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RLI Corp. (RLI) Up 0.4% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for RLI Corp. (RLI - Free Report) . Shares have added about 0.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is RLI Corp. due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

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

RLI Corp. 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.

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.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month.

VGM Scores

Currently, RLI Corp. has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.


Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, RLI Corp. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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