RLI's Q4 Earnings Beat Estimates on Strong Net Investment Income

RLI Corp. RLI reported fourth-quarter 2025 operating earnings of 94 cents per share, which beat the Zacks Consensus Estimate by 23.6%. The bottom line increased 80.8% from the prior-year quarter.

The quarterly results reflect higher premiums, improved investment income, reduced expenses, and solid underwriting income.

Operational Performance

Operating revenues for the reported quarter were $449 million, up 3% year over year, driven by higher net premiums earned and net investment income. The top line missed the Zacks Consensus Estimate by 0.4%.

Gross premiums written decreased 2.1% year over year to $463.2 million. This uptick can be attributed to the solid performance of the Casualty segment (up 2.4%). Our estimate was $505.2 million.

Net investment income increased 9.2% year over year to $42.3 million. The Zacks Consensus Estimate was $42.9 million, while our estimate for the metric was pegged at $44.5 million. The investment portfolio’s total return was 1.5% in the quarter.

Total expenses declined 10% year over year to $341.1 million, primarily due to lower loss and settlement expenses and interest expense on debt. Our estimate was $378.7 million.

Underwriting income of $70.8 million surged more than threefold year over year. Our estimate was $32.6 million. The combined ratio improved 1,180 basis points (bps) year over year to 82.6. Our estimate was 92.

Full-Year Highlights

Operating earnings of $3.47 per share improved 19.2% from the prior-year quarter.

Operating revenues were $1.8 billion, up 6.3% year over year.

Net premiums earned increased 5.8% to $1.6 billion. Our estimate was $1.6 billion. Underwriting income increased 25.4% to $264.2 million. Our estimate was $226 million. The combined ratio improved 260 bps to 83.6, while our estimate was 86.

The investment portfolio’s total return was 9%.

Financial Update

RLI exited the quarter with total investments and cash of $4.7 billion, up 14.2% from 2024-end.

Book value was $19.35 per share as of Dec. 31, 2025, up 33% from the figure as of Dec. 31, 2024.

Net cash flow from operations was $616.1 million, up 10% year over year.

The statutory surplus increased 3.3% from 2024-end to $1.8 billion as of Dec. 31, 2025.

Return on equity was 28.7%, expanding 700 bps from the year-ago period.

Dividend Update

The insurer paid a special dividend of $2.00 per share for the fourth quarter. Shareholder returns totaled $198.4 million. RLI has paid dividends for 198 consecutive quarters and increased regular dividends in each of the last 50 years. Over the last 10 years, the company has returned nearly $1.6 billion to shareholders. The regular dividend has grown an average of 5.4% per year.

Zacks Rank

RLI currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Another Insurer

The Travelers Companies, Inc. TRV reported fourth-quarter 2025 core income of $11.13 per share, which beat the Zacks Consensus Estimate by 32% and improved 22% year over year. Travelers’ total revenues increased 3.2% from the year-ago quarter to $12.4 billion, primarily driven by higher premiums, net investment income, and other revenues. The top line beat the Zacks Consensus Estimate by 0.08%.

Net written premiums increased 1% year over year to a record $10.8 billion. Net investment income increased 10.3% year over year to $1 billion. The figure matched the Zacks Consensus Estimate. Travelers witnessed an underwriting gain of $1.7 billion, up 21.7% year over year. The consolidated underlying combined ratio of 82.2 improved 180 bps year over year.

Upcoming Releases

Brown & Brown, Inc. BRO is set to report fourth-quarter 2025 results on Jan. 26, after market close. The Zacks Consensus Estimate for fourth-quarter earnings per share is pegged at 89 cents per share, indicating an increase of 3.4% from the year-ago quarter’s reported figure.

BRO’s earnings beat estimates in three of the last four quarters, while missing in one.

The Progressive Corporation PGR is set to report fourth-quarter 2025 results on Jan. 28, before market open. The Zacks Consensus Estimate for fourth-quarter earnings per share is pegged at $4.44, suggesting an increase of 8.8% from the year-ago quarter’s reported figure.

PGR’s earnings beat estimates in two of the last four quarters, while missing in the other two.

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This article originally published on Zacks Investment Research (zacks.com).

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