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RLI Corp. (RLI) Q1 Earnings and Revenues Miss Estimates

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RLI Corp.’s RLI first-quarter 2020 operating earnings of 66 cents per share missed the Zacks Consensus Estimate by 9.6%. Also, the bottom line deteriorated 7% from the prior-year quarter.

RLI witnessed improved premiums from Casualty and Property segments along with increase in net investment income in the reported quarter.

RLI Corp. Price, Consensus and EPS Surprise

RLI Corp. Price, Consensus and EPS Surprise
RLI Corp. Price, Consensus and EPS Surprise

RLI Corp. price-consensus-eps-surprise-chart | RLI Corp. Quote

Operational Performance

Operating revenues for the reported quarter totaled $233 million, up 5.4% year over year. This upside can be attributed to higher net premiums earned and net investment income. However, the top line missed the Zacks Consensus Estimate by 1.3%.

Gross premiums written increased 6% year over year to $245.8 million. This uptick can be attributed to solid performance of Casualty and Property segments.

Total expenses increased 7.8% year over year to $202 million, primarily due to increased loss and settlement expenses, policy acquisition costs and interest expense on debt.

Net investment income rose nearly 7.3% year over year to $17.8 million. The company reported underwriting income of $17.2 million, which decreased 23.2% from the year-ago period due to poor performance of Casualty and Surety segment, partially offset by solid performance of the Property segment.

Combined ratio deteriorated 300 basis points (bps) year over year to 92%.

Financial Update

The company exited the first quarter with total investments and cash of $2.4 billion, down 5.6% from 2018 end.

Book value was $20.38 per share as of Mar 31, 2020, up 8.1% from the figure as of Dec 31, 2019.

Long-term debt was $149.3 million.

Statutory surplus decreased 8.4% to $943.1 million as of Mar 31, 2020 from the number as of Dec 31, 2019.

Return on equity was 9.4%, reflecting a decrease of 690 basis points year over year.

Net cash flow used in operations was $5.8 million in the quarter under review compared to net cash flow provided by operations of $30.8 million in the year-ago period.

Dividend Update

On Mar 20, the company paid out a cash dividend of 23 cents per share. Dividends totaled $527 million in the last five years.

Zacks Rank

RLI currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Insurers

Among other insurance industry players who have reported first-quarter earnings so far, the bottom line of The Progressive Corporation PGR and The Travelers Companies, Inc. TRV missed the respective Zacks Consensus Estimate.

Upcoming Releases

First American Financial Corporation FAF is scheduled to release first-quarter earnings on Apr 23.

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