On Jan 30, Zacks Investment Research upgraded
) by a notch to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
RLI Corp. has been riding on a steady growth momentum since
its fourth-quarter and full-year 2013 results. The growth impetus
stems from improved core fundamentals throughout 2013, which are
cushioned by strong operating leverage and a modest capital
RLI Corp. also outperformed the one-year S&P 500 index,
which posted an increase of 19.4% against a return of 26.1%
clocked by the company. Additionally, this global property and
casualty (P&C) insurer delivered positive earnings surprises
in the last three consecutive quarters, with an average beat of
On Jan 22, RLI Corp. reported fourth-quarter 2013 operating
earnings per share of 72 cents, which noticeably outpaced the
Zacks Consensus Estimate of 56 cents by 28.6% and the year-ago
quarter number of 44 cents by 64%.
A 14% year-over-year increase in premiums against mere 1.5%
hike in expenses drove the underwriting income over three-fold,
reflecting lower catastrophe losses and improved combined ratio.
Although investment income reduced owing to persistent low
interest rates, return on equity (ROE) increased to 15.3% from
12.4% at 2012-end and operating cash flow escalated more than
261% in 2013.
RLI Corp.'s effort towards new product initiatives and
increased exposure in mature product offerings are likely to
continue driving top-line growth going forward. Also, incremental
return by way of share buybacks and special dividends apart from
a consistent regular dividend history boosts investor
Following its fourth-quarter earnings release, the Zacks
Consensus Estimate for both 2014 and 2015 moved up by a penny to
$2.32 and $2.28 per share, respectively, in the last 7 days. No
downward revision in estimates was witnessed for either year.
More prominently, the Most Accurate estimate for RLI Corp.'s
2014 and 2015 earnings stands at $2.43 and $2.34 a share,
resulting in an
of +2.1% and +1.3%, respectively.
Other Stocks to Consider
Other top-ranked insurers in the industry include
Platinum Underwriters Holdings Ltd.
Aspen Insurance Holdings Ltd.
Endurance Specialty Holdings Ltd.
). All these stocks carry the same Zacks Rank as RLI Corp.
ASPEN INS HLDGS (AHL): Free Stock Analysis
ENDURANCE SPLTY (ENH): Free Stock Analysis
PLATINUM UNDRWT (PTP): Free Stock Analysis
RLI CORP (RLI): Free Stock Analysis Report
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