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RLI Corp Q4 Earnings Miss on Lower Revenues, Fall Y/Y

Zacks Equity Research
Updated

RLI Corporation RLI posted operating earnings of 56 cents per share for the fourth quarter of 2015 that missed the Zacks Consensus Estimate by 13.8%. The bottom line also plunged 21% year over year.

The company’s lackluster results were attributable to a decline in revenues coupled with an increase in total expense.

 Full-year 2015

RLI Corp.’s full-year 2015 operating earnings came in at $2.53 per share compared with $2.61 in 2014.

Full-year revenues of $754.8 million decreased 3.8% year over year due to a decline in net investment income.

Operational Performance

Operating revenues totaled $193.1 million, down 0.4% year over year. The top line, however, beat the Zacks Consensus Estimate of $191 million.
Gross premiums written improved 3.1% year over year to $200.6 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 increased 3% year over year to $161.6 million due to higher loss and settlement expenses, policy acquisition costs and general corporate expenses.

Underwriting income of this property and casualty insurer totaled $22.5 million, down 18.9% year over year.

RLI Corp.’s net investment income for the quarter fell 0.7% year over year to $13.8 million.

Financial Update

RLI Corp. exited the fourth quarter with total investments and cash of $1.95 billion, down 0.6% from year-end 2014.

Long-term debt was $149.7 million at the end of the quarter, flat with the 2014-end level.

Book value was $18.91 per share as of Dec 31, 2015, down 3.6% from that as of Dec 31, 2014.

Cash from operations was $31.2 million. This reflects a deterioration of 16.1% year over year.

Dividend Payout

RLI Corp. returned $87.1 million to shareholders via a special cash dividend of $2.00 per share paid on Dec 22, 2015. The insurer also paid a regular quarterly dividend of 19 cents per share on the same date. With this, the company has maintained its record of paying special dividends for the past 158 consecutive quarters and of increasing regular dividends in each of the last 40 years.

Zacks Rank and Performance of Other Insurers

RLI Corp. presently carries a Zacks Rank #3 (Hold).  While Chubb Limited CB beat fourth-quarter earnings by 4.4%, other players like PartnerRe Ltd. PRE and Cincinnati Financial Corp. CINF are yet to release their fourth-quarter results.  

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RLI CORP (RLI): Free Stock Analysis Report
 
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CINCINNATI FINL (CINF): Free Stock Analysis Report
 
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Zacks Investment Research