RLI Corp.’s RLI compelling product portfolio, rate increases, improved retention, higher premium receipts and sufficient liquidity make it worth adding to one’s portfolio.
Optimistic Growth Projections
The Zacks Consensus Estimate for RLI’s 2024 earnings per share indicates a year-over-year increase of 16.1% from the consensus estimate of 2023. The consensus estimate for revenues is pegged at $1.63 billion, implying a year-over-year improvement of 15.1% from the consensus mark of 2023.
The consensus estimate for 2025 earnings per share indicates a year-over-year increase of 3.2% from the consensus estimate of 2024. The estimate for 2025 revenues is pinned at $1.75 billion, implying a year-over-year improvement of 7.5% from the consensus mark of 2024.
Earnings Surprise History
RLI has a solid track record of beating earnings estimates in three of the last four quarters while missing in one, the average being 132.39%.
Estimate Revision
The Zacks Consensus Estimate for 2024 and 2025 earnings has moved 18% and 1.2% north, respectively, in the past 30 days. This should instill investors’ confidence in the stock.
Zacks Rank & Price Performance
RLI currently carries a Zacks Rank #2 (Buy). In the past year, the stock has gained 8.7% compared with the industry’s growth of 25.2%.
Image Source: Zacks Investment Research
Business Tailwinds
Product diversification across the Casualty, Property and Surety segments of the company has fueled the insurer’s growth and financial success. The Casualty segment continues to gain from an expanded distribution base in personal umbrella and rate increases.
The commercial property business has been gaining from higher wind and earthquake exposure rates. Rate increases, improved retention and new opportunities in the inland marine space should benefit marine products.
The Surety segment continues to benefit from its compelling product portfolio, growth within existing accounts and writing of bonds with new customers. Building materials inflation and new accounts will aid commercial and contract surety businesses in the future. RLI boasts solid operating results, and its financial position remained strong. Operating cash flows should gain from higher premium receipts.
The insurer has a sound capital structure, helping it meet the interests of its policyholders, enhance operations in the insurance sector and aid growth in its book value for the long term. The insurer’s trailing 12-month return on equity of 17.2% outperforms the industry average of 7.4%. Such a robust capital position provides significant financial flexibility to the operating subsidiaries.
RLI has been paying dividends for 187 consecutive quarters and increased regular dividends in each of the last 48 years, witnessing an eight-year (2016-2023) CAGR of 3.9%. In addition, the insurer has also been paying special dividends since 2011. Over the last five years, the insurer has returned $816 million to shareholders. RLI has $87.5 million of remaining capacity from the repurchase program.
Other Stocks to Consider
Some other top-ranked stocks from the property and casualty insurance industry are Arch Capital Group Ltd. ACGL, Palomar Holdings, Inc. PLMR and NMI Holdings Inc NMIH. While Arch Capital and Palomar Holdings sport a Zacks Rank #1 (Strong Buy) each, NMI Holdings carries a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Arch Capital has a solid track record of beating earnings estimates in each of the trailing four quarters, the average being 28.41%. In the past year, ACGL has gained 28.9%.
The Zacks Consensus Estimate for ACGL’s 2024 and 2025 earnings has moved 5.1% and 3.3% north, respectively, in the past 30 days.
Palomar has a solid track record of beating earnings estimates in each of the trailing four quarters, the average being 15.10%. In the past year, PLMR has surged 75.3%.
The Zacks Consensus Estimate for PLMR’s 2024 and 2025 earnings implies year-over-year growth of 16.8% and 19.1%, respectively, from the consensus estimate of the corresponding years.
NMI Holdings has a solid track record of beating earnings estimates in each of the trailing four quarters, the average being 8.60%. In the past year, NMIH has jumped 40.3%.
The Zacks Consensus Estimate for NMIH’s 2024 and 2025 earnings implies year-over-year growth of 9.1% and 8.3%, respectively, from the consensus estimate of the corresponding years.
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RLI Corp. (RLI) : Free Stock Analysis Report
Arch Capital Group Ltd. (ACGL) : Free Stock Analysis Report
NMI Holdings Inc (NMIH) : Free Stock Analysis Report
Palomar Holdings, Inc. (PLMR) : Free Stock Analysis Report
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