RLI's Q4 Earnings Beat Estimates on Strong Net Investment Income

Core Insights - RLI Corp. reported fourth-quarter 2025 operating earnings of 94 cents per share, exceeding the Zacks Consensus Estimate by 23.6% and reflecting an 80.8% increase from the prior-year quarter [1][8] Operational Performance - Operating revenues for the quarter were $449 million, a 3% year-over-year increase, driven by higher net premiums earned and net investment income, although it missed the Zacks Consensus Estimate by 0.4% [2] - Gross premiums written decreased by 2.1% year over year to $463.2 million, attributed to the Casualty segment's solid performance, which increased by 2.4% [2] - Net investment income rose by 9.2% year over year to $42.3 million, slightly below the Zacks Consensus Estimate of $42.9 million [3] - Total expenses declined by 10% year over year to $341.1 million, mainly due to lower loss and settlement expenses [3] - Underwriting income surged more than threefold year over year to $70.8 million, significantly exceeding the estimate of $32.6 million [4] - The combined ratio improved by 1,180 basis points year over year to 82.6, outperforming the estimate of 92 [4] Full-Year Highlights - For the full year, operating earnings were $3.47 per share, a 19.2% improvement from the prior year [5] - Operating revenues totaled $1.8 billion, up 6.3% year over year [5] - Net premiums earned increased by 5.8% to $1.6 billion, matching the estimate [5] - Underwriting income rose by 25.4% to $264.2 million, surpassing the estimate of $226 million [5] - The combined ratio improved by 260 basis points to 83.6, better than the estimate of 86 [5] - The investment portfolio's total return was 9% [5] Financial Update - RLI ended the quarter with total investments and cash of $4.7 billion, a 14.2% increase from the end of 2024 [6] - Book value per share was $19.35 as of December 31, 2025, reflecting a 33% increase from December 31, 2024 [6] - Net cash flow from operations was $616.1 million, up 10% year over year [6] - The statutory surplus increased by 3.3% from the end of 2024 to $1.8 billion as of December 31, 2025 [6] - Return on equity was 28.7%, expanding by 700 basis points from the year-ago period [6] Dividend Update - RLI paid a special dividend of $2.00 per share for the fourth quarter, marking 198 consecutive quarters of dividend payments and 50 years of dividend increases [8][9] - Shareholder returns totaled $198.4 million, with the company returning nearly $1.6 billion to shareholders over the last 10 years [9]