First Quarter       Earnings Per Diluted Share   2009        2008    Operating earnings           $1.03       $1.03   Net earnings (loss)          ($0.08  )   $1.14    -------------------------------------------------------------------------------  

Highlights for the quarter included:

Operating earnings of $22.5 million ($1.03 per share).

Underwriting income of $15.2 million.

Combined ratio of 87.9.

Book value per share of $32.93.

$6.6 million pretax favorable development in prior years' loss reserves, net of effects on bonus and profit sharing-related expenses.

Net realized losses on investment securities of $33.5 million pretax, primarily from other-than-temporary impairment charges.

"In this environment, we had another excellent underwriting result," said RLI Corp. President & CEO Jonathan E. Michael. "Maintaining underwriting discipline in this market is of the utmost importance. Our underwriters have the experience and know-how to navigate through changing environments. Our investment in underwriting talent will serve us well as market conditions improve."

Underwriting income increases

RLI achieved $15.2 million of underwriting income in the first quarter of 2009 on an 87.9 combined ratio, compared to $14.7 million of underwriting income on an 89.2 combined ratio in the same quarter for 2008.

                                                                             Underwriting Income   First Quarter                        First Quarter   (in millions)         2009    2008        Combined Ratio   2009   2008     Casualty              $6.0    ($0.6  )    Casualty         91.5   100.7    Property              6.2     12.4        Property         83.4   67.3     Surety                3.0     2.9         Surety           83.3   81.9     Total                 $15.2   $14.7       Total            87.9   89.2      -------------------------------------------------------------------------------  

Other income

For the quarter, investment income declined 8.1% to $17.7 million. The investment portfolio's total return was -0.5%. The bond portfolio gained 2.1% and the equity portfolio's return was -14.3%. The decline in investment income is due to changes in asset allocation and a lower interest rate environment. Given the current economic environment and continued market volatility, we have reduced our equity exposures and are currently holding more short-term investments.

Comprehensive earnings, which include after-tax unrealized gains/losses from the investment portfolio, were $1.8 million for the quarter ($0.08 per share) compared to $6.6 million ($0.30 per share) for the same quarter in 2008.

During the quarter, equity in earnings of unconsolidated investee was $1.4 million compared to $2.2 million from the same period last year. These results are related to Maui Jim, Inc., a producer of premium sunglasses, which is affected by the slowdown in economic conditions and the ensuing effect on consumer discretionary spending.

Other news

The company paid a first quarter cash dividend of $0.26 per share on April 15, 2009, the same as in the prior quarter. RLI's cumulative dividends, including this recent payment, are more than $184 million paid in 131 consecutive quarters. The company's dividend yield would be 2.1% based on the $1.04 annualized dividend and today's closing stock price of $49.51.

At 10 a.m. CDT tomorrow, April 21, 2009, RLI management will hold a conference call to discuss quarterly results with insurance industry analysts. Interested parties may listen to the discussion through the Internet at RLI's website, www.rlicorp.com.

Underwriting income, operating earnings, earnings per share (EPS) from operations and other per share items are non-GAAP financial measures, and we believe that investors' understanding of RLI's core operating performance is enhanced by our disclosure of these financial measures. Underwriting income or profit represents the pretax profitability of our insurance operations and is derived by subtracting losses and settlement expenses, policy acquisition costs, and insurance operating expenses from net premium earned. Operating earnings and EPS from operations consist of our net earnings adjusted by net realized investment gains/(losses) and taxes related to net realized gains/(losses). Our definitions of these items may not be comparable to the definitions used by other companies. Net earnings and net earnings per share are the GAAP financial measures that are most directly comparable to operating earnings and EPS from operations. All earnings per share data are calculated using fully diluted shares. Combined ratio refers to a GAAP combined ratio.

Except for historical information, this news release may include forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934) including, without limitation, statements reflecting our current expectations about the future performance of our company or our business segments or about future market conditions. These statements are subject to certain risk factors that could cause actual results to differ materially. Various risk factors that could affect future results are listed in the company's filings with the Securities and Exchange Commission, including the Form 10-K Annual Report for the year ended December 31, 2008.

RLI, a specialty insurance company, offers a diversified portfolio of property and casualty coverages and surety bonds serving "niche" or underserved markets. RLI operates in all 50 states from office locations across the country. The company's talented associates have delivered underwriting profits in 28 of the last 32 years, including the last 13. RLI's insurance subsidiaries -- RLI Insurance Company, Mt. Hawley Insurance Company and RLI Indemnity Company -- are rated A+ "Superior" by A.M. Best Company and A+ "Strong" by Standard & Poor's.

For additional information, contact John Robison, Treasurer at (309) 693-5846 or at John.Robison@rlicorp.com or visit our website at www.rlicorp.com.

                                                                                                                                Supplemental disclosure regarding the earnings impact of specific items                                                                                                                                                                                                                                                        Operating Earnings Per Share                                                                                                  2009          2008                                                                                                            1st Qtr       1st Qtr                                      Operating Earnings Per Share                                       $  1.03       $1.03                                                                                                                                                                      Specific items included in operating earnings per share: (1) (2)                                                              --     Gain from casualty prior years' reserve development         $  0.29       -                                            --     Loss from property prior years' reserve development         $  (0.10  )   -                                            --     Gain from development on 2008 hurricanes                    $  0.01       -                                                                                                                                                                          (1  )  Includes bonus and profit sharing-related impacts which affected other insurance and general corporate expenses.                                                                                                                                     (2  )  Reserve developments reflect revisions for previously estimated losses.                                                 -------------------------------------------------------------------------------  

                                                                                                                                                 RLI CORP.