RLI Corp. ( RLI Quick Quote RLI - Free Report) has been favored by investors on the back of a diversified and compelling product portfolio, improved retention and new opportunities and effective capital deployment. Estimate Revision
The Zacks Consensus Estimate for 2023 and 2024 has moved 0.4% and 9.4% north, respectively, in the past 60 days. This should instill investors' confidence in the stock.
Earnings Surprise History
RLI has a decent earnings surprise history. It beat 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 21.9% against the
industry’s decrease of 10.8%. 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 has been effectively improving its return on equity over the years. ROE in the trailing 12 months of 19% expanded 450 basis points year over year and was better than the industry average of 6.7%. This reflects the insurer’s efficiency in utilizing shareholders’ funds.
RLI’s top-line growth is well poised for growth riding on a diversified product portfolio, focus on introducing new products, sturdy business expansion, sustained rate increase, expanded distribution and operational strength.
Product diversification across the Casualty, Property and Surety segments of RLI has fueled the insurer’s growth and financial success. The Casualty segment continues to gain from rate increases, expanded distribution base in personal umbrella, new production sources and geographic expansion. 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. RLI boasts solid operating results and its financial position remained strong. Operating cash flows should gain from higher premium receipts. The company has been paying dividends for 186 consecutive quarters and increased regular dividends in the last 47 straight years, increasing at an eight-year (2016-2023) CAGR of 4%. Its dividend yield of 0.8% is better than the industry average of 0.3%, making the stock an attractive pick for yield-seeking investors. RLI has $87.5 million of remaining capacity from the repurchase program. The Zacks Consensus Estimate for RLI’s 2024 earnings is pegged at $4.65, indicating an increase of 4.03% on 3.1% higher revenues of $1.45 billion. The insurer has been experiencing an increase in loss and settlement expenses, interest expense on debt plus policy acquisition costs. RLI must strive to control cost or grow revenues at a higher magnitude than that of expense increase or else the margin may continue to erode, raising risks. Stocks to Consider
Some top-ranked stocks from the property and casualty insurance industry are
Axis Capital Holdings Limited ( AXS Quick Quote AXS - Free Report) , Everest Re Group, Ltd. and Kinsale Capital Group, Inc. ( KNSL Quick Quote KNSL - 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. Axis Capital beat estimates in three of the last four quarters and missed in one, the average being 5.70%. The Zacks Consensus Estimate for 2023 and 2024 has moved 5% and 0.3%, north, respectively, in the past 60 days. The Zacks Consensus Estimate for AXS’ 2023 and 2024 earnings per share is pegged at $7.50 and $8.50, indicating year-over-year increase of 29% and 13.3%, respectively. In the past year, AXS has lost 6.6%. Everest Re beat estimates in each of the last four quarters, the average being 18.41%. The Zacks Consensus Estimate for RE’s 2023 and 2024 earnings per share is pegged at $45.63 and $53.02, indicating a year-over-year increase of 68.5% and 16.1%, respectively. In the past year, RE has gained 19%. Kinsale Capital has a solid track record of beating earnings estimates in each of the last four quarters, the average being 13.83%. In the past year, KNSL has gained 26.7%. The Zacks Consensus Estimate for KNSL’s 2023 and 2024 earnings per share is pegged at $9.86 and $11.85, indicating a year-over-year increase of 26.4% and 20.2%, respectively.