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Reasons Why Investing in RLI Stock is a Prudent Move Now
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RLI Corp. (RLI - Free Report) is well-poised for growth, driven by a rate increase, higher earned premium base, underwriting profit and effective capital deployment.
Northbound Estimate Revision
The Zacks Consensus Estimate for RLI’s 2022 and 2023 earnings has moved 1.3% and 1.2% north in the past 60 days. This should instill investors' confidence in the stock.
Earnings Surprise History
RLI has a solid track record of beating earnings estimates in each of the last six quarters.
Style Score
RLI has an impressive Growth Score of B. This style score helps analyze the growth prospects of a company.
Business Tailwinds
RLI’s core business, Casualty, Property, and Surety witnessed significant growth in 2021 riding higher premiums from commercial excess and personal umbrella due to rate increases and expanded distribution. Growth within existing accounts and new business benefited Commercial surety while market disruption led to increased premium for miscellaneous surety. These tailwinds are likely to drive the top line of the insurer.
The Zacks Consensus Estimate for the insurer’s 2022 and 2023 revenues is pegged at $1.17 billion and $1.25 billion, respectively, indicating a year-over-year increase of 11.6% and 6.2%.
RLI achieved the 26th consecutive year of underwriting profit in 2021. Positive current accident year results and favorable development in prior accident years’ loss reserves are likely to benefit the underwriting results of RLI.
By virtue of a higher earned premium base, the expense ratio of RLI should continue to decrease.
RLI achieved 26 straight years of a combined ratio below 100 and beat the industry ratio by an average of 11 margin points over the past 10 years. It also maintains significant reinsurance protection against large losses.
Sturdy Balance Sheet
The financial position of RLI was strong in 2021. The insurer expects to have sufficient sources of liquidity to meet the anticipated needs over the next 12 to 24 months. Its revolving credit facility provides for a borrowing capacity of $60 million, which can be increased to $120 million under certain circumstances. RLI posted positive operating cash flow in the last two years.
Impressive Dividend History
RLI has a distinguished track record of success with 182 consecutive quarters of dividend increases and currently yields 0.9%, which is better than the industry average of 0.3%. In the fourth quarter of 2021, the insurer declared a special cash dividend in a bid to share the rewards of strong performance and return excess capital to shareholders.
The Zacks Consensus Estimate for 2023 earnings per share is pegged at $4.10, indicating a year-over-year increase of 7.8%.
Zacks Rank & Price Performance
RLI currently carries a Zacks Rank #2 (Buy). In the past year, the stock has lost 2.4% against the industry’s increase of 17.6%. Solid segmental results and capital position are likely to help the stock bounce back.
Image Source: Zacks Investment Research
Other Stocks to Consider
Some other top-ranked stocks from the property and casualty insurance sector are Cincinnati Financial Corporation (CINF - Free Report) , United Fire Group, Inc. (UFCS - Free Report) and Kinsale Capital Group, Inc. (KNSL - Free Report) . While Cincinnati Financial and United Fire currently sport a Zacks Rank #1 (Strong Buy), Kinsale Capital carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The bottom line of Cincinnati Financial surpassed earnings estimates in each of the last four quarters, the average being 38.48%. In the past year, the insurer has rallied 28.5%.
The Zacks Consensus Estimate for Cincinnati Financial’s 2022 and 2023 earnings has moved 5.7% and 5.5% north, respectively, in the past 60 days.
United Fire’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 275.45%. In the past year, UFCS stock has declined 10.7%.
The Zacks Consensus Estimate for UFCS’ 2022 and 2023 earnings has moved 122.2% and 76.9% north, respectively, in the past 60 days.
Kinsale Capital’s earnings surpassed estimates in each of the last four quarters, the average beat being 32.04%. In the past year, Kinsale Capital has rallied 39.9%.
The Zacks Consensus Estimate for KNSL’s 2022 and 2023 earnings has moved 5.9% and 8.2% north, respectively, in the past 60 days.
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Reasons Why Investing in RLI Stock is a Prudent Move Now
RLI Corp. (RLI - Free Report) is well-poised for growth, driven by a rate increase, higher earned premium base, underwriting profit and effective capital deployment.
Northbound Estimate Revision
The Zacks Consensus Estimate for RLI’s 2022 and 2023 earnings has moved 1.3% and 1.2% north in the past 60 days. This should instill investors' confidence in the stock.
Earnings Surprise History
RLI has a solid track record of beating earnings estimates in each of the last six quarters.
Style Score
RLI has an impressive Growth Score of B. This style score helps analyze the growth prospects of a company.
Business Tailwinds
RLI’s core business, Casualty, Property, and Surety witnessed significant growth in 2021 riding higher premiums from commercial excess and personal umbrella due to rate increases and expanded distribution. Growth within existing accounts and new business benefited Commercial surety while market disruption led to increased premium for miscellaneous surety. These tailwinds are likely to drive the top line of the insurer.
The Zacks Consensus Estimate for the insurer’s 2022 and 2023 revenues is pegged at $1.17 billion and $1.25 billion, respectively, indicating a year-over-year increase of 11.6% and 6.2%.
RLI achieved the 26th consecutive year of underwriting profit in 2021. Positive current accident year results and favorable development in prior accident years’ loss reserves are likely to benefit the underwriting results of RLI.
By virtue of a higher earned premium base, the expense ratio of RLI should continue to decrease.
RLI achieved 26 straight years of a combined ratio below 100 and beat the industry ratio by an average of 11 margin points over the past 10 years. It also maintains significant reinsurance protection against large losses.
Sturdy Balance Sheet
The financial position of RLI was strong in 2021. The insurer expects to have sufficient sources of liquidity to meet the anticipated needs over the next 12 to 24 months. Its revolving credit facility provides for a borrowing capacity of $60 million, which can be increased to $120 million under certain circumstances. RLI posted positive operating cash flow in the last two years.
Impressive Dividend History
RLI has a distinguished track record of success with 182 consecutive quarters of dividend increases and currently yields 0.9%, which is better than the industry average of 0.3%. In the fourth quarter of 2021, the insurer declared a special cash dividend in a bid to share the rewards of strong performance and return excess capital to shareholders.
The Zacks Consensus Estimate for 2023 earnings per share is pegged at $4.10, indicating a year-over-year increase of 7.8%.
Zacks Rank & Price Performance
RLI currently carries a Zacks Rank #2 (Buy). In the past year, the stock has lost 2.4% against the industry’s increase of 17.6%. Solid segmental results and capital position are likely to help the stock bounce back.
Image Source: Zacks Investment Research
Other Stocks to Consider
Some other top-ranked stocks from the property and casualty insurance sector are Cincinnati Financial Corporation (CINF - Free Report) , United Fire Group, Inc. (UFCS - Free Report) and Kinsale Capital Group, Inc. (KNSL - Free Report) . While Cincinnati Financial and United Fire currently sport a Zacks Rank #1 (Strong Buy), Kinsale Capital carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The bottom line of Cincinnati Financial surpassed earnings estimates in each of the last four quarters, the average being 38.48%. In the past year, the insurer has rallied 28.5%.
The Zacks Consensus Estimate for Cincinnati Financial’s 2022 and 2023 earnings has moved 5.7% and 5.5% north, respectively, in the past 60 days.
United Fire’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 275.45%. In the past year, UFCS stock has declined 10.7%.
The Zacks Consensus Estimate for UFCS’ 2022 and 2023 earnings has moved 122.2% and 76.9% north, respectively, in the past 60 days.
Kinsale Capital’s earnings surpassed estimates in each of the last four quarters, the average beat being 32.04%. In the past year, Kinsale Capital has rallied 39.9%.
The Zacks Consensus Estimate for KNSL’s 2022 and 2023 earnings has moved 5.9% and 8.2% north, respectively, in the past 60 days.