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RLI Corp (RLI)
NYSE:RLI
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RLI
(NYSE:RLI)
75Outperform
Positive Factors
Dividend History
RLI has increased its regular dividends for 49 consecutive years and returned $754 million to shareholders since 2019.
Earnings
RLI reported operating EPS of $1.31, beating both internal estimates and consensus expectations.
Underwriting Performance
RLI shares are believed to deserve a premium trading value compared to peers due to exemplary underwriting and book value growth.
Negative Factors
Financial Performance
RLI reported operating EPS of $0.41, missing the estimate of $0.54 and consensus of $0.52, primarily due to a higher-than-projected Casualty loss ratio and lower-than-expected equity in earnings of unconsolidated investees.
Market Competition
Growing competition in specialty lines and lighter premium growth are expected to result in a challenging environment for RLI Corp.
Premium Growth
The assigned price-to-book multiple is lower due to weaker premium growth expectations and a conservative approach compared to prior periods.
RLI (RLI) vs. S&P 500 (SPY)
Market Cap
$6.99B
Dividend Yield0.8%
Average Volume (3M)475.10K
Price to Earnings (P/E)20.4
Beta (1Y)0.34
Revenue Growth18.31%
EPS Growth13.13%
CountryUS
Employees1,147
SectorFinancial
Sector Strength79
IndustryInsurance - Property & Casualty
Share Statistics
EPS (TTM)3.74
Shares Outstanding91,770,065
10 Day Avg. Volume531,898
30 Day Avg. Volume475,099
Financial Highlights & Ratios
PEG Ratio1.55
Price to Book (P/B)N/A
Price to Sales (P/S)3.95
Price to Cash Flow (P/CF)13.60
P/FCF Ratio13.90
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$77.00Price Target Upside1.06% Upside
Rating ConsensusHold
Number of Analyst Covering5
RLI Business Overview & Revenue Model
Company DescriptionRLI Corp. is a specialty insurance company serving diverse industries, providing property and casualty insurance solutions. Established in 1965, RLI operates through three primary segments: Casualty, Property, and Surety. The company is known for its expertise in niche markets, offering a wide range of insurance products such as general liability, professional liability, commercial property, and surety bonds.
How the Company Makes MoneyRLI Corp. generates revenue primarily through the underwriting of insurance policies within its three segments: Casualty, Property, and Surety. The company earns premiums from the insurance policies it issues, which are invested to generate additional income. RLI's underwriting profits come from accurately assessing risks and managing claims efficiently. Furthermore, the company's investment income from its portfolio of fixed-income securities and equities contributes significantly to its earnings. RLI also benefits from strategic partnerships and collaborations that enhance its market reach and product offerings, further supporting its revenue streams.
RLI Financial Statement Overview
Summary
RLI's financial statements reflect a financially sound company with strong profitability and liquidity. Despite facing some revenue and profit challenges in recent years, the company has managed its balance sheet well, maintaining low leverage and solid equity. Cash flow management is a strength, supporting both operations and shareholder returns. However, the volatility in income performance suggests a need for caution and strategic focus on stabilizing revenue growth.Income Statement
The company's income statement shows a mixed performance. The gross profit margin is consistently strong, indicating efficient cost management. However, the net profit margin has fluctuated, with a notable dip in 2023 due to a negative EBIT, but has since recovered in 2024. Revenue growth has been inconsistent, with a decline from 2022 to 2023, followed by a significant drop in 2024, which may pose a risk to future profitability.75
Positive
Balance Sheet
The balance sheet reflects a robust financial position with a low debt-to-equity ratio, highlighting prudent leverage management. The equity ratio remains stable, suggesting a solid asset base funded by equity. Return on equity has been strong, indicating effective use of shareholder funds, although it dipped in 2023 due to reduced net income.80
Positive
Cash Flow
The cash flow statement demonstrates strong operational cash flow, consistently exceeding net income, which is a positive sign for liquidity and ongoing operations. Free cash flow has generally increased, although the growth rate has been volatile. The company maintains a healthy free cash flow to net income ratio, supporting its dividend and reinvestment strategies.78
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 142.28M | 1.52B | 1.70B | 1.18B | 983.63M | Gross Profit |
| 142.28M | 1.52B | 1.70B | 1.18B | 983.63M | EBIT |
| 265.44M | -28.17M | 720.81M | 344.32M | 189.84M | EBITDA |
| 0.00 | -5.54M | 736.71M | 322.33M | 184.64M | Net Income Common Stockholders |
| 345.78M | 304.61M | 583.41M | 279.35M | 157.09M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 39.79M | 36.42M | 59.05M | 88.80M | 62.22M | Total Assets |
| 5.63B | 5.18B | 4.77B | 4.51B | 3.94B | Total Debt |
| 100.00M | 100.00M | 199.86M | 199.68M | 149.49M | Net Debt |
| 60.21M | 63.58M | 177.04M | 110.87M | 87.27M | Total Liabilities |
| 4.11B | 3.77B | 3.59B | 3.28B | 2.80B | Stockholders Equity |
| 1.52B | 1.41B | 1.18B | 1.23B | 1.14B |
| Cash Flow | Free Cash Flow | |||
| 560.22M | 458.34M | 244.56M | 376.60M | 257.49M | Operating Cash Flow |
| 560.22M | 464.26M | 250.45M | 384.90M | 263.26M | Investing Cash Flow |
| -318.87M | -211.80M | 48.88M | -274.83M | -167.99M | Financing Cash Flow |
| -237.98M | -238.85M | -365.31M | -83.49M | -79.26M |
RLI Technical Analysis
Negative
76.19
Price Trends
76.07
Positive
78.92
Negative
76.37
Negative
Market Momentum
1.00
Negative
70.08
Negative
93.56
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RLI, the sentiment is Negative. The current price of 76.19 is below the 20-day moving average (MA) of 77.31, above the 50-day MA of 76.07, and below the 200-day MA of 76.37, indicating a neutral trend. The MACD of 1.00 indicates Negative momentum. The RSI at 70.08 is Negative, neither overbought nor oversold. The STOCH value of 93.56 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for RLI.
RLI Risk Analysis
RLI disclosed 26 risk factors in its most recent earnings report. RLI reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
RLI Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
82 Outperform | $7.36B | 7.49 | 19.06% | 1.99% | 6.10% | 206.71% | |
82 Outperform | $5.65B | 13.40 | 16.03% | 2.29% | 4.07% | 1110.92% | |
75 Outperform | $6.99B | 20.37 | 23.56% | 0.80% | 18.31% | 13.13% | |
75 Outperform | $9.82B | 11.06 | 20.33% | 2.58% | 6.91% | 4.97% | |
75 Outperform | $5.27B | 26.88 | 6.82% | 1.76% | 15.35% | -44.64% | |
68 Neutral | $4.47B | 19.32 | 5.22% | 0.06% | 2.48% | -54.02% | |
64 Neutral | $13.44B | 9.41 | 9.19% | 4.92% | 16.30% | -8.66% |
* Financial Sector Average
Performance Comparison
RLI
RLI
76.19
9.09
13.55%
AFG
American Financial Group
125.26
4.63
3.84%
AXS
Axis Capital
91.41
30.55
50.20%
SIGI
Selective Insurance Group
86.79
-13.73
-13.66%
THG
Hanover Insurance
156.77
31.63
25.28%
WTM
White Mountains Insurance Group
1,734.88
34.77
2.05%
RLI Earnings Call Summary
Earnings Call Date: Jan 22, 2025 | % Change Since: -2.22% | Next Earnings Date: Apr 23, 2025
Earnings Call Sentiment Neutral
RLI demonstrated strong financial performance with consistent underwriting profitability and growth in investment income. However, the quarter was affected by natural catastrophe losses and reserve additions, particularly impacting the Casualty segment. The investment in Prime, while historically positive, presented a significant loss this quarter. Despite these challenges, RLI's continued commitment to financial discipline and shareholder returns, including a special dividend, underscores a balanced outlook.Highlights
29th Consecutive Year of Underwriting Profit
RLI achieved underwriting profitability for the 29th consecutive year, with a combined ratio of 86.2% for the full year.
Growth in Net Written Premium
Net written premium grew by 12%, and underwriting profits increased by 22% for the year.
Strong Investment Income
Investment income rose by 19% in the fourth quarter.
Casualty Segment Growth
Casualty segment's premium grew by 18% during the fourth quarter, with a 10% rate change driven by auto coverages.
Positive Return on Investment in Prime
Despite a loss in the fourth quarter, the investment in Prime remains positive with dividends exceeding the original investment.
Special Dividend to Shareholders
RLI paid a special dividend of $2 per share, split adjusted, in addition to the regular quarterly dividend.
Lowlights
Hurricane and Wildfire Losses
The combined ratio for the quarter was negatively impacted by hurricane losses and some wildfire claims.
Current Accident Year Reserve Additions
Additions to reserves for the current accident year impacted the Casualty segment's results, particularly in transportation and personal umbrella products.
Prime Investment Loss
RLI recorded a $12.5 million loss from its share of Prime's earnings due to reserve strengthening on prior accident years.
Property Segment Premium Decline
Property segment premiums were down 3% in the quarter, driven largely by increased competition in the E&S property market.
Company Guidance
In the fourth quarter earnings call for 2024, RLI Corp. provided detailed guidance on its financial performance, highlighting a 12% increase in net written premium and a 22% rise in underwriting profits for the year. The company reported operating earnings of $0.41 per share and a combined ratio of 94.4% for the quarter, impacted by hurricane losses. Full-year results showed a combined ratio of 86.2% and net earnings per share of $3.74. The Casualty segment saw an 18% growth in premium and a 10% rate increase, driven by auto coverages. Meanwhile, the Property segment experienced a slight decrease in premiums due to increased competition, yet maintained an 81% combined ratio. Investment income rose by 19%, contributing positively to the overall financial results. RLI also announced a special dividend of $2 per share, reflecting a continued commitment to returning capital to shareholders.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.