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RLI Q4 Earnings & Revenues Top Estimates, Premiums Rise Y/Y

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RLI Corp. (RLI - Free Report) reported fourth-quarter 2022 operating earnings of $1.53 per share, beating the Zacks Consensus Estimate by 41.7%. The bottom line improved 26.4% from the prior-year quarter.

The quarterly results benefited from solid performance across all its segments and favorable reserve development, and higher net investment income.

RLI Corp. Price, Consensus and EPS Surprise


Operational Performance

Operating revenues for the reported quarter were $329.5 million, up 19.4% year over year, driven by 16.7% higher net premiums earned and 59% higher net investment income. The top line beat the Zacks Consensus Estimate by 0.4%.

Gross premiums written increased 14% year over year to $383.8 million. This uptick can be attributed to the solid performance of Casualty (up 3.8%), Property (up 40.2%) and Surety segments (up 5.3%).

Net investment income increased 59% year over year to 28.5 million.

Total expenses increased 18.4% year over year to $253.4 million, primarily due to loss and settlement expenses, higher policy acquisition costs, insurance operating expenses, loss and settlement expenses, general corporate expenses and interest expenses on debt.

Underwriting income of $54 million increased 8.7%, primarily due to the higher profitability at its Property segment. The combined ratio deteriorated 140 basis points (bps) year over year to 82.1.

Full-Year Highlights

Operating earnings of $4.69 per share beat the Zacks Consensus Estimate of $4.50. The bottom line improved 34.7% from the prior-year quarter.

Operating revenues were $178.2 million, up 17.2% year over year. The top line was almost in line with the Zacks Consensus Estimate.

Gross premiums written improved 16% to $1.6 billion.

Underwriting income of $54 million increased 37.2%, primarily due to higher profitability at all its segments. The combined ratio improved 240 bps year over year to 84.4.

Financial Update

RLI exited 2022 with total investments and cash of $3.3 billion, up 3.5% from 2021 end.

Book value was $25.89 per share as of Dec 31, 2022, down 4.6% from the figure as of Dec 31, 2021.

Net cash flow from operations was $250.4 million, down 34.9% year over year.

The statutory surplus decreased 35.9% from 2021 end to $1.4 billion as of Dec 31, 2022.

Return on equity was 25.4%, reflecting an expansion of 710 bps year over year.

Dividend Update

On Dec 20, 2022, RLI paid a special cash dividend of $7.00 per share and a quarterly dividend of 26 cents per share for a combined total of $329.9 million. RLI has paid dividends for 186 consecutive quarters and increased regular dividends in each of the last 47 years. Over the last 10 years, the insurer has returned $1.37 billion to shareholders and the quarterly dividend has grown an average of 5% per year.

Zacks Rank

RLI currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Insurers

The Travelers Companies, Inc. (TRV - Free Report) reported fourth-quarter 2022 core income of $3.40 per share, which matched the Zacks Consensus Estimate. The bottom line decreased 35% year over year. Total revenues increased 7.5% from the year-ago quarter to about $9.6 billion, primarily driven by higher premiums and fee income. The top-line figure beat the Zacks Consensus Estimate by 0.2%.

Net written premiums increased 10% year over year to $8.8 billion. The figure was higher than our estimate of $8.6 billion. Catastrophe losses totaled $459 million pre-tax, wider than $36 million pre-tax in the prior-year quarter. Travelers witnessed an underwriting gain of $449 million, down 51.5% year over year.  The combined ratio deteriorated 650 bps year over year to 94.5.

The Progressive Corporation’s (PGR - Free Report) fourth-quarter 2022 earnings per share of $1.50 beat the Zacks Consensus Estimate of $1.49 as well as our estimate of $1.34. The bottom line improved 42.9% year over year

Net premiums earned grew 11% to $12.9 billion and beat our estimate of $12.3 billion. The combined ratio — the percentage of premiums paid out as claims and expenses — improved 80 bps from the prior-year quarter’s level to 93.9.

AXIS Capital Holdings Limited (AXS - Free Report) posted fourth-quarter 2022 operating income of $1.95 per share, which beat the Zacks Consensus Estimate by about 14.7%. The bottom line declined 8.5% year over year. Total operating revenues of $1.5 billion increased 8.6% year over year on higher net premiums earned and net investment income. The top line beat the consensus estimate of $1.4 billion.

AXIS Capital’s underwriting income of about $132 million, down 2.8%. The combined ratio deteriorated 100 bps to 94.1.

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