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Director Invests in RLI Corp

- By Kyle Ferguson

Director Robert Restrepo purchased 2,325 shares of RLI Corp. (RLI) in five transactions on April 24. The shares were purchased for an average price of $56.02 per share.

He now owns 4,125 total shares of the company.

Headquartered in Peoria, Illinois, RLI is a specialty insurance company. The company underwrites selected property and casualty insurance through its subsidiaries. It also offers insurance coverage in both the specialty admitted and excess and surplus markets.


It operates through three segments: casualty, property and surety.

The casualty segment offers health care and transportation insurance.

The property segment consists of commercial fire, earthquake, difference in conditions, marine, facultative and treaty reinsurance and select personal lines policies, including pet insurance and homeowners reinsurance services.

The surety segment specializes in writing contract surety coverage, licenses and bonds for commercial, energy and industrial sectors

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RLI has a market cap of $2.64 billion, a price-earnings (P/E) ratio of 24.90, an enterprise value of $2.86 billion, a price-book (P/B) ratio of 3.02 and a price-sales (P/S) ratio of 3.13.

According to GuruFocus, the company has a 6 of 10 financial strength rating with a cash-debt ratio of 0.28 and an equity-asset ratio of 0.30. Its interest coverage ratio of 17.91 ranks higher than 54% of the 130 companies in the Global Insurance - Property and Casualty industry.

The company has a 5 of 10 profitability and growth rating. It has an operating margin of 16.39%, a net margin of 12.74%, a return on assets (ROA) of 3.65% and a three-year revenue growth rate of 4.30%.

RLI recently announced first-quarter 2017 earnings

The company reported first-quarter 2017 net earnings of $19.8 million (45 cents per share), compared to $31.4 million (71 cents per share) for the first quarter of 2016. Operating earnings for the first quarter were $19.4 million (44 cents per share), compared to $24.0 million (54 cents per share) for the same period of 2016.

Highlights for the quarter included:

  • Underwriting income of $13.1 million, resulting in a combined ratio of 92.9.
  • 1% decline in gross premiums written.
  • Favorable development in prior years' loss reserves, resulting in a $4.7 million net increase in underwriting income.
  • Book value per share of $19.28, an increase of 4% from year-end 2016, inclusive of dividends.



Over the past year, RLI's stock price has declined an estimated 7%.

Guru George Soros (Trades, Portfolio) established a stake in RLI during the fourth quarter. Since then, the company's stock price has declined by an estimated 6%.

Below is a Peter Lynch chart that shows RLI is trading above its intrinsic value.

Disclosure: Author does not own any shares of this company.

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This article first appeared on GuruFocus.