RLI Corp. (RLI) Up 4.1% Since Last Earnings Report: Can It Continue?

Core Viewpoint - RLI Corp. reported a mixed performance in its latest earnings report, with operating earnings missing estimates due to higher expenses, despite an increase in premiums and investment income [2][4]. Financial Performance - Q4 2024 operating earnings were 41 cents per share, missing the Zacks Consensus Estimate by 14.5% and down 46.8% year over year [2]. - Operating revenues for the quarter reached $436 million, a 15.3% increase year over year, matching the Zacks Consensus Estimate [3]. - Gross premiums written increased by 9% year over year to $473.2 million, driven by an 18.3% rise in the Casualty segment [3]. - Net investment income rose 19% year over year to $38.8 million, exceeding estimates [4]. - Total expenses increased by 29.6% year over year to $379.2 million, primarily due to higher loss and settlement expenses [4]. - Underwriting income decreased by 62.8% year over year to $22.2 million, with the combined ratio deteriorating by 1,170 basis points to 94.4 [5]. Full-Year Highlights - For the full year, operating earnings were $2.87 per share, up 16.2% from the prior year [6]. - Total operating revenues for the year were $1.7 billion, an 18% increase year over year [6]. - Net premiums earned increased by 17.9% to $1.53 billion, in line with estimates [6]. - Underwriting income for the year rose by 21.6% to $210.7 million, surpassing estimates [6]. - The combined ratio improved by 40 basis points to 86.2 [6]. - The investment portfolio's total return was 6.4% for the year [6]. Financial Update - RLI exited the quarter with total investments and cash of $4.1 billion, an 11.1% increase from the end of 2023 [7]. - Book value per share was $16.59 as of December 31, 2024, up 7.1% from the previous year [7]. - Net cash flow from operations was $560.2 million, a 21% increase year over year [7]. - The statutory surplus increased by 17.6% to $1.8 billion as of December 31, 2024 [7]. - Return on equity was 21.7%, down 640 basis points from the previous year [7]. Dividend Update - RLI paid a special dividend of $2.00 per share for Q4, with total shareholder returns amounting to $183.5 million [8]. - The company has consistently paid dividends for 194 consecutive quarters and has increased regular dividends for the last 49 years [9]. - Over the past decade, RLI has returned nearly $1.5 billion to shareholders, with regular dividends growing at an average rate of 4.9% per year [9]. Outlook - RLI Corp. holds a Zacks Rank 3 (Hold), indicating an expectation of an in-line return from the stock in the upcoming months [12].