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RLI Corp. (RLI) filed Quarterly Report for the period ended 2011-09-30.
Rli Corp. has a market cap of $1.5 billion; its shares were traded at around $70.98 with a P/E ratio of 12.01 and P/S ratio of 2.56. The dividend yield of Rli Corp. stocks is 1.69%. Rli Corp. had an annual average earning growth of 17% over the past 10 years. GuruFocus rated Rli Corp. the business predictability rank of 2-star.
This is the annual revenues and earnings per share of RLI over the last 10 years. For detailed 10-year financial data and charts, go to 10-Year Financials of RLI.
Highlight of Business Operations:
Consolidated revenue for the first nine months of 2011 increased $23.4 million, or 5%, from the same period in 2010 as net premiums earned for the Group increased 7% from 2010 levels. The acquisition of CBIC added $19.9 million in net premiums earned for the year. New product initiatives over the last several years have also led to increases in the property and surety segments and have served to offset revenue declines in our casualty segment, which is most affected by the weak economy and continued rate softening. Net investment income declined 5% to $47.4 million. Investment income fell during the first nine months of the year as there was a lower average invested asset base for the nine months ended September 30, 2011 compared to the same period in 2010 as a result of a special dividend paid in the fourth quarter of 2010 and the sale of bonds to fund the purchase of CBIC during the second quarter of 2011. In addition, reinvestment rates subsequently declined during the third quarter of 2011. We realized net investment gains of $14.3 million in the first nine months of 2011, compared to $15.3 million in the first nine months of 2010.Net after-tax earnings for the first nine months of 2011 totaled $99.9 million, $4.68 per diluted share, compared to $87.2 million, $4.11 per diluted share for the same period in 2010. Both periods benefited from positive underwriting income that was bolstered by favorable reserve development. In 2011, favorable development on prior years’ loss reserves resulted in additional pretax earnings of $92.0 million. Partially offsetting the favorable development was $13.0 million in spring storm losses, $6.5 million in losses on Hurricane Irene and $1.0 million in reserves that were established for the losses associated with the Japan earthquake and tsunami, primarily on marine coverages. Also offsetting the favorable development on prior years’ reserves, there was adverse current year loss experience on contract surety and marine coverages totaling $4.8 million. There was nothing similar in 2010. From a comparative standpoint, results for 2010 included $53.8 million of favorable development on prior years’ loss reserves, which was partially offset by $1.6 million in reinstatement premium on our marine coverages and $5.0 million in storm losses. Bonus and profit sharing-related expenses associated with these specific items totaled $8.2 million in 2011 and $6.4 million in 2010. These performance-related expenses affected policy
Underwriting income for the segment was $16.6 million for the nine months of 2011, compared to $22.7 million for the same period in 2010. Results for 2011 reflect $16.6 million of favorable development on prior years’ loss reserves, primarily on marine (2008 and 2009 accident years) and DIC coverages. The latter relates to a final claim for the Northridge earthquake (accident year 1994) that was favorably settled in the second quarter. Offsetting those slightly was a $2.7 million increase in 2005 and 2008 hurricane reserves. In addition for the first nine months of 2011, we had $1.4 million of favorable development on prior year crop business. We recorded a $1.4 million reduction in prior year crop reserves which was reduced by a $0.7 million increase in relating profit commissions. Final settlement of the 2010 treaty year occurred in the second quarter. Offsetting the favorable development, results for 2011 include $1.0 million in reserves established for losses associated with the Japan earthquake and tsunami, primarily on marine coverages, $13.0 million for spring storm losses, concentrated in our fire product but also impacting our marine and facultative reinsurance products as well, and $6.0 million in losses on Hurricane Irene. In addition, 2011 results also included $2.4 million of adverse current year development on marine coverages and a $2.9 million underwriting loss on crop business. From a comparative standpoint, 2010 underwriting results included $0.9 million of favorable development on hurricane reserves, $0.3 million of net favorable development on prior years’ marine coverages and $5.0 million in storm losses.
Net after-tax earnings for the third quarter of 2011 totaled $26.1 million, $1.22 per diluted share, compared to $28.0 million, $1.33 per diluted share, for the same period in 2010. In the third quarter of 2011, favorable development on prior years’ loss reserves resulted in additional pretax earnings of $31.4 million. Partially offsetting the current year favorable development was $6.5 million in Hurricane Irene losses. Also offsetting the favorable development on prior years’ reserves, there was adverse current year loss experience on contract surety and marine coverages totaling $4.8 million during the third quarter of 2011. Comparatively, in the third quarter of 2010, favorable development on prior years’ loss reserves resulted in additional pretax earnings of $23.0 million. Bonus and profit sharing-related expenses related to the favorable development on prior years’ reserves totaled $2.8 million in 2011 and $2.7 million in 2010. These performance-related expenses affected policy acquisition, insurance operating and general corporate expenses. Bonuses earned by executives, managers and associates are predominately influenced by corporate performance (operating earnings and return on capital).
Gross premiums written for the casualty segment increased 10%, totaling $87.9 million for the third quarter of 2011, compared to $79.9 million from the same period last year. The improvement was due largely to the addition of CBIC. The segment continues to feel the pressure of the soft pricing environment and weak economy. The acquisition of CBIC contributed $7.6 million of gross premiums written to the casualty segment. In addition, our professional services product, which was launched in 2009 to provide professional liability coverage for design professionals and which now offers additional property and casualty coverages to its target market, posted $7.3 million in gross premiums written during the third quarter of 2011, up $3.0 million, or 71%, from the same period last year. General liability, our largest casualty product, recorded gross premiums written of $21.5 million for the third quarter of 2011, up 2% from the same period last year. Specialty program gross premiums written totaled $0.5 million for the third quarter of 2011, a decrease of $0.6 million, or 53%, from the third quarter of 2010. This decrease is reflective of our continued re-underwriting of the book, including exiting certain unprofitable classes of business. Transportation recorded gross premiums written of $12.5 million for the third quarter of 2011, down $2.4 million, or 16% from the same period last year.
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