4 million ($1.5 billion.4 million on a
78. "The marketplace is continuing to soften
in many coverage areas, which places additional value on underwriting
selection to produce profits."

Investment income
Investment income for the first quarter reached $14.8 million for the quarter, or $0.12 $0.3%
Reinsurance recoverable on unpaid
losses 520,219 464,180 12.1%

Unpaid losses and settlement
expenses 1,198,741 1,132,599 5. "Chapman certification signifies that boaters have the
knowledge, skills and experience needed to safely and confidently
operate a vessel in a wide range of situations.

navigable domiciled

4 million ($0.
The quarter's results include certain favorable developments from prior
year loss reserves.5 combined
ratio for the same period last year.9% and the bond portfolio's loss was
0.m.5% 21.0%
Realized gains, net of tax 0 .7%
Net earnings per share $1.65 72.1%

Common shares outstanding (in
000's) 25,430 25,316

Book Value per share $24.chapman.

cargoes indemnity

Other quarterly news
During the quarter, RLI announced the opening of a marine insurance
division in New York City.14 per
share dividend.com .
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 for the year ended December 31, 2004.8%
Other insurance expenses 9,258 7,052 31.45 $0.1%

Cash dividends per share $0.3%
Shareholders' equity 631,340 623,661 1.2% 4,420 38."
Chapman students who are interested in receiving the insurance
discount will be referred to an INAMAR agent in their local area to
obtain an insurance quote.

Companies specializing in maritime insurance.

insure insureds

9 million ($0. Quarterly operating
earnings of $27.1 million were down 9% for the quarter .
President + CEO Jonathan E.3%
Interest expense on debt 1,810 1,740 4.5%

Premiums and reinsurance balances
receivable 139 ,088 146,667 -5.7% 4,032 32. Boaters who do not have adequate safety
training and boating skills are far more likely to be involved in an
accident," said Ray Stahl, President, INAMAR Recreational Marine
Insurance."
Chapman's CPC program for recreational power boaters features
extensive instruction and hands-on boat handling exercises while on
the water.

insure hulls

12 per
diluted share), which were 73% better than the $16.8 million (affecting casualty by $2.0 million), or $0.94 -52.5%
Total $183,731 $197,663 -7.64 0.7% 26,747
Underwriting income(loss) $8,061 61.7% 62,640
Net operating expenses 9,266 36. Best Company and A+ (Strong) by
Standard + Poor's.

mardon underwriting

3 million; book
value per share was $24.

All segments report profitable underwriting
RLI reported a first quarter underwriting profit of $26.5 combined ratio. The property segment improved nearly seven
points to register a 61. This
measure is useful in gauging our core operating performance across
reporting periods, but may not be comparable to the definition of
operating earnings used by all companies.5%
(amortized cost - $1,263,151
at 3/31/05)
(amortized cost - $1,237,843
at 12/31/04)
Equity securities 317,140 315,875 0.2%
Long -term debt - bonds payable 100,000 100,000 0.7% $10,820 91. to
offer insurance premium discounts to boaters who earn Chapman
Powerboat Certification (CPC(TM)) following the successful completion
of a qualifying boating safety and education course.

smithwick slatter

RLI Sets Earnings Records

(NYSE: RLI)
announced first quarter net earnings of $29.
Prior to the reserve changes noted above, the casualty segment would have
produced a 93. Our underwriters excelled by delivering
profitable results in all three business segments.rlicorp.

RLI CORP .2%
Total expenses 101,355 118,103 -14.59 78.2%
Underwriting income(loss) 80. Students are
eligible for a discount from INAMAR if they receive certification upon
completion of one or more of the following five-day courses: CPC 1000
- Basic Power Boating; CPC 2000 - Inland Cruising; CPC 3000 - Coastal
Cruising; and CPC 4000 - Offshore Passage . For more information about the Chapman
School of Seamanship, please visit www.

ACE USA is the U.

safeguarding insure

05 per share) were a 78% improvement over last
year's $15.5
combined ratio.or
visit our website at http://www.11 27.6%
Short-term debt 46,946 46,839 0.3%

Statutory Surplus $630,070 $605,967 4.S.

domiciled oti

0 million. Michael . Our property business is down due to marketplace conditions in
several coverages as well as a reduced presence in the construction
marketplace.45
per share.
In early February, the company marked the beginning of its 30th
consecutive year of cash payments to shareholders by declaring a $0.

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) which are subject
to certain risk factors that could cause actual results to differ materially.7%
Net realized investment gains 2,984 2,436 22.7%
Net realized investment gains 2,984 2,436 22.8%
Unearned premiums 349,581 367,205 -4.0%

RLI CORP.6%
Net operating expenses 29.5% 41,122 33.S.

safeguarding indemnity

3 million ($1.23 per share. hurricanes did not develop as expected, improving the first
quarter's pretax results by $3. Casualty recorded an 80.3% per year over the past decade. The company's talented associates have
delivered underwriting profits in 24 of the last 28 years, including the last
nine.3%

(a) Net operating earnings and EPS from operations consist of our net
earnings reduced by after-tax realized investment gains/losses.0%

Net Cash Flow from Operations $31,015 $33,017 -6.5% $17,654

2004
Gross premium written $49,819 $12,922 $120,171
Net premium written 24,247 11,734 87,185
Net premium earned 25,382 11,429 89,087
Net loss + settlement expenses 8,171 32.5%

org

INAMAR Recreational Marine insurance is a business unit of ACE
Select Markets.

insureds insurer

6 million was up 1%.
"During the first quarter, discipline ruled the day," said RLI Corp.2%

Return on Equity:
Net earnings (trailing four
quarters ) 14.1%
Deferred acquisition costs 65,142 67,146 -3.

INAMAR Recreational Marine Insurance to Offer Discounts to Certified Graduates of the Chapman School Of Seamanship

INAMAR Recreational Marine Insurance is the exclusive source for
marine insurance products from ACE USA, and one of the world's leading
providers of marine insurance.

insure cargoes

S.
Net premiums earned were down 1% in the quarter, to $124.
"Our surety segment showed significant progress, reflecting both new
business opportunities and the effect of revised underwriting controls . The division plans to have a presence in several
other current RLI offices.06 16.3%

Comprehensive earnings per share $0.5% $26,399 78.M.
The ACE Group of Companies provides insurance and reinsurance for a
diverse group of clients around the world.

sportsboats domiciled

59 per share) result. Both the per-share and total
dollar results set quarterly net and operating earnings records . The surety segment recorded a 94. The new division will focus on marine classes of
cargo, hull, protection and indemnity, primary and excess liabilities, yachts
and other marine coverages.com .0%

Other comprehensive earnings (loss),
net of tax (17 ,517) 7,587 -330.0%
Income taxes - deferred 29,433 38,966 -24.3% 75,231 59. In addition, our
students now receive the benefit of reduced insurance premiums from
INAMAR. Programs are available to protect the
entire spectrum of pleasure yachts and boats and marine businesses,
including luxury mega-yachts and sailboats, sport fishing boats, ski
boats , personal watercraft, high performance vessels, select charter
vessels and yacht clubs, marinas, boat dealers, and more. Additional information on
ACE USA and its products and services can be found at www.

mops shipowners

7 combined ratio.6 million, a 19%
increase over the same period last year due to the strength of cash flows.
At 3:15 p. RLI's insurance subsidiaries - RLI Insurance Company, Mt.0%
Comprehensive earnings (trailing
four quarters) 11.1%

March 31, December 31,
2005 2004 % Change
SUMMARIZED BALANCE SHEET DATA:
Fixed income and short -term
investments $1,260,343 $1,253,843 0.2%
Ceded unearned premiums 97,074 101,446 -4.8%
Closing stock price per share $41 .
"At INAMAR, we believe strongly that boater safety and education
are worthwhile investments.

insurer safeguarding

The equity portfolio's loss was 0.
Best Company and A+ "Strong" by Standard + Poor's.9%
Policy acquisition costs 31,864 32,795 -2.05 $0.2%
Net investment income 14,612 12,315 18.4%
(cost - $178,527 at 3/31/05)
(cost - $169 ,479 at 12/31/04)
Total investments 1,577,483 1,569,718 0.1% 7,584 61. "The Chapman School's intensive training programs offer an
impressive level of instruction, and boaters will greatly benefit from
the combination of classroom and underway instruction. CPC courses are suitable for novice and experienced boaters
alike, and cover topics such as navigation , piloting, seamanship and
"blue water" skills. To receive certification, boaters must complete a
CPC course and pass both a written and underway exam.
"Chapman's CPC program was developed in response to the
significant need for more advanced training for recreational power
boaters," said Jennifer Castle Field, President of the Chapman School
of Seamanship. More
than 14,000 men, women and children from all 50 states and 39 foreign
countries have trained at the school, with annual enrollment now
averaging 1,000 students.

smithwick navigable

1 million,
or $0.10 per share. As
expected, casualty business was relatively flat, yet continued to be
profitable.com.3% 14.57 -0.6% 23,546
Underwriting income(loss) $7,945 68. By offering a
discount to students who earn Chapman Powerboat Certification, we hope
to encourage more boaters to complete this advanced level of boating
instruction.-based retail operating division of The ACE
Group of Companies, headed by ACE Limited (NYSE:ACE), and is rated A
(Excellent) by A.

domiciled cargoes

9% per year and 11.
Mergent's Dividend Achievers currently ranks RLI 191st among 11,000 public
companies for 10-year average dividend growth rate. Hawley
Insurance Company and RLI Indemnity Company - are rated A+ "Superior" by A.5%
Net investment income 14,612 12,315 18.5%
Consolidated revenue 141,636 140,649 0.07 0.

RLI CORP.5%
Total assets $2,519,636 $2,468,775 2.5%
Other liabilities 86,780 81,443 6.0% 56,519 45.

slatter mardon

65 per
diluted share) reported in the same quarter last year .8 million
and property by $1.83, up 1%; assets rose by 2%, to $2.8 net GAAP combined ratio versus the $10.6%
Investment in unconsolidated
investees 44,541 43,398 2.8%
Reinsurance balances payable 76,815 78,062 -1.
2005 FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share amounts)

UNDERWRITING SEGMENT DATA
(in thousands)

GAAP GAAP
Property Ratios Surety Ratios Casualty

Three Months Ended March 31,
2005

Gross premium written $31,519 $13,772 $120,844
Net premium written 15,141 12,778 82,869
Net premium earned 21,133 12,300 90,607
Net loss + settlement expenses 6,281 29.8% $684 94.M .com.

shipowners slatter

Consolidated revenue of $141.
Comprehensive earnings, which include after-tax unrealized gains/losses
from the investment portfolio, were $11.rlicorp.8%
Net operating expenses 26.7%
Underwriting income(loss) 96.

Business Editors /INAMAR(R), the
marine marketing and underwriting division of ACE USA, today announced
a new program with the Chapman School of Seamanship in Stuart, Fla. INAMAR offers all-risk insurance
coverage for vessels of all sizes - from the smallest to the largest -
throughout the United States.INAMARmarine .ace-ina.

hulls oti

PEORIA, Ill., RLI Corp. During the quarter, positive development on prior accident
year casualty loss reserves resulted in additional earnings of $9. Gross premiums written of
$166.
Due to the declining stock market and rising interest rates, the company's
consolidated investment portfolio's total return for the quarter was a loss of
0.5%. Over the last five years, the company 's quarterly dividend has
grown by an average of 14.7%
Income tax expense 12,233 6,837 78.4%

Per Share Data

Diluted:
Weighted average shares outstanding
(in 000's) 26,213 26,118

EPS from operations (a) $1.14 $0.45 $41.8% 46,206
Net operating expenses 6 ,791 32.3% $2,901

UNDERWRITING SEGMENT DATA
(in thousands)
GAAP GAAP
Ratios Total Ratios

Three Months Ended March 31,
2005

Gross premium written $166,135
Net premium written 110,788
Net premium earned 124,040
Net loss + settlement expenses 51.4% 39,847 31.

navigable cargoes

Through three months, segment
performance included an increase in surety gross premiums of 7%, a rise in
casualty writings of 1%, and a 37% reduction in property business. Interested
parties may listen to the discussion through the Internet at RLI's website,
http://www.
2005 FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share amounts)

Three Months Ended March 31,
2005 2004 % Change
SUMMARIZED INCOME STATEMENT DATA:
Net premiums earned $124,040 $125,898 -1.7%

Loss and settlement expenses 56,519 75,231 -24.0%
Other assets 30,876 31,671 -2.83 $24.com

Chapman School of Seamanship was founded in 1971 as a
not-for-profit maritime training institution, and was designated the
"Maritime School of Florida" by the state legislature in 1982.

ACE Select Markets, a division of ACE USA, focuses on the
underwriting and marketing of specialty insurance products targeted
towards specific insurance buyers, affinity groups, small businesses
and niche industries. Best Company and A+ (Strong) by Standard + Poor's.

smithwick mops

Additionally , losses related to the four Florida and
Southeast U. These developments include
bonus-related accruals which affected other insurance and general corporate
expenses.
During the quarter , shareholders' equity grew 1%, to $631.5%.9%

Operating Earnings:(a)

Net Earnings $29,307 $16,943 73.0%
Property and equipment 18 ,999 18,335 3.5% 7,035 61. Products and services are offered through a
network of specialty agents as well as unique distribution channels
and partners.

exposures mops

CDT today, April 14, RLI management will hold a conference
call to discuss quarterly results with insurance industry analysts.
2005 FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share amounts)

Three Months Ended March 31,
2005 2004 % Change
Total Gross Revenues
Gross premiums written $166,135 182,912 -9.6%
Goodwill 26,214 26,214 0. Insurance policies issued by INAMAR are underwritten
by subsidiary insurance companies of The ACE Group of Companies that
are rated A (Excellent) by A.

fireman watercrafts

8 combined ratio . RLI operates in all 50
states from 18 office locations.
For additional information, contact RLI Vice President, Corporate
Development Aaron Jacoby at (309) 693-5880 or at aaron_jacoby@rlicorp .9%
Net Earnings $29,307 $16,943 73.9%

Comprehensive earnings $11,790 $24,530 -51.0%

Less: Realized investment gains, net
of tax 1,940 1,583 22.6%

Operating earnings $27,367 $15,360 78.2%
Total liabilities +
shareholders' equity $2,519,636 $2,468,775 2.
To learn more about INAMAR and obtain valuable information on a
wide range of safety and loss prevention topics, please visit
www.
ACE USA, through its underwriting companies, provides insurance
products and services throughout the U.

mardon charterers

8 million gain on a 91.
RLI, a specialty insurance company celebrating its 40th anniversary in
2005, offers a diversified portfolio of property and casualty coverages and
surety bonds serving "niche" or underserved markets.M.0%
General corporate expenses 1,904 1,285 48.2%

Equity in earnings of
unconsolidated investees 1,259 1,234 2.0%

Earnings before income taxes 41,540 23,780 74.6%
Total liabilities 1 ,888,296 1,845,114 2.7% $(26) 100.8%

2004
Gross premium written $182,912
Net premium written 123,166
Net premium earned 125,898
Net loss + settlement expenses 70. Products and services include coverage for recreational
boats and yachts , the ACE Disaster Mortgage Protection(SM) Policy, and
credit card enhancement programs.