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RLI Q3 Earnings Top, Revenues Lag Estimates, Premiums Up Y/Y
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RLI Corp. (RLI - Free Report) reported third-quarter 2023 operating earnings of 61 cents per share, beating the Zacks Consensus Estimate by 510%. The bottom line improved 22% from the prior-year quarter’s levels.
Shares gained 1.4% in the aftermarket trading session.
The quarterly results reflect higher gross premiums written and solid underwriting performance despite losses from Hawaiian wildfires.
Operating revenues for the reported quarter were $350.4 million, up 12.1% year over year, driven by 9.2% higher net premiums earned and 50.3% higher net investment income. The top line, however, missed the Zacks Consensus Estimate by 7.2%.
Gross premiums written increased 11.3% year over year to $449.3 million. This uptick can be attributed to the solid performance of the Casualty (up 5.8%) and Property (up 25.8%), partly offset by soft Surety segments (down 2.3%). Our estimate was $450.1 million.
Net investment income increased 50.3% year over year to $32 million. The Zacks Consensus Estimate for the metric was pegged at $30.5 million, while our estimate was $31.3 million. The investment portfolio’s total return was -1.7% in the quarter.
Total expenses increased 10.8% year over year to $318.4 million, primarily due to higher loss and settlement expenses, policy acquisition costs and insurance operating expenses. Our estimate was $275.4 million.
Underwriting income of $4.2 million plunged 52.3% due to Hawaiian wildfire losses. The combined ratio deteriorated 170 basis points (bps) year over year to 98.7. Our estimate was 90.8.
Financial Update
RLI exited the quarter with total investments and cash of $3.5 billion, up 5.6% from 2022 end.
Book value was $28.47 per share as of Sep 30, 2023, up 13% from the figure as of Dec 31, 2022.
Net cash flow from operations was $85 million, down 24.2% year over year.
The statutory surplus increased 5% from 2022 end to $1.5 billion as of Sep 30, 2023.
Return on equity was 20.3% versus 22% in the year-ago period.
Dividend Update
On Sep 20, 2023, RLI paid a quarterly dividend of 27 cents per share. Over the last five years, the insurer has returned $764 million to shareholders.
The Travelers Companies (TRV - Free Report) reported third-quarter 2023 core income of $1.95 per share, which missed the Zacks Consensus Estimate by 33.4%. The bottom line decreased 11.4% year over year, primarily attributable to higher catastrophe losses and net unfavorable prior-year reserve development. Travelers’ total revenues increased 14% from the year-ago quarter to $10.6 billion, primarily driven by higher premiums. The top-line figure beat the Zacks Consensus Estimate by 1.3%.
Net written premiums increased 14% year over year to a record $10.4 billion, driven by strong growth across all three segments. The figure was higher than our estimate of $9.4 billion. Travelers witnessed an underwriting gain of $868 million, up 43% year over year, driven by record net earned premiums of $9.7 billion and a consolidated underlying combined ratio, which improved by 90.6%.
The Progressive Corporation’s (PGR - Free Report) third-quarter 2023 earnings per share of $2.09 beat the Zacks Consensus Estimate of $1.71. The bottom line improved more than fourfold year over year. Net premiums written were $15.6 billion in the quarter, which grew 20% from $13 billion a year ago and beat our estimate of $14.2 billion.
Net premiums earned grew 20% to $14.9 billion, beating our estimate of $13.6 billion and the Zacks Consensus Estimate of $14.8 billion. Net realized losses on securities were $149 million, narrower than a loss of $216.4 million in the year-ago quarter. The combined ratio — the percentage of premiums paid out as claims and expenses — improved 680 bps from the prior-year quarter’s level to 92.4.
W.R. Berkley Corporation’s (WRB - Free Report) third-quarter 2023 operating income of $1.35 per share beat the Zacks Consensus Estimate by 18.4%. The bottom line increased 33.7% year over year. Operating revenues came in at $3.1 billion, up 3.4% year over year, on the back of higher net premiums earned as well as higher net investment income. The top line beat the consensus estimate by 1.4%.
W.R. Berkley’s net premiums written were a record $2.8 billion, up 10.5% year over year as market conditions remained favorable for most lines of business. Figures were in line with our estimate. The consolidated combined ratio (a measure of underwriting profitability) improved 190 basis points to 90.2. The Zacks Consensus Estimate was 92. Our estimate for the combined ratio was 93.5.
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RLI Q3 Earnings Top, Revenues Lag Estimates, Premiums Up Y/Y
RLI Corp. (RLI - Free Report) reported third-quarter 2023 operating earnings of 61 cents per share, beating the Zacks Consensus Estimate by 510%. The bottom line improved 22% from the prior-year quarter’s levels.
Shares gained 1.4% in the aftermarket trading session.
The quarterly results reflect higher gross premiums written and solid underwriting performance despite losses from Hawaiian wildfires.
RLI Corp. Price, Consensus and EPS Surprise
RLI Corp. price-consensus-eps-surprise-chart | RLI Corp. Quote
Operational Performance
Operating revenues for the reported quarter were $350.4 million, up 12.1% year over year, driven by 9.2% higher net premiums earned and 50.3% higher net investment income. The top line, however, missed the Zacks Consensus Estimate by 7.2%.
Gross premiums written increased 11.3% year over year to $449.3 million. This uptick can be attributed to the solid performance of the Casualty (up 5.8%) and Property (up 25.8%), partly offset by soft Surety segments (down 2.3%). Our estimate was $450.1 million.
Net investment income increased 50.3% year over year to $32 million. The Zacks Consensus Estimate for the metric was pegged at $30.5 million, while our estimate was $31.3 million. The investment portfolio’s total return was -1.7% in the quarter.
Total expenses increased 10.8% year over year to $318.4 million, primarily due to higher loss and settlement expenses, policy acquisition costs and insurance operating expenses. Our estimate was $275.4 million.
Underwriting income of $4.2 million plunged 52.3% due to Hawaiian wildfire losses. The combined ratio deteriorated 170 basis points (bps) year over year to 98.7. Our estimate was 90.8.
Financial Update
RLI exited the quarter with total investments and cash of $3.5 billion, up 5.6% from 2022 end.
Book value was $28.47 per share as of Sep 30, 2023, up 13% from the figure as of Dec 31, 2022.
Net cash flow from operations was $85 million, down 24.2% year over year.
The statutory surplus increased 5% from 2022 end to $1.5 billion as of Sep 30, 2023.
Return on equity was 20.3% versus 22% in the year-ago period.
Dividend Update
On Sep 20, 2023, RLI paid a quarterly dividend of 27 cents per share. Over the last five years, the insurer has returned $764 million to shareholders.
Zacks Rank
RLI currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
Performance of Other Insurers
The Travelers Companies (TRV - Free Report) reported third-quarter 2023 core income of $1.95 per share, which missed the Zacks Consensus Estimate by 33.4%. The bottom line decreased 11.4% year over year, primarily attributable to higher catastrophe losses and net unfavorable prior-year reserve development. Travelers’ total revenues increased 14% from the year-ago quarter to $10.6 billion, primarily driven by higher premiums. The top-line figure beat the Zacks Consensus Estimate by 1.3%.
Net written premiums increased 14% year over year to a record $10.4 billion, driven by strong growth across all three segments. The figure was higher than our estimate of $9.4 billion. Travelers witnessed an underwriting gain of $868 million, up 43% year over year, driven by record net earned premiums of $9.7 billion and a consolidated underlying combined ratio, which improved by 90.6%.
The Progressive Corporation’s (PGR - Free Report) third-quarter 2023 earnings per share of $2.09 beat the Zacks Consensus Estimate of $1.71. The bottom line improved more than fourfold year over year. Net premiums written were $15.6 billion in the quarter, which grew 20% from $13 billion a year ago and beat our estimate of $14.2 billion.
Net premiums earned grew 20% to $14.9 billion, beating our estimate of $13.6 billion and the Zacks Consensus Estimate of $14.8 billion. Net realized losses on securities were $149 million, narrower than a loss of $216.4 million in the year-ago quarter. The combined ratio — the percentage of premiums paid out as claims and expenses — improved 680 bps from the prior-year quarter’s level to 92.4.
W.R. Berkley Corporation’s (WRB - Free Report) third-quarter 2023 operating income of $1.35 per share beat the Zacks Consensus Estimate by 18.4%. The bottom line increased 33.7% year over year. Operating revenues came in at $3.1 billion, up 3.4% year over year, on the back of higher net premiums earned as well as higher net investment income. The top line beat the consensus estimate by 1.4%.
W.R. Berkley’s net premiums written were a record $2.8 billion, up 10.5% year over year as market conditions remained favorable for most lines of business. Figures were in line with our estimate. The consolidated combined ratio (a measure of underwriting profitability) improved 190 basis points to 90.2. The Zacks Consensus Estimate was 92. Our estimate for the combined ratio was 93.5.