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RLI Q3 Earnings Surpass Estimates, Revenues Increase Y/Y

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RLI Corp.’s (RLI - Free Report) third-quarter 2019 operating earnings of 57 cents per share beat the Zacks Consensus Estimate by 18.8%. The bottom line improved 23.9% from the prior-year quarter.

The quarter benefited from improved premiums from Casualty and Property segments and growth in net investment income.

Operational Performance

Operating revenues for the reported quarter totaled $229 million, in line with the Zacks Consensus Estimate. The top line increased 5.5% year over year. This upside can be attributed to higher net premiums earned (up 5.2% year over year) and net investment income (up 7.5%).

Gross premiums written increased 16% year over year to $276.9 million. This uptick was driven by Casualty and Property segments.

Total expenses increased 2.1% year over year to nearly $202 million, primarily due to increased insurance operating expenses and policy acquisition costs.

Net investment income rose 7.5% year over year to $17.5 million. Total return from the investment portfolio was 1.9%.

The company reported underwriting income of $13.7 million, which increased 75.6% from the year-ago period. This upside was due to solid results at the Property and Casualty segments, partially offset by soft performance of the Surety segment.

Combined ratio for the third quarter improved 260 basis points year over year to 93.5%.

RLI Corp. Price, Consensus and EPS Surprise

Financial Update

The company exited the third quarter with total investments and cash of $2.5 billion, up 14.6% from 2018 end.

Book value was $22.30 per share as of Sep 30, 2019, up 23% from the figure as of Dec 31, 2018.

Long-term debt was $149.3 million, up 0.1% from 2018 end.

Statutory surplus improved 23.1% to $1021.3 million as of Sep 30, 2019 from $829.8 million as of Dec 31, 2018.

Return on equity was 21.8% for the nine months ended Sep 30, reflecting an increase of 960 basis points.

Net cash flow from operations increased 28.5% year over year to $81.4 million in the quarter under review.

Dividend Update

On Sep 20, 2019, the company paid out quarterly dividend of 23 cents per share. Dividends totaled $606 million in the last five years.

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 Another Insurer

The Progressive Corporation (PGR - Free Report) beat the Zacks Consensus Estimate for earnings by 6.7%.

Upcoming Releases

W.R. Berkley Corporation (WRB - Free Report) will release third-quarter 2019 earnings on Oct 22. The Zacks Consensus Estimate for earnings stands at 67 cents per share.

The Travelers Companies, Inc. (TRV - Free Report) will release third-quarter 2019 earnings on Oct 22. The Zacks Consensus Estimate for earnings is pegged at $2.40 per share.

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