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RLI Corp. (RLI) Q2 Earnings Beat Estimates, Revenues Miss

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RLI Corp.’s (RLI - Free Report) second-quarter 2020 operating earnings of 77 cents per share outpaced the Zacks Consensus Estimate by 71.1%. The bottom line also improved 16.7% from the prior-year quarter.

The company’s results benefited from higher revenues and reduced expenses.

Operational Performance

Operating revenues for the reported quarter were $226 million, up 0.4% year over year. This upside can be attributed to higher net premiums earned, partially offset by reduced net investment income. However, the top line missed the Zacks Consensus Estimate by 3.3%.

Gross premiums written inched up 1.4% year over year to $287.2 million. This uptick can be attributed to solid performance of Casualty and Property segments. However, net premiums written of $230.1 million declined 0.4% on a year-over year basis, which is primarily due to lower premiums written in the Casualty and Surety segments.

However, net investment income declined 0.5% year over year to $16.9 million.

Nevertheless, total expenses declined 4.7% year over year to $188.5 million, primarily due to lower loss and settlement expenses, policy acquisition costs, insurance operating expenses and general corporate expenses.

The company reported underwriting income of $24.2 million, which surged 62.4% from the year-ago period courtesy of robust performance of Casualty and Property segments, partially offset by weak performance of the Surety segment.

Combined ratio improved 440 basis points (bps) year over year to 88.4%.

RLI Corp. Price, Consensus and EPS Surprise

RLI Corp. Price, Consensus and EPS Surprise

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

Financial Update

The company exited the second quarter with total investments and cash of $2.6 billion, up 3.3% from 2019 end.

Book value was $23.39 per share as of Jun 30, 2020, up 5.5% from the figure as of Dec 31, 2019.

Long-term debt was $149.4 million, which inched up marginally from 2019 end.

Statutory surplus decreased 0.9% to $1.02 billion as of Jun 30, 2020 from the figure as of Dec 31, 2019.

Return on equity was 17%, reflecting a contraction of 370 bps year over year.

Net cash flow from operations was $89.5 million in the quarter under review, up 20.1% from the year-ago period.

Dividend Update

On Jun 19, the company paid out a cash dividend of 24 cents per share, which indicates a hike of 4.3% from the prior dividend payout of 23 cents. Dividends totaled more than $529 million in the last five years.

Zacks Rank & Performance of Other Insurers

RLI currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Among other insurance industry players, which have reported second-quarter earnings so far, the bottom line of The Progressive Corporation (PGR - Free Report) beat the Zacks Consensus Estimate, while that of The Travelers Companies, Inc. (TRV - Free Report) met the same. Notably, the bottom line of W. R. Berkley Corporation (WRB - Free Report) missed the Zacks Consensus Estimate.

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