) reported third-quarter 2013 operating earnings of $1.40 per
share. The result surpassed both the Zacks Consensus Estimate of
95 cents by 47% as well as the year-ago level of $1.02 by 37.2%.
Operating earnings in the quarter were $30.5 million, up 39.3%
year over year.
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The year-over-year improvement came on the back of better
underwriting results in the Property and Casualty segments.
Third-quarter 2013 operating earnings include favorable
developments in Casualty's prior years' reserves of 51 cents and
Property's prior years' reserves of 7 cents, offset by
unfavorable development on Surety's prior years' reserves of 1
cent and the impact of net cat loss of 2 cents.
Including realized investment gains, net of tax, of $7.2 million
or 33 cents per share, RLI Corp. reported net income of $37.6
million or $1.73 per share compared with $25.5 million or $1.19
per share in the third quarter of 2012. The prior-year quarter
net income included realized investment gains, net of tax, of
$3.6 million or 17 cents per share.
Net premiums earned by RLI Corp. in the quarter were $163.7
million, up 9.2% year over year. The upside was attributable to
improvement in the Casualty segment. Premium generation also
continues to benefit from better market conditions and new
Underwriting income for RLI Corp. was $31.8 million, up 72% year
over year. The improvement was primarily attributable to better
underwriting performance in the Property and Casualty segments.
Investment income declined 4.4% year over year to $13.6 million.
Revenues in the quarter under review totaled $188.3 million,
improving 11% from $169.6 million in the prior-year quarter. The
increase was owing to higher premiums and net realized investment
gains. Revenues outperformed the Zacks Consensus Estimate by 7%.
Total expenses of RLI Corp. during the third quarter of 2013
increased 0.4% year over year to $135.6 million. Higher policy
acquisition costs and other insurance expenses primarily drove
The combined ratio in the reported quarter improved 720 basis
points (bps) to 80.5%, due to improved performance in the
Property and Casualty segments.
RLI Corp.'s total return from the investment portfolio was 1.3%
during the reported quarter. The bond portfolio returned 0.9%,
while the equity portfolio yielded a return of 3.0%.
RLI Corp. exited the quarter with cash and cash equivalents of
$110.4 million, up 47.6% from 2012-end.
Long-term debt was $250 million at the end of the third quarter,
up from $100 million at 2012-end. The increase was attributable
to the issuance of $150 million 4.875% senior unsecured notes due
RLI Corp.'s book value stood at $39.85 per share as of Oct 31,
2013, compared with $37.45 as of Dec 31, 2012. The company has
recorded a return on equity of 14% along with a 10.4% return on a
comprehensive basis, compared with a return on equity of 12.8%,
with 20.6% on a comprehensive basis in the prior-year quarter.
Statutory surplus increased 18.3% over 2012-end to $809.2 million
as on Oct 31, 2013.
Cash provided by operations was $55 million, up 21.6% year over
In the third quarter of 2013, RLI Corp. paid a dividend of 34
cents per share, representing its 149th dividend payout.
During the quarter, RLI Corp.'s earnings and revenues beat both
the Zacks Consensus Estimate as well as the year-ago result. The
outperformance came on the back of better performances in the
Property and Casualty segments.
The company continues to deliver robust underwriting income.
Given the improving pricing scenario in the insurance market and
widened product lines, we expect RLI Corp. to perform well in the
upcoming quarters. It remains focused on expanding the product
portfolio as well. The company plans to focus on leveraging its
expertise in niche markets as well.
RLI Corp. currently carries a Zacks Rank #3 (Hold). Among other
property & casualty insurers that carry a Zacks Rank #1
The Chubb Corporation
) are slated to release their third-quarter earnings on Oct
Everest Re Group Ltd
) is scheduled to report its third-quarter earnings on Oct 24.