RLI Appears Positioned to Profit From Strong Segment Performance



RLI Corp. (NYSE:RLI) is still in a robust position to expand, thanks to factors such as the company’s recently implemented rate rise, its more extensive earned premium base, its underwriting profit, and its efficient use of capital.

Past Earnings Surprises

Over the past seven quarters, RLI has consistently outperformed profit forecasts.

Rate of Return on Equity (ROE)

For the past 12 months, RLI Corp. (NYSE:RLI) return on equity (ROE) has been 18.9%, an increase of 690 basis points year over year.

Style Score

An A- for RLI Corp. (NYSE:RLI) VGM Score. This aids in locating stocks with the most favorable combination of value, growth, and momentum. The company’s growth potential is indicated by a B score. With this metric, we can examine a company’s future growth potential.

Favorable breezes for business

So far in 2022, RLI Corp. (NYSE:RLI) core business of Casualty, Property, and Surety has seen strong growth on the back of increased premiums from commercial excess and personal umbrella due to both rate hikes and increased distribution.

Commercial real estate has benefited from the increase in wind and earthquake insurance premiums. Marine goods could gain from rising prices, increased customer retention, and new possibilities in the inland marine sector.

The Surety division has been successful thus far because of the quality of its offerings, the expansion of its existing clientele, and the creation of bonds for new businesses.

Underwriting income should rise assuming mild weather-related losses in the Property sector and a slightly better underlying loss ratio in the Casualty segment.

The underwriting performance of RLI should improve if the current accident year is successful and if RLI Corp. (NYSE:RLI) loss reserves improve from previous accident years.

RLI Corp. (NYSE:RLI) has strong financial results and operating results. If premiums are collected at a greater rate, it should be beneficial to operating cash flow. Borrowings under the revolving credit facility, now pegged at $60 million, can rise to $120 million under certain conditions.

RLI Corp. (NYSE:RLI) has grown its dividend payment for 47 consecutive years, with a compound annual growth rate (CAGR) of 4.2% from 2014 through 2022. This dividend payment has been made for 183 consecutive quarters. Since 2011, the insurance company has distributed special cash dividends to its stockholders. In the past decade, the firm has given roughly $1.13 billion to shareholders through special dividends, and its regular quarterly payout has risen by an average of 5.2% annually. The remaining buyback program limit for the corporation is $87.5 million.

Using the exact sales figure of $1.2 billion, the Zacks Consensus Estimate for RLI’s profits in 2022 is $4.85, showing an increase of 25.3%.

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About the author: I'm a financial journalist with more than 1.5 years of experience. I have worked for different financial companies and covered stocks listed on ASX, NYSE, NASDAQ, etc. I have a degree in marketing from Bahria University Islamabad Campus (BUIC), Pakistan.