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.
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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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.
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.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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