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RLI Corp (RLI) Q3 Earnings Miss Estimates, Revenues in Line

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RLI Corp.’s (RLI - Free Report) third-quarter 2016 operating earnings of 37 cents per share missed the Zacks Consensus Estimate by 40.3%. The bottom line also deteriorated 47.1% year over year. The earnings decline is attributable to a decrease in underwriting income.

Including realized gains of 13 cents, net income plunged 38.3% year over year to 50 cents.

Operational Performance

Operating revenues totaled $197 million, up 1.9% year over year. Revenues were in line with the Zacks Consensus Estimate.

Gross premiums written rose 3.4% year over year to $221.6 million on strong performance by the Casualty segment. However, the upside was partially limited by weakness in the Property and Surety segments.

Total expenses increased 18.3% year over year to $177.1 million due to higher loss and settlement expenses, policy acquisition costs, insurance operating expenses and general corporate expenses.

Underwriting income of this property and casualty insurer plunged 68.5% year over year to $10.6 million. Underwriting income deteriorated due to underperformance at Casualty, Property and Surety. Combined ratio deteriorated 1290 basis points year over year to 94.2%.

RLI Corp.’s net investment income declined 3.3% year over year to $13.5 million. Total return in the investment portfolio was 0.8%, while bond portfolio retuned 0.6%.  Equity portfolio returned 1.4%.

Financial Update

RLI Corp. exited the third quarter with total investments and cash of $2.12 billion, up 8.5% from year-end 2015.

Book value was $21.01 per share as of Sep 30, 2016, up 11.1% from that as of Dec 31, 2015.

Long-term debt was $148.7 million, up 0.1% from the 2015-end level.

Statutory surplus increased 7.8% year over year to $932.9 million.

Dividend Payout

RLI Corp. paid quarterly dividend of 20 cents per share. The insurer has paid more than $643 million over last five years.

Performance of Other Insurers

However, two other insurance companies managed to post better-than-expected third-quarter earnings. The bottom line at both Progressive Corp. (PGR - Free Report) and MGIC Investment Corp. (MTG - Free Report) beat their respective Zacks Consensus Estimates.

RLI CORP Price, Consensus and EPS Surprise

 

RLI CORP Price, Consensus and EPS Surprise | RLI CORP Quote

Zacks Rank and Other Stock

Currently, RLI Corp. carries a Zacks Rank #3 (Hold). A better-ranked stock from the same space is Cincinnati Financial Corp. (CINF - Free Report) , which holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Cincinnati Financial, dealing in the P&C insurance business in the United States, is set to report third-quarter results on Oct 25. The Zacks Consensus Estimate is currently pegged at 62 cents per share.

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