FORM 4 Check this box if no longer subject to Section 16. Form 4 or Form 5 obligations may continue. See Instruction 1(b).

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF CHANGES IN BENEFICIAL OWNERSHIP OF SECURITIES Filed pursuant to Section 16(a) of the Securities Exchange Act of 1934, Section 17(a) of the Public Utility Holding Company Act of 1935 or Section 30(h) of the Investment Company Act of 1940

OMB APPROVAL OMB Number: 3235-0287 Expires: January 31, 2005 Estimated average burden hours per response... 0.5

(Print or Type Responses)

1. Name and Address of Reporting Person * STEPHENS GERALD D   2. Issuer Name and Ticker or Trading Symbol RLI CORP [RLI] 5. Relationship of Reporting Person(s) to Issuer (Check all applicable) __X__ Director _____ 10% Owner _____ Officer (give title below) _____ Other (specify below) (Last) (First) (Middle) 9025 N. LINDBERGH DRIVE 3. Date of Earliest Transaction (Month/Day/Year) 07/18/2007 (Street) PEORIA, IL 61615 4. If Amendment, Date Original Filed(Month/Day/Year) 6. Individual or Joint/Group Filing(Check Applicable Line) _X_ Form filed by One Reporting Person ___ Form filed by More than One Reporting Person (City) (State) (Zip) Table I - Non-Derivative Securities Acquired, Disposed of, or Beneficially Owned

1.Title of Security (Instr. 3) 2. Transaction Date (Month/Day/Year) 2A. Deemed Execution Date, if any (Month/Day/Year) 3. Transaction Code (Instr. 8) 4. Securities Acquired (A) or Disposed of (D) (Instr. 3, 4 and 5) 5. Amount of Securities Beneficially Owned Following Reported Transaction(s) (Instr. 3 and 4) 6. Ownership Form: Direct (D) or Indirect (I) (Instr. 4) 7. Nature of Indirect Beneficial Ownership (Instr. 4) Code V Amount (A) or (D) Price Common Stock 07/18/2007   M/K   77,762 (1) A $ 21.1 1,220,909.1677 (2) D   Common Stock 07/18/2007   F/K   47,284 (3) D $ 60.19 1,173,625.1677 (2) D   Common Stock               15,009.4559 (4) I By Executive Deferred Comp Common Stock               72,369.8378 (5) I By Key Emp. Benefit Plan Common Stock               29,103.6853 (6) I By Trust for Grandchildren Common Stock               2,492 I By Trust for Sister Common Stock               68,935 I By Wife

Reminder: Report on a separate line for each class of securities beneficially owned directly or indirectly.
	Persons who respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.		SEC 1474 (9-02)

Table II - Derivative Securities Acquired, Disposed of, or Beneficially Owned
(e.g., puts, calls, warrants, options, convertible securities)

1. Title of Derivative Security (Instr. 3)

2. Conversion or Exercise Price of Derivative Security

3. Transaction Date (Month/Day/Year)

3A. Deemed Execution Date, if any (Month/Day/Year)

4. Transaction Code (Instr. 8)

5. Number of Derivative Securities Acquired (A) or Disposed of (D) (Instr. 3, 4, and 5)

6. Date Exercisable and Expiration Date (Month/Day/Year)

7. Title and Amount of Underlying Securities (Instr. 3 and 4)

8. Price of Derivative Security (Instr. 5)

9. Number of Derivative Securities Beneficially Owned Following Reported Transaction(s) (Instr. 4)

10. Ownership Form of Derivative Security: Direct (D) or Indirect (I) (Instr. 4)

11. Nature of Indirect Beneficial Ownership (Instr. 4)

Code

V

(A)

(D)

Date Exercisable

Expiration Date

Title

Amount or Number of Shares

Option

$ 15.9063

05/06/2000

05/06/2009

Common Stock

55,114

55,114

D

Stock Option

$ 15.7813

05/04/2001

05/04/2010

Common Stock

49,664

49,664

D

Stock Option

$ 20.05

05/03/2001

05/03/2011

Common Stock

1,440

1,440

D

Stock Option

$ 29.405

05/01/2003

05/01/2012

Common Stock

1,080

1,080

D

Stock Option

$ 29.55

05/01/2004

05/01/2013

Common Stock

720

720

D

Stock Option

$ 34.55

05/03/2005

05/03/2014

Common Stock

360

360

D

Stock Option

$ 40.39

02/02/2005

02/02/2014

Common Stock

360

360

D

Stock Option

$ 21.1

07/18/2007

M/K

77,762

05/07/1999

05/07/2008

Common Stock

77,762

$ 21.1

0

D

Reporting Owners

Reporting Owner Name / Address	Relationships
	Director	10% Owner	Officer	Other
STEPHENS GERALD D 9025 N. LINDBERGH DRIVE PEORIA, IL 61615	X

Signatures

Gerald D Stephens		07/20/2007
**Signature of Reporting Person		Date

Explanation of Responses:

*	If the form is filed by more than one reporting person, see Instruction 4(b)(v).
**	Intentional misstatements or omissions of facts constitute Federal Criminal Violations. See 18 U.S.C. 1001 and 15 U.S.C. 78ff(a).
(1)	Transaction represents an exercise of options for 77,762 shares of common stock with a concurrent swap of 47,284 of such shares with the Company for payment of exercise price and related taxes.
(5)	Ownership reflects dividend reinvestment.
(6)	Ownership reflects dividend reinvestment.
(2)	Ownership reflects dividend reinvestment.
(4)	Ownership reflects dividend reinvestment.
(3)	Transaction represents an exercise of options for 77,762 shares of common stock with a concurrent swap of 47,284 of such shares with the Company for payment of exercise price and related taxes.

Note: File three copies of this Form, one of which must be manually signed. If space is insufficient, see Instruction 6 for procedure.

Potential persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB number.