In a concerted effort to enhance shareholders value, the Board
of Directors of
) authorized an increase of approximately 6.7% in its dividend. The
company will now pay a quarterly dividend of 32 cents per share, up
from 30 cents per share paid earlier.
The newly increased dividend will be paid on June 20, 2012 to
the shareholders as of May 31, 2011. The dividend yield is
RLI Corp. has been hiking its dividend over the past 37 years.
The previous hike was authorized in May 2011, when the board
approved a 3.4% increase in dividend. The company has a record of
paying dividend for 144 consecutive quarters.
The company has always remained focused on returning more value
to its shareholders. The company as such had paid special dividend
once each in the last two years. A special dividend of $5.00 per
share was paid in December 2011.
However, there was no jump in the share price of RLI Corp.
despite the announcement. It is likely that the news of the
dividend increase was more than offset by the company's
lower-than-expected quarterly performance.
The company's first quarter operating earnings lagged the Zacks
Consensus Estimate by a dime and were 17.9% below the year-ago
figures. The year-over-year decline in operating earnings per share
was due to lower underwriting income at Casualty and Surety,
partially offset by higher income at Property.
Also, there was no earnings momentum over the last 7 seven days.
We believe the company's effort to return more value to
shareholders might encourage analysts to pull their estimates
upward. The Zacks Consensus Estimate for second quarter 2012 and
full-year 2012 are, respectively, $1.15 and $4.09 per share.
With the improving pricing scenario in the insurance market
supported by RLI Corp.'s strong infrastructure, we can expect the
company to perform well in the coming quarters. The company also
has a favorable loss reserve ratio when compared with the previous
year along with increasing statutory reserve.
However, continued low interest rate environment keeps us on the
We retain our Neutral recommendation on RLI Corp. The
quantitative Zacks #3 Rank (short-term Hold rating) for the company
indicates no clear directional pressure on the shares over the near
Headquartered in Peoria, Illinois, RLI Corp. is a specialty
property-casualty underwriter that caters primarily to niche
markets through its main operating subsidiary, RLI Insurance
Company. The company competes with
CNA Financial Corporation
The Travelers Companies, Inc.
ACE LIMITED (ACE): Free Stock Analysis Report
CNA FINL CORP (CNA): Free Stock Analysis Report
RLI CORP (RLI): Free Stock Analysis Report
TRAVELERS COS (TRV): Free Stock Analysis Report
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