Evaluating RLI: Does the Recent Drop in Share Price Present a Hidden Value Opportunity?
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Dec 09 2025
0mins
Should l Buy RLI?
Source: Yahoo Finance
RLI's Stock Performance: RLI's stock has declined approximately 24% year-to-date, currently trading at $62.07, raising questions about its valuation despite a solid five-year total shareholder return of 48.47%.
Valuation Insights: Analysts have a consensus price target of $74.33 for RLI, with a fair value estimate of $66.25, suggesting the stock may be undervalued, although there are risks such as increased competition and rising catastrophe losses.
Earnings Metrics: RLI trades at about 16.1 times earnings, significantly higher than its peers at 10.2 times, indicating potential valuation risk rather than a clear bargain.
Investment Opportunities: The article suggests exploring other investment opportunities, including undervalued stocks, AI penny stocks, and dividend stocks with yields over 3%, to enhance portfolio performance.
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Analyst Views on RLI
Wall Street analysts forecast RLI stock price to rise
4 Analyst Rating
1 Buy
3 Hold
0 Sell
Hold
Current: 62.430
Low
62.00
Averages
69.67
High
81.00
Current: 62.430
Low
62.00
Averages
69.67
High
81.00
About RLI
RLI Corp. is a specialty insurer serving niche property, casualty, and surety markets. The Company provides underwriting expertise and service to commercial and personal line customers nationwide. The Company's segment includes Casualty, Property, and Surety. The casualty portion of its business consists largely of commercial excess, personal umbrella, general liability, transportation, and management liability coverages, as well as package business and other specialty coverages, such as professional liability and worker’s compensation for office-based professionals. Its Property segment is comprised primarily of commercial fire, hurricane, earthquake, difference in conditions, and marine coverages. Its Surety segment specializes in writing small to medium-sized contract surety coverages, including payment and performance bonds. Its products are offered through its insurance subsidiaries, RLI Insurance Company, Mt. Hawley Insurance Company and Contractors Bonding and Insurance Company.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Strategic Actions Completed: The company has completed targeted re-underwriting and strategic actions across its portfolio, and while property rate deceleration is expected to continue, analysts do not foresee a materially deeper slowdown, suggesting overall market stability.
- Dividend Yield: RLI's dividend yield is approximately 5%, and its valuation has reset from 4x P/B to 2.8x, limiting downside risk and showcasing the company's potential for capital returns.
- Industry Position: RLI's long history of disciplined underwriting supports a premium to peers, and its enhanced capital return capabilities for 2026/27 indicate a competitive advantage in a challenging market.
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- Increased Shareholder Returns: The company declared a special dividend of $2 per share in addition to the ordinary fourth-quarter dividend, reflecting robust capital generation and commitment to shareholders, thereby enhancing investor confidence.
- Book Value Growth: RLI Corp reported a 33% increase in book value per share for the year, reaching $5.29, indicating effective capital management and profitability, which strengthens its competitive position in the market.
- Stable Combined Ratio: The company maintained a combined ratio of 83.6% for the full year, showcasing effective underwriting practices, and despite market pressures, it continues to exhibit strong financial health.
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- Earnings Per Share Growth: The operating earnings per share for Q4 rose to $0.94 from $0.52 in the prior year, primarily driven by improved underwriting performance and increased investment income, reflecting the company's resilience amid market volatility.
- Premium Dynamics Analysis: Despite an 11% decline in property premiums in Q4, the company maintained a strong 49 combined ratio in property, casualty, and surety segments, showcasing its profitability and adaptability in challenging market conditions.
- Future Growth Strategy: Management expects to maintain discipline in growth and risk selection, planning to drive profitability through outstanding customer service and additional rate increases, indicating the company's confidence in future market opportunities.
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- Adjusted Earnings Performance: Excluding non-recurring items, RLI reported adjusted earnings of $86.4 million, or $0.94 per share, demonstrating the ongoing growth and stability of the company's core business operations.
- Revenue Growth Trend: The company's Q4 revenue rose by 6.1% to $465.69 million, compared to $439.12 million last year, reflecting increased market demand and expansion of the company's business activities.
- Positive Market Performance: With both earnings and revenue showing robust growth, RLI Corp is expected to enhance investor confidence and drive future business development.
See More
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- Earnings Beat: RLI reported a Q4 non-GAAP EPS of $0.94, exceeding market expectations by $0.13, indicating strong profitability growth that enhances investor confidence.
- Investment Income Growth: The net investment income for the quarter increased by 9% to $42.3 million, reflecting successful portfolio management and expected support for future shareholder returns.
- Historical Performance Review: RLI's historical earnings data shows consistent profitability growth over recent quarters, indicating the stability of its business model and competitive position in the market.
- Dividend Performance: RLI's dividend scorecard highlights its strong performance in dividends, attracting income-seeking investors and enhancing the company's appeal in capital markets.
See More
Supreme Court Ruling on Tariff Legality Could Have Major Implications
- Potential for Tariff Refunds: Should the Supreme Court rule that Trump's International Emergency Economic Powers Act (IEEPA) tariffs are illegal, U.S. companies could receive billions in tariff refunds and insurance payouts, significantly improving their cash flow and financial health.
- Surge in Customs Bonds: As tariffs have risen from 10% to over 25%, importers are now facing customs bond amounts ranging from the regulatory minimum of $50,000 to $450 million, with some clients experiencing increases of up to 550%, putting pressure on their liquidity positions.
- Increased Insurer Profits: Insurers are benefiting from higher premium collections due to the rising customs bond amounts, with the number of insufficiency notices issued to importers quadrupling since 2017, highlighting the volatility and complexity of the current market environment.
- Future Uncertainty: If the Supreme Court rules the IEEPA tariffs illegal, while this may pose revenue challenges for insurers, the potential for freer trade and reduced uncertainty could yield positive economic outcomes, although the refund process may take time.
See More
RLI Upgraded to Hold by Jefferies, Price Target Remains at $52
- Rating Upgrade: Jefferies upgraded RLI from Underperform to Hold, primarily due to valuation compression, while maintaining the price target at $52, indicating cautious optimism in the market.
- Strategic Actions Completed: The company has completed targeted re-underwriting and strategic actions across its portfolio, and while property rate deceleration is expected to continue, analysts do not foresee a materially deeper slowdown, suggesting overall market stability.
- Dividend Yield: RLI's dividend yield is approximately 5%, and its valuation has reset from 4x P/B to 2.8x, limiting downside risk and showcasing the company's potential for capital returns.
- Industry Position: RLI's long history of disciplined underwriting supports a premium to peers, and its enhanced capital return capabilities for 2026/27 indicate a competitive advantage in a challenging market.
See More
RLI Corp Reports $0.94 EPS Growth and $2 Special Dividend
- Sustained Profitability: RLI Corp achieved its 30th consecutive year of underwriting profitability, with operating earnings per share rising from $0.52 to $0.94 in 2024, demonstrating strong profitability amidst a competitive market.
- Increased Shareholder Returns: The company declared a special dividend of $2 per share in addition to the ordinary fourth-quarter dividend, reflecting robust capital generation and commitment to shareholders, thereby enhancing investor confidence.
- Book Value Growth: RLI Corp reported a 33% increase in book value per share for the year, reaching $5.29, indicating effective capital management and profitability, which strengthens its competitive position in the market.
- Stable Combined Ratio: The company maintained a combined ratio of 83.6% for the full year, showcasing effective underwriting practices, and despite market pressures, it continues to exhibit strong financial health.
See More
RLI Corp. Reports $264M Underwriting Income in Q4 2025, Marks 30th Year of Profitability
- Strong Earnings Performance: RLI Corp. achieved $264 million in underwriting income for Q4 2025 with an 84 combined ratio, demonstrating the company's sustained profitability in a competitive market and marking its 30th consecutive year of profitability, which enhances investor confidence.
- Earnings Per Share Growth: The operating earnings per share for Q4 rose to $0.94 from $0.52 in the prior year, primarily driven by improved underwriting performance and increased investment income, reflecting the company's resilience amid market volatility.
- Premium Dynamics Analysis: Despite an 11% decline in property premiums in Q4, the company maintained a strong 49 combined ratio in property, casualty, and surety segments, showcasing its profitability and adaptability in challenging market conditions.
- Future Growth Strategy: Management expects to maintain discipline in growth and risk selection, planning to drive profitability through outstanding customer service and additional rate increases, indicating the company's confidence in future market opportunities.
See More
RLI Corp Reports Q4 Earnings Surge to $91.18 Million
- Significant Profit Growth: RLI Corp's Q4 net income surged to $91.18 million, translating to earnings per share of $0.99, a substantial increase from last year's $40.86 million and $0.44 per share, indicating a marked improvement in the company's profitability.
- Adjusted Earnings Performance: Excluding non-recurring items, RLI reported adjusted earnings of $86.4 million, or $0.94 per share, demonstrating the ongoing growth and stability of the company's core business operations.
- Revenue Growth Trend: The company's Q4 revenue rose by 6.1% to $465.69 million, compared to $439.12 million last year, reflecting increased market demand and expansion of the company's business activities.
- Positive Market Performance: With both earnings and revenue showing robust growth, RLI Corp is expected to enhance investor confidence and drive future business development.
See More
RLI Reports Q4 Non-GAAP EPS of $0.94, Beating Estimates
- Earnings Beat: RLI reported a Q4 non-GAAP EPS of $0.94, exceeding market expectations by $0.13, indicating strong profitability growth that enhances investor confidence.
- Investment Income Growth: The net investment income for the quarter increased by 9% to $42.3 million, reflecting successful portfolio management and expected support for future shareholder returns.
- Historical Performance Review: RLI's historical earnings data shows consistent profitability growth over recent quarters, indicating the stability of its business model and competitive position in the market.
- Dividend Performance: RLI's dividend scorecard highlights its strong performance in dividends, attracting income-seeking investors and enhancing the company's appeal in capital markets.
See More
