RLI 2026년 3분기 실적 발표 콜: 합산비율 86.2%, 투자 수익 13% 증가

핵심 요약

• RLI Corp.는 2026년 3분기 영업이익이 주당 0.86달러를 기록해 전년 동기 0.82달러에서 증가했다고 발표했습니다. GAAP 기준 순이익은 주로 지분증권 가치 변동으로 인해 전년 동기 1.35달러에서 주당 0.88달러로 감소했습니다.
• 원수보험료는 2% 증가했으며, 언더라이팅 이익은 5,880만 달러에 달했습니다. 합산비율은 86.2%로 2025년 3분기의 85.1%와 비교됩니다.
• 순투자소득은 13% 증가한 4,670만 달러를 기록했습니다. 신규 채권 매입의 평균 수익률은 5.5%로 포트폴리오의 장부 수익률보다 100bp 가까이 높았습니다.
• 재물보험 부문은 원수보험료가 1% 감소했음에도 불구하고 60.1%의 합산비율로 5,000만 달러 이상의 언더라이팅 이익을 창출하며 가장 강세인 인수 부문 자리를 유지했습니다.
• 배상책임보험 보험료는 개인 엄브렐러 보험의 22% 성장에 힘입어 4% 증가했으나, 해당 부문의 합산비율은 99.6%로 상승했습니다. 경영진은 지난 3년간 개인 엄브렐러 보험의 누적 요율 인상이 약 50%에 달했다고 밝혔습니다.
• 배당 및 자사주 매입을 조정한 장부가치는 2025년 말 대비 10% 증가했습니다. RLI는 이번 분기 동안 평균 60.51달러의 가격으로 약 104,000주를 매입했습니다.

주요 재무 데이터

2026년 첫 9개월 동안 RLI는 85.9%의 합산비율로 1억 7,600만 달러의 언더라이팅 이익을 기록했습니다. 순투자소득은 15% 증가했으며, 영업이익은 주당 2.52달러로 전년 수준을 전반적으로 유지했습니다.

사업 및 운영 실적

재물보험

재물보험 원수보험료는 약 1% 감소했으나, 해당 부문은 60.1%의 합산비율을 유지하며 5,000만 달러 이상의 언더라이팅 이익을 냈습니다. 실적에는 이전 연도 폭풍 관련 400만 달러를 포함하여 1,040만 달러의 유리한 전년도 준비금 환입이 포함되었습니다. 당해 연도 대형 재해 손실은 총 390만 달러였으며, 이 중 절반 정도는 하와이 지역 관련 손실이었습니다.

해상보험 보험료는 11% 증가해 언더라이팅 이익에 의미 있게 기여했습니다. 가격 설정이 사실상 제자리걸음을 했음에도 인수 요청 건수는 두 자릿수 성장률을 기록했습니다.

E&S 재물보험 보험료는 신규 자본 유입과 일반 보험사 및 리테일 중개업체의 도매 채널 물량 회수로 인해 17% 감소했습니다. 연화 주기에서 두 번째 갱신에 들어간 계정의 갱신 가격은 두 자릿수 비율로 하락했습니다. 경영진은 현재 요율 수준이 2022년 수준과 비슷하며, 선별된 사업에서 두 자릿수 수익률을 창출하기에 여전히 매력적이라고 밝혔습니다.

하와이 주택소유자 보험료는 13%의 요율 인상에 힘입어 9% 증가했습니다. 증권 수는 소폭 감소했으며, 폭풍 활동 증가로 인한 재무적 영향은 RLI에 미미했습니다.

임대인 전문 보험사인 Steadily와의 파트너십을 통해 이번 분기 동안 900만 달러의 보험료가 발생해 재물보험 다른 분야의 부진을 부분적으로 상쇄했습니다. RLI는 MGA 제안의 99% 이상을 거절하고 있으며, Steadily를 언더라이팅, 손해사정, 보고 등에 대해 긴밀히 감독하며 지점처럼 운영하고 있다고 밝혔습니다.

배상책임보험

배상책임보험 보험료는 4% 증가한 반면, 합산비율은 98.2%에서 99.6%로 상승했습니다. 해당 부문은 820만 달러의 유리한 전년도 준비금 환입을 기록했습니다. 기초 손해율은 전분기 대비 안정적인 모습을 보이며 첫 9개월 동안 67 미만을 유지했습니다.

개인 엄브렐러 보험료는 요율이 8% 인상됨에 따라 22% 성장했습니다. 경영진은 포트폴리오 전체 요율이 3년간 누적으로 약 50% 상승했다고 말했습니다. 2025년 및 당해 사고자 경과 손해의 초기 징후는 긍정적이지만, RLI는 더 많은 데이터가 확보될 때까지 기존 손해율 가정을 유지하고 있습니다.

E&S 배상책임보험 보험료는 특히 미국 동북부 지역에서의 경쟁 심화로 인해 10% 감소했습니다. 그럼에도 인수 요청 건수는 두 자릿수 성장률을 보였으며, 경영진은 분기 말 초과 배상책임보험 매수 활동이 강화되었다고 언급했으나 이를 지속적인 트렌드로 보기는 아직 이르다고 덧붙였습니다.

운송보험 보험료는 요율이 12% 인상되었음에도 불구하고 9% 감소했습니다. RLI는 수익성 또는 손해 통제 기준을 충족하지 못한 일부 계정의 갱신을 거절했습니다. 기존 보험사 및 시장에 복귀한 MGA와의 경쟁 심화로 갱신 유지율이 거의 10%포인트 하락했습니다.

보증보험

보증보험 보험료는 약 1% 증가했으며, 합산비율은 85.0%에서 79.8%로 개선되었습니다. 언더라이팅 이익은 430만 달러의 유리한 전년도 준비금 환입과 손해 발생 감소에 힘입어 560만 달러에서 730만 달러로 증가했습니다.

계약 및 상업 보증보험 보험료는 정부 및 신재생에너지 건설 착공 지연으로 인해 소폭 감소했습니다. 트랜잭션 보증보험은 선거철 공무원 보증 수요 증가로 수혜를 입었습니다. 경영진은 일부 경쟁사가 언더라이팅 요건을 완화하는 등 시장 경쟁이 치열하다고 평가했습니다.

경영진 가이던스

RLI는 승인된 개인 엄브렐러 요율 신청안이 1월 1일부터 효력을 발휘하며, 2027년 중 요율 인상이 다시 두 자릿수 수준으로 돌아올 것으로 예상된다고 말했습니다.

또한 경영진은 현재 환경을 구매자 시장으로 묘사하며 다음 갱신 시 긍정적인 출재 재보험 조건이 형성될 것으로 예상하고 있습니다. 하지만 논의는 아직 초기 단계이며 추가 협상이 필요한 상황입니다.

회사 측은 매출 규모보다는 인수 수익성을 강조하면서 Steadily 파트너십에 대한 목표 보험료를 설정하지 않았습니다.

위험 및 관전 포인트

• 새로운 MGA 및 기타 자본 제공자가 시장에 진입함에 따라 E&S 재물보험 가격 연화 현상이 지속되고 있습니다. 경영진은 시장 상황을 아직 연화 시장(soft market)으로 규정짓지는 않았지만 추가적인 가격 하락을 예상하고 있습니다.
• 배상책임보험 분야의 경쟁은 초과 배상책임 및 상업용 운송 부문에서 심화되어 보험료, 유지율 및 조건에 압박을 가하고 있습니다.
• 경쟁사들이 보험료 성장을 위해 대형 계정을 확보하려 함에도 불구하고 운송 부문은 손해 심도(loss severity)에 대한 우려에 계속 직면해 있습니다.
• 보증보험 실적은 정부 및 신재생에너지 프로젝트 지연으로 역풍을 맞고 있으며, 일부 경쟁사는 배상 및 언더라이팅 요건을 완화하고 있습니다.
• 수익률 상승 및 채권 가격 하락으로 인해 분기 총투자수익률이 -2%를 기록하고 3,680만 달러의 총포괄손실이 발생했습니다.
• 재물보험, 배상책임보험, 보증보험 부문의 준비금 환입을 포함한 유리한 준비금 변동이 분기 언더라이팅 실적을 실질적으로 뒷받침했습니다.

애널리스트 Q&A 하이라이트

• 개인 엄브렐러: 경영진은 요율 인상과 리스크 선별 개선에서 긍정적인 징후를 확인했으나, 사도가 손해율 가정을 낮추기에는 아직 근거가 부족하다고 판단하고 있습니다.
• Steadily 파트너십: 수수료 및 이익수수료 구성 요소로 인해 해당 포트폴리오의 신계약비 비율이 몇 퍼센트포인트 더 높습니다. 경영진은 이것이 RLI 전체 사업비율의 동일한 증가를 의미하는 것은 아니라고 명확히 했습니다.
• 재물보험 손해율: RLI는 이번 분기에 의미 있는 일회성 요인이 없었다고 밝혔습니다. 상반기의 높은 경상 손실이 이전 실적 악화의 원인이었습니다.
• 임원배상책임보험: 가격 설정이 안정화되어 이번 분기 요율은 변동이 없었고 연초 대비 1% 하락했습니다. 경영진은 시장이 하한선 가격을 유지하는 데 있어 보다 규율을 갖추게 되었다고 보고 있습니다.
• 초과 배상책임 준비금: 유리한 변동은 주로 2020년 및 2021년 사도가에서 발생했으며, 이는 해당 상품의 롱테일 특성과 일치합니다.
• AI 및 판매 채널: RLI는 개인 엄브렐러 사업에서 개인용 AI 에이전트가 구매 행태에 영향을 미치는 현상을 아직 확인하지 못했습니다. 회사는 이러한 도구가 주택 및 자동차 보험을 넘어 확장됨에 따라 도입 현황을 계속 모니터링하고 있습니다.

실적발표 컨퍼런스 콜 전문

전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

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.

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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.