Rating Action on RLI Corp.

A.M. Best Co. has reiterated its issuer credit ratings (ICR) of “a-” for RLI Corp. (RLI - Analyst Report). The rating agency has upgraded the outlook to positive from stable.

Also, A.M. Best has reiterated the debt rating of “a-” on the $100 million 5.95% senior unsecured notes, due 2014 of RLI Corp. and upgraded the outlook to positive from stable.

The credit rating agency reiterated ICR of “aa-” and financial strength rating (FSR) of A+ (Superior) of RLI Group and its members. The outlook of ICR is upgraded to positive from stable while the outlook of FSR remains stable.

The upward revision of the ICR outlook came on the back of solid long term operational performance, better capitalization, outstanding business profile as well as financial position. However, these positives are somewhat dwarfed by above average equity leverage and the resulting susceptibility of earnings to the volatility of the financial markets.

Additionally, A.M. Best has affirmed the FSR of A (Excellent) and ICR of “a+” of Contractors Bonding and Insurance Company (CBIC). The outlook remains stable.

The rating affirmations came on the back of CBIC’s sold risk-adjusted capitalization, continued strong performances and advantages of being affiliated to RLI, partially offset by its restricted business scope and slightly lower profitability due to soft market conditions. A.M. Best expects CBIC’s exposure to RLI and offering the latter's products to RLI customers will eventually benefit CBIC.

A.M. Best Co. has also upgraded ICR and senior debt ratings to “a” from “a-” of ACE Limited (ACE - Analyst Report), a peer of RLI Corp.

The quantitative Zacks #3 Rank (short term Hold rating) on the stock indicates no clear directional pressure on the shares over the near term.

Headquartered in Peoria, Illinois, RLI Corp. is a specialty property-casualty (P&C) underwriter that caters primarily to niche markets through its main operating subsidiary, RLI Insurance Company.

Read the full analyst report on RLI

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