Volatile stock to watch: RLI Corp (NYSE: RLI)

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RLI Corp (NYSE: RLI) stock fell over 0.25% on 18th July, 2019 (as of 11:26 am GMT-4; Source: Google finance) after the company posted mixed results for the second quarter of FY 19. Gross premium had grown 5% in the second quarter, driven by the casualty and property segments. Underwriting income was strong in the casualty and surety segments, while the property segment was impacted by $4 million in spring storm activity. Investment income was up over last year as the company continues to invest in operating cash flow. Declining interest rates and favorable equity market conditions also contributed to book value growth, which is up 21% year to date.

RLI in the second quarter of FY 19 has reported the adjusted earnings per share of 66 cents, beating the analysts’ estimates for the adjusted earnings per share of 58 cents, as per Zacks Consensus Estimate. The company had reported the adjusted revenue of $224.54 million in the second quarter of FY 19, missing the analysts’ estimates for revenue by 1.15%.

RLI has achieved $14.9 million of underwriting income in the second quarter of 2019 on a 92.8 combined ratio, compared to $14.1 million on a 92.8 combined ratio in 2018. Results for both years include favorable development in prior years’ loss reserves which had totaled $17.8 million and $12.4 million for 2019 and 2018, respectively.

Moreover, RLI’s net investment income for the quarter increased by 16.6% to $17.0 million, compared to the same period in 2018. The investment portfolio’s total return was 2.9% for the quarter and 7.6% for the year. Comprehensive earnings were $68.3 million for the quarter ($1.51 per share) compared to $25.6 million ($0.57 per share) for the same quarter in 2018.  Equity in earnings of unconsolidated investees was $8.5 million for the second quarter of 2019 compared to $7.1 million from the same period last year. These results are related to Maui Jim, Inc. ($6.5 million), a producer of premium sunglasses, and Prime Holdings Insurance Services, Inc. ($2.0 million), a specialty insurance company. For the second quarter of 2018, equity in earnings of unconsolidated investees from Maui Jim and Prime was $6.6 million and $0.5 million, respectively

RLI has paid a regular quarterly dividend of $0.23 per share, a $0.01 increase over the prior quarter. RLI’s cumulative dividends total more than $603 million paid over the last five years.

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