New ETF Book by Larry Connors - Click here to read more
Third Quarter Earnings Per Diluted Share 2009 2008 Operating earnings $1.18 $1.12 Net earnings $1.42 $0.40
Highlights for the quarter included:
-- Operating earnings of $25.8 million ($1.18 per share).
-- Combined ratio of 81.3.
-- Book value per share of $38.23, an increase of 15.9% from year end 2008.
-- Net operating cash flow of $46.8 million.
-- $15.1 million ($0.45 per share) pretax favorable development in prior years' loss reserves, net of effects on bonus and profit sharing-related expenses.
"This outstanding result was driven by solid underwriting, favorable loss trends and positive investment returns," said Jonathan E. Michael, President & CEO. "Our strong balance sheet and disciplined approach to business continue to serve us well."
Third quarter underwriting results
RLI achieved $23.0 million of underwriting income in the third quarter of 2009 on an 81.3 combined ratio, compared to $15.2 million of underwriting income on an 88.3 combined ratio in the same quarter for 2008.
Underwriting Income Third Quarter Third Quarter (in millions) 2009 2008 Combined Ratio 2009 2008 Casualty $17.4 $18.5 Casualty 73.2 75.9 Property 3.9 (11.0 ) Property 90.2 130.4 Surety 1.7 7.7 Surety 90.6 55.8 Total $23.0 $15.2 Total 81.3 88.3
RLI reported year-to-date underwriting income of $63.2 million representing an 82.9 combined ratio versus the $59.0 million underwriting income representing an 85.2 combined ratio for the same period last year.
Other income
For the quarter, investment income was $16.3 million compared to $19.8 million for the same period in 2008. For the nine month period ended September 30, 2009, investment income was $50.5 million versus $58.7 million for the same period in 2008.
The investment portfolio's total return for the quarter was 5.0%, with the bond portfolio returning 3.8% and the equity portfolio returning 12.8%. Through nine months, the investment portfolio's total return was 8.6% with the bond portfolio returning 8.4% and equities returning 10.2%. During the last six months capital markets have significantly improved, contributing to our book value growth. Investment income is lower in 2009 versus the same period in 2008 as the result of lower reinvestment rates, dividend cuts and changes in asset allocation.
Comprehensive earnings, which include after-tax unrealized gains/losses from the investment portfolio, were $68.0 million for the quarter ($3.12 per share) versus a loss of $15.5 million ($0.72 per share) over the same period in 2008. Year-to-date comprehensive earnings were $126.6 million ($5.82 per share), compared to $4.4 million ($0.20 per share) for the same period last year.
During the quarter, equity in earnings of unconsolidated investee was $1.1 million compared to $0.2 million from the same period last year. The quarter's results for last year were negatively impacted by the increased value of the dollar, which resulted in currency losses. For the nine month period, earnings were $5.2 million versus $6.4 million in 2008. These results are related to Maui Jim, Inc., a producer of premium sunglasses, which has been affected by the economic slowdown and the ensuing effect on consumer discretionary spending.
Supplemental disclosure regarding the earnings impact of specific items
Operating Earnings Per Share
2009 2008 2009 2008
3rd Qtr 3rd Qtr 9 mos. 9 mos.
Operating Earnings Per Share $ 1.18 $ 1.12 $ 3.53 $ 3.69
Specific items included in operating earnings per share: (1)
(2)
--- Gain from casualty prior years' reserve development $ 0.51 $ 0.52 $ 1.34 $ 0.95
--- Gain (Loss) from property prior years' reserve development $ (0.07 ) - $ (0.23 ) $ 0.06
--- Gain (Loss) from surety prior years' reserve development $ - $ 0.14 $ (0.01 ) $ 0.16
--- Gain from 2008 hurricanes' reserve development $ 0.01 $ - $ 0.05 $ -
--- Loss from 2008 hurricanes $ - $ (0.64 ) $ - $ (0.63 )
--- Gain from change in tax rate applicable to the Maui Jim dividend (3) $ - $ 0.05 $ - $ 0.05
(1) Includes bonus and profit sharing-related impacts which affected
other insurance and general corporate expenses.
(2) Favorable developments reflect revisions for previously estimated
losses.
(3) As required under the accounting standard for income taxes, the
gain reflects the tax benefit of applying the lower tax rate
applicable to dividends received from an affiliate (7%) as
compared to the corporate capital gains tax rate (35%) on which
tax estimates were based.
Other news
During the quarter, the company was named as one of the insurance industry's top performing companies by the Ward's 50(R) Top P&C Performers group. RLI is one of only five property and casualty insurers to have been recognized for excellence among 3,100 property and casualty insurers for 19 straight years since the group's inception in 1991.
The company paid a third quarter cash dividend of $0.27 per share on October 15, 2009. RLI's cumulative dividends, including this recent payment, are more than $190 million paid in 133 consecutive quarters. RLI has paid and increased dividends in each of the last 34 years. The company's dividend yield would be 2.0%, based on the $1.08 annualized dividend and today's closing stock price of $54.90.
The company's $200 million stock repurchase program, approved in 2007 and suspended in the third quarter of 2008, was reinstated with $37.8 million of remaining capacity.
At 10 a.m. CDT tomorrow, October 20, 2009, RLI management will hold a conference call to discuss quarterly results with insurance industry analysts. Interested parties may listen to the discussion through the Internet at RLI's website, www.rlicorp.com.
Underwriting income, operating earnings, earnings per share (EPS) from operations and other per share items are non-GAAP financial measures, and we believe that investors' understanding of RLI's core operating performance is enhanced by our disclosure of these financial measures. Underwriting income or profit represents the pretax profitability of our insurance operations and is derived by subtracting losses and settlement expenses, policy acquisition costs, and insurance operating expenses from net premium earned. Operating earnings and EPS from operations consist of our net earnings adjusted by net realized investment gains/(losses) and taxes related to net realized gains/(losses). Our definitions of these items may not be comparable to the definitions used by other companies. Net earnings and net earnings per share are the GAAP financial measures that are most directly comparable to operating earnings and EPS from operations. All earnings per share data are calculated using fully diluted shares. Combined ratio refers to a GAAP combined ratio.
Except for historical information, this news release may include forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934) including, without limitation, statements reflecting our current expectations about the future performance of our company or our business segments or about future market conditions. These statements are subject to certain risk factors that could cause actual results to differ materially. Various risk factors that could affect future results are listed in the company's filings with the Securities and Exchange Commission, including the Form 10-K Annual Report for the year ended December 31, 2008.
RLI, a specialty insurance company, offers a diversified portfolio of property and casualty coverages and surety bonds serving "niche" or underserved markets. RLI operates in all 50 states from office locations across the country. The company's talented associates have delivered underwriting profits in 28 of the last 32 years, including the last 13. RLI's insurance subsidiaries -- RLI Insurance Company, Mt. Hawley Insurance Company and RLI Indemnity Company -- are rated A+ "Superior" by A.M. Best Company and A+ "Strong" by Standard & Poor's.
For additional information, contact John Robison, Treasurer, Chief Investment Officer at (309) 693-5846 or at John.Robison@rlicorp.com or visit our website at www.rlicorp.com.
RLI CORP.
2009 FINANCIAL HIGHLIGHTS
(Unaudited)
(Dollars in thousands, except per share amounts)
Three Months Ended September 30, Nine Months Ended September 30,
2009 2008 % Change 2009 2008 % Change
SUMMARIZED INCOME STATEMENT DATA:
Net premiums earned $ 122,736 $ 130,850 -6.2 % $ 370,910 $ 399,110 -7.1 %
Net investment income 16,295 19,844 -17.9 % 50,494 58,707 -14.0 %
Net realized investment gains (losses) 6,985 (24,212 ) (20,789 ) (12,396 ) -67.7 %
Consolidated revenue 146,016 126,482 15.4 % 400,615 445,421 -10.1 %
Loss and settlement expenses 47,677 66,013 -27.8 % 157,678 190,043 -17.0 %
Policy acquisition costs 41,627 41,424 0.5 % 121,196 121,721 -0.4 %
Other insurance expenses 10,480 8,216 27.6 % 28,814 28,346 1.7 %
Interest expense on debt 1,512 1,646 -8.1 % 4,537 5,191 -12.6 %
General corporate expenses 2,177 1,735 25.5 % 5,847 5,759 1.5 %
Total expenses 103,473 119,034 -13.1 % 318,072 351,060 -9.4 %
Equity in earnings of unconsolidated investee 1,120 248 351.6 % 5,242 6,417 -18.3 %
Earnings before income taxes 43,663 7,696 467.3 % 87,785 100,778 -12.9 %
Income tax expense (benefit) 12,644 (890 ) 24,502 28,083 -12.8 %
Net Earnings $ 31,019 $ 8,586 261.3 % $ 63,283 $ 72,695 -12.9 %
Other comprehensive earnings (loss), net of tax 36,969 (24,109 ) 63,357 (68,274 )
Comprehensive earnings (loss) $ 67,988 $ (15,523 ) $ 126,640 $ 4,421 2764.5 %
Operating Earnings:(1)
Net Earnings $ 31,019 $ 8,586 261.3 % $ 63,283 $ 72,695 -12.9 %
Less: Realized investment gains (losses) , net of tax 5,250 (15,737 ) (13,603 ) (8,057 ) -68.8 %
Operating earnings $ 25,769 $ 24,323 5.9 % $ 76,886 $ 80,752 -4.8 %
Return on Equity:
Net earnings (trailing four quarters) 9.3 % 13.8 %
Comprehensive earnings (trailing four quarters) 16.1 % 4.1 %
Per Share Data
Diluted:
Weighted average shares outstanding (in 000's) 21,769 21,678 21,760 21,893
EPS from operations (1) $ 1.18 $ 1.12 5.4 % $ 3.53 $ 3.69 -4.3 %
Realized gains (losses), net of tax 0.24 (0.72 ) (0.62 ) (0.37 ) -67.6 %
Net earnings per share $ 1.42 $ 0.40 255.0 % $ 2.91 $ 3.32 -12.3 %
Comprehensive earnings (loss) per share $ 3.12 $ (0.72 ) $ 5.82 $ 0.20 2810.0 %
Cash dividends per share $ 0.27 $ 0.25 8.0 % $ 0.80 $ 0.73 9.6 %
Net Cash Flow from Operations $ 46,845 $ 40,164 16.6 % $ 108,445 $ 126,732 -14.4 %
(1) See discussion of non-GAAP financial measures on page 3.
RLI CORP.
2009 FINANCIAL HIGHLIGHTS
(Unaudited)
(Dollars in thousands, except per share amounts)
September 30, December 31,
2009 2008 % Change
SUMMARIZED BALANCE SHEET DATA:
Fixed income $ 1,475,032 $ 1,274,056 15.8 %
(amortized cost - $1,427,058 at 9/30/09)
(amortized cost - $1,286,779 at 12/31/08)
Equity securities 238,590 286,790 -16.8 %
(cost - $166,505 at 9/30/09)
(cost - $251,283 at 12/31/08)
Short-term investments 142,771 97,982 45.7 %
Total investments 1,856,393 1,658,828 11.9 %
Premiums and reinsurance balances receivable 86,033 92,149 -6.6 %
Ceded unearned premiums 66,417 65,977 0.7 %
Reinsurance recoverable on unpaid losses 343,377 350,284 -2.0 %
Deferred acquisition costs 79,923 78,520 1.8 %
Property and equipment 19,592 21,565 -9.1 %
Income taxes - deferred - 24,141 -100.0 %
Investment in unconsolidated investee 44,348 38,697 14.6 %
Goodwill 26,214 26,214 -
Other assets 40,661 63,026 -35.5 %
Total assets $ 2,562,958 $ 2,419,401 5.9 %
Unpaid losses and settlement expenses $ 1,159,025 $ 1,159,311 0.0 %
Unearned premiums 330,629 335,170 -1.4 %
Reinsurance balances payable 22,844 30,224 -24.4 %
Long-term debt - bonds payable 100,000 100,000 -
Income taxes - deferred 26,089 - -
Accrued expenses 36,327 32,894 10.4 %
Other liabilities 61,100 53,648 13.9 %
Total liabilities 1,736,014 1,711,247 1.4 %
Shareholders' equity 826,944 708,154 16.8 %
Total liabilities & shareholders' equity $ 2,562,958 $ 2,419,401 5.9 %
OTHER DATA
Common shares outstanding (in 000's) 21,629 21,474
Book Value per share $ 38.23 $ 32.98 15.9 %
Closing stock price per share $ 52.78 $ 61.16 -13.7 %
Statutory Surplus $ 750,478 $ 678,041 10.7 %
RLI CORP.
2009 FINANCIAL HIGHLIGHTS
UNDERWRITING SEGMENT DATA
(Unaudited)
(Dollars in thousands, except per share amounts)
Three Months Ended September 30,
GAAP GAAP GAAP GAAP
Casualty Ratios Property Ratios Surety Ratios Total Ratios
2009
Gross premiums written $ 83,337 $ 51,177 $ 25,406 $ 159,920
Net premiums written 59,274 38,018 21,874 119,166
Net premiums earned 64,794 39,829 18,113 122,736
Net loss & settlement expenses 24,243 37.4 % 19,379 48.7 % 4,055 22.4 % 47,677 38.8 %
Net operating expenses 23,221 35.8 % 16,536 41.5 % 12,350 68.2 % 52,107 42.5 %
Underwriting income $ 17,330 73.2 % $ 3,914 90.2 % $ 1,708 90.6 % $ 22,952 81.3 %
2008
Gross premiums written $ 99,570 $ 51,599 $ 21,728 $ 172,897
Net premiums written 73,371 38,334 20,363 132,068
Net premiums earned 76,993 36,376 17,481 130,850
Net loss & settlement expenses 34,121 44.3 % 33,395 91.8 % (1,503 ) -8.6 % 66,013 50.4 %
Net operating expenses 24,335 31.6 % 14,040 38.6 % 11,265 64.4 % 49,640 37.9 %
Underwriting income (loss) $ 18,537 75.9 % $ (11,059 ) 130.4 % $ 7,719 55.8 % $ 15,197 88.3 %
Nine Months Ended September 30,
GAAP GAAP GAAP GAAP
Casualty Ratios Property Ratios Surety Ratios Total Ratios
2009
Gross premiums written $ 254,933 $ 163,959 $ 68,336 $ 487,228
Net premiums written 186,732 122,301 56,897 365,930
Net premiums earned 202,766 115,394 52,750 370,910
Net loss & settlement expenses 96,718 47.7 % 49,769 43.1 % 11,191 21.2 % 157,678 42.5 %
Net operating expenses 68,668 33.9 % 46,354 40.2 % 34,988 66.3 % 150,010 40.4 %
Underwriting income $ 37,380 81.6 % $ 19,271 83.3 % $ 6,571 87.5 % $ 63,222 82.9 %
2008
Gross premiums written $ 307,860 $ 151,372 $ 59,710 $ 518,942
Net premiums written 228,524 110,058 55,929 394,511
Net premiums earned 237,559 110,869 50,682 399,110
Net loss & settlement expenses 130,243 54.8 % 56,775 51.2 % 3,025 6.0 % 190,043 47.6 %
Net operating expenses 73,870 31.1 % 43,244 39.0 % 32,953 65.0 % 150,067 37.6 %
Underwriting income $ 33,446 85.9 % $ 10,850 90.2 % $ 14,704 71.0 % $ 59,000 85.2 %
SOURCE: RLI Corp.
RLI Corp. John Robison, (309) 693-5846 John.Robison@rlicorp.com www.rlicorp.com
More News:
Market Updates |
Stock Alerts |
All Trading News |
Stock Index
About TradingMarkets | Contact | Advertise | Careers | Link to Us | Site Map | Help | Terms & Conditions | Privacy Policy | Return Policy | Testimonials | Feedback
The Connors Group, Inc. ("Company") is not an investment advisory service, nor a registered investment advisor or broker-dealer and does not purport to tell or suggest which securities or currencies customers should buy or sell for themselves. The analysts and employees or affiliates of Company may hold positions in the stocks, currencies or industries discussed here. You understand and acknowledge that there is a very high degree of risk involved in trading securities and/or currencies. The Company, the authors, the publisher, and all affiliates of Company assume no responsibility or liability for your trading and investment results. Factual statements on the Company's website, or in its publications, are made as of the date stated and are subject to change without notice.
It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results of any individual trader or trading system published by Company are not indicative of future returns by that trader or system, and are not indicative of future returns which be realized by you. In addition, the indicators, strategies, columns, articles and all other features of Company's products (collectively, the "Information") are provided for informational and educational purposes only and should not be construed as investment advice. Examples presented on Company's website are for educational purposes only. Such set-ups are not solicitations of any order to buy or sell. Accordingly, you should not rely solely on the Information in making any investment. Rather, you should use the Information only as a starting point for doing additional independent research in order to allow you to form your own opinion regarding investments. You should always check with your licensed financial advisor and tax advisor to determine the suitability of any investment.
HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING AND MAY NOT BE IMPACTED BY BROKERAGE AND OTHER SLIPPAGE FEES. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.
The Connors Group, Inc.
10 Exchange Place, Suite 1800
Jersey City, NJ 07302
© Copyright 2009 The Connors Group, Inc.