RLI: Small casualty and wheels price increases slow in Q3

While rates continued to rise across much of RLI’s portfolio in Q3 2021 and helped to fuel net premiums written (NPW) growth of 19 percent during the period, pricing in lines like commercial auto and smaller casualty has started to taper off, according to president and chief operating officer Craig Kliethermes.

RLI’s casualty NPW hit $178.6mn in Q3 2021, up from $157.3mn in the prior year period. On a call to discuss the Q3 2021 results, Kliethermes said the company achieved an overall casualty rate increase of 9 percent for the quarter.

Growth was widespread across all major casualty products, with overall rate rises largely driven by excess liability products, and particularly commercial and management liability coverages.

Rates in commercial excess E&S business, D&O and management liability all “seemed to hold up more than I thought”, Kliethermes said.

“Our transportation business continues to bounce back with increased bookings in public auto, but is still challenged by driver shortages,” the executive said.

While Kliethermes said “wheels-based rates continue to be up”, he noted that the increases are now more moderate in size.

“We were getting double-digit increases, and they’re now mid-single-digit increases,” he said.

“Despite the overall growth in the transportation space, we still find the trucking class to be increasingly competitive as top line and rates decreased for the quarter,” he added.

In its lower limit small casualty book, Kliethermes said rate rises have slowed, although they never increased by much in the first place.

“They were going up 3 percent, 4 percent, maybe 5 percent, and maybe they’re a point or so lower than that right now,” he explained.

Property NPW totalled $68.4mn in Q3 2021, compared with $48.9mn in the same three months last year. That increase, Kliethermes explained on the call, was driven by exposure growth and a 7 percent average rate rise across the book.

“All products in this segment realized growth,” he said.

Looking ahead, Kliethermes predicted RLI will bring in more construction business as that market grows.

“There are more construction opportunities in the market, and we are supporting our contractors as they win this business,” he said.

“We will continue to expand our writings with existing clients and producers and invest in technology where it is a differentiator,” he added.

Kliethermes said RLI’s book of E&S business is growing “at about the pace that the rest of our casualty portfolio is growing”.

It “may be a little faster, but not a lot faster”, he added.

RLI’s property book leads the way in terms of growth though, with rates in that market exceeding those elsewhere in its portfolio.

“Our underwriters are…trying to take advantage of that,” Kliethermes said.