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Why Is RLI Corp. (RLI) Down 12.4% Since Last Earnings Report?

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It has been about a month since the last earnings report for RLI Corp. (RLI - Free Report) . Shares have lost about 12.4% in that time frame, underperforming the S&P 500.

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

RLI's Q1 Earnings Top, Revenues Miss, Premiums Rise Y/Y

RLI Corp. reported first-quarter 2023 operating earnings of $1.63 per share, beating the Zacks Consensus Estimate by 34.7%. The bottom line improved 14% from the prior-year quarter. Shares gained 3.1% in the after-market trading hours to reflect the outperformance

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

Operational Performance

Operating revenues for the reported quarter were $335 million, up 19.4% year over year, driven by 14.3% higher net premiums earned and 51.5% higher net investment income. The top line however missed the Zacks Consensus Estimate by 2.2%.

Gross premiums written increased 15.6% year over year to $415 million. This uptick can be attributed to the solid performance of the Casualty (up 1%), Property (up 45%) and Surety segments (up 13.6%).

Net investment income increased 52% year over year to 27.1 million. The investment portfolio’s total return was 2.8% in the quarter.

Total expenses increased 14.4% year over year to $246.1 million, primarily due to higher loss and settlement expenses, and higher policy acquisition costs, insurance operating expenses and general corporate expenses.

Underwriting income of $67.9 million increased 14.1%, primarily due to higher profitability at its Property and Casualty segment. Combined ratio remained flat year over year at 77.9.

Financial Update

RLI exited the quarter with total investments and cash of $3.4 billion, up 4.6% from 2022 end. Book value was $28.62 per share as of Mar 31, 2023, up 12% from the figure as of Dec 31, 2022.

Net cash flow from operations was $69.2 million, up 77.4% year over year. The statutory surplus decreased 3.6% from 2022 end to $1.5 billion as of Mar 31, 2023.

Return on equity was 41.9%, reflecting an expansion of 3160 basis points (bps) year over year.

Dividend Update

On Mar 20, 2023, RLI paid a quarterly dividend of 26 cents per share. Over the last five years, the insurer has returned $759 million to shareholders.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

Currently, RLI Corp. has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. However, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. 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 these revisions looks promising. It comes with little surprise RLI Corp. has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.

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