Why Is RLI Corp. (RLI) Up 6.4% Since Last Earnings Report?

A month has gone by since the last earnings report for RLI Corp. (RLI). Shares have added about 6.4% in that time frame, outperforming the S&P 500.

But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is RLI Corp. due for a pullback? Well, first let's take a quick look at the most recent earnings report in order to get a better handle on the recent catalysts for RLI Corp. before we dive into how investors and analysts have reacted as of late.

RLI's Q2 Earnings Beat Estimates on Premium Growth, Investment Income

RLI Corp. reported second-quarter 2026 operating earnings of 83 cents per share, which beat the Zacks Consensus Estimate by 16.9%. The bottom line increased 1.2% from the prior-year quarter.

The quarterly results reflect continued premium growth, higher investment income and favorable prior-year reserve development. However, weaker underwriting performance in the casualty segment partly offset these positives.

Operational Performance

Operating revenues for the reported quarter were $463 million, up 4.9% year over year, driven by higher net premiums earned and net investment income. The top line beat the Zacks Consensus Estimate by 1.6%.

Gross premiums written (GPW) increased 3.1% year over year to $579.7 million, driven by strong growth in the casualty segment. Our estimate was $592.9 million.

Net investment income increased 16.8% year over year to $46 million. The Zacks Consensus Estimate was $42.7 million, while our estimate for the metric was pegged at $40.7 million. The investment portfolio’s total return was 3.4% in the quarter.

Total expenses increased 6.4% year over year to $367.9 million, primarily due to higher policy acquisition costs, insurance operating expenses and interest expense on debt. Our estimate was $376.8 million.

Underwriting income fell 3.7% year over year to $59.9 million. Our estimate was $53.1 million. The combined ratio deteriorated 110 basis points year over year to 85.6, reflecting higher catastrophe losses. Our estimate was 87.2.

Segmental Results

Casualty lines’ GPW rose 10.6% year over year to $339 million. The figure was above our estimate of $338.1 million.

The underwriting income decreased significantly to $1.7 million from $8.3 million, down 79% year over year. The combined ratio deteriorated 280 bps year over year to 99.3%. The figure was above our estimate of 98.4%.

Property lines’ GPW fell 5.9% year over year to $199.3 million. The figure was below our estimate of $207.7 million.

The underwriting income increased to $53.5 million, up 8.1% supported by favorable reserve development. The combined ratio improved 530 bps year over year to 56.8%. Our estimate was 65.2%.

Surety lines’ GPW declined 5.7% year over year to $41.4 million. The figure was below our estimate of $47.1 million.

The underwriting income improved 5.4% year over year to $4.7 million. The combined ratio improved 70 bps year over year to 87.2%. Our estimate was 84.8%.

Financial Update

RLI exited the second quarter with total investments and cash of $4.9 billion, up 4.5% from 2025-end.

Book value was $19.09 per share as of June 30, 2026, up 11% from the figure as of Dec. 31, 2025.

Net cash flow from operations was $145.2 million, down 16.9% year over year.

The statutory surplus increased 5.2% from 2025-end to $1.94 billion as of June 30, 2026.

Return on equity was 24.5%, expanding 480 bps from the year-ago period.

Capital Deployment Update

On June 12, 2026, the insurer paid a regular quarterly dividend of 18 per cent per share for the second quarter. RLI’s cumulative dividends totaled more than $1.3 billion, paid over the last five years.

On May 14, 2026, the board of directors approved a $250 million share repurchase program. The company repurchased 0.2 million shares for $12 million during the second quarter. As of June 30, 2026, $238 million remained available under the authorization.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month.

VGM Scores

Currently, RLI Corp. has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Following the exact same course, the stock was allocated a score of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, RLI Corp. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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

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