RLI's Q4 Earnings Miss on Higher Expenses, Premiums Rise Y/Y

Core Insights - RLI Corp. reported fourth-quarter 2024 operating earnings of 41 cents per share, missing the Zacks Consensus Estimate by 14.5% and reflecting a 46.8% decrease from the prior-year quarter [1] - The quarterly results were influenced by higher premiums and improved investment income, but were partially offset by increased expenses and poor underwriting income [1] Operational Performance - Operating revenues for the quarter were $436 million, up 15.3% year over year, driven by higher net premiums earned and net investment income, matching the Zacks Consensus Estimate [2] - Gross premiums written increased 9% year over year to$ 473.2 million, attributed to strong performance in the Casualty segment, which rose 18.3% [2] Investment Income and Expenses - Net investment income rose 19% year over year to $38.8 million, exceeding both the Zacks Consensus Estimate and the company's estimate of$ 38.1 million [3] - Total expenses increased 29.6% year over year to $379.2 million, primarily due to higher loss and settlement expenses, policy acquisition costs, and interest expense on debt [3] Underwriting Performance - Underwriting income decreased 62.8% year over year to$ 22.2 million, with the combined ratio deteriorating by 1,170 basis points to 94.4 [4] Full-Year Highlights - For the full year, operating earnings were $2.87 per share, up 16.2% from the prior year [5] - Operating revenues totaled$ 1.7 billion, an 18% increase year over year, with net premiums earned rising 17.9% to $1.53 billion [5] - Underwriting income increased 21.6% to$ 210.7 million, with the combined ratio improving by 40 basis points to 86.2 [5] Financial Update - RLI ended the quarter with total investments and cash of $4.1 billion, an 11.1% increase from the end of 2023 [6] - Book value per share was$ 16.59 as of December 31, 2024, up 7.1% from the previous year [6] - Net cash flow from operations was $560.2 million, a 21% year-over-year increase [6] - The statutory surplus rose 17.6% to$ 1.8 billion as of December 31, 2024 [6] - Return on equity was 21.7%, down 640 basis points from the year-ago period [6] Dividend Update - RLI paid a special dividend of $2.00 per share for the fourth quarter, with total shareholder returns amounting to$ 183.5 million [7] - The company has consistently paid dividends for 194 consecutive quarters and has increased regular dividends for the last 49 years [7][8] Industry Comparison - The Travelers Companies reported fourth-quarter 2024 core income of $9.15 per share, beating the Zacks Consensus Estimate by 39.3% and improving 30.5% year over year [10] - Travelers' total revenues increased 10.4% year over year to$ 11.9 billion, surpassing the Zacks Consensus Estimate by 1% [10]