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RLI Q2 Earnings & Revenues Top Estimates on Solid Underwriting

RLI Corp. RLI reported second-quarter 2022 operating earnings of $1.49 per share, beating the Zacks Consensus Estimate by 6.1%. The bottom line improved 36.7% from the prior-year quarter.

The quarterly results benefited from solid performance across all its segments and favorable reserve development, which aided underwriting results, and higher net investment income.

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 were $301.3 million, up 16.9% year over year, driven by 17.3% higher net premiums earned and 10.5% higher net investment income. The top line beat the Zacks Consensus Estimate of $276 million by 0.9%.

Gross premiums written increased 17% year over year to $418.8 million. This uptick can be attributed to the solid performance of Casualty (up 5.1%), Surety (up 12.6%) and Property segments (up 47.8%).

Net investment income increased 10.5% year over year to $18.5 million.

Total expenses increased 10.1% year over year to $231.3 million, primarily due to higher policy acquisition costs, loss and settlement expenses, and interest expenses on debt.

Underwriting income of $56 million increased 53%, primarily due to the strong performance of the Property and Surety segments.

The combined ratio improved 460 basis points (bps) year over year to 80.2.

Financial Update

RLI exited the second quarter of 2022 with total investments and cash of $2.9 billion, down 7.3% from 2021 end.

Book value was $23.02 per share as of Jun 30, 2022, down 13% from the figure as of Dec 31, 2021.

Long-term debt was $199.8 million, flat from 2021 end.

Net cash flow from operations were $131.6 million, up 26.3% year over year.

The statutory surplus increased 0.7% from 2021 end to $1.12 billion as of Jun 30, 2022.

Return on equity was 14.4%, reflecting a contraction of 1030 bps year over year.

Dividend Update

RLI paid a quarterly dividend of 26 cents in the second quarter, an increase of 4%. RLI’s cumulative dividends total more than $510 million paid over the last five years.

Business Update

RLI has agreed to sell its minority interest in Maui Jim, Inc. and estimates net proceeds of about $500 million.  The final proceeds are to be determined at closing, based on adjustments to the purchase price for working capital and other items. The sale is expected to close in the second half of 2022

Zacks Rank

RLI currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Another P&C Insurer

The Progressive Corporation’s PGR earnings per share of 95 cents were in line with the Zacks Consensus Estimate. The bottom line dropped 37.1% year over year.

Progressive’s net premiums earned grew 13% to $12.1 billion. The combined ratio improved 90 bps from the prior-year quarter’s level to 95.6.

Upcoming Releases

Chubb Limited CB will report second-quarter 2022 results on Jul 26. The Zacks Consensus Estimate for the second quarter is pegged at $3.59, indicating a decrease of 0.8% from the year-ago reported figure.

Chubb beat estimates in the last four quarters.

Axis Capital Holdings Limited AXS will report second-quarter 2022 results on Jul 27. The Zacks Consensus Estimate for the second quarter is pegged at $1.49, indicating a decrease of 25.5% from the year-ago reported figure.

Axis Capital beat estimates in the last four quarters.


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