RLI 2026年第3四半期決算説明会：コンバインド・レシオ86.2%、投資収益13%増

主要なポイント

• RLI Corp.が発表した2026年第3四半期の営業利益は1株あたり0.86ドルとなり、前年同期の0.82ドルから増加しました。GAAPベースの純利益は、主に保有株式の評価額変動により、前年同期の1.35ドルから1株あたり0.88ドルに減少しました。
• 元受保険料は2%増加し、保険引き受け利益は5,880万ドルに達しました。コンバインド・ラシオは86.2%となり、2025年第3四半期の85.1%から上昇しました。
• 純投資収益は13%増の4,670万ドルとなりました。新規に購入した固定利付証券の平均利回りは5.5%で、ポートフォリオの簿価利回りを約100ベーシスポイント上回りました。
• 財物保険部門は引き続き最も力強い引き受け成績を示し、元受保険料が1%減少したにもかかわらず、コンバインド・ラシオ60.1%で5,000万ドルを超える保険引き受け利益を創出しました。
• 損害保険部門の保険料は個人用アンブレラ保険の22%増が牽引して4%増加したものの、同部門のコンバインド・ラシオは99.6%に上昇しました。経営陣によると、個人用アンブレラ保険の過去3年間の累積料率引き上げ幅は約50%に達しています。
• 配当および自社株買い調整後の1株あたり純資産（BPS）は、2025年年末から10%増加しました。RLIは当四半期中に平均価格60.51ドルで約10万4,000株の自社株買いを実施しました。

主要財務データ

2026年第1〜第3四半期累計で、RLIはコンバインド・ラシオ85.9%を記録し、1億7,600万ドルの保険引き受け利益を計上しました。純投資収益は15%増加し、営業利益は1株あたり2.52ドルと前年同期とほぼ同水準となりました。

事業および業績の動向

財物保険部門

財物保険部門の元受保険料は約1%減少したものの、同部門は60.1%のコンバインド・ラシオを維持し、5,000万ドルを超える保険引き受け利益を創出しました。業績には、前年以前の暴風雨関連の400万ドルを含む、過去年度準備金の好都合な繰り戻し1,040万ドルが含まれています。当年度の大規模災害損失は合計390万ドルで、その約半数はハワイでの災害に関連するものでした。

海上保険の保険料は11%増加し、保険引き受け利益に大きく貢献しました。料率がほぼ横ばいで推移するなかでも、引受診査件数は2桁のペースで増加しました。

E&S財物保険の保険料は、新たな引き受け能力の市場参入や、標準的な保険会社および小売保険業者がホールセールチャネルから案件を取り戻したことにより、17%減少しました。軟化サイクルにおいて2回目の改定を迎えた契約の更新料率は2桁台の下落となりました。経営陣は、現在の料率水準は2022年と同程度であり、厳選された契約においては依然として2桁の投資リターンを生み出すのに十分魅力的であると述べています。

ハワイの住宅所有者保険の保険料は、13%の料率引き上げにより9%増加しました。契約件数はわずかに減少したほか、暴風雨活動の活発化による財務的影響はRLIにとって軽微でした。

家主向け保険に特化したSteadily社との提携により、当四半期中に900万ドルの保険料が計上され、財物保険部門の他の不振を部分的に補いました。RLIは、MGA（総代理店）からの提案の99%以上を拒否しており、Steadily社については引き受け、保険金支払い、レポーティングを厳格に監督し、実質的に支社と同様に運営していると説明しました。

損害保険部門

損害保険部門の保険料は4%増加しましたが、コンバインド・ラシオは98.2%から99.6%に上昇しました。同部門では820万ドルの過去年度準備金の好都合な繰り戻しを計上しました。本質的な損害率は前四半期比で安定しており、第1〜第3四半期累計では67をわずかに下回る水準を維持しました。

個人用アンブレラ保険の保険料は22%増加し、料率は8%上昇しました。経営陣によると、ポートフォリオ全体の料率は3年間で累計約50%上昇しています。2025年および当事故年度の初期損害動向は良好ですが、RLIは十分なデータ・経験が集まるまで既存の損害率前提を維持しています。

E&S損害保険の保険料は、特に北東部での競争激化を受け10%減少しました。ただし引受診査件数は引き続き2桁ペースで増加しており、経営陣は四半期後半において超過損害賠償責任保険の買増しの動きが強まったと指摘しました。しかし、これが持続的なトレンドであると判断するには時期尚早としています。

輸送料率が12%上昇したにもかかわらず、運輸・交通保険の保険料は9%減少しました。RLIは収益性や損害管理基準を満たさなかった一部の契約の更新を見送りました。既存の大手保険会社や市場に復帰したMGAとの競争激化により、更新維持率は約10ポイント低下しました。

保証保険部門

保証保険の保険料は約1%増加し、コンバインド・ラシオは85.0%から79.8%に改善しました。430万ドルの過去年度準備金の好都合な繰り戻しと損害発生の減少に支えられ、保険引き受け利益は560万ドルから730万ドルに増加しました。

政府関連および再生可能エネルギー関連の着工遅延により、契約保証および商業保証の保険料はわずかに減少しました。一方でトランスアクショナル保証は、選挙年に伴う公務員保証証券の需要増の恩恵を受けました。経営陣は市場が過密状態にあり、一部の競合他社が引き受け要件を緩和していると説明しました。

経営陣の見通し（ガイダンス）

RLIは、認可された個人用アンブレラ保険の料率改定申請が1月1日付で発効すると発表し、経営陣は2027年中に料率引き上げ幅が再び2桁台に戻ると予想しています。

また、経営陣は現在の環境を買い手市場と捉えており、次回の更新時には再保険の契約条件が好都合なものになると予想しています。ただし、協議はまだ初期段階であり、更なる交渉が必要です。

同社はSteadily社との提携について売上規模よりも引き受け収益性を重視しており、具体的な保険料目標を設定していません。

リスクと注目点

• 新たなMGAやその他の引き受け能力供給者が市場に参入するなか、E&S財物保険の価格設定は軟化し続けています。経営陣は更なる軟化を見込んでいますが、現在の状況をソフトマーケットとまでは定義していません。
• 損害保険部門では、超過損害賠償責任および商用交通・運輸分野での競争が激化しており、保険料、維持率、契約条件の圧迫要因となっています。
• 運輸・交通分野では、競合他社が保険料成長を求めて大型契約を獲得しにいっている一方で、損害の深刻化に対する懸念が続いています。
• 保証保険の活動は、政府および再生可能エネルギー関連プロジェクトの停滞という逆風に直面しており、一部の競合他社は補償および引き受け要件を緩和しています。
• 利回りの上昇と債券価格の下落が影響し、当四半期の投資トータルリターンはマイナス2%となり、3,680万ドルの包括損失を計上しました。
• 財物保険、損害保険、保証保険の各部門における準備金の取り崩しを含め、過去年度準備金の好都合な繰り戻しが当四半期の保険引き受け業績を大幅に下支えしました。

アナリスト質疑応答のハイライト

• 個人用アンブレラ保険：経営陣は料率引き上げとリスク選別の改善に心強い兆候を見出しているものの、事故年度の損害率前提を引き下げるには時期尚早であると考えています。
• Steadily社との提携：手数料や利益連動手数料の影響により、当該ポートフォリオの獲得コストは数パーセントポイント高くなっています。経営陣は、これがRLI全体の事業費率の同様の上昇を意味するものではないと説明しました。
• 財物保険の損害率：当四半期に顕著な一時的要因はなかったとRLIは述べています。以前の悪化は上半期における通常損害の増加によるものでした。
• 会社役員賠償責任保険：価格設定は安定しており、当四半期の料率は横ばい、年初来では1%低下となりました。経営陣は、価格底値を維持する上で市場の規律が高まったと考えています。
• 超過損害賠償責任保険の準備金：好都合な繰り戻しは主に2020事故年度および2021事故年度に由来しており、この商品のロングテール（長期支払型）な特性と一致しています。
• AIと販売チャネル：個人用アンブレラ保険事業において、個人向けAIエージェントが購買行動に影響を与えている状況はまだみられません。同社は、こうしたツールが住宅保険や自動車保険以外の分野に拡大する動きを注視し続けています。

決算発表電話会議トランスクリプト全文

決算説明会の完全なトランスクリプト

経営陣による説明

Operator

Good morning, and welcome to the RLI Corp. Third Quarter Earnings Teleconference. After management's prepared remarks, we will open the conference up for question 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 of 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. Additionally, equity and earnings of unconsolidated investees and related taxes are excluded from operating earnings and operating EPS to present a consistent approach in excluding all unrealized changes in values from equity investments.

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 will now turn the conference over to RLI's President and Chief Executive Officer, Mr. Craig Kliethermes. Please go ahead.

Craig Kliethermes

Good morning, everyone, and thank you for joining us today. With me are Aaron Diefenthaler, our Chief Financial Officer; and Jen Klobnak, our Chief Operating Officer. We are pleased with another quarter of consistent profitable performance. We produced an 86% combined ratio, grew premiums 2%, increased net investment income 13% and grew book value 10% from year-end, inclusive of dividends and share repurchases. Those results may sound familiar. We're okay with that. Consistency may be boring to some. At RLI, we think boring is beautiful.

Behind that consistency is disciplined underwriting. Our underwriters are selective, discerning and exacting about the risks we take and the price and terms we require. We don't need every opportunity across our diverse portfolio of niche specialty products. We will look for the right opportunities where expertise and risk selection gives us an advantage.

Insurance remains a relationship business. People like doing business with people they like and more importantly, people and companies, they trust. Our customers and distribution partners know our people are accessible, genuine, empowered to solve problems and consistently show up. Our expertise gets us to the right answer. Our service and relationships help earn us the next opportunity. Markets change, our principles don't. We will continue to underwrite with discipline, invest in our people and relationships and pursue profitable opportunities where our expertise makes a difference.

With that, I'll turn it over to Aaron for more detail on the financials.

Aaron Diefenthaler

Thanks, Craig, and good morning. Yesterday, we reported third quarter operating earnings of $0.86 per share compared with $0.82 last year. The quarter reflected solid underwriting performance, a 13% increase in net investment income and 2% growth in gross premiums written. As we have noted in prior quarters, our definition of operating earnings changed in Q4 of 2025 and excludes equity in the earnings of unconsolidated investees and the related taxes. Prior period comparisons have been appropriately recast.

On a GAAP basis, third quarter net earnings totaled $0.88 per share compared with $1.35 in the year ago period. The year-over-year difference was primarily driven by comparable changes in the value of equity securities between periods. Underwriting income totaled $58.8 million for the quarter and our overall combined ratio was 86.2% compared with 85.1% last year. The loss ratio increased 1.3 points to 47.4% while the expense ratio improved modestly to 38.8%. Results benefited from favorable development on prior year's loss reserves which totaled $22.9 million in the current quarter, up from $15.5 million in the third quarter of 2025. Current year catastrophe losses were modest at approximately $4 million primarily in the Property segment.

Related to catastrophe losses, I want to mention a new display in our earnings press release on Page 4, where we now break out catastrophe losses by segment. As we have discussed in prior quarters, the Casualty segment can pick up some catastrophe activity related to packaged businesses. We believe the new disclosure will be helpful in determining changes in the underlying loss ratio. As discussed in the footnote, any development on prior year storms is included in the upper part of the table.

Turning to our segments results. Casualty again led on growth, up 4% in the quarter while posting a 99.6% combined ratio compared with 98.2% last year. Casualty's underwriting results benefited from $8.2 million of favorable development on prior year's reserves, roughly in line with Q3 of 2025. Several products contributed to the release, including excess casualty and commercial transportation. On a sequential basis, Casualty's underlying loss ratio was similar to the prior quarter and remains just under 67 on a year-to-date basis.

Property continued to generate very strong underwriting results. Gross premiums were down approximately 1% while the segment produced just over $50 million of underwriting income on a 60.1% combined ratio equivalent to last year. Property benefited from $10.4 million of favorable prior year reserve development inclusive of $4 million from prior year storms. During the quarter, properties current year catastrophe losses totaled $3.9 million, about half of which was represented by activity in Hawaii.

Surety also had a very good quarter with gross premiums up approximately 1% on a 79.8 combined ratio compared with 85 last year. The segment benefited from $4.3 million of favorable prior year reserve development and lower loss activity. Underwriting income for surety increased $7.3 million from $5.6 million in the prior year quarter. As usual, Jen will offer more detail on product level performance and market conditions.

Turning to cash and investments. Operating cash flow was $195 million in the quarter, up 9% from last year and providing meaningful support to portfolio activity. New purchases were largely concentrated in investment-grade fixed income with average yields of 5.5%, which is nearly 100 basis points above our book yield. As mentioned, net investment income increased 13% to $46.7 million and remains an important contributor to operating results. On a mark-to-market basis, rising yields, lower bond prices and a modest offset from equities resulted in a negative 2% total return for the quarter.

The movement in fixed income prices also affected comprehensive earnings. We recorded a comprehensive loss of $36.8 million or $0.40 a share for the quarter compared with comprehensive earnings of $152 million or $1.65 a share last year. From a capital management perspective, during the quarter, we paid our regular quarterly dividend of $0.18 per share, while repurchasing just under 104,000 shares at an average price of $60.51. At September 30, approximately $232 million remained available under our share repurchase authorization. Adjusting for dividends and share repurchases, book value increased 10% from year-end 2025.

Putting it all together through the first 9 months of 2026, we generated $176 million of underwriting income on an 85.9% combined ratio. Net investment income increased 15% and operating earnings were $2.52 a share, very consistent with the prior year. We are pleased with our third quarter performance and the balance of underwriting profitability, investment income and capital strength.

And with that, I'll turn the call over to Jen for more detail.

Jennifer Klobnak

Thank you, Aaron. I'll jump right into segment update. Property premium was down 1% in the quarter on a 60 combined ratio. Marine is a highlight within our portfolio, delivering 11% premium growth in the quarter, along with a meaningful contribution to underwriting profit. While the marine market remains competitive with rate change essentially flat for both the quarter and year, the team continues to proactively work with our producers and are known as problem solvers. Our partnership approach helped drive double-digit growth in submissions providing us with plenty of opportunities, so we can be selective in writing profitable business.

E&S Property continues to navigate a highly competitive environment with premium down 17% for the quarter as additional capacity enters the market and standard carriers and retailers reclaim business that had previously flowed through wholesalers. However, new business submission activity remained strong and increased again this quarter, providing us with plenty of opportunities to target profitable business.

Renewal pricing declined double digits on accounts experiencing their second renewal in this softening market cycle and retention remains slightly below historical levels. We continue to prioritize underwriting discipline over premium retention and are comfortable allowing business to move when pricing does not meet our return targets. The business we are binding is our rates we believe are adequate.

Hawaii Homeowners delivered solid rate-driven growth with premium increasing 9% for the quarter and rates up 13%. Policy count was modestly lower, reflecting a book roll completed earlier this year with renewal retention slightly below historical levels. Storm activity remained elevated during the quarter, and our local claims team responded to our insurers following these events. However, the associated financial impact to ROI was immaterial.

We continue to look for new opportunities for profitable growth across our insurance portfolio. Over the past several years, we planted a number of seeds including hiring underwriting talent, expanding into complementary products that leverage our existing underwriting expertise and more recently, developing strategic distribution partnerships that bring new capabilities to bear. This quarter, one of those investments began to meaningfully contribute to our top line.

Our partnership with Steadily, which specializes in landlord insurance, generated $9 million of premium and helped to offset some of the premium decline in parts of our property segment. We are pleased with the early results and remain disciplined in how we manage the partnerships. Our teams are closely aligned on underwriting and claims, and we actively monitor production through regular reporting, ongoing communication and on-site visits with the same rigor as all RLI products. This is a good example of how we maintain underwriting discipline while finding new opportunities to add to our diverse portfolio.

Surety delivered another strong quarter with a 79.8 combined ratio and premium growth of 1%. Competition has increased, particularly in the small to middle market where some competitors are reducing underwriting requirements. Contract and commercial surety premium was modestly lower, reflecting slower construction starts in government and renewable energy projects. Transactional surety was a bright spot with increased opportunities in public official bonds during this election year. Our team is actively marketing our capabilities and focusing on growing producer relationships, while maintaining the underwriting discipline and oversight that continue to drive strong results.

Casualty premium increased 4% on a 99.6% combined ratio. Personal umbrella delivered strong premium growth of 22% for the quarter, with rates increasing 8%. As forecast last quarter, the pace of rate increases moderated as several previously approved rate actions have now earned through the book. Our next approved rate filing is effective January 1, and we expect rate increases to return to double-digit levels during 2027.

In addition to rate, we continue to focus on improving the underlying risk profile of the book. We are closely monitoring new business characteristics and sharing those insights with our producer partners to reinforce our risk appetite and shape the growth. We are encouraged by the progress we are seeing, particularly in geographic mix and driver characteristics. Combined with the meaningful rate increases implemented over the past 3 years, we believe these improvements position the personal umbrella book well for more profitable growth.

E&S casualty, which includes both general and excess liability coverage, has seen an increase in competition, particularly in the Northeast. Premium declined 10% in the quarter, reflecting pressure from new entrants on both renewal retention and new business. Despite the evolving market conditions, underlying activity remains encouraging. Submissions increased double digits supported by continued engagement with our producer partners and a strong focus on maintaining those relationships.

While new capacity from MGAs and standard carriers has modestly impacted retention, we remain disciplined in our underwriting and focused on achieving adequate rate for the coverages we provide. We have a strong pipeline of quoted project business and saw increased buying activity on excess liability business at the end of the quarter. We hope this encouraging activity signals improving momentum.

Transportation delivered a profitable quarter, including recognizing favorable reserve development. As competition increased late in the quarter, we remain focused on underwriting discipline and maintaining an underwriting profit. Premium declined 9% for the quarter, while rates increased 12%. We proactively nonrenewed select accounts that did not meet our profit expectations or failed to address loss control recommendations. We also saw increased competition from both established markets and reemerging MGAs and which contributed to renewal retention declining almost 10 points.

Insurers continue to seek great relief and are increasingly shopping, which has contributed to higher new business submission activity and provides additional opportunities to selectively add attractive accounts. We remain disciplined and well positioned to capitalize on opportunities where we believe the insured invest in safety practices and we can obtain adequate premium for the risk.

The theme for 2026 has been maintaining discipline in an evolving environment. We have the benefit of a diverse product portfolio, where in some sectors, competitors are hungry for growth and aggressively cutting rates and expanding terms and conditions to write premium. We do not enforce top line budgets with our underwriters, and they are empowered to pull back when market conditions do not support our profitability objectives.

At the same time, the market continues to provide opportunities in other sectors. Our talented teams stay close to our customers to recognize where those opportunities exist. In an overall softening market, the team was able to grow premium 2% in the quarter and produced an 86% combined ratio. That is an outstanding result. With 3 quarters of underwriting profit on the books, we are well positioned for a strong finish to 2026.

And now I'll turn the call back to the moderator to open it up for questions.

Operator

[Operator Instructions] Your first question comes from Michael Phillips with Oppenheimer.

質疑応答

Michael Phillips

I wanted to first ask on personal umbrella. You've mentioned some rate actions and now it's going to moderate and pick back up, Jen, you said, in 2027. You've done a lot of stuff there that with rates recently and then, of course, higher underlying attachment points. I guess my question would be, are you seeing those benefits in that businesses current year loss ratios? Or are they holding steady because those benefits are maybe being offset by higher severity there?

Jennifer Klobnak

Yes. Thank you, Michael. I'd say it is early days. We have taken a lot of action. If you look at cumulatively over the last 3 years, rates overall on the book are up about 50%. In addition to that, we've changed a lot in regard to working with our producers to make sure that the business we're getting on the books meets our appetite and the risk profile we're looking for. So all that has been good action. We are seeing positive signs in the current accident year as well as in the prior accident year 2025. We are very hesitant to recognize those good signs yet. And so we are holding up our loss ratio picks in those accident years for now until we have a little longer period of time to make sure that all of those actions are truly resulting in a positive impact.

Michael Phillips

Okay. Could you give a little more detail on your relationship with Steadily that you mentioned? Who's doing the underwriting there? How much risk will you guys retain? Is that more of a distribution play? Just any details there.

Jennifer Klobnak

Sure. So as we look at these unique relationships, we see a lot, as you can imagine, a lot of MGAs want to have our paper. We say no to over 99% of them. But occasionally, there's a diamond in the rough. And so in this case, Steadily really impressed us with regard to the focus, the laser focus that they have as a company. We see them as running essentially like a branch office of ROI. We have a strong cultural fit. We have input into coverage, and we vetted the claims that they do, which they do in-house and we also have a lot of interaction with the team. We're actually doing a visit next week. But -- so there is constant interaction in terms of reporting and understanding what's going on in the book of business.

So the other thing is they don't have a top line focus in terms of -- we don't have a target for them. We really don't feel strongly about how much business they write. We just want to have business that we expect to be on the books and then we want the losses to come in as expected as well. And that has happened so far, even though it's early days. But that's the nature of that relationship.

Michael Phillips

Okay. And you haven't said how much kind of a top line that could be over the next year?

Jennifer Klobnak

We really don't forecast that because, again, we don't have strong feelings about having them produce a certain amount.

Operator

Your next question comes from Hristian Getsov with Wells Fargo.

Hristian Getsov

My first question is on the property underlying loss ratio. The ratio was flat year-over-year, which was surprising given the 400 bps of deterioration we saw in the first half. Is there anything one-off that we should be aware of or any change in loss assumptions as we kind of think about the trajectory going forward?

Aaron Diefenthaler

No. Hristian, this is Aaron. It -- there's nothing in the current quarter that's one-off necessarily. I would point to the first half of the year is just having some higher attritional loss activity across the portfolio and we mentioned that in the prior call.

Hristian Getsov

Got it. And then for my second question, with the increased adoption of personal AI agents by consumers, have you seen any change in shopping any parts of your business, particularly focusing on like the personal umbrella product where agentic AI can help consumers refine their coverages or shop around more easily? And any changes you're thinking about your distribution strategy?

Jennifer Klobnak

Good question. We have not seen any changes at this point in time. We have a very diverse group of producers on personal umbrella ranging from large personal lines carriers all the way to independent agents in your local talent. And so I think a lot of that agentic AI capabilities are really focused on the home and auto so far. And so as that evolves, we're obviously monitoring that, but we haven't seen it impact our personal umbrella book as of yet.

Operator

Your next question comes from the line of Meyer Shields with Keefe, Bruyette, & Woods.

Meyer Shields

Two really brief questions. First, with regard to the MGA relationship, should we think of that as having any expected impact on, I guess, acquisition expenses or the expense ratio?

Jennifer Klobnak

Yes, Meyer, you're correct in the commissions are a little bit higher when you work with a distribution partner like that, and they do have a profit commission component. So that will self-regulate depending on the results of the business. But yes, a couple of points higher, I would say.

Meyer Shields

A couple of points on that book, not that the overall impact is a couple of points?

Jennifer Klobnak

No, just -- yes, just on that particular book, you're right.

Meyer Shields

Okay. Sorry. I just want to make sure I understood it. I was hoping for an update on management liability. I was hearing some signs out there that might be turning, but I'm wondering what you're seeing?

Jennifer Klobnak

Yes. Meyer, I think that management liability market has stabilized. I'm going to use that word. It appears that our rate change, for example, is fairly flat for the year. And -- well, actually, for the quarter, it's flat. It's down just 1% for the year. But we are seeing, I'll say, some discipline in that market in terms of people understanding that the risk continues and involved. If you think about the artificial intelligence components of things, there's a need to have a floor on that pricing. And so I think the market has come to terms with flat is reasonable. And then you have to look at individual risk to determine if someone needs a rate increase or someone deserves a rate decrease. But overall, it's definitely a flat market at this point.

Meyer Shields

Okay. Perfect. And I also wanted to thank you for the additional disclosure.

Operator

Your next question comes from the line of C Gregory Peters with Raymond James.

Charles Peters

I wanted to just pivot back to the excess casualty, I think you had some favorable development there that you talked about. And I think you previously just described that book is primarily construction related. Can you talk about the years where you're getting the development? And then -- and just talk about how you think about the competitive pressures in that market right now?

Aaron Diefenthaler

Greg, it's Aaron. It tends to be a longer tail business for us, so primarily accident years '20 and '21, driving some of that favorable result.

Jennifer Klobnak

Yes. And this is Jen. As you think about the competitive environment, I would say the competition has picked up in the excess liability space. I'd say last year, there was less competition. People were pulling back or providing less limit. And this year, it seems like people are, again, looking for premium. And so particularly in the Northeast region, we've seen more competition from both MGAs as well as standard markets coming in, making a combinations on larger accounts taking advantage of offering the auto to package the liability with that. And so there is more competition this year.

Again, we're kind of, as Craig mentioned, boring, we have a stable appetite. We are consistent for our producers and our insurers. So the market knows what we offer. They know that we will be there. We wait for these other markets to have issues and pull back. And then again, we'll have more opportunity. This year just happens to be a little bit more crowded marketplace.

Charles Peters

Got it. My follow-up question is and I realize it's early days, but it feels like there's going to be another positive step change in reinsurance costs for you guys next year. Just curious how you're -- if you've had any early read on how you think reinsurance is going to play out for you guys for the '27 year?

Jennifer Klobnak

You're right. It is early days. We've had a few of our reinsurance trips happen already. So we're definitely in the market talking to our partners in that space. And as is well publicized, it's a buyer's market. So we expect to get some positive terms and conditions as we renew, but we have a couple more conferences and things to attend and a lot of negotiation yet to happen. But I do expect a positive result for ROI for one month.

Operator

Your next question comes from the line of Andrew Andersen with Jefferies.

Unknown Analyst

This is Sid on for Andrew. First, it looks like the year-over-year deterioration in the casualty underlying loss ratio accelerated this quarter. Can you just unpack how much of that was pricing and mix versus if there is any change in your underlying view of loss trends?

Aaron Diefenthaler

Yes. Sid, this is Aaron. I would say -- I would put the current underlying loss ratio for casualty kind of in line with the prior 2 quarters. So on a sequential basis, we're very much in line. And I would set aside the prior year quarter, where we had a little bit of action on the current accident year that helped that quarter. So I would just say we're fairly stable from an underlying standpoint when you look at the sequential trajectory.

Unknown Analyst

Okay. And then maybe pivoting to surety. I think growth turned positive this quarter, but you also mentioned some increased competition. So just curious if you can give us an update on what the pipeline looks like there and if you're seeing any signs of increased activity that could sustain positive growth?

Jennifer Klobnak

Yes. So surety, the market is crowded. There's a lot of competition. I would say in the construction part of the book, there's a lot of talk of construction in the United States regarding the data centers that's where a lot of the focus is, and there are a lot of large contractors in that space. And for that reason, we're not a big market for that space because we tend to target small to middle market sized contractors. So this year is kind of a headwind a bit in the other construction projects aren't as active as, I'll say, the data center part of the world.

On the commercial and transactional side, we've had several years of growth. And so this year, it might be a bit of a reset. We had some headwinds coming. Last year, we took some opportunities from -- in the last couple of years from investments in renewable energy projects, things of that nature. And this year, that has slowed given the change to tax advantage and things of that nature. So -- and then you have to balance that with the interest rates, which at first, I thought that was holding up some construction, but I think some people in different regions are tired of waiting for lower interest rates, so they're just starting projects. So it's kind of a mixed bag. You can't kind of do a broad brush.

I know there are also a couple of industry losses in surety, and we're hoping that, that brings a little discipline to the market. But what we've seen is some competitors are so hungry for surety premium that they're asking almost no questions and not requiring indemnity, which is unusual in the surety space and typically results eventually in some loss activity.

So we are remaining disciplined and continuing our underwriting practices as we have and hoping that, again, opportunity will knock down the road. But we have seen some bright spots this year so far, and we hope that we can continue. We're getting out and marketing often and trying to stay in front of people and asking for their business, which as simple as that sounds, tends to result in some positive opportunities.

Operator

Your next question comes from the line of Mark Hughes with Truist Securities.

Mark Hughes

You had mentioned in the excess liability that I think your binding rate was a little bit better at quarter end. And you thought maybe that was a potential green shoot if I heard you correctly. Do you think that was your initiatives, kind of your relationships? Or do you think there's anything more broadly that is influencing that?

Jennifer Klobnak

Well, it's hard to tell as we meet with our broker partners, which -- WSA was a big conference last week, we got to touch base with a lot of our producer partners. The first half of the year was a bit slower for us and for them and we're all banking on construction picking up. We're also kind of waiting. And so we're hoping that, that is a sign, but it's a little too early to tell. Again, it's kind of specific by region, so we're seeing strong business in the West and in the middle of the country. It's just really the East Coast that has been a bit slower. And so here, we saw a couple more binders at the end of the quarter. We're hoping that, that will continue. But it's hard to -- I mean, I'm hoping that's a trend, but it's hard to call it that yet.

Mark Hughes

Okay. In the Marine, you had nice acceleration top line. Any individual markets, kind of end markets, your geographies where you saw more strength?

Jennifer Klobnak

We have a great group of underwriters who are planted across the country. And that's really helping us just take advantage wherever there is some opportunity because a lot of marine is based on the construction industry as well. So wherever in the U.S., there is opportunity, we tend to find it because we do have people locally who are working with producers closely. So I'd say, it's really broad. We did start up a smaller product a couple of years ago, auto physical damage in that space. We've seen some big growth there. But there's nothing too specific to point to. I think it's just our team doing a great job.

Mark Hughes

Yes. If I might squeeze one more in the E&S property down 17%, talked about more capacity coming into the market, how much more downside do we have here? How is the pricing when you think about relative to earlier cycles? What are the signposts of the worse could be behind us or not?

Jennifer Klobnak

Yes. I would say we're assuming a softening market. It's not a soft market. We can still get -- we can find business at rates in terms that we're comfortable with and getting a double-digit return on. So we think the market is still very attractive. Our rates are approximately around 2022 rates, which are up from prior years. So there's still room to go. And I think with [indiscernible] not being a very big event, I think the market will continue to soften, again, new MGAs and people coming to the table. So we still have a ways to go. We like that business. We're going to keep writing it and we're going to try to stay as disciplined as possible as others try to attack different terms and conditions.

But it's still a very attractive market. And so I know it's disappointing because it's not what it used to be, but it's still got a lot of good business out there that we hope to be able to obtain.

Operator

Your next question comes from the line of Michael Phillips with Oppenheimer.

Michael Phillips

I wanted to follow up one more time. Jen, your comments on transportation. I think you said late in the quarter, you saw increased competition there from emerging players and some new MGAs, I think you said. Was that just more random fluctuations there? Or anything more fundamental do you think is happening?

Jennifer Klobnak

I think people are coming back to the market. This is just me thinking about it. But towards the end of the quarter, we -- and into this quarter, we're just seeing a lot more competition, people going after these large accounts. There's a lot of large accounts in the business given the consolidation that has occurred. And so when you're looking at an account with a $2 million premium, for example, there are people starting to want that just to help their top line. So I think it is a reemerging more competitive dynamic that we're going to have to deal with which is a little bit nonsensical given the severity and all the issues we've had in commercial transportation business.

But again, we're going to really lean into risk selection and pick the accounts that we think are, again, dedicated to loss control and are priced appropriately for the risk that happened because there are actions that happen every day. So you have to be disciplined around charging to cover those losses.

Operator

Your next question comes from the line of Hristian Getsov with Wells Fargo.

Hristian Getsov

One more for me. Last time, Jen, I think you talked about increasing some of the limit sizes. I think it was a comment around property to defend some of your renewals. Can you maybe kind of frame how successful has that been? Or is it people kind of still kind of undercutting by a decent margin where the limit size doesn't matter as much?

Jennifer Klobnak

It has been successful in that we've been able to retain business. But you look at some of the announcements of these new MGAs and people coming out to provide capacity, they have big limits they're providing, limits that are larger than what we provide. So we have to stretch in ways that makes sense for us. And one of those has been, again, increasing limits given inflation by itself has increased the value of these locations. So it has helped. But again, there's a lot going on in that market in terms of competition that is -- are things that we just have to fight against. And so it's a constant evaluation of what's changing the market and what we can do to continue to retain the accounts that we love and try to win new business.

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, thanks, Aaron, and Jen, and thank you all for your questions today. Our objective is pretty simple, produce consistent underwriting profits, protect our financial strength, serve our customers and distribution partners exceptionally well and get a little better every day. That doesn't mean taking the least risk, it means taking the right risks selected by experienced underwriters who know their markets deeply and have the discipline to say, yes, when the opportunity is right, and no thank you when it isn't.

Our diverse portfolio gives us plenty of places to look for those opportunities, and our people, relationships and service give us an advantage when we find them. There will always be something newer, faster or more exciting in this business. We're comfortable adapting to things that make sense and that improve our value proposition while remaining true to who we are. We like our position, and we're optimistic about what's ahead being different, still works.

Thank you for your continued confidence in RLI. We look forward to speaking with you 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, and have a nice day. All parties may now disconnect.