It has been about a month since the last earnings report for RLI Corp. (RLI). Shares have added about 4.5% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is RLI Corp. due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

RLI's Q4 Earnings Top Estimates on Strong Premium Growth

RLI Corp. reported fourth-quarter 2023 operating earnings of $1.54 per share, beating the Zacks Consensus Estimate by 6.9%. The bottom line improved 0.6% from the prior-year quarter.

The quarterly results reflect continued premium growth across all product segments.

Operational Performance

Operating revenues for the reported quarter were $378.4 million, up 15% year over year, driven by 14.9% higher net premiums earned and 14.4% higher net investment income. The top line, however, missed the Zacks Consensus Estimate by 2%. Gross premiums written increased 13% year over year to $434.4 million. This uptick can be attributed to the solid performance of the Casualty (up 7.5%), Property (up 23.5%) and Surety segments (up 10.9%). Our estimate was $459 million. Net investment income increased 14.4% year over year to $32.5 million. The Zacks Consensus Estimate for the metric was pegged at $33.5 million, while our estimate was $38.1 million. The investment portfolio’s total return was 6.4% in the quarter.

Total expenses increased 15.5% year over year to $292.5 million, primarily due to higher loss and settlement expenses, and higher policy acquisition costs, insurance operating expenses and general corporate expenses. Our estimate was $293.7 million. Underwriting income of $59.8 million increased 10.9%. Combined ratio deteriorated 60 basis points (bps) year over year to 82.7. The Zacks Consensus Estimate for the metric was pegged at 85, while our estimate was 82.7.

Full-Year Highlights

Operating earnings of $4.94 per share improved 5.3% from the prior-year quarter. Operating revenues were $1.4 billion million, up 15% year over year.

Net premiums earned increased 13.1% to $1.3 billion and were in line with our estimate. Underwriting income slipped 0.02% to $173.2 million. Our estimate was $173.6 million.  Combined ratio deteriorated 220 bps to 86.6 and was in line with our estimate. The investment portfolio’s total return was 8.8%.

Financial Update

RLI exited the quarter with total investments and cash of $3.6 billion, up 12.3% from 2022 end. Book value was $30.97 per share as of Dec 31, 2023, up 19.6% from the figure as of Dec 31, 2022.

Net cash flow from operations was $464.3 million, up 85.4% year over year.
The statutory surplus increased 5.8% from 2022 end to $1.5 billion as of Dec 31, 2023. Return on equity was 28.1%, expanding 270 bps from the year-ago period.