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RLI Corp's (RLI) Q1 Earnings Beat, Revenues Miss Estimates

RLI Corporation’s RLI first-quarter 2016 operating earnings of 54 cents per share beat the Zacks Consensus Estimate by 3.8%. The bottom line also improved 8% year over year.

The company’s earnings growth was driven by increase in underwriting income.

Including realized gains of 17 cents, net income came in at 71 cents, up 1.4% year over year.

Operational Performance

Operating revenues totaled $190 million, up 4.1% year over year. The top line, however, missed the Zacks Consensus Estimate of $194 million by 2%.

Gross premiums written improved 3% year over year to $196.2 million on better performances by the Casualty and Surety segments. However, the upside was limited by weaker results at the Property segment. 

Total expense increased 2.8% year over year to $159.8 million due to higher loss and policy acquisition costs, other insurance expenses and general corporate expenses.

Underwriting income of this property and casualty insurer totaled $21.3 million, up 21% year over year. Underwriting income increased due to favorable development in prior years’ loss reserves. Combined ratio improved 150 basis points year over year.

RLI Corp.’s net investment income declined 0.9% year over year to $13.4 million. Investment portfolio’s total return was 3.2%. While the bond portfolio retuned 2.6%, equity portfolio returned was 5.7%.

Financial Update

RLI Corp. exited the first quarter with total investments and cash of $2.00 billion, up 2.8% from year-end 2015.

Book value was $19.97 per share as of Mar 31, 2016, up 5.6% from that as of Dec 31, 2015.

Long-term debt were $148 million, flat with 2015 end level.

Statutory Surplus increased 3.8% over 2015 level to $898 million at quarter end.

Dividend Payout

RLI Corp. paid regular quarterly dividend of 19 cents per share. RLI Corp. has paid more than $638 million paid over last five years.                                                                                                           

Zacks Rank and Stocks to Consider

RLI Corp. presently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the insurance industry are Alleghany Corp Y, Hallmark Financial HALL and Market Corp MKL. Each of these stocks sport a Zacks Rank #1 (Strong Buy).  

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RLI CORP (RLI): Free Stock Analysis Report
 
MARKEL CORP (MKL): Free Stock Analysis Report
 
HALLMARK FINL (HALL): Free Stock Analysis Report
 
ALLEGHANY CORP (Y): Free Stock Analysis Report
 
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