RLI Corp. RLI is well-poised for growth, driven by a higher earned premium base, underwriting profit and effective capital deployment.
Earnings Surprise History
The bottom line of RLI surpassed earnings estimates in each of the last four quarters, the average being 45.89%.
Zacks Rank & Price Performance
RLI currently carries a Zacks Rank #1 (Strong Buy). In the past year, the stock has gained 9.4% against the industry’s decrease of 2.2%. Solid segmental results and capital position are likely to help the stock retain the momentum.
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The Zacks Consensus Estimate for 2022 earnings per share is pegged at $4.38, indicating a year-over-year increase of 13.2%.
RLI’s core business, Casualty, Property, and Surety has witnessed significant growth over the past several years. The Casualty segment continues to gain from rate increases, expanded distribution base in personal umbrella, new production sources and geographic expansion.
The commercial property business has been gaining from higher rates of wind and earthquake exposures. Rate increases, improved retention and new opportunities in the inland marine space should benefit marine products.
The Surety segment continues to benefit from its compelling product portfolio, growth within existing accounts and writing bonds with new customers. These tailwinds are likely to boost the top line of the insurer.
By virtue of improved leverage on the expense base, with the continued growth of net premiums earned, the expense ratio of RLI should improve.
Underwriting profit is likely to gain from benign weather-related losses in the Property segment, continued favorable benefits from the prior year's loss reserves across all the segments and improved underlying loss ratio in the Casualty segment.
Positive current accident year results and favorable development in prior accident years’ loss reserves are likely to benefit the underwriting results of RLI.
RLI boasts solid operating results and its financial position remained strong.
Operating cash flows should gain from higher premium receipts. RLI expects the cash generated by operations and investments to provide sufficient sources of liquidity to meet the anticipated needs of the insurer over the next 12 to 24 months.
RLI has been paying dividends for 183 consecutive quarters and increased dividends regularly in the last 47 years. RLI currently yields 0.9%, which is better than the industry average of 0.4%.
The Zacks Consensus Estimate for RLI’s 2022 earnings has moved 0.7% north in the past seven days. This should instill investors' confidence in the stock.
Other Stocks to Consider
Some other top-ranked stocks in the property and casualty insurance industry are HCI Group, Inc. HCI, American Financial Group, Inc. AFG and Cincinnati Financial Corporation CINF. While HCI Group and American Financial currently sport a Zacks Rank #1, Cincinnati Financial carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for HCI Group’s 2022 and 2023 earnings has moved 33.3% and 40% north, respectively, in the past 60 days. In the past year, HCI Group stock has lost 26.1%.
The Zacks Consensus Estimate for HCI’s 2022 and 2023 earnings per share indicates year-over-year increases of 280.9% and 75%, respectively.
American Financial’s earnings surpassed estimates in each of the last four quarters, the average beat being 41.72%. In the past year, American Financial has rallied 11.8%.
The Zacks Consensus Estimate for AFG’s 2022 and 2023 earnings has moved 9.8% and 6.9% north, respectively, in the past 60 days.
The bottom line of Cincinnati Financial surpassed earnings estimates in each of the last four quarters, the average being 32.55%. In the past year, the insurer has rallied 1.6%.
The Zacks Consensus Estimate for Cincinnati Financial’s 2022 and 2023 earnings has moved 3.6% and 1.7% north, respectively, in the past 60 days.
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