In keeping with its continual effort of expanding its
) acquired Rockbridge Underwriting Agency.
ACE LIMITED (ACE): Free Stock Analysis Report
RLI CORP (RLI): Free Stock Analysis Report
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Houston-based Rockbridge Underwriting Agency is a managing
general agency focusing mainly on medical malpractice insurance.
With a widespread network of retail and wholesale brokers,
Rockbridge provides coverage in 50 states.
This acquisition bodes well with RLI Corp's strategy of
capitalizing on the resources in niche markets in order to induce
growth. RLI Corp. expects Rockbridge to infuse $20 million in
premium annually to its business.
RLI Corp. has been delivering solid premium numbers over several
quarters. We expect the addition of Rockbridge to its portfolio
will help it to continue with the momentum. In the last quarter,
gross premium increased 6.4% year over year.
RLI Corp. undertook the acquisition after a long gap of nearly
one and a half years. Last in April 2011, RLI Corp. acquired
Contractors Bonding Insurance Company. The acquisition has
broadened the company's client base, thereby proving accretive
for its earnings.
With the improving pricing scenario in the insurance market
supported by RLI Corp.'s strong infrastructure, we expect the
company to perform well in the coming quarters.
RLI Corp. reported third quarter 2012 operating earnings of $1.02
per share, surpassing the Zacks Consensus Estimate by 10.8%. The
Zacks Consensus Estimates for fourth quarter is 96 cents while
for the full year it is $1.01.
In late October,
), which closely competes with RLI Corp. announced its decision
to ink a definitive agreement for the acquisition of Mexico's
sixth-largest property and casualty (P&C) insurer, ABA
Seguros from Ally Financial Inc. The $865 million cash purchase
deal is expected to culminate in the first half of 2013. The
acquisition is anticipated to be accretive to ACE Limited's
earnings from the first year of purchase. Moreover, it is likely
to achieve or even surpass the company's targeted long-term
return on equity projection by the third year.
We retain our Neutral recommendation on RLI Corp. In the absence
of any near term catalysts, which will drastically impacts the
results, we expect the company to perform in line with the market
and thus blends well with our Zacks # 3 Rank, implying a short
term Hold rating.