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RLI Corp (RLI) Q2 Earnings Beat, Revenues Miss Estimates

RLI Corp.’s RLI second-quarter 2017 operating earnings of 61 cents per share surpassed the Zacks Consensus Estimate by nearly 13%.

The bottom line remained flat year over year. The quarter witnessed lower premiums owing to re-underwriting on auto-related exposures, and discontinuation of some products. Nonetheless, the Casualty segment performed strongly.  

Including net realized gain of 2 cents, net income declined 9% year over year to 59 cents per share due to adjustment of some one time items.

RLI Corp. Price, Consensus and EPS Surprise

 

RLI Corp. Price, Consensus and EPS Surprise | RLI Corp. Quote

Operational Performance

Operating revenues for the quarter totaled $197.5 million, up 2.3% year over year due to higher net premiums earned and net investment income. However, revenues missed the Zacks Consensus Estimate of $199 million by 1%.

Gross premiums written declined 4% year over year to $240.9 million due to weaker performance by the Property and Casualty, and Surety segments.

Total expenses increased 6.4% year over year to $168.9 million due to higher loss and settlement expenses, policy acquisition costs and insurance operating expenses.

Underwriting income declined 24% year over year to $19.7 million due to lower underwriting income in the Property and Casualty segment. Combined ratio deteriorated 380 basis points year over year to 89.3%. Nonetheless, the company has been able to deliver underwriting profits for the last 21 straight years.  

RLI Corp.’s net investment income improved nearly 1.5% year over year to $13 million. Total return from the investment portfolio was 1.8%, while the bond portfolio retuned 1.7%. The equity portfolio returned 1.8%.

Financial Update

RLI Corp. exited the second quarter with total investments and cash of $2.1 billion, up 4% from year-end 2016.

Book value was $19.93 per share as of Jun 30, 2017, up 6.4% from Dec 31, 2016.

Long-term debt was $148.8 million, reflecting a 0.1% increase from the 2016-end level.

Statutory surplus increased 5.1% year over year to $904 million.

Net cash flow from operations improved 31.1% to $63.3 million in the quarter.

Dividend Payout

On Jun 20, 2017, the company paid out a cash dividend of 21 cents per share, reflecting a 5% year-over-year increase. During the last five years, RLI has paid cumulative dividends of over $632 million.

RLI has been consistently paying dividends for the last 42 years.

Zacks Rank

Currently, RLI Corp. has a Zacks Rank #3 (Hold).

You can see https://www.zacks.com/stocks/buy-list/?ADID=zp_1link&ICI... _1link">the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Insurers

Among other players from the insurance industry that have reported their second-quarter earnings, the bottom line at Brown & Brown, Inc. BRO and Fidelity National Financial, Inc. FNF beat their respective Zacks Consensus Estimate, while The Progressive Corporation PGR missed the same.

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Brown & Brown, Inc. (BRO): Free Stock Analysis Report
 
RLI Corp. (RLI): Free Stock Analysis Report
 
Progressive Corporation (The) (PGR): Free Stock Analysis Report
 
Fidelity National Financial, Inc. (FNF): Free Stock Analysis Report
 
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