It has been about a month since the last earnings report for RLI Corp. (RLI) . Shares have lost about 1.5% in that time frame, underperforming the S&P 500.Will the recent negative trend continue leading up to its next earnings release, or is RLI Corp. due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.How Have Estimates Been Moving Since Then?It turns o ...

Group 1: Valuation and Market Performance - RLI Corp. shares are trading at a premium to the Zacks Property and Casualty Insurance industry, with a price-to-book value of 4.28X compared to the industry average of 1.49X and the Finance sector's 4.1X, but at a discount to the Zacks S&P 500 Composite's 7.82X [1] - RLI shares have gained 0.6% in the past year, lagging behind the industry, Finance sector, and Zacks S&P 500 composite returns of 18.7%, 16.2%, and 11%, respectively [2][3] - The stock closed at $74.83, below its 52-week high of $91.14, and is trading below the 50-day and 200-day simple moving averages of $76.04 and $78.11, indicating downward momentum [4] Group 2: Growth Projections - The Zacks Consensus Estimate for RLI's 2025 earnings per share indicates a year-over-year increase of 3.4%, with revenues projected at $1.78 billion, implying a year-over-year improvement of 6.5% [8] - For 2026, the consensus estimates for earnings per share and revenues indicate increases of 3.2% and 5.9%, respectively, from the corresponding 2025 estimates [8] Group 3: Financial Performance and Strategy - RLI's return on equity (ROE) has improved, with a trailing 12 months ROE of 16.2%, significantly higher than the industry average of 7.7% [9] - The company continues to grow through product diversification, a compelling product portfolio, and a conservative underwriting policy, which helps achieve favorable reserve releases despite incurring catastrophe losses [10] - RLI has a strong track record of underwriting profitability, with 29 consecutive years of profitability [11] Group 4: Shareholder Value and Capital Structure - RLI enhances shareholder value through dividend hikes, special dividends, and share buybacks, boasting an impressive dividend track record with regular dividends increased for the last 50 years [12] - The company is strengthening its balance sheet by improving liquidity and leverage, which supports its operations and long-term book value growth [13] Group 5: Conclusion - RLI is recognized as one of the industry's most profitable P&C writers, with a strong local branch network and a focus on specialty insurance lines contributing to its superior profitability [15] - Given its premium valuation, it may be prudent to wait for a better entry point for this stock [16]

Financial Performance - RLI Corp. achieved a net premium earned of $398.3 million for Q1 2025, a 10% increase from $360.7 million in Q1 2024[114]. - Underwriting income for Q1 2025 was $71 million with a combined ratio of 82.3, compared to $78 million and a combined ratio of 78.5 in Q1 2024[115]. - The loss ratio increased to 44.5% in Q1 2025 from 39.9% in Q1 2024, while the expense ratio decreased to 37.8% from 38.6%[116]. - Net earnings for Q1 2025 totaled $63 million, down from $128 million in Q1 2024, primarily due to unrealized losses on equity securities[119]. - Comprehensive earnings for Q1 2025 were $93 million, compared to $115 million in Q1 2024, with other comprehensive earnings of $30 million attributed to lower interest rates[120]. Premiums and Underwriting - Gross premiums written increased by $22 million in Q1 2025, driven by the casualty segment, while net premiums earned increased by $38 million across all segments[122]. - Gross premiums written for the casualty segment increased by $33 million in Q1 2025, driven by positive rate movement and new business growth[124]. - Gross premiums written for the property segment decreased by $10 million in Q1 2025, influenced by increased competition in the commercial property space[125]. - Gross premiums written for the surety segment remained flat in Q1 2025, with growth in transactional and commercial surety offset by a decline in contract surety premium[126]. - Underwriting income for the casualty segment was $2 million in Q1 2025, down from $14 million in the same period last year[128]. - The combined ratio for the casualty segment increased to 99.1 in Q1 2025 from 93.1 in Q1 2024, reflecting higher loss ratios[129]. - Underwriting income for the property segment was $57 million in Q1 2025, compared to $58 million in the same period last year[130]. - The surety segment recorded underwriting income of $12 million in Q1 2025, up from $6 million in the same period last year[132]. Investment Income - Investment income rose by 12% in Q1 2025, attributed to an increased average asset base and higher reinvestment rates[114]. - Net investment income increased by 12% to $37 million in Q1 2025, attributed to higher reinvestment rates and an increased average asset base[135]. - The company reported $42 million in unrealized losses on equity securities in Q1 2025, contrasting with $45 million in unrealized gains in Q1 2024[114]. - The company recognized $3 million of equity in earnings from unconsolidated investees in Q1 2025, down from $5 million in Q1 2024[118]. Cash Flow and Debt - Operating cash flows improved to $103.5 million in Q1 2025 from $70.9 million in Q1 2024, benefiting from increased premium receipts[140]. - As of March 31, 2025, the company had $100 million in debt outstanding, with a revolving line of credit of $50 million accessed in September 2023[141]. - The capital structure included $100 million in debt, representing 6% of total capital, with an average interest rate of 5.18%[155]. Investment Portfolio - As of March 31, 2025, the investment portfolio increased by $120 million from December 31, 2024, totaling $4.204 billion[146]. - The fixed income portfolio accounted for 77.9% of the total portfolio, with a fair value of $3.274 billion and an unrealized loss of $174.47 million[146]. - The equity portfolio had a fair value of $725.946 million, with a dividend yield of 1.9%, outperforming the S&P 500 index's yield of 1.4%[152]. - The corporate fixed income securities totaled $1.385 billion, including $124 million in a high-yield credit strategy[149]. - The municipal bond portfolio consisted of approximately 68% taxable securities and 32% tax-exempt securities, with 93% rated 'AA' or better[150]. - The investment portfolio has limited exposure to structured asset-backed securities, with $220 million in ABS as of March 31, 2025[147]. - The fixed income portfolio is well diversified, comprising 1,851 individual issues as of March 31, 2025[146]. Dividends - RLI Ins. paid $80 million in ordinary dividends to RLI Corp. in the first three months of 2025, compared to $152 million in 2024[158]. Investment Strategy - The company has no exposure to derivatives, maintaining a conservative investment strategy[154].

RLI (RLI) Q1 2025 Earnings Call April 24, 2025 08:40 PM ET Company Participants Aaron Diefenthaler - Chief Investment Officer & TreasurerCraig Kliethermes - President and CEOTodd Bryant - CFOJen Klobnak - COOGregory Peters - Managing DirectorMeyer Shields - Managing DirectorAndrew Andersen - Equity Research Vice President Conference Call Participants Bill Carcache - Equity Research AnalystMichael Phillips - Managing Director and Insurance AnalystCasey Alexander - Senior Vice President & Research Analyst Ope ...

Financial Data and Key Metrics Changes - The company reported operating earnings of $0.92 per share, supported by solid underwriting performance and a 12% increase in investment income [13] - The total combined ratio was 82.3%, up from 78.5% last year, influenced by lower levels of favorable prior year's reserve releases [14] - Net earnings on a GAAP basis totaled $0.68 per share, down from $1.39 per share in Q1 2024, primarily due to a shift from $45 million in unrealized equity gains to $42 million in unrealized losses [15] Business Line Data and Key Metrics Changes - The property segment experienced a 6% decline in gross premiums, largely due to rate decreases in E&S property, offset by growth in marine and Hawaii homeowners [16] - The casualty segment posted a 99 combined ratio for Q1, with gross premiums up 14% over last year, but a cautious approach was maintained regarding wheel space businesses [18][19] - The securities segment's gross premium was relatively flat, with a combined ratio of 68.5%, down from 80.9% in 2024, benefiting from favorable development [21] Market Data and Key Metrics Changes - The insurance industry is facing challenges from legal system abuse, trade disruption, and economic uncertainty, impacting overall market conditions [10] - Increased competition in several areas has led to slower top-line growth, particularly in the property segment [26] - The inland marine market has seen growth due to a larger team and better coverage, with opportunities primarily linked to the construction industry [110] Company Strategy and Development Direction - The company emphasizes a diversified portfolio and disciplined underwriting to navigate market disruptions [8] - Management is focused on opportunities where expertise can differentiate the company, particularly in areas where competitors are pulling back [11] - The company is committed to maintaining a consistent risk appetite and underwriting profitability, even in challenging market conditions [58] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating potential economic downturns, citing a diversified product portfolio as a key advantage [47] - The company anticipates that increased construction activity in the U.S. could create more opportunities, despite potential recessionary pressures [50] - Management remains cautious about the auto insurance segment due to increased severity and loss trends [79] Other Important Information - The company announced a 6% increase in book value per share from year-end 2024 and a quarterly dividend increase to $0.15 per share [24] - Operating cash flow for Q1 totaled $103 million, up $33 million from last year, providing a basis for portfolio activity [22] Q&A Session Summary Question: Insights on managing through potential recession due to tariff policy - Management highlighted a diversified portfolio as a significant advantage, noting that while construction may face pressure, overall profitability could be maintained [47][48] Question: Concerns about undisciplined market behavior from MGAs - Management acknowledged aggressive competition from MGAs but emphasized their consistent market presence and financial strength as a stabilizing factor [55][56] Question: Update on personal umbrella book regarding frequency and severity - Management confirmed that severity has been increasing for several years, and they are actively addressing this through rate increases and selective underwriting [66][67] Question: Impact of tariffs on transportation coverage - Management noted that while there could be short-term impacts on shipping and transportation, they are prepared to navigate these challenges based on past experiences [125][126] Question: Opportunities in California residential owners market - Management remains hesitant to enter the California market due to historical underwriting losses and regulatory challenges, preferring to focus on commercial lines [90][141]

Core Insights - RLI Corp. reported first-quarter 2025 operating earnings of 92 cents per share, exceeding the Zacks Consensus Estimate by 4.5%, but down 9.2% from the prior-year quarter [1] - The quarterly results were influenced by higher premiums and improved investment income, which were offset by increased expenses and poor underwriting income [1] Operational Performance - Operating revenues for the quarter reached $436 million, reflecting a 10.7% year-over-year increase, driven by higher net premiums earned and net investment income, although it missed the Zacks Consensus Estimate by 0.9% [2] - Gross premiums written rose 5% year over year to $491 million, primarily due to strong performance in the Casualty segment, which increased by 13.5% [2] - Net investment income increased by 12% year over year to $36.7 million, falling short of the Zacks Consensus Estimate of $38.6 million [3] - Total expenses increased by 14.7% year over year to $332 million, mainly due to higher loss and settlement expenses and policy acquisition costs [3] Underwriting Performance - Underwriting income decreased by 9.3% year over year to $70.5 million, with the combined ratio deteriorating by 380 basis points to 82.3 [4] Dividend Update - On March 20, 2025, RLI paid a regular quarterly dividend of 15 cents per share, with cumulative dividends exceeding $967 million over the last five years [5] Peer Performance - The Travelers Companies reported first-quarter 2025 core income of $1.91 per share, beating the Zacks Consensus Estimate, but down 29.3% year over year [7] - Progressive Corporation's first-quarter 2025 earnings per share of $4.65 missed the Zacks Consensus Estimate, although it increased by 24.6% year over year [9] - W.R. Berkley Corporation's first-quarter 2025 operating income of $1.01 per share matched the Zacks Consensus Estimate, but declined 2.9% year over year [11]

RLI (RLI) Q1 2025 Earnings Call April 24, 2025 11:00 AM ET Company Participants Aaron Diefenthaler - Chief Investment Officer & TreasurerCraig Kliethermes - President and CEOTodd Bryant - CFOJen Klobnak - COOGregory Peters - Managing DirectorMeyer Shields - Managing DirectorAndrew Andersen - Equity Research Vice President Conference Call Participants Bill Carcache - Equity Research AnalystMichael Phillips - Managing Director and Insurance AnalystCasey Alexander - Senior Vice President & Research Analyst Ope ...

Financial Performance - RLI Corp. reported revenue of $435.07 million for the quarter ended March 2025, reflecting a year-over-year increase of 10.6% [1] - The company's EPS was $0.92, a slight decrease from $0.95 in the same quarter last year [1] - Revenue fell short of the Zacks Consensus Estimate of $439.19 million, resulting in a surprise of -0.94% [1] - The EPS exceeded the consensus estimate of $0.88, delivering a surprise of +4.55% [1] Key Metrics - Net loss & settlement expenses were reported at 44.5%, compared to the five-analyst average estimate of 45.9% [4] - Net operating expenses totaled 37.8%, slightly better than the 38.4% average estimate [4] - Underwriting income (loss) was reported at 82.3%, compared to the average estimate of 84.3% [4] - Net investment income was $36.73 million, below the average estimate of $38.64 million, but showed a year-over-year increase of +11.8% [4] Premiums Earned - Net premiums earned were $398.35 million, slightly below the average estimate of $400.55 million, with a year-over-year change of +10.4% [4] - Net premiums earned in the Property segment were $132.54 million, compared to the estimated $133.13 million, representing a +2.4% change year-over-year [4] - Net premiums earned in the Surety segment were $36.75 million, below the average estimate of $37.75 million, with a year-over-year increase of +11.4% [4] - Net premiums earned in the Casualty segment were $229.05 million, exceeding the average estimate of $227.36 million, reflecting a +15.5% change year-over-year [4] Stock Performance - RLI Corp. shares returned +0.3% over the past month, contrasting with the Zacks S&P 500 composite's -6.6% change [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

RLI Corp. (RLI) came out with quarterly earnings of $0.92 per share, beating the Zacks Consensus Estimate of $0.88 per share. This compares to earnings of $0.95 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 4.55%. A quarter ago, it was expected that this specialty insurance company would post earnings of $0.48 per share when it actually produced earnings of $0.41, delivering a surprise of -14.58%.Over the last four quarters, ...

EXHIBIT 99.1 RLI REPORTS FIRST QUARTER 2025 RESULTS PEORIA, ILLINOIS, April 23, 2025 – RLI Corp. (NYSE: RLI) – RLI Corp. reported first quarter 2025 net earnings of $63.2 million ($0.68 per share), compared to $127.9 million ($1.39 per share) for the first quarter of 2024. Operating earnings(1) for the first quarter of 2025 were $84.9 million ($0.92 per share), compared to $87.4 million ($0.95 per share) for the same period in 2024. On January 15, 2025, RLI executed a two-for-one stock split of common stock ...