RLI Corp. (RLI) Up 9.9% Since Last Earnings Report: Can It Continue?

Core Viewpoint - RLI Corp. has shown strong performance in its recent earnings report, with significant increases in operating earnings and revenues, indicating a robust underwriting-focused business model and a diversified portfolio [2][3]. Financial Performance - RLI Corp. reported Q3 2024 operating earnings of $1.31 per share, exceeding the Zacks Consensus Estimate by 33.7% and more than doubling year-over-year [2]. - Operating revenues reached $426 million, a 1.4% increase year-over-year, driven by a 22.3% rise in net premiums earned and a 14.8% increase in net investment income [3]. - Gross premiums written increased by 13% year-over-year to $563.4 million, with notable growth in the Casualty (up 15.7%), Property (up 9.6%), and Surety segments (up 9%) [3]. - Net investment income rose 15% year-over-year to $36.7 million, while total expenses increased by 11.3% to $354.4 million due to various operational costs [4]. Underwriting and Ratios - Underwriting income surged to $40.7 million from $4.2 million in the previous year, with the combined ratio improving by 910 basis points to 89.6 [5]. Financial Update - As of September 30, 2024, RLI had total investments and cash of $4.2 billion, a 14.9% increase from the end of 2023, and a book value of $38.17 per share, up 26% [6]. - Net cash flow from operations was $219.4 million, reflecting a 122.5% year-over-year increase, while the statutory surplus rose 18.8% to $1.8 billion [6]. Dividend Information - RLI paid a dividend of 29 cents on September 20, 2024, with cumulative dividends exceeding $822 million over the last five years [7]. Market Sentiment and Estimates - Recent estimates for RLI have shown a downward trend, with the consensus estimate shifting down by 37.38% [8][9]. - The stock currently holds a Zacks Rank 3 (Hold), indicating expectations for an in-line return in the coming months [12]. Industry Comparison - RLI Corp. operates within the Zacks Insurance - Property and Casualty industry, where another player, Travelers, reported revenues of $11.85 billion, reflecting a year-over-year increase of 10.7% [13]. - Travelers is projected to post earnings of $6.28 per share for the current quarter, indicating a year-over-year decline of 10.4%, with a Zacks Rank 2 (Buy) [14].