Will Cat Loss Exposure Hamper RLI Corp's (RLI) Growth?

On Sep 2, we issued an updated research report on RLI Corp.RLI .

RLI Corp. remains one of the industry's most profitable P&C writers with an impressive track record of underwriting profits in 36 of the past 40 years, the last 20 years in particular.

The company is also on track with its strategic investments to boost the Casualty segment. Moreover, one third of the company's product portfolio is related to the construction industry, which is gradually gaining traction and is likely to provide ample growth opportunities in the future. The launch of cyber liability insurance further added to its comprehensive product portfolio.

The insurer boasts a sound capital structure, which is backed by its favorable operating performance. RLI Corp has been successfully maintaining low leverage offering financial flexibility. This helps the company engage in effective capital deployment, in turn, enhancing shareholders' value.

However, exposure to catastrophe losses has adversely affected the company's underwriting results. Moreover, the net investment income of the company has been on a downtrend owing to the low interest rate.

In addition, the P&C insurer has been witnessing rising expenses, primarily due to higher losses and settlement expenses and policy acquisition costs.

With respect to earnings trends, the Zacks Rank #3 (Hold) property and casualty insurer delivered positive surprise in two of the last four quarters.

Stocks to Consider

Some better-ranked stocks from the same space include Allied World Assurance Company Holdings, AG AWH , National Interstate Corporation NATL and NMI Holdings, Inc. NMIH . Each of these stocks sports a Zacks Rank #1 (Strong Buy).

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RLI CORP (RLI): Free Stock Analysis Report

NATL INTERST CP (NATL): Free Stock Analysis Report

ALLIED WORLD AS (AWH): Free Stock Analysis Report

NMI HOLDINGS-A (NMIH): Free Stock Analysis Report

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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 Nasdaq, Inc.

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

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