RLI Corp.'s Q4 Earnings: A Mixed Bag of Results

RLI Corp. (RLI), an insurance holding company, recently reported its fourth-quarter and full-year 2024 results, offering a mixed bag of performance metrics. While the company experienced growth in certain areas, it also faced challenges that impacted its earnings and overall performance.



In the fourth quarter of 2024, RLI Corp. reported operating earnings of $0.41 per share, missing the Zacks Consensus Estimate by 14.5% and decreasing 46.8% from the prior-year quarter. The quarterly results reflected higher premiums and improved investment income, partially offset by higher expenses and poor underwriting income. Operating revenues for the reported quarter were $436 million, up 15.3% year over year, driven by higher net premiums earned and net investment income. Gross premiums written increased 9% year over year to $473.2 million, with the Casualty segment leading the growth with an 18.3% increase.

However, total expenses rose 29.6% year over year to $379.2 million, primarily due to higher loss and settlement expenses, policy acquisition costs, and interest expense on debt. Underwriting income of $22.2 million decreased 62.8% year over year, with the combined ratio deteriorating 1,170 basis points (bps) year over year to 94.4. The Zacks Consensus Estimate for the combined ratio was pegged at 96, while our estimate was 102.



On the positive side, RLI Corp.'s full-year 2024 highlights included operating earnings of $2.87 per share, up 16.2% from the prior-year quarter. Operating revenues were $1.7 billion, up 18% year over year, with net premiums earned increasing 17.9% to $1.53 billion. Underwriting income increased 21.6% to $210.7 million, and the combined ratio improved 40 bps to 86.2. The investment portfolio's total return was 6.4%.

In conclusion, RLI Corp.'s Q4 2024 earnings results were a mixed bag, with growth in premiums and investment income offset by higher expenses and poor underwriting income. While the full-year 2024 performance showed improvement in earnings, revenues, and underwriting income, the company must address its expenses and underwriting performance to maintain long-term growth and profitability. Investors should monitor RLI Corp.'s future earnings reports to assess the company's progress in managing these challenges.