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RLI Q4 Earnings and Revenues Surpass, Premiums Increase

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RLI Corp.’s (RLI - Free Report) fourth-quarter 2017 operating earnings of 51 cents per share surpassed the Zacks Consensus Estimate by 6.3%. However, the bottom line deteriorated 8.9% year over year.

RLI Corp. Price, Consensus and EPS Surprise

 

RLI Corp. Price, Consensus and EPS Surprise

RLI Corp. price-consensus-eps-surprise-chart | RLI Corp. Quote

 

Lower underwriting income and higher expenses were primarily responsible for this downside. Nonetheless, the company witnessed a strong performance at its property and casualty segments.

Net income soared 79.2% year over year to $1.29 per share.

Full-Year Highlights

For 2017, RLI Corp. reported operating earnings per share of $1.60, beating the Zacks Consensus Estimate by 2.6% but declined 23.1% year over year.

Total revenues of $792.8 million rose 1.4% year over year.

Operational Performance

Operating revenues for the quarter totaled $202.7 million, up 0.9% year over year owing to higher net premiums earned as well as net investment income. Also, the top line outpaced the Zacks Consensus Estimate of $198 million by 2.4%.

Gross premiums written improved 11% year over year to $229.1 million on the back of a solid performance by the Property and Casualty segments.

Total expenses increased 6% year over year to $184.7 million due to higher loss and settlement expenses, policy acquisition costs, insurance operating expenses plus general corporate expenses.
 
The company reported underwriting income of $26.8 million, which plunged 64.8% year over year. Combined ratio deteriorated 690 basis points year over year to 96.4%.
 
The property and casualty (P&C) insurer’s net investment income improved nearly 9.8% year over year to $14.4 million. Total return from the investment portfolio was 1.4% while the bond portfolio returned 0.4%. The equity portfolio yielded 5.7%.

Financial Update

The company exited the fourth quarter with total investments and cash of $2.1 billion, up 5.9% from the year-end 2016.

Book value was $19.33 per share as of Dec 31, 2017, up 3.1% from Dec 31, 2016.

Long-term debt was $148.9 million, reflecting a 0.1% rise from the 2016-end level.

Statutory surplus nudged up 0.5% year over year to $864.6 million.

Net cash flow from operations inched up 0.3% to $51.6 million in the quarter.

Dividend Payout

On Dec 27, 2017, the company paid out a cash dividend of 21 cents per share for an aggregate amount of $86.5 million. In the last 10 years, the average annual growth rate of the P&C insurer’s quarterly dividend came up to 6.2%.

Interestingly, on the aforementioned date, the company paid a special cash dividend of $1.75 per share, resulting in a tax benefit of $1.9 million (4 cents per share).

Zacks Rank

RLI Corp. has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Insurers

Among other players from the insurance industry having reported fourth-quarter earnings, the bottom line of Brown & Brown, Inc. (BRO - Free Report) , MGIC Investment Corporation (MTG - Free Report) and The Progressive Corporation (PGR - Free Report) beat the respective Zacks Consensus Estimate.

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