RLI RLI Corp

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LEADERSHIP TRANSITION:

In November 2021, Jonathan E. Michael, Chairman of the Board of Directors and Chief Executive Officer, announced his resignation as Chief Executive Officer of RLI Corp. (the “Company”) effective December 31, 2021.  He remains Chairman of the Board of Directors of the Company (the “Board”) effective January 1, 2022, until he stands for re-election to the Board at the 2022 annual meeting of shareholders. Mr. Michael’s resignation as Chief Executive Officer was part of a succession plan previously approved by independent Directors of the Board.

Also, in November 2021 and in connection with the CEO succession plan, the Board appointed Craig W. Kliethermes as President and Chief Executive Officer of the Company and appointed Jennifer L. Klobnak as Chief Operating Officer of the Company, each effective January 1, 2022.  

COVID-19 pandemic response:

In July 2021, the Company implemented an office reopening plan for all employees to return to the in-office work arrangement from prior to the COVID-19 pandemic. All employees are eligible to request a flexible work schedule with up to two days per week working remotely and at least three days in the office.

The Company maintained its normal compensation cycle in 2021 and made no changes to annual incentive goals for 2021 for any executive or any other employee in the Company as a result of the COVID-19 pandemic and related economic impact.

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2021 FINANCIAL PERFORMANCE

FINANCIAL RESULTS:

As a result of the efforts of our associates, we achieved outstanding financial results in 2021. These results included posting a 86.8 combined ratio*, which marked our 26th consecutive year of underwriting profit; delivering return on equity of 23.2 percent, a testament to our sustained profitability; growing book value per share by 20 percent during the year, inclusive of dividends; and continuing to reward shareholders through regular dividends and a $2.00 per share special dividend which resulted in returning $135 million in 2021 and more than $1.1 billion in dividends over the last 10 years.

* For more information regarding the Combined Ratio, please refer to the information under the header “GAAP, NON-GAAP AND PERFORMANCE MEASURES” in Part II, Item 7, of Company’s Annual Report on Form 10-K for fiscal year ended December 31, 2021 filed with the SEC on February 18, 2022.

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SUSTAINABLE BUSINESS PRACTICES

The Company is a specialty underwriting company and our financial performance starts with our entrepreneurial and ownership culture. We are steadfast in our belief that to deliver strong returns for our shareholders, we must also remain a sustainable organization. Our approach to sustainability reflects our focus on doing the right thing – for our customers, our employees, our communities and the environment. With that philosophy guiding our efforts, we are committed to continue integrating sound and relevant Environmental, Social and Governance principles into our business. Our Corporate Social Responsibility Report outlines our approach with our People, Communities, the Environment, and Governance and can be found at www.rlicorp.com/sustainability.

Ethical Business Conduct:

Our Code of Conduct, which applies to all employees and Directors, provides guidance on ethical business behavior to support our strong reputation as a leading specialty property and casualty insurance company. Annually, employees and Directors are asked to read, understand, agree to comply with the Code, and confirm they have complied with the Code in the last year. No waiver of the Code has been made for any executive or Director. We also maintain a Third-Party Code of Conduct for our suppliers, vendors, consultants, and business partners to communicate ethical business standards under which Third Parties are expected to operate when providing goods and services to the Company.

Diversity and Inclusion:

The Company strives to perpetuate our ownership culture by cultivating an exceptional workforce to deliver excellent customer service and continue to achieve superior business results. Our goal is to attract, develop and retain the best employee talent from diverse backgrounds while promoting an environment where different viewpoints are valued and individuals feel respected, are treated fairly, and have an opportunity to excel in their chosen careers. We actively support, and participate in, initiatives led by the American Property Casualty Insurance Association that aim to increase diversity in the insurance industry.

The Company sustains its high-performance ownership culture through ongoing investments in our greatest assets — our people. Our Total Rewards program is designed to attract the best talent in the industry and we strive to help all employees realize their potential through training, mentoring and professional development.

The Company believes in fostering an open and collaborative workplace that encourages employees to take ownership of their performance and development. We consistently track employee engagement and satisfaction metrics, along with other workforce data and insights, to assess the health of our workforce culture on an ongoing basis and make improvements based on employee feedback.  Every two years, we conduct an employee engagement survey. Results from RLI’s last employee engagement survey were highly positive and exceeded global benchmarks.

The Company also has a goal of establishing diversity among members of its Board of Directors reflecting, but not limited to, profession, background, experience, geography, skills, ethnicity, and gender. The Nominating & Corporate Governance Committee of the Board is committed to actively seeking highly qualified women and minority candidates, and will include such candidates in each director search it undertakes, including those by third-party search firms.

Environmental Stewardship:

The Company has demonstrated its commitment to a renewable future through its $5 million investment in a 1.8-megawatt solar field on our corporate campus in Peoria, Illinois. Located on six and a half acres, the 4,752-panel solar field is capable of producing annual electrical power equal to or exceeding annual electrical usage for our office buildings in Peoria, which house approximately 43% of our workforce.

In 2021, the Company’s solar field produced 1,385,000 kilowatt hours (“kWh”) of electricity, compared to electrical use of 1,010,000 kWh for the Company’s Peoria campus during the year, resulting in net excess electrical power returned to the electrical grid of 375,000 kWh. According the Illinois Power Agency, the excess power returned the grid by Company in 2021 equates to a reduction of equivalent greenhouse gas emissions of 1,841 tons of carbon dioxide.

While we are doing our part to support the global transition to more sustainable energy sources, we also believe this process will be lengthy and complex. Current energy needs cannot be met solely through green technologies and many, including those who are the most economically vulnerable, cannot simply stop using fossil fuels. By providing insurance products to the energy market, our responsible underwriting and sound risk management practices serve to support a reliable energy supply and enable a transition to more sustainable energy sources over time.

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RLI Corp. | 9025 N. Lindbergh Drive | Peoria, Illinois 61615

PROXY STATEMENT

Annual Meeting of Shareholders to be held May 5, 2022

GENERAL INFORMATION

This Proxy Statement is furnished to the shareholders of RLI Corp., a Delaware corporation (“Company”), in connection with the solicitation by the Board of Directors of the Company (“Board” or “Board of Directors”) of proxies to be used at the Annual Meeting of Shareholders (“Annual Meeting”) to be held at 9:00 a.m. Central Daylight Time on Thursday, May 5, 2022 which will be conducted via live webcast at www.virtualshareholdermeeting.com/rli2022 and at any adjournments or postponements of the Annual Meeting.

This year, we are pleased to again be taking advantage of a Securities and Exchange Commission (“SEC”) rule that allows companies to furnish their proxy materials over the Internet. As a result, we are mailing to our shareholders a Notice of Internet Availability of Proxy Materials (“E-Proxy Notice”) instead of a paper copy of the proxy materials. The E-Proxy Notice contains instructions that will enable shareholders receiving the E-Proxy Notice to access these materials over the Internet and, if so desired, to request a paper copy of these proxy materials by mail. Shareholders who do not receive the E-Proxy Notice will receive a paper copy of the proxy materials by mail. The Company intends to mail the E-Proxy Notice to shareholders on or about March 24, 2022.

VOTING AND QUORUM

It is necessary that a large number of our voting shares be represented at the Annual Meeting by proxy to achieve a quorum. Pursuant to the Company’s Bylaws, at least a majority in voting power of the stock issued and outstanding and entitled to vote must be present (in person or by proxy) at the Annual Meeting to conduct the meeting, which is known as a “quorum” of shares. Even if you expect to attend the virtual Annual Meeting, we encourage you to promptly submit your proxy by any method described below to ensure your vote is counted.

Whether you hold your shares directly as the shareholder of record or through a broker, trustee, or other nominee (“in street name”), you may vote by proxy without attending the virtual Annual Meeting in three different ways:

If you submit your proxy by telephone or over the Internet, you do not need to also submit a proxy card, although you may do so as one method of changing your vote as described below. The method of voting will not limit a shareholder’s right to attend the Annual Meeting. You may also vote electronically while the Annual Meeting is in progress by visiting www.virtualshareholdermeeting.com/rli2022. You will need your 16-digit control number included in your proxy materials, on your proxy card, or on the instructions that accompanied your proxy materials. Attending the virtual Annual Meeting will not, in and of itself, revoke a proxy.

Each proxy will be voted in accordance with the shareholder’s specifications. If you return a signed proxy card without providing voting instructions or do not designate a voting preference when using the other methods, your shares will be voted as recommended by the Board of Directors, except that if your shares are held in the Company’s (“ESOP”) and no vote is received for those shares by 11:59 p.m.

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on May 3, 2022, the Trustee (as defined herein) of the ESOP will vote such shares in proportion to other ESOP votes cast unless contrary to applicable law, as further explained in note 1 on page 12. All proxies delivered pursuant to this solicitation are revocable at any time prior to the meeting at the option of the shareholder either by giving written notice to the Corporate Secretary at 9025 North Lindbergh Drive, Peoria, Illinois, 61615, or by timely delivery of a properly completed proxy, whether by proxy card or by Internet or telephone vote, bearing a later date, or by voting electronically while the Annual Meeting is in progress by visiting www.virtualshareholdermeeting.com/rli2022. All shares represented by valid, unrevoked proxies will be voted at the Annual Meeting.

VOTES REQUIRED TO APPROVE THE PROPOSALS

Proposal One, the election of Directors proposal, requires the affirmative vote of a majority of the votes cast with respect to each Director to be elected. Shareholders may vote “For,” “Against” or “Abstain” with regard to each nominee. Abstentions are deemed present at the meeting and thus will be counted for quorum purposes but will have no effect on the vote with regard to each nominee.

Proposal Two, the “Say-on-Pay” proposal, requires the affirmative vote of a majority of the votes cast to be approved. Shareholders may vote “For,” “Against” or “Abstain” on this proposal. The vote on Proposal Two is a non-binding, advisory vote. Abstentions are deemed present at the meeting, and thus will be counted for quorum purposes, but will have no impact on the vote on this proposal.

Proposal Three, the “Say-When-On-Pay” proposal, requires the affirmative vote of a majority of the votes cast to be approved. Shareholders may vote “One Year,” “Two Years”, “Three Years” or “Abstain” on this proposal. The vote on Proposal Three is a non-binding, advisory vote. Abstentions are deemed present at the meeting, and thus will be counted for quorum purposes, but will have no impact on the vote on this proposal.

Proposal Four, the proposal to ratify the selection of Deloitte & Touche LLP (“Deloitte”) as the Company’s independent accounting firm, requires the affirmative vote of a majority of the votes cast to be approved. Shareholders may vote “For,” “Against” or “Abstain” on these proposals. While shareholder ratification of the selection of Deloitte as our independent registered public accounting firm is not required by our By-laws or otherwise, the Board considers the selection of an independent auditor to be an important matter of shareholder concern and considers a proposal for shareholders to ratify such selection to be an important opportunity for shareholders to provide direct feedback to the Board on an important issue of corporate governance. Abstentions are deemed present at the meeting, and thus will be counted for quorum purposes, but will have no impact on the vote on this proposal.

Brokers who hold shares for the accounts of their clients “in street name” may vote such shares either as directed by their clients or at their own discretion if permitted by the New York Stock Exchange (“NYSE”) and other organizations of which they are members. If an executed proxy is returned by a broker on behalf of its client that indicates the broker does not have discretionary authority as to certain shares to vote on one or more matters, such shares will be considered present at the Annual Meeting for purposes of determining a quorum, but are not considered entitled to vote on any matter for which the broker does not have discretionary authority. These are referred to as “broker non-votes.” Broker non-votes will not have any effect on the voting results of the proposals being voted upon at the meeting. If your broker holds your shares “in street name” and you do not instruct your broker how to vote, your broker will have discretion authority to vote your shares on “routine” matters, such as Proposal Four, the ratification of the selection of the Company’s independent public accounting firm, but will not have authority to vote your shares on the other proposals described in this Proxy Statement. Therefore, it is important that you provide your broker with voting instructions on all proposals. If your shares are held by your broker “in street name,” you will receive a voting instruction form from your broker or the broker’s agent asking you how your shares should be voted. Please complete the form and return it as instructed by the broker or agent.

SHAREHOLDERS ENTITLED TO VOTE

Shareholders of record at the close of business on March 7, 2022, the record date, shall be entitled to vote at the 2022 Annual Meeting. As of the record date, the Company had 45,290,062 shares of Common Stock outstanding and entitled to vote. Common share ownership entitles the holder to one vote per share upon each matter to be voted at the 2022 Annual Meeting.

ATTENDING THE VIRTUAL ANNUAL MEETING

In order to provide expanded access, improved communication and cost savings for our shareholders and our Company, this year’s Annual Meeting will be a completely “virtual” meeting of shareholders, which will be conducted via live audio webcast. We believe that hosting a virtual meeting will enable more of our shareholders to attend and participate in the meeting since our shareholders can participate from any location around the world with Internet access. You will be able to attend the Annual Meeting online and submit your

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questions during the meeting by visiting www.virtualshareholdermeeting.com/rli2022. Such questions must be confined to matters properly before the Annual Meeting and of general Company concern. You will also be able to vote your shares electronically at the Annual Meeting. To participate, you will need your 16-digit control number included in your proxy materials, on your proxy card, or on the instructions that accompanied your proxy materials. If you are not a shareholder of record but hold shares as a beneficial owner in street name, you may be required to provide proof of beneficial ownership, such as your most recent account statement as of the record date, a copy of the voting instruction form provided by your broker, trustee or other nominee, or other similar evidence of ownership. If your shares are held in the ESOP, you will not be able to vote your shares at the virtual Annual Meeting.

The meeting will begin promptly at 9:00 a.m. Central Daylight Time. We encourage you to access the meeting prior to the start time. Online access will open at 8:45 a.m. Central Daylight Time, and you should allow ample time to log in to the meeting webcast and test your computer audio system. We recommend that you carefully review the procedures needed to gain admission in advance.

We will have technicians ready to assist you with any technical difficulties you may have accessing the virtual meeting. If you encounter any difficulties accessing the virtual meeting during check-in or during the meeting, please call the technical support number that will be posted on the virtual shareholder meeting login page at www.virtualshareholdermeeting.com/rli2022.

A replay of the Annual Meeting will be posted as soon as practical at www.virtualshareholdermeeting.com/rli2022 along with answers to shareholder questions pertinent to meeting matters that are received before and during the Annual Meeting that cannot be answered during the Annual Meeting due to time constraints.

PROXY SOLICITATION

The Company will bear the cost of proxy solicitation. In addition to the use of the mail, proxies may be solicited in person or by telephone, facsimile or other electronic means, by Directors, officers, or employees of the Company. No additional compensation will be paid to such persons for their services. In accordance with the regulations of the SEC and the NYSE, the Company will reimburse banks, brokerage firms, investment advisors and other custodians, nominees, fiduciaries, and service bureaus for their reasonable out-of-pocket expenses for forwarding soliciting material to beneficial owners of the Company’s Common Stock and obtaining their proxies or voting instructions.