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RLI Looks Poised to Gain From Solid Segmental Performance
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RLI Corp. (RLI - Free Report) remains well-poised for growth, driven by a rate increase, higher earned premium base, underwriting profit and effective capital deployment.
Earnings Surprise History
RLI has a solid track record of beating earnings estimates in each of the last seven quarters.
Zacks Rank & Price Performance
RLI currently carries a Zacks Rank #3 (Hold). In the past year, the stock has gained 0.2% against the industry’s decrease of 8.3%. Solid segmental results and capital position are likely to help the stock continue the upside.
Image Source: Zacks Investment Research
Return on Equity (ROE)
RLI’s ROE for the trailing 12 months is 18.9%, up 690 basis points year over year and reflecting its efficiency in utilizing shareholders’ funds.
Style Score
RLI has a VGM Score of B. This helps identify stocks with the most attractive value, growth and momentum. The insurer has a Growth Score of B. This style score analyzes the growth prospects of a company.
Business Tailwinds
RLI’s core business, Casualty, Property, and Surety has witnessed significant growth so far in 2022, riding on higher premiums from commercial excess and personal umbrella due to rate increases and expanded distribution.
The commercial property business has been gaining from higher rates on wind and earthquake exposure. Rate increases, improved retention and new opportunities in the inland marine space should benefit marine products.
The Surety segment continues to benefit from its compelling product portfolio, growth within existing accounts and writing of bonds with new customers.
Underwriting income should gain from benign weather-related losses in the Property segment, a modestly improved underlying loss ratio in the Casualty segment as well as continued favorable benefits from the prior year's loss reserves in all three segments.
Positive current accident year results and favorable development in prior accident years’ loss reserves are likely to benefit the underwriting results of RLI.
RLI boasts solid operating results and its financial position has been strong. Operating cash flows should gain from higher premium receipts. The revolving credit facility, which has a borrowing capacity of $60 million, can be increased to $120 million under certain circumstances.
RLI has been paying dividends for 183 consecutive quarters and increased regular dividends in the last 47 straight years, increasing at a nine-year (2014-2022) CAGR of 4.2%. The insurer has also been paying special cash dividends since 2011 to return excess capital to shareholders. With special dividends, over the last 10 years, the company has returned about $1.13 billion to shareholders and the regular quarterly dividend has grown 5.2% per year on average. The company has $87.5 million of remaining capacity from the repurchase program.
The Zacks Consensus Estimate for RLI’s 2022 earnings is pegged at $4.85, indicating an increase of 25.3% on 17.3% higher revenues of $1.2 billion.
The bottom line of Arch Capital surpassed earnings estimates in three of the last four quarters and missed in one, the average being 33.64%. In the past year, the insurer has rallied 15.4%.
The Zacks Consensus Estimate for Arch Capital’s 2022 and 2023 earnings has moved 1.3% and 2.8% north, respectively, in the past 30 days.
American Financial’s earnings surpassed estimates in each of the last four quarters, the average beat being 37.09%. In the past year, American Financial has lost 7.7%.
The Zacks Consensus Estimate for AFG’s 2022 and 2023 earnings has moved 4% and 4.3% north, respectively, in the past 30 days.
The bottom line of ProAssurance surpassed earnings estimates in three of the last four quarters and missed in one, the average being 150.9%. In the past year, the insurer has lost 14.4%.
The Zacks Consensus Estimate for ProAssurance’s 2022 and 2023 earnings has moved 25.9% and 13.9% north, respectively, in the past 30 days.
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RLI Looks Poised to Gain From Solid Segmental Performance
RLI Corp. (RLI - Free Report) remains well-poised for growth, driven by a rate increase, higher earned premium base, underwriting profit and effective capital deployment.
Earnings Surprise History
RLI has a solid track record of beating earnings estimates in each of the last seven quarters.
Zacks Rank & Price Performance
RLI currently carries a Zacks Rank #3 (Hold). In the past year, the stock has gained 0.2% against the industry’s decrease of 8.3%. Solid segmental results and capital position are likely to help the stock continue the upside.
Image Source: Zacks Investment Research
Return on Equity (ROE)
RLI’s ROE for the trailing 12 months is 18.9%, up 690 basis points year over year and reflecting its efficiency in utilizing shareholders’ funds.
Style Score
RLI has a VGM Score of B. This helps identify stocks with the most attractive value, growth and momentum. The insurer has a Growth Score of B. This style score analyzes the growth prospects of a company.
Business Tailwinds
RLI’s core business, Casualty, Property, and Surety has witnessed significant growth so far in 2022, riding on higher premiums from commercial excess and personal umbrella due to rate increases and expanded distribution.
The commercial property business has been gaining from higher rates on wind and earthquake exposure. Rate increases, improved retention and new opportunities in the inland marine space should benefit marine products.
The Surety segment continues to benefit from its compelling product portfolio, growth within existing accounts and writing of bonds with new customers.
Underwriting income should gain from benign weather-related losses in the Property segment, a modestly improved underlying loss ratio in the Casualty segment as well as continued favorable benefits from the prior year's loss reserves in all three segments.
Positive current accident year results and favorable development in prior accident years’ loss reserves are likely to benefit the underwriting results of RLI.
RLI boasts solid operating results and its financial position has been strong. Operating cash flows should gain from higher premium receipts. The revolving credit facility, which has a borrowing capacity of $60 million, can be increased to $120 million under certain circumstances.
RLI has been paying dividends for 183 consecutive quarters and increased regular dividends in the last 47 straight years, increasing at a nine-year (2014-2022) CAGR of 4.2%. The insurer has also been paying special cash dividends since 2011 to return excess capital to shareholders. With special dividends, over the last 10 years, the company has returned about $1.13 billion to shareholders and the regular quarterly dividend has grown 5.2% per year on average. The company has $87.5 million of remaining capacity from the repurchase program.
The Zacks Consensus Estimate for RLI’s 2022 earnings is pegged at $4.85, indicating an increase of 25.3% on 17.3% higher revenues of $1.2 billion.
Stocks to Consider
Some better-ranked stocks from the property and casualty insurance industry are Arch Capital Group Ltd. (ACGL - Free Report) , American Financial Group, Inc. (AFG - Free Report) and ProAssurance Corporation (PRA - Free Report) , each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The bottom line of Arch Capital surpassed earnings estimates in three of the last four quarters and missed in one, the average being 33.64%. In the past year, the insurer has rallied 15.4%.
The Zacks Consensus Estimate for Arch Capital’s 2022 and 2023 earnings has moved 1.3% and 2.8% north, respectively, in the past 30 days.
American Financial’s earnings surpassed estimates in each of the last four quarters, the average beat being 37.09%. In the past year, American Financial has lost 7.7%.
The Zacks Consensus Estimate for AFG’s 2022 and 2023 earnings has moved 4% and 4.3% north, respectively, in the past 30 days.
The bottom line of ProAssurance surpassed earnings estimates in three of the last four quarters and missed in one, the average being 150.9%. In the past year, the insurer has lost 14.4%.
The Zacks Consensus Estimate for ProAssurance’s 2022 and 2023 earnings has moved 25.9% and 13.9% north, respectively, in the past 30 days.