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RLI's (RLI) Q4 Earnings Surpass Estimates, Increase Y/Y

Zacks Equity Research

RLI Corp.’s RLI fourth-quarter 2019 operating earnings of 63 cents per share beat the Zacks Consensus Estimate by 28.6%. The bottom line improved 57.5% from the prior-year quarter.

The quarter benefited from improved premiums from Casualty and Property segments, growth in net investment income and reduced expenses.

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, missing the Zacks Consensus Estimate by 1.1%. The top line however increased 5.4% year over year. This upside can be attributed to higher net premiums earned (up 5.7% year over year) and net investment income (up 4.8%).

Gross premiums written increased 6% year over year to $273.8 million. This uptick was driven by higher contribution from Casualty and Property segments.

Total expenses decreased 0.2% year over year to nearly $204.7 million, primarily due to reduced loss and settlement expenses.

Net investment income rose 4.8% year over year to $17.8 million. Total return from the investment portfolio was 1.8% year over year.

The company reported underwriting income of $16.5 million, which increased 650% from the year-ago period. This upside was due to solid results at the Property, Casualty and Surety segments.

Combined ratio for the fourth quarter improved 650 basis points year over year to 92.4%.

Financial Update

The company exited the fourth quarter with total investments and cash of $2.6 billion, up 16.7% from 2018 end levels.

Book value was $22.18 per share as of Dec 31, 2019, up 22.3% from the figure as of Dec 31, 2018.

Long-term debt was $149.3 million, up 0.1% from 2018 end.

Statutory surplus improved 24.1% to $1029.7 million as of Dec 31, 2019 from $829.8 million as of Dec 31, 2018.

Return on equity was 27.8% for the twelve months ended Dec 31, reflecting an increase of 2420 basis points.

Net cash flow from operations increased 67.8% year over year to $90.2 million in the quarter under review.

Dividend Update

On Dec 20, 2019, the company paid out quarterly dividend of 23 cents per share and a special cash dividend of $1.00 per share. The company returned nearly $1.25 billion to shareholders in the last 10 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.

Upcoming Releases

Brown & Brown, Inc. BRO will release fourth-quarter 2019 earnings on Jan 27. The Zacks Consensus Estimate for earnings stands at 27 cents per share.

Principal Financial Group, Inc. PFG will release fourth-quarter 2019 earnings on Jan 28. The Zacks Consensus Estimate for earnings is pegged at $1.42 per share.

W.R. Berkley Corporation WRB will release fourth -quarter 2019 earnings on Jan 28. The Zacks Consensus Estimate for earnings stands at 74 cents per share.

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