Fitch Affirms RLI Corp. Ratings; Outlook Stable.CHICAGO -- Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. has affirmed the 'BBB' senior debt rating on 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 Corp.'s (RLI) $100 million 5.95% senior unsecured notes due 2014 and the company's 'BBB+' issuer default rating (IDR IDR In currencies, this is the abbreviation for the Indonesian Rupiah. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. ). In addition, Fitch has affirmed the 'A' insurer financial strength (IFS) ratings on RLI's subsidiaries, RLI Insurance Company (RLI Insurance), Mt. Hawley Insurance Co. (Mt. Hawley), and RLI Indemnity Company (RLICO). The Rating Outlook for all ratings is Stable. Fitch's ratings reflect RLI's consistently strong 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. profitability, moderate financial leverage, and strong earnings-based and cash basis interest coverage. Partially offsetting these positives is RLI's high 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. leverage, concentrated premium production in the catastrophe exposed states of California and Texas, and potential surplus volatility derived from the company's comparatively high investment portfolio allocation to equities. Fitch views RLI as a strong and proven underwriter whose combined ratio is typically materially lower than the commercial lines industry aggregate combined ratio. Fitch attributes RLI's superior underwriting results to the company's consistent focus on managing each of its various books of business to individually generate underwriting profits Underwriting profit is a term used in the insurance industry. It consists of the earned premium remaining after losses have been paid and administrative expenses have been deducted. It does not include any investment income earned on held premiums. . Fitch also believes that RLI's practice of employing experienced underwriters and basing their compensation, in part, on the profitability of their book of business over comparatively long periods of time contributes to the company's superior underwriting profitability. Fitch views RLI as a moderately sized niche-oriented commercial insurer whose key competitors typically have more resources and larger capital bases. The company competes in this environment by tailoring products and coverages for underserved markets. RLI reported GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). basis net premiums earned of $253 million for the first half 2006 and GAAP basis equity of $672 million. RLI utilizes a moderate amount of financial leverage and generates very good interest coverage. Fitch estimates the company's debt-to-capital at June 30, 2006 was 13%. Fitch believes that RLI's near-term earnings-based interest coverage will be in a range of 10 times(x)-15x. Note: These ratings were initiated by Fitch as a service to users of Fitch ratings. The ratings are based primarily on publicly available information. Fitch affirmed the following IFS ratings with a Stable Outlook: --RLI Insurance Company at 'A'; --Mt. Hawley Insurance Company at 'A'; --RLI Indemnity at 'A'; Fitch affirmed the following with a Stable Outlook to: RLI Corp. --IDR at 'BBB+'; --Senior Debt at 'BBB'; --US$100 million senior unsecured 5.95% notes due Jan 14, 2014 at 'BBB'. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. The issuer did not participate in the rating process other than through the medium of its public disclosure. |
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