Yahoo Finance RLI's Q1 Earnings Top, Revenues Miss, Premiums Rise Y/Y
RLI Corp. RLI reported first-quarter 2023 operating earnings of $1.63 per share, beating the Zacks Consensus Estimate by 34.7%. The bottom line improved 14% from the prior-year quarter. Shares gained 3.1% in the after-market trading hours to reflect the outperformance
The quarterly results benefited from solid performance across all its segments, favorable reserve development and higher net investment income.
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 $335 million, up 19.4% year over year, driven by 14.3% higher net premiums earned and 51.5% higher net investment income. The top line however missed the Zacks Consensus Estimate by 2.2%.
Gross premiums written increased 15.6% year over year to $415 million. This uptick can be attributed to the solid performance of the Casualty (up 1%), Property (up 45%) and Surety segments (up 13.6%).
Net investment income increased 52% year over year to 27.1 million. The investment portfolio’s total return was 2.8% in the quarter.
Total expenses increased 14.4% year over year to $246.1 million, primarily due to higher loss and settlement expenses, and higher policy acquisition costs, insurance operating expenses and general corporate expenses.
Underwriting income of $67.9 million increased 14.1%, primarily due to higher profitability at its Property and Casualty segment. Combined ratio remained flat year over year at 77.9.
Financial Update
RLI exited the quarter with total investments and cash of $3.4 billion, up 4.6% from 2022 end.
Book value was $28.62 per share as of Mar 31, 2023, up 12% from the figure as of Dec 31, 2022.
Net cash flow from operations was $69.2 million, up 77.4% year over year.
The statutory surplus decreased 3.6% from 2022 end to $1.5 billion as of Mar 31, 2023.
Return on equity was 41.9%, reflecting an expansion of 3160 basis points (bps) year over year.
Dividend Update
On Mar 20, 2023, RLI paid a quarterly dividend of 26 cents per share. Over the last five years, the insurer has returned $759 million to shareholders.
Zacks Rank
RLI currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
The Travelers Companies TRV reported first-quarter 2022 core income of $4.11 per share, which beat the Zacks Consensus Estimate of $3.64 and our estimate of $3.41. However, the bottom line decreased 2.6% year over year. Travelers’ total revenues increased 10% from the year-ago quarter to $9.7 billion, primarily driven by higher premiums. The top-line figure however missed the Zacks Consensus Estimate of $9.8 billion.
Net written premiums increased 12% year over year to a record $9.4 billion, driven by strong growth across all three segments. The figure was higher than our estimate of $8.9 billion.
Catastrophe losses totaled $422 million, wider than $36 million pre-tax in the prior-year quarter. Catastrophe losses primarily resulted from severe wind and hail storms in multiple states. Travelers witnessed an underwriting gain of $501 million, down 12.9% year over year. The combined ratio deteriorated 410 bps year over year to 95.4
The Progressive Corporation’s PGR first-quarter 2023 earnings per share of 65 cents missed the Zacks Consensus Estimate of $1.44 as well as our estimate of $1.50. The bottom line declined 20.7% year over year.
Operating revenues were about $14.2 billion, up 15.8% year over year. This improvement was driven by a 15% increase in premiums, 18.5% higher fees and other revenues, a 7.1% increase in service revenues and 73.2% higher investment income. The top line exceeded the Zacks Consensus Estimate of $14.1 billion and our estimate of $13.1 billion.
Net premiums earned grew 15% to $13.5 billion and beat our estimate of $12.6 billion. The combined ratio — the percentage of premiums paid out as claims and expenses — deteriorated 450 bps from the prior-year quarter’s level to 99.
Upcoming Release
Chubb Limited CB will report first-quarter 2023 earnings on Apr 25. The Zacks Consensus Estimate for the first quarter is pegged at $4.37, suggesting an increase of 14.4% from the year-ago quarter’s reported figure.
CB’s bottom line beat estimates in three of the last four quarters and missed in one.
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