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RLI Estimates Q3 Catastrophe Loss of $35M to $40M From Hurricanes
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RLI Corp. (RLI - Free Report) estimates pretax net catastrophe losses in the range of $35-$40 million, primarily due to Hurricanes Beryl and Helene. The estimated losses are net of reinsurance recoverables and are likely to be reflected in the third-quarter results.
The Zacks Consensus Estimate for RLI’s third-quarter earnings is currently pegged at 92 cents, indicating a year-over-year increase of 50.8% from the year-ago quarter’s reported figure. We expect estimates to move south once analysts start incorporating loss estimates into their numbers.
Per Verisk, global modeled insured average annual loss from natural catastrophes is projected at $151 billion, suggesting a sharp increase from earlier years.
Per Moody’s RMS Event Response, total U.S. private market insured losses from Hurricane Helene are estimated in the range of $8-$14 billion, with a best estimate of $11 billion. Per the report, the estimate represents insured losses associated with wind, storm surge and precipitation-induced flooding from the event. Moody’s RMS Event Response also stated that Hurricane Helene was the sixth named storm of the 2024 North Atlantic hurricane season, as well as the fourth hurricane to make landfall in the United States in this season.
RLI has been incurring catastrophe loss stemming from earthquakes that primarily hit the West Coast and damages to commercial properties throughout the Gulf and East Coast, as well as to homes, which were damaged by hurricanes in the Gulf and East Coast and Hawaii. Exposure to catastrophes is a lingering concern as natural disasters are unpredictable and induce volatility in a company’s earnings. In the first half of 2024, the company incurred $28 million of pretax storm losses, wider than the year-ago pretax storm losses of $22 million.
Nevertheless, RLI is one of the industry’s most profitable P&C writers, with an impressive track record of delivering 28 consecutive years of underwriting profitability. In the first half of 2024, underwriting income was $147.7 million, which increased 35.4% year over year. A strong local branch office network, a broad range of product offerings and a focus on specialty insurance lines should continue contributing to its superior profitability.
The combined ratio, which reflects its underwriting profitability, of this specialty property-casualty (P&C) underwriter that caters primarily to niche markets has been exemplary. RLI has maintained a combined ratio below 100 for 26 consecutive years, averaging 88.4, and below 90 for 14 straight years. This solid track record of maintaining the combined ratio at favorable levels even in the toughest operating environment reflects its superior underwriting discipline. The combined ratio improved 270 basis points in the first half of 2024 as the company is continuously making an effort to boost underwriting results.
Price Performance of RLI
RLI presently carries a Zacks Rank #2 (Buy). Shares of RLI have gained 14.2% year to date compared with the industry’s growth of 29.3%. A compelling product portfolio, rate increases, sufficient liquidity and effective capital deployment should help it retain momentum.
The Zacks Consensus Estimate for Arch Capital’s 2024 and 2025 earnings implies year-over-year growth of 6.6% and 3.5%, respectively. It beat earnings estimates in each of the past four quarters, with an average surprise of 28.93%. Year to date, shares of ACGL have gained 45.1%.
The Zacks Consensus Estimate for Axis Capital’s 2024 and 2025 earnings implies year-over-year growth of 8.7% and 8.6%, respectively. It beat earnings estimates in each of the past four quarters, with an average surprise of 94.62%. Year to date, shares of AXS have gained 42.3%.
The Zacks Consensus Estimate for Cincinnati Financial’s 2024 and 2025 earnings implies year-over-year growth of 9.1% and 7%, respectively. It beat earnings estimates in each of the past four quarters, with an average surprise of 27.01%. Year to date, shares of CINF have gained 28.4%.
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RLI Estimates Q3 Catastrophe Loss of $35M to $40M From Hurricanes
RLI Corp. (RLI - Free Report) estimates pretax net catastrophe losses in the range of $35-$40 million, primarily due to Hurricanes Beryl and Helene. The estimated losses are net of reinsurance recoverables and are likely to be reflected in the third-quarter results.
The Zacks Consensus Estimate for RLI’s third-quarter earnings is currently pegged at 92 cents, indicating a year-over-year increase of 50.8% from the year-ago quarter’s reported figure. We expect estimates to move south once analysts start incorporating loss estimates into their numbers.
Per Verisk, global modeled insured average annual loss from natural catastrophes is projected at $151 billion, suggesting a sharp increase from earlier years.
Per Moody’s RMS Event Response, total U.S. private market insured losses from Hurricane Helene are estimated in the range of $8-$14 billion, with a best estimate of $11 billion. Per the report, the estimate represents insured losses associated with wind, storm surge and precipitation-induced flooding from the event. Moody’s RMS Event Response also stated that Hurricane Helene was the sixth named storm of the 2024 North Atlantic hurricane season, as well as the fourth hurricane to make landfall in the United States in this season.
RLI has been incurring catastrophe loss stemming from earthquakes that primarily hit the West Coast and damages to commercial properties throughout the Gulf and East Coast, as well as to homes, which were damaged by hurricanes in the Gulf and East Coast and Hawaii. Exposure to catastrophes is a lingering concern as natural disasters are unpredictable and induce volatility in a company’s earnings. In the first half of 2024, the company incurred $28 million of pretax storm losses, wider than the year-ago pretax storm losses of $22 million.
Nevertheless, RLI is one of the industry’s most profitable P&C writers, with an impressive track record of delivering 28 consecutive years of underwriting profitability. In the first half of 2024, underwriting income was $147.7 million, which increased 35.4% year over year. A strong local branch office network, a broad range of product offerings and a focus on specialty insurance lines should continue contributing to its superior profitability.
The combined ratio, which reflects its underwriting profitability, of this specialty property-casualty (P&C) underwriter that caters primarily to niche markets has been exemplary. RLI has maintained a combined ratio below 100 for 26 consecutive years, averaging 88.4, and below 90 for 14 straight years. This solid track record of maintaining the combined ratio at favorable levels even in the toughest operating environment reflects its superior underwriting discipline. The combined ratio improved 270 basis points in the first half of 2024 as the company is continuously making an effort to boost underwriting results.
Price Performance of RLI
RLI presently carries a Zacks Rank #2 (Buy). Shares of RLI have gained 14.2% year to date compared with the industry’s growth of 29.3%. A compelling product portfolio, rate increases, sufficient liquidity and effective capital deployment should help it retain momentum.
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Other Key Picks
Investors interested in the property and casualty insurance industry may look at some other top-ranked players like Arch Capital Group Ltd. (ACGL - Free Report) , Axis Capital Holdings Limited (AXS - Free Report) and Cincinnati Financial Corporation (CINF - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Arch Capital’s 2024 and 2025 earnings implies year-over-year growth of 6.6% and 3.5%, respectively. It beat earnings estimates in each of the past four quarters, with an average surprise of 28.93%. Year to date, shares of ACGL have gained 45.1%.
The Zacks Consensus Estimate for Axis Capital’s 2024 and 2025 earnings implies year-over-year growth of 8.7% and 8.6%, respectively. It beat earnings estimates in each of the past four quarters, with an average surprise of 94.62%. Year to date, shares of AXS have gained 42.3%.
The Zacks Consensus Estimate for Cincinnati Financial’s 2024 and 2025 earnings implies year-over-year growth of 9.1% and 7%, respectively. It beat earnings estimates in each of the past four quarters, with an average surprise of 27.01%. Year to date, shares of CINF have gained 28.4%.