Slide 1: 2011 NYSSA Investor Presentation
2011 NYSSA ie | Investor Presentation | +h duarter 2010 Meath a ae
Slide 2: Forward Looking Statements
Forward Looking Statements 2 Forward looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 may be made during this presentation. These statements relate to our expectations, hopes, beliefs, intentions, goals or strat
Slide 3: Select Market Information
Select Market Information 3 Exchange / Ticker . . . . . . . . . . . . . . . . . . NYSE / RLI Share Price (2/3/11) . . . . . . . . . . . . . . $55.43 Dividend / Yield . . . . . . . . . . . . . . . . . . . $1.16 / 2% Market Cap . . . . . . . . . . . . . . . . . . . . . . . $1.2 billion % held by Insid
Slide 4: The RLI Story
The RLI Story - _— =) —— _ || Founded contact lenses insurance agency, Replacement Lens Inc. ™@ Began underwriting specialty P&C coverages Continue to expand product offerings Licensed in all 50 states RLI common stock first traded on NASDAQ RLI NYSE. RLI DIFFERENT WORKS Merged contact lens division
Slide 5: Insurance Industry Lingo-Bingo
Insurance Industry Lingo-Bingo 5 Everyone says it, but do their results reflect it? 4Q 2010
Slide 6: Our Business Model
Our Business Model 6 Underwriting company Experienced underwriters Reward underwriters on profits Insiders/ESOP own 18% ESOP company Ownership mentality Diversified insurance product portfolio Products stand on their own Grow when we are rewarded for the risk Growth by design Organic Liftouts Acquis
Slide 7: Key metrics that measure insurance
Key metrics that measure insurance 7 Underwriting Profit ROE Book Value Growth Financial Strength 4Q 2010
Slide 8: Diversified Product Portfolio
Diversified Product Portfolio 8 4Q 2010
Slide 9: Underwriting Profit
Underwriting Profit 9 Statutory Combined Ratio Track Record: Over the last 15 years, RLI has outperformed the industry combined ratio by an average of 15 points. 4Q 2010
Slide 10: Book Value Growth
Book Value Growth 10 Note: Raised $115 million in 2002 4Q 2010
Slide 11: Ordinary Dividend
Ordinary Dividend 11 Distinguished Dividend Track Record: Over the last five years, the company’s quarterly dividend has grown by an average of 12%. RLI paid a special cash dividend of $7.00 per share to shareholders on December 29, 2010. 4Q 2010
Slide 12: Return on Equity
Return on Equity 12 TRAILING FOUR QUARTERS: 10-year average ROE is 14%. 4Q 2010
Slide 13: Loss Reserves Development
Loss Reserves Development 13 4Q 2010
Slide 14: CBIC
CBIC 14 Acquiring CBIC for approximately $137 million in cash; expected to close in early 2011 CBIC is a profitable, high-quality surety company based in Seattle Offers strategic benefits to RLI’s surety business Adds scale and expands geographic footprint Product diversification opportunities Upsid
Slide 15: Financial Information
Financial Information 15 15 straight years of ($ 000 except Operating EPS/Combined Ratio) producing an under- 2010 2009 2008 2007 2006 writing profit, and 30 Gross Premium 636,316 631,200 681,169 739,334 799,013 Written out of the last 34 yrs Named a Ward’s Top Net Earnings 127,432 93,845 78,676 175
Slide 16: Investment Portfolio
Investment Portfolio 16 FS Value Book Security Type (millions) Duration Yield Portfolio Allocation Agency 390.6 4.93 4.38 Equities Agency Corporate 487.9 5.91 5.16 17.8% 21.7% U.S. Government 15.8 4.23 2.92 Cash Mortgage Backed 254.2 2.73 4.52 2.2% ABS/CMBS 49.9 2.17 5.34 Municipal 242.9 4.09 5.48 M
Slide 17: Total Return
Total Return 17 Annualized returns as of 12/31/10 S&P S&P P&C RLI 500 Index 1 year 14.2 15.1 9.2 5 year 5.5 2.3 -3.3 10 year 12.0 1.4 1.1 20 year 15.7 9.1 7.6 4Q 2010