RLI Corp: A Value-Investment Opportunity in Q2 2025?

For investors eyeing the insurance sector, RLI Corp. (NYSE: RLI) has emerged as a compelling case study in navigating macroeconomic headwinds. With its upcoming Q2 2025 earnings release on July 21, the company faces both skepticism and cautious optimism. By dissecting earnings trends, institutional sentiment, and insider activity, we can assess whether RLI's long-standing fundamentals position it for a meaningful comeback.

Earnings Trends: A Mixed Picture

RLI's recent performance has been a tug-of-war between revenue optimism and earnings caution. For Q2 2025, analysts expect revenue of $459.29 million and earnings of $0.82 per share, with the full-year revenue forecast revised up to $1.73 billion. However, the $2.92 per share earnings estimate for 2025—down from $3.19—signals lingering concerns about margin pressures.

The previous quarter (Q1 2025) was a cautionary tale: RLI missed revenue estimates by -0.85% and earnings by -19.05%, sending shares down 3.65%. Yet, the upward revision in revenue estimates over the past 90 days suggests improving underwriting discipline and niche market demand. RLI's 29-year streak of underwriting profits and 50-year dividend growth streak (the latter including 2025) remain critical tailwinds.

Institutional Sentiment: A Tale of Two Camps

Institutional ownership in Q2 2025 reveals a divided landscape. While 187 funds increased stakes—most notably Champlain Investment Partners (adding 605K shares) and T. Rowe Price (up 27.8%)—others like Thrivent Financial and Vanguard reduced positions by double-digit percentages. This duality reflects a broader debate: Is RLI's niche insurance model a safe haven, or is it vulnerable to rising catastrophe losses and interest rate volatility?

The July 2025 13F filings add nuance. Legal & General Group Plc and Ausbil Investment Management Ltd. added millions in RLI stock, while Norges Bank and Wolverine Trading liquidated entirely. This suggests a “buy the rumor, sell the news” approach from some players, with others betting on RLI's ability to capitalize on its A+ AM Best ratings and wholesale distribution network.

Insider Activity: Confidence Amid Caution

RLI's insider transactions in Q2 2025 paint a cautiously optimistic picture. CEO Craig Kliethermes spent $356,750 to acquire 5,000 shares, while directors and officers collectively added 13,200 shares. This contrasts with two sales (by Robert Restrepo and Jordan Graham) totaling 4,364 shares. Notably, no insider activity occurred in July 2025, but the first-half purchases suggest a vote of confidence in management's strategy.

The lack of recent insider sales is telling. In a sector where executives often hedge against volatility, RLI's leadership appears unswayed by short-term noise. This aligns with the company's long-term focus on disciplined underwriting and niche market expertise.

Investment Implications

RLI's earnings guidance and institutional activity present a classic value-investment dilemma. On one hand, the stock's 10.52% upside potential (based on analyst price targets) and 15.21% GF Value estimate imply undervaluation. On the other, the “Hold” consensus recommendation and downward earnings revisions highlight risks in a challenging insurance environment.

For value investors, the key question is whether RLI's niche focus on casualty, property, and surety markets can offset macro risks. Its A+ ratings, 50-year dividend streak, and recent institutional buying by high-conviction funds like Champlain suggest a strong foundation. However, the July 21 earnings report will be pivotal. If Q2 results meet or exceed estimates, the stock could rally on renewed optimism. A miss, however, might trigger further selling pressure.

Final Verdict

RLI's comeback potential hinges on its ability to balance growth with profitability. While the insurance sector remains volatile, RLI's long-term fundamentals—strong ratings, consistent dividends, and a resilient business model—make it a compelling candidate for patient investors. Those willing to ride out near-term volatility may find opportunity in its current valuation, provided Q2 results reinforce the company's strategic strengths.

Investment Recommendation: Consider a small position in RLI for a diversified portfolio, with a stop-loss at $65 and a target of $80–$85. Monitor the July 21 earnings report and subsequent conference call for clarity on underwriting trends and margin guidance.