in 2020. I'm grateful for your continued commitment to the company and appreciate your joining. Today's meeting will be held virtually due to ongoing public health concerns related to COVID nineteen and to support the health and well-being of our shareholders and other meeting participants. Our thoughts continue to be with all who have been impacted by by the pandemic, especially our shareholders, customers, and employees. By all accounts, 2020 was an extraordinary year. We could not have predicted the unprecedented challenges that the world, insurance industry, and our business would face from the wide ranging impact of the pandemic. I'm incredibly proud of our associates' unyielding dedication to our customers over the past year. Amid tremendous uncertainty and change, the entire RLI team stepped up and worked together to keep our business and our customers moving forward. As a result of their efforts, we were able to successfully navigate a highly dynamic and challenging environment and achieve outstanding results. At this time, I'd like to call the meeting to First, I'd like to introduce the members of our board, all of whom have joined today's meeting, Kai Allman, Mike Angelina, John Bailey, Calvin Butler, Dave Duclose, Susan Fleming, Jordan Graham, Craig Plythermos, Bob Restrepo, Debbie Roberts, and Mike Stone. I'm proud to serve with such an experienced and dedicated group of directors who are committed to representing the best interest of ROI and its shareholders. Also joining us today is Blake Stewart representing Deloitte, our external independent auditor for the fiscal year 2020. The business agenda for the meeting is described in the notice and proxy statement related to the meeting, copies of which were distributed in advance of the meeting. The formal meeting will be conducted first, after which, MyCourt president and COO, Craig Kleithermas, will make a few remarks about our operations. And after Craig's presentation, we'll be available to answer your question. Jeff Pick, our corporate secretary, has reported to me the required notice of meeting was mailed on time. A certified list of shareholders is also available for review on the meeting portal for attendees who have entered their 16 digit control number in the web portal prior to joining the meeting. As noted in the proxy statement previously provided to all shareholders of record, the record date for voting at this meeting was 03/08/2021. Todd Bryant, our CFO, will serve as inspector of the election, and his report along with the proxies will be filed with the minutes of the meeting. Mister Fick will report the voting result. We have 95% of the outstanding shares represented here in today in person or by proxy, and therefore, a quorum is present, and we may conduct the meeting. As indicated in the proxy, there are three proposals to be acted upon today. Proposal one is the election of 12 directors of the company. Proposal two is a nonbinding advisory vote to approve the compensation of the company's named executive officers. And proposal three is the ratification selection of Deloitte and Touche LLP as the company's independent county firm. Each of these proposals is more fully described in the proxy statement, and each is recommended by the board of directors. Will mister Fick present the results of the vote? Mister chairman, the voting results are as follows. With respect to proposal number one, the election of directors, of the votes cast have been voted for the election of each of the 12 nominees. With respect to proposal number two, the nonbinding advisory vote to approve the compensation of the company's named executive officers say on pay as described in the 2021 proxy statement, the proposal received approval of 96% cast. And with respect to proposal number three, the ratification of Deloitte and Touge LLP as independent registered public accounting firm of the company for fiscal twenty twenty one, the proposal received approval of a majority of the votes cast. Thank you, mister Pick. Based on the report of the inspector of election, each person nominated for elections of director has been elected to serve as director until the twenty twenty two annual meeting. The nonbinding advisory vote on the compensation of the company's named executive officers, also known as say on pay, as described in the 2021 proxy statement, the proposal received approval of 96% of the votes cast. The audit committee selection of Deloitte and Touche LLP as independent registered public accounting firm for fiscal twenty twenty one has been by. These actions will be recorded as stated in the minutes of this meeting. This concludes the formal meeting. I declare the meeting adjourned. Now I'd like to turn it over to our president and COO, Craig Kleethermis, who'll bring you up to date on progress. Craig? Thank you, John. Good afternoon, everyone. On behalf of all our associate owners at RLI, thank you for joining us today. In the face of many extraordinary events over the past year, I'm pleased to share that RLI delivered strong results. Amid the COVID nineteen pandemic and a highly active year of natural catastrophes, our to the needs of our policyholders with professionalism and unparalleled service. Despite the impact of catastrophe losses and the economic slowdown from the pandemic, our underwriting performance was strong. We attained profitability while growing our business. We also advanced many strategic initiatives that will further differentiate ROI in the markets we serve and position our company for future growth. Our talented associates continue to be the driving force behind our success. They have persevered and risen to the occasion over the past year even as their work routines and personal lives were heavily disrupted by the pandemic. I believe this is a testament to the strength of RLI's ownership culture. As a result of our associates' efforts, we achieved outstanding financial results. Highlights of our accomplishments during the year follow. Operating earnings for the year were $118,000,000 or $2.59 per share. We reported a combined ratio of 92, which marked our fifth consecutive year of underwriting profit. Gross premiums written grew 7% to $1,100,000,000 in 2020, which was largely driven by rate increases across most of our product portfolio. Investment 1.4%, primarily due to a low interest rate environment, which suppressed reinvestment rates. However, on a total return basis, our investment portfolio performed well and was up 7.5%. Shareholders' equity grew 14% to $1,100,000,000 at year end. We delivered value and returns to our shareholders through regular quarterly dividends and a $1 per share special. In fact, 2020 marked the forty fifth consecutive year that ROI has increased regular dividends. Overall, our solid underwriting performance and outstanding customer service distinguished us during the year. We will continue to make strategic investments in our business and remain competitive in the markets we serve by understanding customer needs, providing stable coverage with a consistent appetite, nurturing existing distribution partnerships, selectively adding new risks and relationships, and continuously optimizing our service standards. I want to thank all of our associates once again for their hard work in 2020. Turning to the first quarter of twenty twenty one, we're off to a strong start to the year. Despite the impact of an active winter storm season, we achieved profitability and continue to find growth opportunities across our portfolio. Operating earnings for the quarter were $39,600,000 or zero eight seven dollars per share, up from $0.66 per share a year ago. We achieved underwriting income of $29,900,000 resulting in an 86.9 combined ratio. Gross premiums written were up 20% in the quarter or 10% when adjusting for the return of premium to transportation customers impacted by the pandemic in 2020. Premium volume was up over last year in all three of our product segments and primarily driven by rate increases and expanded distribution. Investment income was down 7.6% in the quarter, but our investment portfolio posted a 0.2% total return for the quarter. Overall, very solid underwriting results. The sub-ninety combined ratio we achieved is a testament to our well diversified portfolio of specialty products and the consistency of our disciplined underwriting approach. We never forget that the true measure of our success lies in our ability to generate long term growth for our shareholders and consistently deliver value for all stakeholders we serve. A brief review of our track record reinforces the value of investing in ROI. We've delivered profitable underwriting results consecutive years and beaten the industry average combined ratio by 13 points over the last decade. We've paid and consistently increased regular dividends in each of the last forty five years. Over the past ten years, we've delivered a ten year annualized total return of 21% to shareholders, a return that has outpaced that of the S and P 500 and S and P 500 property and casualty insurance index. We will work to continue creating consistent value for our shareholders through the thoughtful management of our product portfolio, the careful selection of niche markets, distribution, partners and customers, the quality and character of our people, and the strength of our balance sheet. Looking forward, we are optimistic about the future. RLI is well positioned for continued growth and success. Our businesses are competitive and agile. Our associates are owners, and their actions are aligned with the interests of our customers and shareholders. These attributes will allow us to continue differentiating ROI in the markets we serve and delivering value to our shareholders. I look forward to working with our head to prove once again that difference works. I will now turn it back over to John. Thank you, everyone, for joining us today. We'll now take your questions. Questions can be submitted in the designated field in the online meeting portal. As a reminder, only shareholders who provided their 16 digit control number prior to joining the meeting today will be able to submit questions. We'll now pause allow time for questions to be submitted. And we do have a question. The question is, what's your exit strategy for Maui Jim and when? And, I'll take that one. We have enjoyed a, I guess, twenty five year history with our ownership in Maui Jim. And, that investment for I would call it, nothing short of wildly successful, and we continue to enjoy that investment. We have had queries, on selling our shares, But, each time that we have those, they're they fall short of our expectations as to what to get for that ever if we're to ever exit that asset. So, the, answer is we we really do not have an exit strategy per se, but we do entertain queries when they come. Well, Craig, it appears there are no other questions submitted. I thank you for your time today and your investment in ROI. This concludes our meeting.