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RLI Corp. Hikes Dividend by 6.25%

Zacks Equity Research

In a concerted effort to enhance shareholder value, the board of directors of RLI Corp.  (RLI) authorized an increase of approximately 6.25% in its dividend. The company will now pay a quarterly dividend of 34 cents per share, up from 32 cents per share paid earlier.

The newly increased dividend will be paid on Jun 20, 2013 to the shareholders of record as of May 31, 2012. The increased dividend represents a yield of 1.9%. It is better than the dividend yield of a few other property and casualty insurers - HCC Insurance Holdings Inc. (HCC) with a yield of 1.5%, Montpelier Re Holdings Ltd. (MRH) with a yield of 1.8% and Platinum Underwriters Holdings Ltd. (PTP) with a yield of 0.6%.

RLI Corp. has been hiking its dividend over the past 38 years. The previous hike was authorized in May 2012, when the board approved a 6.7% increase in dividend. The company has a record of paying dividends for 148 consecutive quarters.

RLI Corp. has always remained focused on returning more value to its shareholders. In fact, the company has paid a special dividend once in each of the last three years. A special dividend of $5.00 per share was paid in Dec 2012.

Based on the 21.6 million shares outstanding as of Mar 31, 2013, the company requires $7.3 million for the payment of the quarterly dividend. Cash balance at the end of the third quarter stood at 22.4 million, sufficient to meet the additional requirement.

Mid last month, RLI Corp. reported first-quarter 2013 operating earnings of $1.04 per share. Though it lagged the Zacks Consensus Estimate of $1.06 by 1.89%, operating earnings surpassed the year-ago level of 96 cents by 8.3%. The year-over-year improvement came on the back of better underwriting results at Casualty and Surety.

RLI Corp. carries a Zacks Rank #3 (Hold).

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