The Top 5 Analyst Questions From RLI’s Q4 Earnings Call

Specialty insurance provider RLI met Wall Streets revenue expectations in Q4 CY2025, with sales up 2.8% year on year to $451.5 million. Its non-GAAP profit of $0.94 per share was 17.1% above analysts’ consensus estimates.

RLI (RLI) Q4 CY2025 Highlights:

• Revenue: $451.5 million vs analyst estimates of $453 million (2.8% year-on-year growth, in line)
• Adjusted EPS: $0.94 vs analyst estimates of $0.80 (17.1% beat)
• Adjusted Operating Income: $111.3 million (24.6% margin, 82.5% year-on-year growth)
• Operating Margin: 28.8%, up from 14.6% in the same quarter last year
• Market Capitalization: $5.23 billion

StockStory’s Take

RLI’s fourth quarter results drew a negative market reaction as investors focused on tepid top-line growth and intensifying competitive headwinds in several of its core specialty insurance markets. Management highlighted that improved underwriting discipline, minimal storm activity, and higher investment income were the primary drivers of margin expansion, with Chief Financial Officer Aaron Diefenthaler citing “better underwriting performance, minimal storm activity and increases in investment income” as key contributors. Competitive pressures, particularly in the property and transportation segments, necessitated a selective approach to premium growth, which management believes underscores the company’s focus on profitability over volume.

Looking ahead, RLI’s leadership signaled a continued emphasis on disciplined underwriting and rate increases to navigate persistent market competition and evolving risk dynamics. Chief Operating Officer Jennifer Klobnak noted that the company will pursue additional rate increases in personal umbrella and transportation lines, and invest in operational efficiency and technology. While expressing confidence in the company’s ability to adapt, management remains cautious about ongoing challenges in casualty and property markets, emphasizing that “claim counts in transportation were down 24% for the year,” but the environment remains volatile. The company intends to balance growth opportunities with prudent risk selection in 2026.

Key Insights from Management’s Remarks

Management attributed the quarter’s profitability to disciplined underwriting, selective growth in profitable niches, and targeted investment in technology and operational efficiency.

• Underwriting discipline in property: Despite an 11% decline in property premiums due to competitive pricing and increased risk retention by clients, RLI achieved strong underwriting margins by focusing only on high-quality accounts and maintaining strict terms and conditions.
• Casualty segment risk management: The company continued to pull back from underpriced transportation accounts, prioritizing profitability over volume as new claim counts in transportation fell 24%. This approach contributed to a more stable loss ratio and reduced exposure to volatile risk.
• Personal umbrella growth through rate actions: Premiums in the personal umbrella segment grew 24%, driven by a 12% rate increase and additional approvals for future rate hikes. RLI continues to leverage its strong distribution relationships and service quality to defend its market position despite increased competition.
• Technology investment for efficiency: RLI’s investments in automation and data analytics have streamlined submissions and claims management, with Chief Operating Officer Jennifer Klobnak highlighting upgrades to the surety business and improved feedback loops among underwriting, claims, and analytics teams.
• Reinsurance cost savings: The company renewed two-thirds of its catastrophe reinsurance programs at 15–20% lower rates and reduced its catastrophe limit by $150 million for 2026, reflecting both a smaller book and softening market conditions.

Drivers of Future Performance

RLI expects that ongoing competitive pressure, efforts to secure additional rate increases, and continued investment in operational technology will shape its performance in the next year.

• Sustained margin focus: Management believes margin preservation will require further rate increases in auto and transportation lines, with CEO Craig Kliethermes stating the company aims for “10% to 15% increases on auto business going forward until we see that loss cost trend subside.”
• Market volatility and competition: The property and casualty segments are expected to remain highly competitive, with management identifying excess capacity and aggressive pricing from managing general agents (MGAs) as persistent headwinds. The company is prepared to pull back from markets where risk-reward profiles deteriorate.
• Operational and technology investments: RLI plans to continue investing in automation, data infrastructure, and customer experience improvements to support more granular underwriting and efficient claims management, which management believes will help maintain its track record of underwriting profitability.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will be monitoring (1) the pace and effectiveness of further rate increases in personal umbrella and transportation lines, (2) the competitive landscape and pricing discipline in specialty property markets, and (3) the tangible benefits from ongoing investments in technology and operational efficiency. Execution on these fronts will be key to maintaining underwriting profitability amid a shifting market environment.

RLI currently trades at $57.86, down from $59.06 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free).

Stocks That Trumped Tariffs

Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.

The names generating the next wave of massive growth are right here in our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).

Stocks that have made our list include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return).

Specialty insurance provider RLI reported Q4 CY2025 results beating Wall Street’s revenue expectations, with sales up 6.8% year on year to $465.7 million. Its non-GAAP profit of $0.94 per share was 17.1% above analysts’ consensus estimates.

RLI (RLI) Q4 CY2025 Highlights:

• Net Premiums Earned: $406.4 million vs analyst estimates of $405 million (2.3% year-on-year growth, in line)
• Revenue: $465.7 million vs analyst estimates of $453 million (6.8% year-on-year growth, 2.8% beat)
• Combined Ratio: 82.6% vs analyst estimates of 87.1% (451.7 basis point beat)
• Adjusted EPS: $0.94 vs analyst estimates of $0.80 (17.1% beat)
• Book Value per Share: $19.35 vs analyst estimates of $20.39 (16.6% year-on-year growth, 5.1% miss)
• Market Capitalization: $5.47 billion

Company Overview

Founded in 1965 and named after its original focus on "replacement lens insurance" for contact lens wearers, RLI is a specialty insurance company that underwrites property, casualty, and surety products through wholesale brokers, independent agents, and carrier partnerships.

Revenue Growth

Insurers earn revenue three ways. The core insurance business itself, often called underwriting and represented in the income statement as premiums earned, is one way. Investment income from investing the “float” (premiums collected upfront not yet paid out as claims) in assets such as fixed-income assets and equities is the second way. Fees from various sources such as policy administration, annuities, or other value-added services is the third. Luckily, RLI’s revenue grew at an exceptional 13.9% compounded annual growth rate over the last five years. Its growth beat the average insurance company and shows its offerings resonate with customers, a helpful starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade historical view may miss recent interest rate changes, market returns, and industry trends. RLI’s annualized revenue growth of 12.5% over the last two years is below its five-year trend, but we still think the results suggest healthy demand.

This quarter, RLI reported year-on-year revenue growth of 6.8%, and its $465.7 million of revenue exceeded Wall Street’s estimates by 2.8%.

Net premiums earned made up 91.7% of the company’s total revenue during the last five years, meaning RLI lives and dies by its underwriting activities because non-insurance operations barely move the needle.

Net premiums earned commands greater market attention due to its reliability and consistency, whereas investment and fee income are often seen as more volatile revenue streams that fluctuate with market conditions.

Microsoft, Alphabet, Coca-Cola, Monster Beverage—all began as under-the-radar growth stories riding a massive trend. We’ve identified the next one: a profitable AI semiconductor play Wall Street is still overlooking. Go here for access to our full report.

Book Value Per Share (BVPS)

Insurance companies are balance sheet businesses, collecting premiums upfront and paying out claims over time. The float–premiums collected but not yet paid out–are invested, creating an asset base supported by a liability structure. Book value per share (BVPS) captures this dynamic by measuring these assets (investment portfolio, cash, reinsurance recoverables) less liabilities (claim reserves, debt, future policy benefits). BVPS is essentially the residual value for shareholders.

We therefore consider BVPS very important to track for insurers and a metric that sheds light on business quality. While other (and more commonly known) per-share metrics like EPS can sometimes be lumpy due to reserve releases or one-time items and can be managed or skewed while still following accounting rules, BVPS reflects long-term capital growth and is harder to manipulate.

RLI’s BVPS grew at a decent 9% annual clip over the last five years. BVPS growth has accelerated recently, growing by 11.8% annually over the last two years from $15.49 to $19.35 per share.

Over the next 12 months, Consensus estimates call for RLI’s BVPS to grow by 8.8% to $20.39, mediocre growth rate.

Key Takeaways from RLI’s Q4 Results

It was good to see RLI beat analysts’ EPS expectations this quarter. We were also glad its revenue outperformed Wall Street’s estimates. On the other hand, its book value per share missed. Overall, this print had some key positives. The market seemed to be hoping for more, and the stock traded down 1.4% to $58.26 immediately following the results.

Should you buy the stock or not? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here (it’s free).

Specialty insurance provider RLI will be reporting earnings this Wednesday afternoon. Here’s what investors should know.

RLI met analysts’ revenue expectations last quarter, reporting revenues of $449 million, up 5.3% year on year. It was a mixed quarter for the company, with a beat of analysts’ EPS estimates but a significant miss of analysts’ book value per share estimates.

Is RLI a buy or sell going into earnings? Read our full analysis here, it’s free for active Edge members.

This quarter, analysts are expecting RLI’s revenue to grow 3.9% year on year to $453 million, slowing from the 15.2% increase it recorded in the same quarter last year. Adjusted earnings are expected to come in at $0.80 per share.

Analysts covering the company have generally reconfirmed their estimates over the last 30 days, suggesting they anticipate the business to stay the course heading into earnings. RLI has missed Wall Street’s revenue estimates six times over the last two years.

With RLI being the first among its peers to report earnings this season, we don’t have anywhere else to look to get a hint at how this quarter will unravel for insurance stocks. However, the segment has faced declining investor sentiment as RLI’s peer group is down 5.6% on average over the last month. RLI is down 10.7% during the same time and is heading into earnings with an average analyst price target of $64.25 (compared to the current share price of $59.35).

As the craze of earnings season draws to a close, here’s a look back at some of the most exciting (and some less so) results from Q3. Today, we are looking at property & casualty insurance stocks, starting with First American Financial .

Property & Casualty (P&C) insurers protect individuals and businesses against financial loss from damage to property or from legal liability. This is a cyclical industry, and the sector benefits when there is 'hard market', characterized by strong premium rate increases that outpace loss and cost inflation, resulting in robust underwriting margins. The opposite is true in a 'soft market'. Interest rates also matter, as they determine the yields earned on fixed-income portfolios. On the other hand, P&C insurers face a major secular headwind from the increasing frequency and severity of catastrophe losses due to climate change. Furthermore, the liability side of the business is pressured by 'social inflation'—the trend of rising litigation costs and larger jury awards.

The 33 property & casualty insurance stocks we track reported a strong Q3. As a group, revenues beat analysts’ consensus estimates by 14.7%.

In light of this news, share prices of the companies have held steady as they are up 4.7% on average since the latest earnings results.

First American Financial

Tracing its roots back to 1889 when California was experiencing its first major real estate boom, First American Financial provides title insurance, settlement services, and risk solutions for residential and commercial real estate transactions across the United States and internationally.

First American Financial reported revenues of $1.98 billion, up 40.7% year on year. This print exceeded analysts’ expectations by 6.2%. Overall, it was a stunning quarter for the company with a solid beat of analysts’ revenue estimates and a beat of analysts’ EPS estimates.

The market was likely pricing in the results, and the stock is flat since reporting. It currently trades at $61.44.

Best Q3: Root

Pioneering a data-driven approach that rewards good driving habits, Root is a technology-driven auto insurance company that uses mobile apps to acquire customers and data science to price policies based on individual driving behavior.

Root reported revenues of $387.8 million, up 26.9% year on year, outperforming analysts’ expectations by 4.5%. The business had an incredible quarter with a beat of analysts’ EPS estimates and an impressive beat of analysts’ net premiums earned estimates.

Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 19.9% since reporting. It currently trades at $71.69.

Weakest Q3: Progressive

Starting as a small auto insurance company in 1937 with a pioneering focus on high-risk drivers, Progressive is a major auto, property, and commercial insurance provider that offers policies through independent agents, online platforms, and over the phone.

Progressive reported revenues of $22.51 billion, up 14.2% year on year, in line with analysts’ expectations. It was a softer quarter as it posted a significant miss of analysts’ EPS estimates and a miss of analysts’ book value per share estimates.

As expected, the stock is down 5.1% since the results and currently trades at $228.12.

Read our full analysis of Progressive’s results here.

RLI

Founded in 1965 and named after its original focus on "replacement lens insurance" for contact lens wearers, RLI is a specialty insurance company that underwrites property, casualty, and surety products through wholesale brokers, independent agents, and carrier partnerships.

RLI reported revenues of $449 million, up 5.3% year on year. This number met analysts’ expectations. Aside from that, it was a mixed quarter as it also logged a beat of analysts’ EPS estimates but a significant miss of analysts’ book value per share estimates.

The stock is up 7.3% since reporting and currently trades at $63.98.

Read our full, actionable report on RLI here, it’s free for active Edge members.

Assured Guaranty

Serving as a financial safety net for over $11 trillion in debt service payments since its founding in 2003, Assured Guaranty provides credit protection products that guarantee scheduled payments on municipal bonds, infrastructure projects, and structured finance obligations.

Assured Guaranty reported revenues of $207 million, down 23% year on year. This result topped analysts’ expectations by 12.2%. It was an incredible quarter as it also logged a beat of analysts’ EPS estimates and an impressive beat of analysts’ revenue estimates.

Assured Guaranty had the slowest revenue growth among its peers. The stock is up 10.3% since reporting and currently trades at $89.87.

Read our full, actionable report on Assured Guaranty here, it’s free for active Edge members.

Over the past six months, RLI’s shares (currently trading at $64.88) have posted a disappointing 10.2% loss, well below the S&P 500’s 11.7% gain. This may have investors wondering how to approach the situation.

Following the pullback, is now a good time to buy RLI? Find out in our full research report, it’s free for active Edge members.

Why Does RLI Spark Debate?

Founded in 1965 and named after its original focus on "replacement lens insurance" for contact lens wearers, RLI is a specialty insurance company that underwrites property, casualty, and surety products through wholesale brokers, independent agents, and carrier partnerships.

Two Things to Like:

1. Net Premiums Earned Skyrocket, Fueling Growth Opportunities

Insurers sell policies then use reinsurance (insurance for insurance companies) to protect themselves from large losses. Net premiums earned are therefore what's collected from selling policies less what’s paid to reinsurers as a risk mitigation tool.

RLI’s net premiums earned has grown at a 13.3% annualized rate over the last two years, better than the broader insurance industry and in line with its total revenue.

2. Stellar ROE Showcases Lucrative Growth Opportunities

Return on equity (ROE) is a crucial yardstick for insurance companies, measuring their ability to generate returns on the capital provided by shareholders. Insurers that consistently deliver superior ROE tend to create more value for their investors over time through strategic capital allocation and shareholder-friendly policies.

Over the last five years, RLI has averaged an ROE of 28.4%, exceptional for a company operating in a sector where the average shakes out around 12.5% and those putting up 20%+ are greatly admired. This shows RLI has a strong competitive moat.

One Reason to be Careful:

Recent EPS Growth Below Our Standards

While long-term earnings trends give us the big picture, we also track EPS over a shorter period because it can provide insight into an emerging theme or development for the business.

RLI’s EPS grew at a weak 10.3% compounded annual growth rate over the last two years, lower than its 13.6% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded.

Final Judgment

RLI’s positive characteristics outweigh the negatives. After the recent drawdown, the stock trades at 3.3× forward P/B (or $64.88 per share). Is now a good time to initiate a position? See for yourself in our full research report, it’s free for active Edge members.