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RLI Corp.'s Premium Growth Impresses, Rising Costs a Woe

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RLI Corp. (RLI - Free Report) has successfully built its solid product and service portfolio over time that helps it to cater to evolving demands of its customers. The company is an industry-leading property and casualty (P&C) writer, boasting an impressive track record of underwriting profits in 37 of the past 41 years (especially the last 21 years).

A compelling portfolio has been aiding premiums to grow, reflected through revenue growth graph over a considerable period. We expect the momentum to continue, banking on the strength of its diversified portfolio.

A strong local branch office network, broad range of product offerings as well as focus on specialty insurance lines helps the company retain profitability. This apart, the company is committed toward expanding business through new professional liability products.

The company is also capitalizing on the growing needs of cyber insurance with its cyber liability insurance. This particular insurance will protect medium to large sized firms from financial damage associated with cyber attacks and data breaches.

Additionally, the P&C insurer boasts an excellent track record of combined ratio over the past several years. Despite a challenging operating environment, the company has been able to exhibit superior underwriting discipline owing to continued favorable combined ratio. Hence, RLI Corp. will continue to focus on strengthening underwriting results to help boost overall results.

It is important to note that RLI Corp. anticipates witnessing improved net investment income, owing to gradual improvement in rate environment.

RLI Corp's effective capital deployment in enhancing shareholders value will retain investors’ confidence in the stock.

However, RLI Corp.’s exposure to catastrophe losses induces volatility in underwriting results thus affecting earnings. Plus, escalating expenses will remain a concern as it is likely to restrict operating margin expansion.

Stocks that Warrant a Look

Investors interested in stocks worth considering from the insurance industry might take a look at First American Corporation (FAF - Free Report) , CNO Financial Group, Inc. (CNO - Free Report) and Argo Group International Holdings, Ltd. .

First American Corporation provides financial services. The company delivered positive surprises in all the last four quarters with an average beat of 12.64%.

CNO Financial develops, markets and administers health insurance, annuity, individual life insurance and other insurance products for senior and middle-income markets in the United States. The company delivered positive surprises in three of the trailing four quarters with an average beat of 6.69%.

Argo Group underwrites specialty insurance and reinsurance products in the property and casualty market worldwide. The company delivered positive surprises in all the last four quarters with an average beat of 26.51%.

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