RLI Corp. (NYSE:RLI) Q2 2024 Earnings Conference Call July 23, 2024 11:00 AM ET
Company Participants
Aaron Diefenthaler - Chief Investment Officer and Treasurer
Craig Kliethermes - President and Chief Executive Officer
Todd Bryant - Chief Financial Officer
Jen Klobnak - Chief Operating Officer
Conference Call Participants
Sid Parameswar - Raymond James
Andrew Anderson - Jefferies
Scott Heleniak - RBC
Meyer Shields - KBW
Operator
Good morning, and welcome to the RLI Corp Second Quarter Earnings Teleconference. After management's prepared remarks, we will open the conference up for questions and answers.
Before we get started, let me remind everyone that through the course of the teleconference, RLI management may make comments that reflect their intentions, beliefs, and expectations for the future. As always, these forward-looking statements are subject to certain factors and uncertainties, which could cause actual results to differ materially. Please refer to the risk factors described in the company's various SEC filings, including in the Annual Report on the Form 10-K as supplemented in Forms 10-Q, all of which should be reviewed carefully. The company has filed a Form 8-K with the Securities and Exchange Commission that contains the press release announcing third quarter results.
During the call, RLI management may refer to operating earnings and earnings per share from operations, which are non-GAAP measures of financial results. RLI's operating earnings and earnings per share from operations consist of net earnings after the elimination of after-tax realized gains or losses and after-tax unrealized gains or losses on equity securities.
RLI's management believes these measures are useful in gauging core operating performance across reporting periods but may not be comparable to other companies' definitions of operating earnings. The Form 8-K contains a reconciliation between operating earnings and net earnings. The Form 8-K and press release are available at the company's website at www.rlicorp.com.
I would now turn the conference over to RLI's Chief Investment Officer and Treasurer, Mr. Aaron Diefenthaler. Please go ahead.
Aaron Diefenthaler
Thank you, Makaya. Good morning, everyone. Thank you for joining us to review RLI's results for the second quarter and first-half of 2024. As usual, we are joined by Craig Kliethermes, President and CEO; Jen Klobnak, Chief Operating Officer; and Todd Bryant, Chief Financial Officer.
Craig is going to open with some high-level commentary. Todd will then give us the play-by-play on financial results. Jen will offer commentary on market conditions and further details on our product portfolio. We will then open things up for questions and Craig will close with some final thoughts. Craig?
Craig Kliethermes
Thank you, Aaron, and good morning, everyone. We're off to a very good first-half for 2024 with well-balanced growth and underwriting profitability across all of our reporting segments. As Todd and Jen will go into in a minute, we continue to lean into opportunities where we have the expertise and track record to differentiate ourselves.
Legal system abuse, particularly in wheels-based businesses continues to be a frequent topic of vigilance within our strong collaborative underwriting and claim feedback discussions. We remain cautious where the risks are more dynamic, difficult to quantify or where we choose to proactively mitigate the volatility to the bottom line.
I will let Todd and Jen share more detail on the financials in the market in general. Todd, it's all yours.
Todd Bryant
Thanks, Craig. Good morning, everyone.
Last night, we reported second quarter operating earnings of $1.72 per share. The quarter's results reflected solid underwriting performance and a combined ratio of 81.5 and an 18% increase in net investment income.
On a GAAP basis, Q2 net earnings of $1.78 compares to $1.69 in the same period last year. Underwriting income benefited from growth in earned premium, lower attritional losses in our Property segment and continued favorable development of prior year's loss reserves in all three segments.
Overall, the loss ratio was down 3.5 points due to better emergence on prior year's reserves, favorable experience in the current accident year, and support from stronger earned premium. Storm losses in the quarter totaled $16 million, compared to $18 million a year ago, $15 million of that impacted the Property segment, while $1 million was associated with package policies in the Casualty segment.
The scale of earned premium further contributed to an improved expense ratio, which was down more than 2 points, compared to last year. Despite tempered growth in Property, total gross premiums written were up 11% and balanced across all three segments. Casualty experienced its second consecutive quarter of double-digit growth and benefited from $12.8 million of favorable prior year's loss development with notable contributions from general liability, commercial excess, and executive products.
In addition, $1 million in reductions to prior year storm losses was attributed to Casualty, all of which contributed to a slight improvement in the loss ratio and a 95 combined ratio for the current quarter. Surety achieved growth in the mid-teens and $2.4 million of favorable prior year development compared to $4.2 million of favorable emergence in Q2 2023.
Prior year development can lose several million dollars in isolated periods for Surety, which can impact the calendar year loss ratio. In this case, the smaller release resulted in the loss ratio being up 5 points above last year's comparable quarter, but underlying results were similar as was the year-to-date comparison.
Despite the continued growth in premium, Surety's expense ratio was up 2 points as average commissions were influenced by mix of business and our [4.1] (ph) reinsurance renewal, which ceded additional premium during the quarter. Property growth remained positive, up 6.4% in the quarter with the largest contribution coming from marine and more modest increases from E&S Property. Total losses were flat compared to last year in dollar terms but were much lower as a percentage of earned premium, contributing to the excellent combined ratio of 60.3 for Q2.
Property experienced $5.3 million in favorable loss development on prior accident years, largely marine-related, and posted a $1 million reduction to prior year storm losses. Operating cash flow was $142 million, down slightly from the comparable quarter as larger tax payments and the timing of several large claims weighed on the current period.
Despite the decline, we are still putting a fair amount of money to work in the investment portfolio at attractive rates, well above our current book yield. Purchase activity for the quarter averaged a 5% yield and was again concentrated in high-quality fixed income. Also in the quarter, the equity portfolio posted $3.6 million of unrealized gains compared to $25 million a year ago. Despite modestly rising treasury yields, the portfolio achieved a 0.9% total return, including positive contributions from both stocks and bonds.
Although credit spreads remain tight by historic standards, we are encouraged by the higher for longer rate environment. We have achieved more intermediate bond duration recently to ensure investment income is sustainable. Accordingly, duration was up one-tenth of a year to end Q2 at 4.7 years. Away from the traditional investment portfolio, investing earnings from Prime were comparable to last year at $1.6 million. Incorporating comprehensive earnings and adjusting for dividends, book value per share increased by 14% from year end 2023 to $34.64.
Additionally, we announced a $0.02 increase to our ordinary dividend during the quarter, the 49th consecutive year of paying and increasing dividends. All in, a very good first-half of the year.
And with that, I'll turn the call over to Jen. Jen?
Jen Klobnak
Thank you, Todd. I'll provide more information by segment. Premium for the Property segment grew 6% for the quarter while posting a 60 combined ratio. Top-line expansion was led by the Marine division, which grew by 20%, including a 5% rate increase. Marine continues to nurture producer relationships, creatively solve problems.
Our team has been building a larger presence in the Builder's risk space and that has driven a lot of our recent success. Hawaii Homeowners' premium also increased 27% due to a combination of our focus on service and some retraction by competitors.
E&S Property growth is slowing and rates are flattening. Overall premium was up 2%, while rates increased 1%. The hurricane market is stabilizing with increased competition this spring, particularly from MGAs, as they obtained more capacity from their capital providers, they increased limits and have become a little more aggressive on rates.
We still believe we are achieving appropriate returns in this business. This latest hard market began in 2020. Since then, our cumulative rate change on Hurricane exposure is about 200%. We continue to manage our exposure to catastrophe business to stay within our risk appetite and optimize our portfolio. We are seeing more opportunity in the E&S space and non-catastrophe exposures. Standard markets are pulling back and that business is shifting to the E&S market. Terms and conditions have improved, including increased rates and the use of percentage deductibles as a couple of examples.
The combined ratio for our Property segment improved with past rate increases earning through, while we experienced a similar level of catastrophe activity in the quarter versus last year. We don't expect a lot of changes to occur in the hurricane market during the season, and we will still see select growth opportunities in all of our Property product offerings. Surety premium was up 17% during the quarter on an 82 combined ratio.
We achieved growth and underwriting profit in each of our Surety businesses. Contract Surety focuses on public construction projects, which has been a healthy part of the market. In addition, construction costs continue to be elevated, which supports premium. Contract Surety grew 25% in the quarter. We have not seen an increase in our own claim frequency, which we know has ticked up from the industry.
Our commercial surety book has also grown through investments in relationships. Premium was up 20%, driven by increasing success and supporting and expanding renewable energy sector. Transactional surety is in a highly competitive market. This product grew 6% as we continue to find new opportunities to serve producers and customers with our easy-to-use digital solutions. We renewed our Surety reinsurance treaty effective April 1, given the timing of the renewal, the impact of the harder reinsurance market was delayed for us.
Like other severity-driven reinsurance renewals, we increased our retention and our costs increased as well. The increased retention for Surety helps maintain net premium balance between our three segments. We have been in the Surety market for over 30 years and continue to seek opportunities in this space using our prudent approach to risk selection and exposure management.
Cash flow premium grew by 14% with a 95 combined ratio for the quarter. Rates increased 9% for the segment, which compares favorably with 7% in the first quarter. Our first Umbrella business led the way with 37% premium growth. We have been successful working with several state insurance departments to achieve both broad and targeted rate increases where they are warranted. This quarter, we recognized a 20% rate increase and we have more approvals that will be effective later this year.
We also achieved growth in our Professional Services Group, which includes professional lines and package coverage. Premium was up 10% through a combination of increased marketing efforts for the construction-focused part of this business and rate increases on our auto coverages. We have had elevated auto loss activity in our package business and are addressing this issue using multiple tools such as commission, filed rate increases, and additional scrutiny at our risk selection process.
This brings me to transportation, where we now see mixed results in our portfolio. Premium was up 8% for the quarter, which matches our rate increase. The industry has seen increased severity driven by legal system abuse, which others call social inflation. We are not immune to these industry trends and address them through our underwriting appetite and investment in thorough claim mailing practices. We are growing our commercial specialty auto book where market turmoil has moved terms and conditions within our appetite and we're able to increase rates.
We're also expanding into market niches like moving and storage to offset the unreasonable competition in spaces like traditional trucking. We believe our in-house loss control services that are applied prior to quoting in many cases have informed our underwriting process and are helping make our insurers safer. This market is slowly improving.
While competitors are making some changes, we are seeing submissions increase over 20%. This allows us to be selective in the risks that we cover. As I've mentioned in recent quarters, our Executive Products Group is in a much tougher market environment, particularly in the public D&O space. Our book is weighted toward private insurance.
Premium was down 4%, while rates were down 6%. Although competitors are shifting towards the private space as well, we don't see drastic pressure on terms and conditions because the private market is much larger and provides plenty of opportunity.
The market is challenging, but we have been through these cycles before. Our underwriters are well-positioned as they continue to focus on the bottom line. Finally, our E&S Casualty division top-line was up 3%. Primary business struggled to grow premiums as private construction projects continues to take longer to get started. We're also competing against aggressive standard markets and MGAs.
On the excess side, we had more success as there was slightly less competition given industry results have affected some carriers' appetite. The focus in E&S Casualty is on the bottom line where we continue to produce an underwriting profit and have not experienced the adverse development that has gathered recent headlines for several competitors. Overall, another great quarter for RLI.
We grew premium 11% with all segments contributing. We have built needed scale in many longstanding profitable businesses. We are achieving rate increases to address loss trends and our investments in relationships and people are paying off of increased submissions. We posted an 81.5 combined ratio for the quarter with improvements in both the loss ratio and expense ratio. Loss activity has been steady, while rate increases from prior years earned through and positively impact our bottom line.
We finished the first-half of the year with 12% growth on an 80 combined ratio. Our insurance product portfolio is healthy and we're in a good position to support our current and future insurers' and producers' needs in the second-half.
Now I'll turn the call over to the moderator to open it up for some questions.
Question-and-Answer Session
Operator
Thank you. The question-and-answer session will begin at this time. [Operator Instructions] Our first question comes from the line of Greg Peters. You may proceed.
Sid Parameswar
Yes. Hey, good morning. This is Sid on for Greg. I'm just hoping you could provide some more comments on the competition you're seeing across your three segments. And maybe more specifically what you're seeing in the E&S Property. I think you called out slower growth there, but you still see some opportunities in the non-coastal areas. So some additional comments there would be helpful.
Jen Klobnak
Sure, Sid. This is Jen. In the Property segment, specifically in the CAT exposure, I'd say the biggest competition is coming from MGAs, some of which are backed by Lowe's. And with a quiet season last year, they're fairly aggressive now on trying to take advantage of the market while it remains at a pretty attractive level. So while rates have slowed, it's still starting point is a very good place. So MGAs are starting to provide larger limits.
In the last couple of years, we as well as others have been reducing limits. We were down to offering just $2.5 million on new business. Others might have been a little higher than that, but people are moving more towards 5, 10, 20, in some cases, a lot higher than that from the MGAs. They're also expanding coverage a bit in terms of sub-limits or expanding on the definition of things that are covered. We prefer to hold firm on the words because the words matter when there is an event. And so we're watching carefully there's the coverage part of that. And I think there's also some competition just from going there.
So if you look at our earthquake exposure in California, the cumulative rate increases are causing people to wonder, should I buy this at this point or not? And more people are taking a little bit of that net. I'd say competition is healthy in all of our spaces. We have seen a few areas pull back. So within the Property segment, in Hawaii, we've had a couple of competitors pull-back post the wildfire from a couple of years ago.
We've also seen in areas of transportation where people have changed their appetite, which gives us a chance to look at some more business. But then there are other spaces where there's a lot of competition, whether that's in Surety where people continue to provide very large limits to accounts in times when -- some companies are performing very well and others not so well. So that financial uncertainty makes us look a little bit closer at accounts.
And then when you look at the Casualty book, places like Casualty where we focus on construction, there are smaller contractors that are struggling in some cases. So providing that coverage, you have to be careful if the person can even pay the premium.
And then in other cases, the larger contractors seem to be doing very well, and so they seem more stable and able to buy coverage. And so there's more competition in that space. So it's difficult to talk about competition in our book because we have such a diverse portfolio. And so in any given business unit, you're competing with a handful of folks, and another business unit competing with a different handful of folks. And so it's very hard to roll that up into a succinct answer for you, but it gives you a sense of what we're doing in the market.
I'd say that's why we focus on providing our underwriters with the autonomy to work within their space and decide what they need to do to be successful in that space depending what's going on in the competition.
Sid Parameswar
Okay, great. Yes, thanks for the answer. And then just as a quick follow-up. I believe a couple of quarters ago, you called out increasing picks in the Casualty book and I know you're getting additional pricing, but just curious if you've seen any changes in the severity trends there, if it's been relatively stable since you made those changes?
Jen Klobnak
So I missed the very first part of your question. You said I saw increasing something in the Casualty segment.
Sid Parameswar
Loss pick. Sorry.
Jen Klobnak
Can you repeat -- a loss pick? Yes, sorry. I would say in the Casualty segment, again, we have a very diverse portfolio. We have increased our loss trends over the last couple of years, recognizing that severity in the industry is higher. I will tell you that in our book, we tend to see that the trends that we are picking for our estimates tend to be a little bit higher than what our actual experience shows.
So we use our own experience and we also use industry experience to understand what might be going on. We also rely a bit on our reinsurance brokers for that type of insight. So we would say that severity is up a bit, especially in auto coverages and that's why we're so diligent around risk selection and around our claim handling practices to address that because it's very hard to overcome severity this week. Do you really have to look at other ways of looking at it.
Todd Bryant
I would just add there too. I think Jen has a good summary. I think if you look at the overall underlying loss ratio for our Casualty book, it's fairly similar to what it was in that mid-60, 64 range. And from a loss trend standpoint, I think our rate on the Casualty side overall is a couple of points above what we're assuming rate. But again natural rate is often below what lost churn, net churn, and what we see when it comes through on an actual basis versus an estimated basis.
So we feel pretty good about the Casualty book.
Sid Parameswar
Okay. Got it. Thank you.
Operator
Thank you. The next question is from the line of Andrew Anderson. You may proceed.
Andrew Anderson
Hey, good morning. Maybe sticking on Casualty. It seems pricing improved sequentially a couple of points really led by the umbrella product. But do you expect Casualty segment as a whole to keep seeing rate momentum and perhaps accelerate in the second-half?
Jen Klobnak
I would love to see that. You're right umbrella is driving in this case. So it's really a mix change that's causing that increase from the 7% in the first quarter to 9%, First umbrella leading the way. As I mentioned, we have a couple more approvals already in the can in different states for first umbrella. So we continue to see some improvement on rate there. Other than that, you know we underwrite at an individual level, a lot of these business units we have are looking at individual risks and trying to achieve overall rate to address loss trends and claim experience that we have.
So I think there is some potential for it, but you know it's a fight every day to see what a given account is willing to do based on our competition, which in some cases makes no sense to us and that they've been cutting rates in some areas. So I'll stick with you and say, hopefully, rates will continue to go up, but I'm not going to put that in writing at this point.
Andrew Anderson
Okay. And maybe on the Casualty reserves, favorable PYD was pretty good here this quarter. But could you talk about any movements you may have had on more recent accident years? Have you been adjusting those either way or holding steady?
Todd Bryant
Yes. This is Todd. I think the actuarial approach has not changed. There are areas, I would say we're extending the tail a little bit. Jen mentioned that in her comments with respect to transportation. So there's a bit of that. The approach is the same. I think if you look at the years from that standpoint where development was, it's pretty spread out. There's nothing big in any given year. So you're 2019 to 2023, pretty spread out some in '17.
We haven't really changed our approach on a current basis, certainly not, and not as we look back over the prior years’ either.
Andrew Anderson
Okay. Thank you.
Operator
Thank you. The next question is from the line of Scott Heleniak with RBC. You may proceed.
Scott Heleniak
Yes, thanks. Good morning. Just had a question to follow up on the umbrella line. Obviously, there's significant growth of 37% in the rate increases. Can you just talk about the profitability of the book? It's been a tougher line for a lot of your peers, a lot of your competitors and RLI has done really well with that. But just can you see -- can you just give us an update on what you're seeing in terms of loss trend? And where you're seeing the opportunity and maybe what you're doing a little bit different in terms of focus and how you've been able to weather that better than others?
Jen Klobnak
Sure, so we've been in the personal umbrella business since the late 80s -- mid to late 80s. So I've been doing this for a little bit. And in more recent years, probably the last five years or so, we have leaned into growing this book. And that's because the market has been in turmoil. There's been a lot of changes by competitors and their appetite in addition to the standard carriers where the homeowners in the auto books have become disconnected and carriers are only willing to cover one or the other.
And so then their overall first umbrella is not eligible for that churn. So we step in and we provide only a standalone first umbrella policy. And so we've actually partnered with some of those carriers to help them out with their insurers. So that's where the growth is coming from. We have a lot of data, as you can imagine. We have close to 400,000 insurers. So we have a lot of data over the years and in our current book to see what's going on in terms of trends, what's driving losses, et cetera.
I'd say our loss activity actually has been fairly stable from a frequency standpoint. The industry has seen severity. We've seen a lot of this vary as well as you would expect. But we continue to stay ahead of it by looking at rate -- what rate is needed by state, by type of insurance on a highly regular basis, I'll say.
We're constantly looking at what state we need to tweak here or there. We're constantly meeting with our producers to understand where the opportunities are, where our book might be shifting. So we use a lot of data for our underwriters to meet with our claim department, with our actuaries to talk about specific venues, specific claim trends that we're seeing, and that kind of thing to kind of continuously tweak what we're doing with that book.
So we -- with new growth, we always are a little more conservative on how we look at the book. So we're expecting that book to have some issues just because we've been growing a lot. But we're staying on top of it and trying to monitor and make sure that we're staying up-to-date on particularly the rate, but on other terms. So as an example, with the severity in the industry, we've changed our appetite a bit to require a $500,000 -- excuse me, underlying auto liability limit in the State of California as opposed to a $250.
And with that, it takes another minute to get to our layer on a loss and we think that that's prudent as we look forward to severity in the industry. So that's just one example of a lot of things that we look at on a constant basis with that book.
Craig Kliethermes
This is Craig. I would add that we -- this is Craig Kliethermes. I'm just going to add. We invest heavily on the claims side of the house as much as we do on the underwriting side of the house. We have narrow and deep expertise. Our claim people for personal umbrella basically handle personal umbrella claims only. So they're dedicated to the space. They're used -- they understand the underlying -- sometimes they know the underlying carrier claim people that they're doing business with or that they have getting handoffs from.
So sometimes they're working closely with those folks to try to make sure we get the best outcome for the insured, for the defendant, and for our company. So, but I would not understate the value of having dedicated claim people that only handle excess claims in the personal auto space for the most part.
Scott Heleniak
Okay. I appreciate the detail. And then just one follow-up, just on the Surety growth, which was pretty significant. And I mean that's been a more competitive line. You guys have talked about that over the past few years and not getting a ton of rate increases. So is some of that just kind of -- I know you mentioned expansion and good relationships with customers, but is some of that just what's happening market-wide, there's just more construction activity and more opportunity or is there -- or is it just something else you're taking share from others or what do you think is going on there?
Jen Klobnak
Sure. So in the contract space, that business unit focuses on public construction, whereas a lot of our P&C products focus on the private construction. And as you know, the government is really good at investing in private construction projects. So we've seen plenty of inventory out there and our contractors have been very active in bidding on those projects. So we have a lot of bid bonds and resulting in project bonds as well.
And with construction materials continuing to be at a higher price, that's the basis for the rating. So that helps support the premium. And in addition to that, we have some pretty energetic folks out there that are asking for business. And that might sound silly, but to get in front of your producers and market on a regular basis, that's just blocking exactly what that product produces. So that's important.
On the commercial side, I'll say a similar story in the energy and then the marketing aspect. I think we -- there's a lot of different industries that we support. We develop some expertise in the renewable energy space that's providing some benefit there. But again, getting out there and being in front of your producers and answering the phone and being there when they need you. And so that's really driving the growth in that space.
Scott Heleniak
Okay. Great. Appreciate all the detail. Thanks.
Operator
Thank you. The next question is from the line of Meyer Shields. You may proceed.
Meyer Shields
Thanks. I just wanted to start with a question on a point that Jen just made about asking for more business. I know you've talked about it for a while, we're seeing the success. Is there any way of benchmarking how much of this effort has already panned out? And how much more opportunity there is going forward?
Jen Klobnak
So, Meyer, it's a little hard to hear you, but I think you're asking about -- we are increasing our marketing efforts. We've been in front of a lot of folks and how much more stand out versus how much might keep going. I believe that's your question. So I would answer that with, you know, we've been incredibly active in the first-half of the year in meeting with producers. We've had a number of in-person cross-product gatherings where we've been very educational about what we offer and people have been very receptive to say, hey, I think I could use you in this space or that space.
That's been good. I think that just creates momentum and as long as we continue to invest in those relationships, I think that organic growth is possible going forward as well. So I don't -- I think it's not time to stay home then just wait for the phone to ring. We're going to continue to be mobile out there in the second-half of the year and we should hope to see more growth just from staying in front of our producers.
Meyer Shields
Okay, that's very helpful. The second question, and I guess this is on the Casualty side. I was hoping you could give us a sense of regional difference in terms of how much of social impression or lawsuit abuse you're seeing, or is it out there?
Jen Klobnak
It's very hard to hear you, Meyer. I don't know how you're using your phone today, but I think you said something about regional differences. Is that specific to a particular product?
Meyer Shields
Yes, Casualty and the issues with social inflation or lawsuit abuse?
Jen Klobnak
Yes. So in the United States here as you know every state is a different story, right. So there are some states where the dynamics of legal system abuse, which is what I'm calling it, are different than others. I'll say that the states that are challenging California is obviously a challenging state and we do have a fair amount of business there and that's why you have to look at as we do, we look at our underwriting appetite and risk selections assuming where we're willing to take risk there. But then when claims come in, you have to stay on top of it, investigate quickly, and understand the situation so you can get ahead of any sort of attorney tactics that might drive the exposure quite a bit higher.
Other states have done a better job with reform. So the reforms that have happened in Florida have been very helpful. It's still early to say exactly or quantify or to say exactly what the impact of those reforms have been, but we know from claim counts and just from stories of certain claims that have -- that we've been able to resolve that those reforms have helped. And so each state is unique. I know Louisiana has taken a try to be more friendly towards business, but it hasn't quite gotten there yet, I think. So we're pretty careful in that state. So it does affect our appetite and our underwriting, but it is unique and it does change as laws and case -- cases -- case law solidifies in different states.
Todd Bryant
Meyer, I'll just add…
Meyer Shields
Okay. Thank you very much. Go ahead.
Craig Kliethermes
Meyer, I'll just add, I know we've talked about this before, but we talk about our -- the feedback we have, very strong feedback loop between our claims, our underwriting, and our actuaries. And those conversations are going on every day. When our claim people see problem areas, problem jurisdictions, they give that feedback to the underwriters as quickly as possible. Sometimes we change our appetite in regards to locations, sometimes it's even within states. It might be -- could be a portion of Texas even that we may want to watch or be careful in regards to how much limit we might want to deploy, the type of risks we might want to write, type of -- type of insured classes, the limits we might deploy, those all vary and can vary even within region, within a state.
So -- but that feedback loop is critical to getting that information in the hands of the underwriter and obviously, as we've explained before the way our model works is our underwriters are very receptive, whereas in other places maybe they're less receptive to that information because it helps them build their business out in a profitable way or so.
Meyer Shields
Okay. Thank you very much. That is very helpful.
Operator
If there are no further questions, I will now turn the conference over to Mr. Craig Kliethermes for some closing remarks.
Craig Kliethermes
Well, thank you all for joining today. A good quarter and first-half of the year. We believe our hallmark underwriting discipline and diversified portfolio of specialty products should translate into consistent financial overcome -- outcomes over time and allow us to continue serving as a stable market for our customers. As our Founder, Gerald Stephens once said, we do it right because we all work for a company we own. We know if the company succeeds, so do we. That's different. We're not like other companies.
I would like to thank all of our RLI associate owners for their contributions to our shared success and encourage them to keep delivering on the difference that works. Thank you all again for tuning in and we'll visit again next quarter.
Operator
Ladies and gentlemen, if you wish to access the replay for this call, you may do so on the RLI homepage at www.rlicorp.com. This concludes our conference for today. Thank you all for participating. Have a nice day. All parties may now disconnect.