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Why Is RLI Corp (RLI) Up 2.6% Since the 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 added about 2.6% in that time frame, outperforming the market.

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

RLI Corp. Earnings and Revenues Miss Estimates in Q1

RLI Corp.’s first-quarter 2017 operating earnings of $0.44 per share missed the Zacks Consensus Estimate by 8.3%. Also, the bottom line fell 18.5% from the prior-year quarter.

Including realized gain of $0.01 per share, net income plummeted 36.6% year over year to $0.45 per share.

Operational Performance

Operating revenues for the quarter totaled $196.3 million, up 3.2% year over year. However, revenues missed the Zacks Consensus Estimate of $198 million by 0.9%.

Gross premiums written dipped 0.7% year over year to $194.9 million due to weak performance by the Property segment. However, the downside was partially limited by strong performance by the Casualty and Surety segments.

Total expense increased 9.7% year over year to $175.4 million due to higher loss and settlement expenses, policy acquisition costs, insurance operating expenses and general corporate expenses.

Underwriting income of this Property and Casualty (P&C) insurer plunged 38.5% year over year to $13.1 million. Underwriting income deteriorated due to weakness at the Casualty segment. Combined ratio deteriorated 490 basis points year over year to 92.9%.

RLI Corp.’s net investment income declined 2.7% year over year to $13.0 million. Total return on the investment portfolio was 1.8%, while bond portfolio retuned 2.3%. Equity portfolio returned 4.1%.

Financial Update

RLI Corp. exited the first quarter with total investments and cash of $2.06 billion, up 2.1% from year-end 2016.

Book value was $19.28 per share as of Mar 31, 2017, up 2.9% from the level as of Dec 31, 2016.

Long-term debt remained flat with the 2016-end level of $148.8 million.

Statutory surplus improved 4.3% year over year to $897.3 million.

Dividend Payout

On Mar 20, 2017, RLI Corp. paid quarterly dividend of $0.20 per share. The insurer has paid more than $630 million to investors over the last five years.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month. There has been one upward revision for the current quarter.

RLI Corp. Price and Consensus

 

RLI Corp. Price and Consensus | RLI Corp. Quote

VGM Scores

At this time, RLI Corp.'s stock has a subpar Growth Score of 'D', a grade with the same score on the momentum front. Following the exact same course, the stock was allocated also a grade of 'D' on the value side, putting it in the bottom 40% 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.

Our style scores indicate investors will probably be better served looking elsewhere.

Outlook

Estimates have been trending upward for the stock. The magnitude of this revision also looks promising. Notably, the stock has a Zacks Rank #4 (Sell). We are expecting a below average return from the stock in the next few months.


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