RLI Corp (RLI) Reports Solid Q4 Earnings and Concludes 2023 with Robust Underwriting Profit
Net Earnings: Q4 net earnings increased to $114.6 million ($2.49 per share) from $97.8 million ($2.13 per share) in Q4 2022.
Operating Earnings: Q4 operating earnings slightly up at $71.1 million ($1.54 per share) compared to $70.5 million ($1.53 per share) in the prior year.
Gross Premiums Written: Achieved a 13% growth in Q4, contributing to a strong underwriting performance.
Combined Ratio: Reported an 83 combined ratio for Q4, indicating profitable underwriting operations.
Investment Income: Net investment income for the year increased by 39.9% to $120.4 million.
Dividends: Paid a special cash dividend of $2.00 per share and a regular quarterly dividend of $0.27 per share in December 2023.
Book Value Growth: Book value per share increased by 19.6% to $30.97 at year-end 2023.
On January 24, 2024, RLI Corp (NYSE:RLI) released its 8-K filing, detailing the company's financial performance for the fourth quarter and full year of 2023. RLI Corp, a specialty insurer known for underwriting property and casualty insurance, has reported a robust set of earnings, underpinned by disciplined underwriting and strong investment income.
RLI Corp's President & CEO, Craig Kliethermes, highlighted the company's 28th consecutive year of underwriting profit, driven by premium growth across all product segments. The company's focus on underwriting discipline and financial strength has been pivotal in fulfilling its commitments to policyholders and maintaining superior customer service.
Financial Performance Overview
For the fourth quarter of 2023, RLI achieved $59.8 million of underwriting income on an 82.7 combined ratio, compared to $54.0 million on an 82.1 combined ratio in the same quarter of 2022. The full year saw RLI attain $173.2 million of underwriting income on an 86.6 combined ratio, despite being partially offset by significant storm losses.
The company's net investment income saw a substantial increase, rising 14.4% to $32.5 million for the quarter and 39.9% to $120.4 million for the year. This growth in investment income contributed significantly to the company's comprehensive earnings, which included after-tax unrealized gains from the fixed income portfolio.
RLI's commitment to shareholder returns remained evident with the payment of a special cash dividend and a regular quarterly dividend in December 2023, marking 190 consecutive quarters of dividend payments. Over the past decade, RLI has returned $1.41 billion to shareholders, with the regular dividend growing an average of 4.7% per year.
Challenges and Opportunities
Despite the positive results, RLI faced challenges in 2023, including $81.2 million of Hawaiian wildfire and other storm losses. However, favorable development in prior years' loss reserves resulted in a $95.3 million net increase to underwriting income, helping to mitigate the impact of these catastrophic events.
Looking ahead to 2024, CEO Kliethermes expressed gratitude towards RLI's associate-owners, whose dedication is seen as a driving force for the company's ability to navigate future challenges and opportunities.
Financial Statements Highlights
RLI's balance sheet remains strong, with total assets increasing by 8.7% to $5.18 billion. Shareholders' equity also saw a significant rise, growing by 20.1% to $1.41 billion. The company's book value per share increased to $30.97, reflecting a 19.6% growth from the previous year-end.
Net cash flow from operations was notably positive, with a substantial increase to $464.3 million for the year, demonstrating RLI's operational efficiency and financial health.
Conclusion
RLI Corp's financial results for the fourth quarter and full year of 2023 showcase a company that continues to leverage its underwriting expertise and investment acumen to deliver strong financial performance. With a disciplined approach to risk management and a commitment to shareholder value, RLI is well-positioned to maintain its track record of profitability and growth in the specialty insurance market.
For more detailed insights and analysis, investors and interested parties are encouraged to review RLI Corp's full earnings report and join the management conference call scheduled for January 25, 2024.
Explore the complete 8-K earnings release (here) from RLI Corp for further details.
This article first appeared on GuruFocus.
