RLI CORP

Previous wording

The surety segment specializes in writing small to medium-sized contract surety coverages, including payment and performance bonds. We offer a variety of commercial surety bonds for medium to large-sized businesses across a broad spectrum of industries, including the home builders, financial, healthcare, energy and renewable energy industries. We also offer a variety of transactional bonds, including but not limited to license and permit, notary and court bonds. Often, our surety coverages involve a statutory requirement for bonds. While these bonds typically maintain a relatively low loss ratio, losses may fluctuate due to adverse economic conditions affecting the financial viability of our insureds. The contract surety product guarantees commercial contractors’ contractual obligations for a specific construction project. Generally, losses occur due to the deterioration of a contractor’s financial condition.

Current wording

The surety segment specializes in writing small to medium-sized contract surety coverages, including payment and performance bonds. We offer a variety of commercial surety bonds for medium to large-sized businesses across a broad spectrum of industries, including the home builders, financial, healthcare, energy and renewable energy industries. We also offer a variety of transactional bonds, including but not limited to license and permit, notary and court bonds. Often, our surety coverages involve a statutory requirement for bonds. While these bonds typically maintain a relatively low loss ratio, losses may fluctuate due to adverse economic conditions affecting the financial viability of our insureds.

Previous wording

Underwriting income or profit represents one measure of the pretax profitability of our insurance operations, and is derived by subtracting losses and settlement expenses, policy acquisition costs and insurance operating expenses from net premiums earned, which are all GAAP financial measures. Each of these components are presented in the statements of earnings but are not subtotaled. However, this information is available in total and by segment in note 7 to the unaudited condensed consolidated financial statements in this quarterly report on Form 10-Q, and in note 11 to the consolidated financial statements in our 2025 Annual Report on Form 10-K, regarding operating segment information. The nearest comparable GAAP measure is earnings before income taxes which, in addition to underwriting income, includes net investment income, net realized gains or losses, net unrealized gains or losses on equity securities, general corporate expenses, debt costs and our portion of earnings from unconsolidated investees. A reconciliation of net earnings to underwriting income follows:

Current wording

Underwriting income or profit represents one measure of the pretax profitability of our insurance operations, and is derived by subtracting losses and settlement expenses, policy acquisition costs and insurance operating expenses from net premiums earned, which are all GAAP financial measures. Each of these components is presented in the statements of earnings but are not subtotaled. However, this information is available in total and by segment in note 7 to the unaudited condensed consolidated financial statements in this quarterly report on Form 10-Q, and in note 11 to the consolidated financial statements in our 2025 Annual Report on Form 10-K, regarding operating segment information. The nearest comparable GAAP measure is earnings before income taxes which, in addition to underwriting income, includes net investment income, net realized gains or losses, net unrealized gains or losses on equity securities, general corporate expenses, debt costs and our portion of earnings from unconsolidated investees. A reconciliation of net earnings to underwriting income follows:

Previous wording

Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025

Current wording

Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025

Previous wording

Net premiums earned increased 4 percent, driven primarily by products in our casualty segment. Investment income was up 16 percent, reflecting higher reinvestment rates and an increased average asset base. Market increases resulted in $64 million of unrealized gains on equity securities during the first six months of 2026, compared to $1 million in the same period of 2025. Realized gains in 2026 included $20 million of realized gains on equity securities, primarily due to rebalancing within our equity strategies, and $1 million of realized losses on fixed income securities. This compares to $29 million of realized gains on equity securities, $1 million of realized losses on fixed income securities and $2 million of other realized gains during the first six months of 2025.

Current wording

Net premiums earned increased 4 percent, driven primarily by products in our casualty segment. Investment income was up 15 percent, reflecting higher reinvestment rates and an increased average asset base. Market increases resulted in $60 million of unrealized gains on equity securities during the first nine months of 2026, compared to $43 million in the same period of 2025. Realized gains in 2026 included $30 million of realized gains on equity securities, primarily due to rebalancing within our equity strategies, and $3 million of realized losses on fixed income securities. This compares to $45 million of realized gains on equity securities, $2 million of realized gains on fixed income securities and $1 million of other realized gains during the first nine months of 2025.

Previous wording

Underwriting income was $118 million on an 85.8 combined ratio for the first six months of 2026, compared to $133 million on an 83.4 combined ratio in the same period of 2025. Underwriting results were impacted by $26 million of pretax catastrophe losses in both 2026 and 2025. Results for each period benefited from favorable development on prior years’ loss reserves, which provided additional pretax earnings of $75 million in the first six months of 2026, compared to $59 million in 2025.

Current wording

Underwriting income was $176 million on an 85.9 combined ratio for the first nine months of 2026, compared to $193 million on an 84.0 combined ratio in the same period of 2025. Underwriting results were impacted by $30 million of pretax catastrophe losses in 2026, compared to $26 million in 2025. Results for each period benefited from favorable development on prior years’ loss reserves, which provided additional pretax earnings of $98 million in the first nine months of 2026, compared to $74 million in 2025.

Previous wording

The loss ratio was 46.2 for the first six months of 2026, compared to 45.2 in 2025. The benefit of greater favorable development on prior years’ loss reserves was offset by a shift in the mix of business towards casualty lines, which tend to have higher non-catastrophe loss ratios than our property and surety products. The expense ratio increased to 39.6 from 38.2. The increase primarily reflected continued investments in our workforce.

Current wording

The loss ratio was 46.6 for the first nine months of 2026, compared to 45.5 in 2025. The benefit of greater favorable development on prior years’ loss reserves was offset by a shift in the mix of business towards casualty lines, which tend to have higher non-catastrophe loss ratios than our property and surety products. The expense ratio increased to 39.3 from 38.5, primarily reflecting continued investments in underwriting and technology capabilities.

Previous wording

Equity in earnings of unconsolidated investees relates to our investment in Prime Holdings Insurance Services, Inc. (Prime), a specialty insurance company. We recognized $5 million of investee earnings from Prime in the first six months of 2026, the same as in the first six months of 2025.

Current wording

Equity in earnings of unconsolidated investees relates to our investment in Prime Holdings Insurance Services, Inc. (Prime), a specialty insurance company. We recognized $2 million of investee earnings from Prime in the first nine months of 2026, compared to $7 million in the first nine months of 2025.

Previous wording

Net earnings for the first six months of 2026 totaled $223 million, compared to $188 million for the same period in 2025. The increase primarily reflected larger unrealized gains on equity securities and higher investment income.

Current wording

Net earnings for the first nine months of 2026 totaled $304 million, compared to $312 million for the same period in 2025. Higher investment income and greater unrealized gains on equity securities were offset by lower underwriting income and higher interest expense.

Previous wording

Comprehensive earnings totaled $195 million for the first six months of 2026, compared to $236 million for the first six months of 2025. Other comprehensive earnings (loss) primarily included net after-tax unrealized gains (losses) from the fixed income portfolio. Other comprehensive loss of $28 million in the first six months of 2026 was primarily attributable to rising interest rates, which decreased the fair value of securities held in the fixed income portfolio. Comparatively, $49 million of other comprehensive earnings was recognized in 2025.

Current wording

Comprehensive earnings totaled $158 million for the first nine months of 2026, compared to $389 million for the first nine months of 2025. Other comprehensive earnings (loss) primarily included net after-tax unrealized gains (losses) from the fixed income portfolio. Other comprehensive loss of $145 million in the first nine months of 2026 was primarily attributable to rising interest rates, which decreased the fair value of securities held in the fixed income portfolio. Comparatively, $76 million of other comprehensive earnings was recognized in 2025.

Previous wording

Gross premiums written increased $30 million for the first six months of 2026, driven by favorable rate movement and growth within our casualty segment. Net premiums earned increased $28 million, primarily due to continued growth within our casualty segment.

Current wording

Gross premiums written increased $42 million for the first nine months of 2026, driven by growth within our casualty segment, which continued to benefit from favorable rate movement. Net premiums earned increased $45 million, primarily due to continued growth within our casualty segment.

Previous wording

Gross premiums written for the casualty segment increased $61 million in the first six months of 2026. We continued to benefit from positive rate movement across a large portion of our casualty segment. Personal umbrella expanded its distribution base while achieving favorable rate increases. Our commercial transportation business benefited from favorable market conditions as some competitors reduced their appetite, creating opportunities to write additional high-quality business at adequate rates. The decline in general liability premiums resulted from slower construction activity within our targeted markets, which created a more challenging environment for writing new project business. Other casualty premiums declined due to increased competition in our binding authority business and our decision to no longer participate in the reinsurance agreement with Prime.

Current wording

Gross premiums written for the casualty segment increased $75 million in the first nine months of 2026. We continued to benefit from favorable rate movement across a large portion of our casualty segment. Personal umbrella continued to expand its distribution base while achieving favorable rate increases. Our commercial transportation business benefited from favorable market conditions as some competitors reduced their underwriting appetite, creating opportunities to write additional high-quality business at adequate rates. General liability and commercial excess premiums declined as slower construction activity and increased competition within our targeted markets created a more challenging environment for attracting new business. Other casualty premiums declined due to increased competition in our binding authority business and our decision to no longer participate in the reinsurance agreement with Prime.

Previous wording

Gross premiums written for the property segment decreased $28 million in the first six months of 2026. Commercial property declined $36 million as increased market capacity and competition continued to pressure pricing. Marine premiums increased $5 million, driven by strong new business production and continued growth in our inland marine products. Additionally, growth in other property premiums was driven by rate increases for our Hawaii homeowners business and new business opportunities.

Current wording

Gross premiums written for the property segment decreased $30 million in the first nine months of 2026. Commercial property declined $52 million as capacity and competition continued to pressure pricing and renewal retention. Marine premiums increased $10 million, driven by continued growth in our inland marine products. Additionally, growth in other property premiums was driven by rate increases for our Hawaii homeowners business and new opportunities with strategic distribution partners.

Previous wording

Gross premiums written for the surety segment decreased by $3 million in the first six months of 2026. Contract surety remained relatively stable despite economic conditions that tempered construction activity, reflecting continued marketing efforts and disciplined underwriting. Commercial surety premiums declined due to lower levels of non-recurring premium from our renewable energy portfolio and a competitive marketplace that resulted in fewer new business opportunities.

Current wording

Gross premiums written for the surety segment decreased by $3 million in the first nine months of 2026. Transactional surety premiums increased as a result of continued marketing efforts. Contract surety remained relatively stable despite economic conditions that tempered construction activity, reflecting disciplined underwriting and ongoing producer engagement. Commercial surety premiums declined due to lower levels of non-recurring premium from our renewable energy portfolio and a competitive marketplace that resulted in fewer new business opportunities.

Previous wording

The casualty segment recorded underwriting income of $9 million in the first six months of 2026, compared to $10 million for the same period last year. Prior accident years’ reserve releases reduced loss and settlement expenses for the casualty segment by $28 million in 2026, primarily related to accident years 2019 through 2022, as well as 2024 and 2025. Larger drivers of the favorable development were commercial transportation, executive products, professional services and commercial excess, while personal umbrella experienced some adverse development. In comparison, $20 million of prior accident years’ reserves were released in the first six months of 2025. Commercial excess, general liability and subsegments within professional liability drove the favorable development, while commercial transportation and personal umbrella had adverse development related to auto exposures in 2025. Storm losses on casualty-oriented package policies that include property coverage resulted in $2 million of losses in both 2026 and 2025.

Current wording

The casualty segment recorded underwriting income of $10 million in the first nine months of 2026, compared to $15 million for the same period last year. Prior accident years’ reserve releases reduced loss and settlement expenses for the casualty segment by $36 million in 2026, primarily related to accident years 2018 through 2021, as well as 2024 and 2025. Larger drivers of the favorable development were commercial transportation, commercial excess, professional services and general liability, while personal umbrella experienced adverse development. In comparison, $28 million of prior accident years’ reserves were released in the first nine months of 2025. Commercial excess, general liability and subsegments within professional liability drove the favorable development, while commercial transportation had adverse development related to auto exposures in 2025. Storm losses on casualty-oriented package policies that include property coverage resulted in $3 million of losses in 2026, compared to $2 million in 2025.

Previous wording

The property segment recorded underwriting income of $102 million for the first six months of 2026, compared to $106 million for the same period last year. Underwriting results for 2026 included $44 million of favorable development on prior years’ loss and catastrophe reserves, offset by $24 million of storm losses. Comparatively, results for 2025 included $28 million of favorable development on prior years’ loss and catastrophe reserves and $24 million of storm and other catastrophe losses.

Current wording

The property segment recorded underwriting income of $152 million for the first nine months of 2026, compared to $157 million for the same period last year. Underwriting results for 2026 included $54 million of favorable development on prior years’ loss and catastrophe reserves, offset by $27 million of storm losses. Comparatively, results for 2025 included $32 million of favorable development on prior years’ loss and catastrophe reserves and $24 million of storm and other catastrophe losses.

Previous wording

Underwriting results for the second quarter of 2026 resulted in a combined ratio of 56.8, compared to 62.1 for the same period last year. The segment’s loss ratio was 21.6 in 2026, down from 29.4 in 2025, due to larger reserve releases and lower catastrophe losses. The segment’s expense ratio increased to 35.2 in 2026 from 32.7 in the prior year, as a result of continued investments in people on a lower earned premium base.

Current wording

Underwriting results for the first nine months of 2026 resulted in a combined ratio of 59.6, compared to 59.8 for the same period last year. The segment’s loss ratio was 24.3 in 2026, down from 26.7 in 2025, due to increased favorable development on prior accident years. The segment’s expense ratio increased to 35.3 in 2026 from 33.1 in the prior year, as a result of continued investments in people on a lower earned premium base.

Previous wording

The surety segment recorded underwriting income of $7 million for the first six months of 2026, compared to $16 million for the same period last year. Results for 2026 included favorable development on prior accident years’ reserves, which decreased loss and settlement expenses for the segment by $4 million, compared to $11 million in 2025.

Current wording

The surety segment recorded underwriting income of $14 million for the first nine months of 2026, compared to $22 million for the same period last year. Results for 2026 included favorable development on prior accident years’ reserves, which decreased loss and settlement expenses for the segment by $8 million, compared to $13 million in 2025.

Previous wording

The combined ratio for the surety segment totaled 90.4 for the first six months of 2026, compared to 78.2 for the same period last year. The segment’s loss ratio was 13.8 in 2026, up from 4.8 in 2025, due to lower levels of favorable prior accident years’ reserve development. The expense ratio was 76.6, up from 73.4 in the prior year, due to continued investments in people, as well as higher acquisition expenses, which can fluctuate between periods.

Current wording

The combined ratio for the surety segment totaled 86.9 for the first nine months of 2026, compared to 80.5 for the same period last year. The segment’s loss ratio was 11.2 in 2026, up from 7.0 in 2025, due to lower levels of favorable prior accident years’ reserve development. The expense ratio was 75.7, up from 73.5 in the prior year, due to a lower earned premium base and higher acquisition-related expenses, which can fluctuate between periods.

Previous wording

Our investment portfolio generated net investment income of $88 million during the first six months of 2026, an increase of 16 percent from the same period in 2025. The increase in investment income was due to higher reinvestment rates, as well as an increased average asset base relative to the prior year.

Current wording

Our investment portfolio generated net investment income of $135 million during the first nine months of 2026, an increase of 15 percent from the same period in 2025. The increase in investment income was due to higher reinvestment rates, as well as an increased average asset base relative to the prior year.

Previous wording

Yields on our fixed income investments for the first six months of 2026 and 2025 were as follows:

Current wording

Yields on our fixed income investments for the first nine months of 2026 and 2025 were as follows:

Previous wording

The fixed income portfolio increased by $85 million in the first six months of 2026, as the majority of investment cash flows were directed to the fixed income portfolio. Average fixed income duration was 4.7 years at June 30, 2026, reflecting our liability structure and sound capital position. The equity portfolio increased by $61 million during the first six months of 2026, due to positive performance in the equity markets, primarily in the second quarter. Proceeds from debt issuance were invested into short-term securities, increasing the short-term investment portfolio by $86 million.

Current wording

The fixed income portfolio increased by $68 million in the first nine months of 2026, as the majority of investment cash flows were directed to the fixed income portfolio, overcoming declines in market value due to rising interest rates. Average fixed income duration was 4.6 years at September 30, 2026, reflecting our liability structure and sound capital position. The equity portfolio increased by $49 million during the first nine months of 2026, due to positive performance in the equity markets. Short-term investments increased by $134 million as we maintained higher levels of liquidity in short-term securities, which continued to offer attractive yields in the current interest rate environment.

Previous wording

Our effective tax rate for the first six months of 2026 was 19.8 percent, compared to 20.2 percent for the same period in 2025. Effective rates are dependent upon components of pretax earnings or losses and the related tax effects. The decrease in the effective tax rate for the six-month period in 2026 was primarily due to higher levels of tax credit utilization and deductions related to the $2.00 special dividend paid to our Employee Stock Ownership Plan.

Current wording

Our effective tax rate for the first nine months of 2026 was 19.6 percent, compared to 20.4 percent for the same period in 2025. Effective rates are dependent upon components of pretax earnings or losses and the related tax effects. The decrease in

Previous wording

Net premiums earned increased 4 percent, driven primarily by products in our casualty segment. Investment income was up 17 percent, reflecting higher reinvestment rates and an increased average asset base. Market increases resulted in $103 million of unrealized gains on equity securities in the second quarter of 2026, compared to $44 million of unrealized gains for the same period in 2025. Realized gains in 2026 included $10 million of realized gains on equity securities, primarily due to rebalancing within our equity strategies, and less than $1 million of realized losses on fixed income securities. This compares to $14 million of realized gains on equity securities, $1 million of realized losses on fixed income securities and $2 million of other realized gains during the second quarter of 2025.

Current wording

Net premiums earned increased 4 percent, driven primarily by products in our casualty segment. Investment income was up 13 percent, reflecting higher reinvestment rates and an increased average asset base. Unrealized losses on equity securities were $3 million in the third quarter of 2026, compared to $42 million of unrealized gains for the same period in 2025, with the current-period amount impacted by the realization of gains on equity securities during the quarter. Realized gains in 2026 included $10 million of realized gains on equity securities, primarily due to rebalancing within our equity strategies, and $1 million of realized losses on fixed income securities. This compares to $16 million of realized gains on equity securities, $3 million of realized gains on fixed income securities and $1 million of other realized losses during the third quarter of 2025.

Previous wording

Underwriting income was $60 million on an 85.6 combined ratio for the second quarter of 2026, compared to $62 million on an 84.5 combined ratio in the same period of 2025. Underwriting results for 2026 were impacted by $10 million of pretax catastrophe losses, compared to $14 million in 2025. Results for each period benefited from favorable development on prior years’ loss reserves, which provided additional pretax earnings of $40 million in the second quarter of 2026, compared to $28 million in 2025.

Current wording

Underwriting income was $59 million on an 86.2 combined ratio for the third quarter of 2026, compared to $61 million on an 85.1 combined ratio in the same period of 2025. Underwriting results for 2026 were impacted by $4 million of pretax catastrophe losses, while minimal catastrophe losses were incurred in the third quarter of 2025. Results for each period benefited from favorable development on prior years’ loss reserves, which provided additional pretax earnings of $23 million in the third quarter of 2026, compared to $15 million in 2025.

Previous wording

Equity in earnings of unconsolidated investees relates to our investment in Prime Holdings Insurance Services, Inc. (Prime), a specialty insurance company. We recognized $3 million of investee earnings from Prime in the second quarter of 2026, the same as in the second quarter of 2025.

Current wording

Equity in earnings of unconsolidated investees relates to our investment in Prime Holdings Insurance Services, Inc. (Prime), a specialty insurance company. We recognized $3 million of investee losses from Prime in the third quarter of 2026, compared to $2 million of investee earnings in the third quarter of 2025.

Previous wording

Net earnings for the second quarter of 2026 totaled $168 million, compared to $124 million for the same period in 2025. The increase primarily reflected larger unrealized gains on equity securities and higher investment income.

Current wording

Net earnings for the third quarter of 2026 totaled $81 million, compared to $125 million for the same period in 2025. The decrease primarily reflected lower realized gains and a shift from unrealized gains to unrealized losses on equity securities, partially offset by higher net investment income.

Previous wording

Comprehensive earnings totaled $166 million for the second quarter of 2026, compared to $143 million for the same period in 2025. Other comprehensive earnings (loss) primarily included net after-tax unrealized gains (losses) from the fixed income portfolio. Other comprehensive loss of $2 million in the second quarter of 2026 was primarily attributable to rising interest rates, which decreased the fair value of securities held in the fixed income portfolio. Comparatively, $19 million of other comprehensive earnings was recognized in 2025.

Current wording

Comprehensive loss totaled $37 million for the third quarter of 2026, compared to $152 million of comprehensive earnings for the same period in 2025. Other comprehensive earnings (loss) primarily included net after-tax unrealized gains (losses) from the fixed income portfolio. Other comprehensive loss of $118 million in the third quarter of 2026 was primarily attributable to rising interest rates, which decreased the fair value of securities held in the fixed income portfolio. Comparatively, $28 million of other comprehensive earnings was recognized in 2025.

Previous wording

Gross premiums written increased $17 million for the second quarter of 2026, driven by favorable rate movement and growth within our casualty segment. Net premiums earned increased $15 million, primarily due to continued growth within our casualty segment.

Current wording

Gross premiums written increased $12 million for the third quarter of 2026, driven by favorable rate movement and growth within our casualty segment. Net premiums earned increased $17 million, primarily due to continued growth within our casualty segment.

Previous wording

Gross premiums written for the casualty segment increased $32 million in the second quarter of 2026. We continued to benefit from favorable rate movement across a large portion of our casualty segment. Personal umbrella expanded its distribution base while benefiting from favorable rate movement. Our commercial transportation business benefited from favorable market conditions as some competitors reduced their appetite, creating opportunities to write additional high-quality business at adequate rates. The decline in general liability premiums resulted from slower construction activity within our targeted markets, which created a more challenging environment for writing new project business. Other casualty premiums declined due to increased competition in our binding authority business.

Current wording

Gross premiums written for the casualty segment increased $14 million in the third quarter of 2026. We continued to benefit from favorable rate movement across a large portion of our casualty segment, including personal umbrella, where we have also expanded our distribution base. These increases were partially offset by declines in general liability and commercial excess due to increased competition within our targeted markets, as well as lower commercial transportation premiums resulting from underwriting actions in a more competitive market. Other casualty premiums declined primarily due to increased competition in our binding authority business.

Previous wording

Gross premiums written for the property segment decreased $13 million in the second quarter of 2026. Commercial property premiums declined $17 million as increased market capacity and competition continued to pressure pricing. Marine premiums increased $3 million, driven primarily by continued growth in our inland marine products. Additionally, growth in other property premiums was driven by rate increases for our Hawaii homeowners business.

Current wording

Gross premiums written for the property segment decreased $2 million in the third quarter of 2026. Commercial property premiums declined $16 million as capacity and competition continued to pressure pricing and renewal retention. Marine premiums increased $5 million, driven primarily by continued growth in our inland marine products. Additionally, growth in other property premiums was driven by rate increases for our Hawaii homeowners business and new opportunities with strategic distribution partners.

Previous wording

The casualty segment recorded underwriting income of $2 million in the second quarter of 2026, compared to $8 million for the same period last year. Prior accident years’ reserve releases reduced loss and settlement expenses for the casualty segment by $13 million in 2026, primarily related to accident years 2020, 2021, 2024 and 2025. Larger drivers of the favorable development were commercial excess, commercial transportation, professional services and executive products, while personal umbrella experienced some adverse development. In comparison, $15 million of prior accident years’ reserves were released in the second quarter of 2025. Commercial excess, personal umbrella, general liability and subsegments within professional liability drove the favorable development. Storm losses on casualty-oriented package policies that include property coverage resulted in $1 million of losses in both 2026 and 2025.

Current wording

The casualty segment recorded underwriting income of $1 million in the third quarter of 2026, compared to $4 million for the same period last year. Prior accident years’ reserve releases reduced loss and settlement expenses for the casualty segment by $8 million in 2026, primarily related to accident years 2020, 2021 and 2025. Larger drivers of the favorable development were commercial transportation, commercial excess and professional services, while personal umbrella experienced some adverse development. In comparison, $8 million of prior accident years’ reserves were released in the third quarter of 2025. Commercial excess, general liability, executive products and personal umbrella drove the favorable development. Storm losses on casualty-oriented package policies that include property coverage resulted in less than $1 million of losses in both 2026 and 2025.

Previous wording

The combined ratio for the casualty segment was 98.2 in 2026, compared to 97.8 in 2025. The segment’s loss ratio was 61.8 in 2026, down from 61.9 in 2025. The expense ratio for the casualty segment was 36.4, up from 35.9 for the same period last year.

Current wording

The combined ratio for the casualty segment was 99.6 in 2026, compared to 98.2 in 2025. The segment’s loss ratio was 64.1 in 2026, up from 62.0 in 2025, primarily due to a shift in the mix of business toward higher loss ratio products. The expense ratio for the casualty segment was 35.5, down from 36.2 for the same period last year.

Previous wording

The property segment recorded underwriting income of $53 million for the second quarter of 2026, compared to $50 million for the same period last year. Underwriting results for 2026 included $23 million of favorable development on prior years’ loss and catastrophe reserves, offset by $9 million of storm losses. Comparatively, results for 2025 included $10 million of favorable development on prior years’ loss and catastrophe reserves and $13 million of storm and other catastrophe losses.

Current wording

The property segment recorded underwriting income of $50 million for the third quarter of 2026, the same amount as the prior year. Underwriting results for 2026 included $10 million of favorable development on prior years’ loss reserves, offset by $4 million of storm losses. Comparatively, results for 2025 included $5 million of favorable development on prior years’ loss reserves.

Previous wording

The surety segment recorded underwriting income of $5 million for the second quarter of 2026, compared to $4 million for the same period last year. Results for 2026 included favorable development on prior accident years’ reserves, which decreased loss and settlement expenses for the segment by $3 million, compared to $2 million in 2025.

Current wording

The surety segment recorded underwriting income of $7 million for the third quarter of 2026, compared to $6 million for the same period last year. Results for 2026 included favorable development on prior accident years’ reserves, which decreased loss and settlement expenses for the segment by $4 million, compared to $3 million in 2025.

Previous wording

The combined ratio for the surety segment totaled 87.2 for the second quarter of 2026, compared to 87.9 for the same period last year. The segment’s loss ratio was 9.6 in 2026, down from 13.3 in 2025, due to larger levels of favorable prior accident years’ reserve development. The expense ratio was 77.6, up from 74.6 in the prior year, due to continued investments in people, as well as higher acquisition expenses, which can fluctuate between periods.

Current wording

The combined ratio for the surety segment totaled 79.8 for the third quarter of 2026, compared to 85.0 for the same period last year. The segment’s loss ratio was 5.9 in 2026, down from 11.4 in 2025, due to higher levels of favorable prior accident years’ reserve development. The expense ratio was 73.9, up from 73.6 in the prior year, due to a lower earned premium base and higher acquisition-related expenses, which can fluctuate between periods.

Previous wording

Our investment portfolio generated net investment income of $46 million during the second quarter of 2026, an increase of 17 percent from the same period in 2025. The increase in investment income was due to higher reinvestment rates, as well as an increased average asset base relative to the prior year.

Current wording

Our investment portfolio generated net investment income of $47 million during the third quarter of 2026, an increase of 13 percent from the same period in 2025. The increase in investment income was due to higher reinvestment rates, as well as an increased average asset base relative to the prior year.

Previous wording

Yields on our fixed income investments for the second quarter of 2026 and 2025 were as follows:

Current wording

Yields on our fixed income investments for the third quarter of 2026 and 2025 were as follows:

Previous wording

Our effective tax rate for the second quarter of 2026 was 20.2 percent, compared to 20.6 percent for the same period in 2025. Effective rates are dependent upon components of pretax earnings or losses and the related tax effects. The decrease in the effective tax rate for the second quarter of 2026 was primarily due to deductions related to the $2.00 special dividend paid to our Employee Stock Ownership Plan.

Current wording

Our effective tax rate for the third quarter of 2026 was 19.1 percent, compared to 20.8 percent for the same period in 2025. Effective rates are dependent upon components of pretax earnings or losses and the related tax effects. The decrease in the effective tax rate for the third quarter was primarily due to greater utilization of tax credits.

Previous wording

The following table summarizes cash flows provided by (used in) our activities for the six-month periods ended June 30, 2026 and 2025:

Current wording

The following table summarizes cash flows provided by (used in) our activities for the nine-month periods ended September 30, 2026 and 2025:

Previous wording

Premiums received from customers are our largest source of cash, while claim payments on insured losses represent our largest use of cash. Cash flows from operating activities may vary between periods due to the timing of these receipts and payments. Operating cash flow decreased in the first six months of 2026 compared to the same period in 2025, primarily due to higher loss and settlement expense payments, the purchase of federal income tax credits, and higher employee compensation payments. These decreases were partially offset by higher investment income receipts and lower reinsurance costs. During 2026, our financing activities included returning $184 million to shareholders through a $2.00 special dividend and repurchasing $12 million of common stock under the $250 million share repurchase plan the Company’s Board of Directors authorized on May 14, 2026.

Current wording

Premiums received from customers are our largest source of cash, while claim payments on insured losses represent our largest use of cash. Cash flows from operating activities may vary between periods due to the timing of these receipts and payments. Operating cash flow decreased in the first nine months of 2026 compared to the same period in 2025, primarily due to higher loss and settlement expense payments, the purchase of federal income tax credits and higher employee compensation payments. These decreases were partially offset by higher investment income receipts and lower reinsurance costs. During 2026, our financing activities included returning $184 million to shareholders through a $2.00 special dividend and repurchasing $18 million of common stock under the $250 million share repurchase plan the Company’s Board of Directors authorized on May 14, 2026.