A 'RLI'able Dividend Champion

Core Insights - RLI Corp. is recognized as a "Dividend Insurance Champion" with a strong history of consistent dividend increases over 49 years, despite a low dividend yield below 1% [2][15] - The company has outperformed the S&P 500 in total return over the last two decades, showcasing its strong market position [2] - RLI's focus on underwriting margin over premium growth, along with a well-managed investment portfolio, supports its steady dividend increases [4] Financial Performance - Year-to-date income for RLI increased by approximately $33 million compared to the previous year, driven by higher investment income and steady underwriting income [5] - The company recorded an underwriting income of $147.7 million in the first six months of the year, achieving a combined ratio of 80%, which is an improvement of 2.7 points year-over-year [9] - The property segment was the largest contributor to underwriting income, with a combined ratio of 57.9% year-to-date, generating $110.9 million [11] Underwriting Segments - The property segment's gross written premium grew by 6% in Q2, with marine insurance leading at a 20% increase [13] - The casualty insurance segment experienced a 12% year-to-date net premium increase but saw a reduction in underwriting income to approximately $24 million, down around $14.8 million from the previous year [14] - The surety insurance segment's combined ratio increased to 81.4% for the first half of 2024, compared to 75.8% in 2023, indicating reduced underwriting income [14] Dividend Policy - RLI is recognized as a dividend aristocrat, with a consistent track record of dividend increases and annual special dividends [15][16] - In 2022, RLI distributed a special dividend of $7.0 per share, while in 2023, the special dividend returned to $2 per share [15] Valuation - RLI's shareholder equity stands at $1.58 billion, with a market capitalization of approximately $6.85 billion, resulting in a price-to-book (P/B) ratio of around 4.3 [17] - The current valuation is considered fair compared to its 5-year average, but peers typically trade at lower multiples of 1.5 to 2.5 [18] - Despite strong financial performance, the high valuation suggests a lack of safety margin for new investors [19]