RLI Corp. (RLI): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report


RLI Corp. posted third-quarter earnings outperforming the Zacks Consensus Estimate. Results declined year over year due to higher expenses. Underwriting results declined primarily on the back of weak underwriting performance in the Casualty segment. Subsequently, the combined ratio deteriorated. Nevertheless, the company remains focused on leveraging its expertise in niche markets. Given the improving pricing scenario in the insurance market and widened product lines, we expect RLI Corp. to perform well in the coming quarters. The leveraging has strengthened its equilibrium with improving cash balance and in-line debt balance. It continues to return value to shareholders through regular dividend hikes and special dividends. However, total expenses witnessed an increase in the quarter. Hence, we remain Neutral on the stock.


Headquartered in Peoria, IL, RLI Corp. (RLI) is a specialty property-casualty (P&C) underwriter that caters primarily to niche markets through its main operating subsidiary, RLI Insurance Company. Other subsidiaries include Mt. Hawley Insurance Company and RLI Indemnity Company. The company, founded in 1965, serves 50 states and the District of Columbia.

RLI Corp. classifies its operations into three distinct segments - Casualty, Property, and Surety.

Casualty (generated 54% of the gross premium written in 2013) The segment comprises general liability, personal umbrella, transportation, executive products, commercial umbrella, multi-peril program business, and other specialty coverage. In addition, the segment provides employers' indemnity and in-home business owners' coverage.

Property (32%) The segment provides commercial property coverage, including excess and surplus (E&S) lines and specialty insurance such as fire, earthquake, flood and inland marine. Marine operations include cargo, hull, protection and indemnity, primary and excess liabilities, yachts, and other marine coverage.

Surety (14%) The segment specializes in writing small-to-large commercial and small contract surety coverage, as well as those for the energy (plugging and abandonment of oil wells), petrochemical and refining industries.

RLI Corp. distributes its products through branch offices to wholesale and retail brokers, independent agents and e-commerce channels throughout the United States including Puerto Rico, the Virgin Islands and Guam.

As of Sep 30, 2014, the company had total assets of $2.93 billion (up 1.4% year over year), long-term debt of $149.6 million (down 40% year over year) and shareholder equity of approximately $933.5 million (up 9.2% year over year).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Stocks

Referenced Stocks: RLI



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