RLI Q4 Earnings Beat on Higher Underwriting, Revenues Miss
RLI Corp. RLI reported fourth-quarter 2021 operating earnings of $1.26 per share, beating the Zacks Consensus Estimate by 35.9%. The bottom line improved 38% from the prior-year quarter.
The quarterly results benefited from a not-so-active catastrophe environment, favorable reserve development and solid investment returns.
RLI Corp. Price, Consensus and EPS Surprise
RLI Corp. price-consensus-eps-surprise-chart | RLI Corp. Quote
Operational Performance
Operating revenues for the reported quarter were $275.9 million, up 14.2% year over year, driven by 14.7% higher net premiums earned and 7.7% higher net investment income. The top line missed the Zacks Consensus Estimate of $276 million by a whisker.
Gross premiums written increased 12.2% year over year to $337.2 million. This uptick can be attributed to the solid performance of Casualty (up 8.9%), Surety (up about 23%) and Property segments (up 7.1%).
Net investment income increased 7.7% year over year to $17.9 million.
Total expenses increased 5.1% year over year to $214 million, primarily due to higher policy acquisition costs, operating expenses and interest expense on debt.
Underwriting income of $49.7 million increased 84.1% from the year-ago period primarily due to the strong performance of the Property and Surety segments.
The combined ratio improved 730 basis points (bps) year over year to 80.7.
Full-Year Highlights
Adjusted income of $3.87 per share beat the Zacks Consensus Estimate of $3.50. The bottom line increased 49.4% year over year.
Total revenues increased 12.4% from the year-ago level to about $1 billion but missed the Zacks Consensus Estimate of $1.1 billion.
The last year marked the 26th consecutive year of underwriting profit. Combined ratio 520 bps to 86.8.
Financial Update
RLI exited 2021 with total investments and cash of $3.2 billion, up 11.5% from 2020 end.
Book value was $27.14 per share as of Dec 31, 2021, up 20% from the figure as of Dec 31, 2020.
Long-term debt was $199.7 million, which jumped 33.6% from 2020 end.
The statutory surplus increased 10.6% year over year to $1.12 billion as of Dec 31, 2021.
Return on equity was 18.3%, reflecting an expansion of 220 bps year over year.
Dividend Update
RLI paid out a special dividend of $2.00 per share and a quarterly dividend of 25 cents for a total of $101.9 million to shareholders in the fourth quarter.
RLI has paid dividends for 182 consecutive quarters and increased regular dividends in the last 46 years. Over the last 10 years, the company has returned about $1.13 billion to shareholders and the regular quarterly dividend has grown 5.2% per year on average.
Zacks Rank
RLI currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Some Other P&C Insurers
Of the insurance industry players that have reported fourth-quarter results so far, The Travelers Companies TRV, RenaissanceRe Holdings Ltd. RNR and The Progressive Corporation PGR beat the Zacks Consensus Estimate for earnings.
Travelers’ core income of $5.20 per share surpassed the Zacks Consensus Estimate of $3.86 and increased 6% year over year. Total revenues rose 7% to about $9 billion and beat the Zacks Consensus Estimate of $8.7 billion. Net written premiums increased 10% year over year to a record $8 billion. The combined ratio deteriorated 130 bps year over year to 88.
RenaissanceRe’s operating earnings per share of $4.71 surpassed the Zacks Consensus Estimate by 27% and rebounded from a year-ago loss of $1.59 per share. Total revenues of $1.39 billion dipped 0.1% year over year. Gross premiums written surged 40.4% year over year to $1.3 billion. The combined ratio improved 3530 bps year over year to 79.4.
Progressive’s earnings per share of $1.05 beat the Zacks Consensus Estimate of 99 cents but declined 43.2% from the year-ago quarter. Net premiums written were $10.7 billion in the quarter, up 13% from $9.5 billion a year ago. The combined ratio deteriorated 630 bps from the prior-year quarter to 94.7.
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