RLI CORP Leases Disclosure
10. | LEASES |
Right-of-use (ROU) assets are included in the other assets line item and lease liabilities are included in the other liabilities line item of the consolidated balance sheet. We determine if a contract contains a lease at inception and recognize operating lease ROU assets and operating lease liabilities based on the present value of the future minimum lease payments at the commencement date. As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. Lease agreements may include options to extend or terminate. The options are exercised at our discretion and are included in operating lease liabilities if it is reasonably certain the option will be exercised. Lease agreements have lease and non-lease components, which are accounted for as a single lease component. Operating lease costs for future minimum lease payments are recognized on a straight-line basis over the lease terms. Variable lease costs are expensed in the period in which the obligations are incurred. Sublease income is recognized on a straight-line basis over the sublease term.
The components of lease expense and other lease-related information, as of and during the years ended December 31, 2025, 2024 and 2023, were as follows:
(in thousands) |
| 2025 |
| 2024 |
| 2023 | |||
Operating lease cost | $ | 4,578 | $ | 4,631 | $ | 4,935 | |||
Variable lease cost | 1,245 | 1,103 | 1,469 | ||||||
Sublease income | (170) | (170) | (469) | ||||||
Total lease cost | $ | 5,653 | $ | 5,564 | $ | 5,935 | |||
| |||||||||
Cash paid for amounts included in measurement of lease liabilities | |||||||||
Operating cash flows from operating leases | $ | 4,637 | $ | 4,083 | $ | 5,407 | |||
| |||||||||
ROU assets obtained in exchange for new operating lease liabilities | $ | 1,516 | $ | 4,392 | $ | 5,805 | |||
| |||||||||
Reduction to ROU assets resulting from reduction to lease liabilities | $ | — | $ | — | $ | 300 | |||
(in thousands) |
| 2025 |
| 2024 | |||
$ | 13,117 | $ | 14,016 | ||||
$ | 14,752 | $ | 15,711 | ||||
Weighted-average remaining lease term - operating leases | 5.93 | years | 6.01 | years | |||
Weighted-average discount rate - operating leases | 3.78 | % | 3.63 | % | |||
Future minimum lease payments under non-cancellable leases as of December 31, 2025 were as follows:
(in thousands) |
| 2025 | |
2026 | $ | 4,332 | |
2027 | 2,981 | ||
2028 | 2,052 | ||
2029 | 1,931 | ||
2030 | 1,369 | ||
Thereafter | 4,111 | ||
Total future minimum lease payments | $ | 16,776 | |
Less imputed interest | (2,024) | ||
Total operating lease liability | $ | 14,752 | |
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 20, 2026 | Showing above |
| 2024 | Feb 21, 2025 | |
| 2023 | Feb 23, 2024 | |
| 2022 | Feb 24, 2023 | |
| 2021 | Feb 18, 2022 | |
| 2020 | Feb 19, 2021 | |
| 2019 | Feb 21, 2020 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.