RLI Corporation RLI posted operating earnings of 70 cents per share for the third quarter of 2015. The bottom line handily beat the Zacks Consensus Estimate by 18.6% and also improved about 2.9% year over year. Marginally improved top line coupled with lower expenses backed the quarter’s outperformance.
Share of RLI gained 4.2% in the last two trading sessions reflecting the outperformance.
Also, the favorable impact of a 16 cents increase in the Casualty segment, 5 cents increase in the Surety segment and a 1 cent increase in the Property segment’s reserves supported the impressive third-quarter results.
Including realized investment gains, net of tax of 11 cents per share, RLI Corp. reported net income of 81 cents per share, up 6.6% year over year. The prior-year quarter net income included realized investment gains, net of tax of 8 cents per share.
Operational Performance
Operating revenues totaled $193.4 million, up about 0.8% year over year. The top-line growth was driven by 1% higher net premiums earned. However, a 1.7% decrease in net investment income was a partial dampener. The top line surpassed the Zacks Consensus Estimate by 2.3%.
Gross premiums written improved 3.1% year over year to $214.3 million due to better performances at the Casualty and Surety segments. However, the upside was limited by weaker results at the Property segment.
Total expense decreased 1.5% year over year to $149.7 million. Lower loss and settlement expenses, insurance operating costs and general corporate expenses led to the improvement.
Underwriting income of this property and casualty insurer was $33.6 million, up 10.4% year over year.
Combined ratio improved 160 basis points to 81.3% due to improved combined ratio at the Property and Surety segments.
RLI Corp.’s total return from the investment portfolio was 0.0% during the reported quarter. The bond portfolio returned 1.3%, while the equity portfolio yielded a negative return of 5.3%.
Financial Update
RLI Corp. exited the third-quarter with total investments and cash of $1.99 billion, up 1.8% from year-end 2014.
Long-term debt was $149.7 million at the end of the quarter, flat with the 2014-end level.
RLI Corp.’s book value was $20.36 per share as of Sep 30, 2015, up 3.8% from that as of Dec 31, 2014.
Cash from operations was $50.2 million. This reflects an improvement of 6.1% year over year.
Dividend Payout
On Sep 18, 2015, RLI Corp. paid a quarterly dividend of 19 cents per share, same as the previous payout. RLI returned more than $693 million in dividend over the last five years.
Zacks Rank and Performance of Some Other Insurers
RLI Corp. presently holds a Zacks Rank #2 (Buy). The bottom line at Progressive Corp. PGR, The Chubb Corporation CB and The Travelers Companies Inc. TRV have outperformed their respective Zacks Consensus Estimate in the reported quarter.
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