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RLI Corporation (RLI) Up 10% in a Year: More Room to Run?

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Shares of RLI Corporation RLI have risen 10.1% in a year against the industry’s decrease of 5.6% as well as the Finance sector’s and the Zacks S&P 500 composite’s decline of 13.3% and 11.2%, respectively, in the same period. With a market capitalization of $5.2 billion, the average volume of shares traded in the last three months was about 0.2 million.

Zacks Investment Research
Zacks Investment Research


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A compelling portfolio, a focus on specialty insurance lines and an impressive record of underwriting profits and effective capital deployment continue to drive this insurer.

RLI has a solid track record of beating estimates in the last eight quarters, and generated a 20-year annual shareholder return of 15.9% and delivered 12.2% return on equity over the past 10 years.

Can RLI Retain the Momentum?

The Zacks Consensus Estimate for RLI Corporation’s 2022 earnings is pegged at $4.38, indicating an increase of 13.2% on 16.9% higher revenues of $1.2 billion. RLI has a Growth Score of B. This style score analyzes the growth prospects of a company.

This Zacks Rank #3 (Hold) company boasts one of the industry’s most profitable P&C writers with an impressive track record of delivering 26 consecutive years of underwriting profitability. RLI Corporation is continuously taking efforts, such as dropping underperforming products from its property business and maintaining significant reinsurance protection against large losses, to boost underwriting results.

With a highly diverse product portfolio, the insurer continues to generate an improved topline over the years. Banking on new products, re-underwriting several of its products, a sturdy business expansion, a sustained rate increase, expanded distribution and operational strength, the momentum is expected to continue.

The insurance industry is experiencing accelerated digitalization, and RLI is no exception to that. The insurer is heavily investing in technological development to improve efficiency.

This premier specialty underwriter remains focused on generating long-term industry-leading combined ratios and book value growth.

RLI Corporation maintains a conservative underwriting and reserving policy and continues to achieve favorable reserve releases from prior years. Such a robust capital position provides significant financial flexibility for operating subsidiaries.

Banking on a solid financial position, RLI maintains an impressive track of paying dividends for 183 consecutive quarters, increasing regular dividends in the last 47 straight years and paying special dividends for 12 straight years, with a dividend yield of 0.9%, better than the industry average of 0.4%. This has made the stock an attractive pick for yield-seeking investors. It also has $87.5 million of remaining capacity from the repurchase program.

RLI has a VGM Score of B. This helps identify stocks with the most attractive value, growth and momentum.

Stocks to Consider

Some better-ranked stocks from the insurance industry are James River Group Holdings, Ltd. JRVR, Zurich Insurance Group Ltd. ZURVY and MGIC Investment Corp. MTG. While James River Group sports a Zacks Rank #1 (Strong Buy), Zurich Insurance and MGIC Investment each carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for James River Group’s 2022 and 2023 earnings implies 136% and 13.1% year-over-year growth, respectively.

The Zacks Consensus Estimate for JRVR’s 2022 and 2023 earnings has moved 15.1% and 4.9% north, respectively, in the past 60 days. In the past year, the insurer has declined 36.2%.

The Zacks Consensus Estimate for Zurich Insurance’s 2022 and 2023 earnings has moved 3% and 5.1% north, respectively, in the past 60 days. In the past year, ZURVY stock has rallied 7.5%.

The Zacks Consensus Estimate for Zurich Insurance’s 2022 and 2023 earnings implies 7.5% and 9.6 year-over-year growth, respectively.

MGIC Investment’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 10.9%. In the past year, MTG stock has dropped 6%.

The Zacks Consensus Estimate for MGIC Investment’s 2022 and 2023 earnings has moved 1.8% and 3.2% north, respectively, in the past 60 days. 


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RLI Corp. (RLI) : Free Stock Analysis Report
 
MGIC Investment Corporation (MTG) : Free Stock Analysis Report
 
Zurich Insurance Group Ltd. (ZURVY) : Free Stock Analysis Report
 
James River Group Holdings, Ltd. (JRVR) : Free Stock Analysis Report
 
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