A.M. Best Upgrades Rating of RLI Group; Revises Outlook to Stable for All Ratings.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--May 27, 2004 A.M. Best Co. has upgraded the financial strength rating to A+ (Superior) from A (Excellent) of RLI RLI Realtors Land Institute RLI Reserve Life Index (oil industry) RLI Rhodesian Light Infantry (Rhodesian Army Unit) RLI Retail & Leisure International RLI Resource List Interoperability Group (RLI). Additionally, RLI Indemnity Recompense for loss, damage, or injuries; restitution or reimbursement. An indemnity contract arises when one individual takes on the obligation to pay for any loss or damage that has been or might be incurred by another individual. Company's (RLI Indemnity) financial strength rating has been upgraded to A+ (Superior) from A- (Excellent). Formerly a stand-alone rating, RLI Indemnity is now group rated based on a 90% quota share For This article is about quota shares (shares of the quota). For other usages of quota, see, see . A quota share is a specified number or percentage of the allotment as a whole (quota), that is prescribed to each individual entity (see Non-tariff barriers to trade). reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. arrangement with RLI Insurance Company, which is currently in place. Concurrently, A.M. Best has upgraded the debt rating to "a-" from "bbb+" of RLI Corp's (NYSE NYSE See: New York Stock Exchange :RLI) existing $100 million 5.95% senior unsecured notes, due January 2014. The outlook for all ratings has been revised to stable from positive. All companies are located in Peoria, IL. These rating actions follow RLI's sustained operating profitability, enhanced capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. and the financial flexibility afforded by its access to the capital markets, as demonstrated by RLI Corp.'s successful $115 million secondary common stock offering in December 2002 and $100 million senior debt offering in December 2003. Of these offerings, a significant portion of the proceeds were contributed to the insurance company subsidiaries with the remainder retained at RLI Corp. Consequently, RLI Corp.'s financial leverage (total debt to capital) at year-end 2003 grew to 21% up from 10.6% (in 2002), while overall capitalization among the insurance companies improved significantly. These rating actions also consider RLI's business strategy and its position in the marketplace, which recognizes the benefits gained from its specialty insurance solutions approach, extensive product offerings and local branch office network. As part of its strategy, RLI provides insurance solutions to market segments that are generally underserved by the standard market due to their unique risk characteristics. This strategy also incorporates the added operating flexibility provided by its ability to write on an admitted and excess and surplus lines basis. Despite intense competition in recent years, RLI continues to demonstrate its ability to generate strong operating results through strict underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. discipline and rate adequacy. The group also benefits from its high risk, high reward property (difference in conditions) business, which over the years, has provided a disproportionate dis·pro·por·tion·ate adj. Out of proportion, as in size, shape, or amount. dis  pro·por share of RLI's earnings. Albeit to a lesser extent, a portion of RLI's success is its use of technology, aggregate risk management and its comprehensive reinsurance program, which serves to preserve capital. Moreover, RLI continues to take advantage of market opportunities as evidenced by its strong growth (via pricing), record earnings, increased business retention and enhanced capitalization to support these opportunities. Partially offsetting are the challenges associated with RLI's high equity leverage, increased debt service obligations (via dividends to RLI Corp.), reinsurance dependence and significant susceptibility susceptibility the state of being susceptible. Refers usually to infectious disease but may be to physical factors such as wetting or to psychological factors such as harassment. to natural and man-made catastrophe Catastrophe, from the Greek Καταστροφή (katastrephein), literally means "to turn" (strephein) "downwards" (kata-). losses. Additionally, approximately 24% of RLI's overall premium writings is derived from California. The financial strength rating has been upgraded to A+ (Superior) from A (Excellent) for RLI Group and its following members, and the outlook has been revised to stable -- RLI Insurance Company -- Mt. Hawley Insurance Company -- RLI Indemnity Company The following debt rating has been upgraded: RLI Corp-- -- to "a-" from "bbb+" on $100 million 5.95% senior unsecured notes, due 2014 For a list of A.M. Best's debt ratings, please visit http://www.ambest.com/debtratings/. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
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