RLI Corp. (RLI): A Bull Case Theory

We came across a bullish thesis on RLI Corp. on Stock Analysis Compilation’s Substack. In this article, we will summarize the bulls’ thesis on RLI. RLI Corp.'s share was trading at $69.66 as of July 22^nd. RLI’s trailing and forward P/E were 19.93 and 22.94 respectively according to Yahoo Finance.

RLI Corp. is a premier specialty insurance company with a long-standing reputation for exceptional underwriting discipline, a focus on niche markets, and shareholder-oriented capital allocation. The company’s philosophy centers on consistently generating underwriting profits, a rare achievement in the property and casualty insurance industry, which has enabled it to build a durable competitive moat and a track record of compounding shareholder value over decades.

RLI deliberately targets underserved and complex risk markets, avoiding commoditized lines where price is the dominant competitive factor. Its empowered underwriting teams, incentivized to prioritize profitability over growth, can flexibly scale business up or down depending on pricing adequacy, underscoring its commitment to long-term returns over short-term volume. This disciplined underwriting culture is strengthened by significant employee ownership, ensuring alignment between management, staff, and shareholders and fostering a focus on sustainable value creation.

RLI’s prudent capital allocation further distinguishes it; consistent underwriting profitability generates meaningful free cash flow, which management deploys with an owner’s mindset. The company boasts a multi-decade record of raising regular dividends while frequently paying out sizable special dividends, reflecting a philosophy that capital belongs to shareholders unless redeployment offers compelling returns.

This integrated model—superior underwriting discipline, expertise in specialized markets, deeply ingrained ownership culture, and shareholder-focused capital stewardship—has positioned RLI as an elite operator in the specialty insurance industry. The combination of resilient profitability, aligned incentives, and shareholder-first capital management provides a compelling foundation for continued value creation and reinforces RLI’s status as a category-defining player in its chosen markets.

Previously, we covered a bullish thesis on RLI Corp. by Serhio MaxDividends in May 2025, highlighting its consistent dividend growth, disciplined underwriting, and solid financials. The company’s stock has depreciated by about 8% as earnings contracted despite steady operations. The thesis still stands on RLI’s underwriting discipline and capital returns. Stock Analysis Compilation shares an identical view, emphasizing its durable moat and shareholder-first culture.

RLI Corp. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 32 hedge fund portfolios held RLI at the end of the first quarter which was 31 in the previous quarter. While we acknowledge the potential of RLI as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.