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RLI's Q4 Earnings Top Estimates on Strong Premium Growth
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RLI Corp. (RLI - Free Report) reported fourth-quarter 2023 operating earnings of $1.54 per share, beating the Zacks Consensus Estimate by 6.9%. The bottom line improved 0.6% from the prior-year quarter.
The quarterly results reflect continued premium growth across all product segments.
Operational Performance
Operating revenues for the reported quarter were $378.4 million, up 15% year over year, driven by 14.9% higher net premiums earned and 14.4% higher net investment income. The top line, however, missed the Zacks Consensus Estimate by 2%.
Gross premiums written increased 13% year over year to $434.4 million. This uptick can be attributed to the solid performance of the Casualty (up 7.5%), Property (up 23.5%) and Surety segments (up 10.9%). Our estimate was $459 million.
Net investment income increased 14.4% year over year to $32.5 million. The Zacks Consensus Estimate for the metric was pegged at $33.5 million, while our estimate was $38.1 million. The investment portfolio’s total return was 6.4% in the quarter.
Total expenses increased 15.5% year over year to $292.5 million, primarily due to higher loss and settlement expenses, and higher policy acquisition costs, insurance operating expenses and general corporate expenses. Our estimate was $293.7 million.
Underwriting income of $59.8 million increased 10.9%. Combined ratio deteriorated 60 basis points (bps) year over year to 82.7. The Zacks Consensus Estimate for the metric was pegged at 85, while our estimate was 82.7.
Full-Year Highlights
Operating earnings of $4.94 per share improved 5.3% from the prior-year quarter.
Operating revenues were $1.4 billion million, up 15% year over year.
Net premiums earned increased 13.1% to $1.3 billion and were in line with our estimate. Underwriting income slipped 0.02% to $173.2 million. Our estimate was $173.6 million. Combined ratio deteriorated 220 bps to 86.6 and was in line with our estimate.
The investment portfolio’s total return was 8.8%.
Financial Update
RLI exited the quarter with total investments and cash of $3.6 billion, up 12.3% from 2022 end.
Book value was $30.97 per share as of Dec 31, 2023, up 19.6% from the figure as of Dec 31, 2022.
Net cash flow from operations was $464.3 million, up 85.4% year over year.
The statutory surplus increased 5.8% from 2022 end to $1.5 billion as of Dec 31, 2023.
Return on equity was 28.1%, expanding 270 bps from the year-ago period.
Dividend Update
The insurer paid a special dividend of $2.00 per share for the fourth quarter. Shareholder returns totaled $91.3 million.
RLI has paid dividends for 190 consecutive quarters and increased regular dividends in each of the last 48 years. Over the last 10 years, the company has returned $1.41 billion to shareholders. The regular dividend has grown 4.7% per year on average.
The Travelers Companies (TRV - Free Report) reported fourth-quarter 2023 core income of $7.01 per share, which beat the Zacks Consensus Estimate of $5.04. The bottom line more than doubled year over year, driven by higher underlying underwriting gain, lower catastrophe losses and higher net investment income. Travelers’ total revenues increased 13.5% from the year-ago quarter to $10.9 billion, primarily driven by higher premiums. The top-line figure beat the Zacks Consensus Estimate by 0.2%.
Net written premiums increased 13% year over year to about $10 billion, driven by strong growth across all three segments. The figure was higher than our estimate of $9.7 billion. Travelers witnessed an underwriting gain of $1.4 billion, up more than three-fold year over year, driven by higher business volumes. The combined ratio improved 870 bps year over year to 85.8, driven by a lower underlying combined ratio and lower catastrophe losses.
The Progressive Corporation’s (PGR - Free Report) fourth-quarter 2023 earnings per share of $2.96 beat the Zacks Consensus Estimate of $2.38. The bottom line improved 97.3% year over year. Operating revenues of $16.6 billion beat the Zacks Consensus Estimate by 3% and increased 23.2% year over year.
Net premiums written were $15.1 billion in the quarter, up 21% from $12.5 billion a year ago. Premiums beat our estimate of $14 billion. Net premiums earned grew 22% to $15.8 billion and beat our estimate of $14.8 billion.
The combined ratio — the percentage of premiums paid out as claims and expenses — improved 520 bps from the prior-year quarter’s level to 88.7.
W.R. Berkley Corporation’s (WRB - Free Report) fourth-quarter 2023 operating income of $1.45 per share beat the Zacks Consensus Estimate of $1.35 by 7.4%. The bottom line improved 25% year over year. Operating revenues came in at $3.2 billion, up 9.3% year over year, on the back of higher net premiums earned as well as improved net investment income. The top line beat the consensus estimate by 1.3%
W.R. Berkley’s net premiums written were $2.7 billion, up 12% year over year. The figure was lower than our estimate of $2.8 billion. Pre-tax underwriting income increased 8.2% to $315.9 million. The consolidated combined ratio) remained flat year over year at 88.4.
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RLI's Q4 Earnings Top Estimates on Strong Premium Growth
RLI Corp. (RLI - Free Report) reported fourth-quarter 2023 operating earnings of $1.54 per share, beating the Zacks Consensus Estimate by 6.9%. The bottom line improved 0.6% from the prior-year quarter.
The quarterly results reflect continued premium growth across all product segments.
Operational Performance
Operating revenues for the reported quarter were $378.4 million, up 15% year over year, driven by 14.9% higher net premiums earned and 14.4% higher net investment income. The top line, however, missed the Zacks Consensus Estimate by 2%.
RLI Corp. Price, Consensus and EPS Surprise
RLI Corp. price-consensus-eps-surprise-chart | RLI Corp. Quote
Gross premiums written increased 13% year over year to $434.4 million. This uptick can be attributed to the solid performance of the Casualty (up 7.5%), Property (up 23.5%) and Surety segments (up 10.9%). Our estimate was $459 million.
Net investment income increased 14.4% year over year to $32.5 million. The Zacks Consensus Estimate for the metric was pegged at $33.5 million, while our estimate was $38.1 million. The investment portfolio’s total return was 6.4% in the quarter.
Total expenses increased 15.5% year over year to $292.5 million, primarily due to higher loss and settlement expenses, and higher policy acquisition costs, insurance operating expenses and general corporate expenses. Our estimate was $293.7 million.
Underwriting income of $59.8 million increased 10.9%. Combined ratio deteriorated 60 basis points (bps) year over year to 82.7. The Zacks Consensus Estimate for the metric was pegged at 85, while our estimate was 82.7.
Full-Year Highlights
Operating earnings of $4.94 per share improved 5.3% from the prior-year quarter.
Operating revenues were $1.4 billion million, up 15% year over year.
Net premiums earned increased 13.1% to $1.3 billion and were in line with our estimate. Underwriting income slipped 0.02% to $173.2 million. Our estimate was $173.6 million. Combined ratio deteriorated 220 bps to 86.6 and was in line with our estimate.
The investment portfolio’s total return was 8.8%.
Financial Update
RLI exited the quarter with total investments and cash of $3.6 billion, up 12.3% from 2022 end.
Book value was $30.97 per share as of Dec 31, 2023, up 19.6% from the figure as of Dec 31, 2022.
Net cash flow from operations was $464.3 million, up 85.4% year over year.
The statutory surplus increased 5.8% from 2022 end to $1.5 billion as of Dec 31, 2023.
Return on equity was 28.1%, expanding 270 bps from the year-ago period.
Dividend Update
The insurer paid a special dividend of $2.00 per share for the fourth quarter. Shareholder returns totaled $91.3 million.
RLI has paid dividends for 190 consecutive quarters and increased regular dividends in each of the last 48 years. Over the last 10 years, the company has returned $1.41 billion to shareholders. The regular dividend has grown 4.7% per year on average.
Zacks Rank
RLI currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
The Travelers Companies (TRV - Free Report) reported fourth-quarter 2023 core income of $7.01 per share, which beat the Zacks Consensus Estimate of $5.04. The bottom line more than doubled year over year, driven by higher underlying underwriting gain, lower catastrophe losses and higher net investment income. Travelers’ total revenues increased 13.5% from the year-ago quarter to $10.9 billion, primarily driven by higher premiums. The top-line figure beat the Zacks Consensus Estimate by 0.2%.
Net written premiums increased 13% year over year to about $10 billion, driven by strong growth across all three segments. The figure was higher than our estimate of $9.7 billion. Travelers witnessed an underwriting gain of $1.4 billion, up more than three-fold year over year, driven by higher business volumes. The combined ratio improved 870 bps year over year to 85.8, driven by a lower underlying combined ratio and lower catastrophe losses.
The Progressive Corporation’s (PGR - Free Report) fourth-quarter 2023 earnings per share of $2.96 beat the Zacks Consensus Estimate of $2.38. The bottom line improved 97.3% year over year. Operating revenues of $16.6 billion beat the Zacks Consensus Estimate by 3% and increased 23.2% year over year.
Net premiums written were $15.1 billion in the quarter, up 21% from $12.5 billion a year ago. Premiums beat our estimate of $14 billion. Net premiums earned grew 22% to $15.8 billion and beat our estimate of $14.8 billion.
The combined ratio — the percentage of premiums paid out as claims and expenses — improved 520 bps from the prior-year quarter’s level to 88.7.
W.R. Berkley Corporation’s (WRB - Free Report) fourth-quarter 2023 operating income of $1.45 per share beat the Zacks Consensus Estimate of $1.35 by 7.4%. The bottom line improved 25% year over year. Operating revenues came in at $3.2 billion, up 9.3% year over year, on the back of higher net premiums earned as well as improved net investment income. The top line beat the consensus estimate by 1.3%
W.R. Berkley’s net premiums written were $2.7 billion, up 12% year over year. The figure was lower than our estimate of $2.8 billion. Pre-tax underwriting income increased 8.2% to $315.9 million. The consolidated combined ratio) remained flat year over year at 88.4.