William Blair analyst Adam Klauber has maintained their neutral stance on RLI stock, giving a Hold rating today.
Adam Klauber has given his Hold rating due to a combination of factors impacting RLI’s financial performance. The company reported a first-quarter operating EPS of $0.92, which was above the consensus estimate of $0.84. However, the overall top-line growth has slowed significantly, dropping to 5% from 13% in the previous year, with the property segment experiencing a decline for the second consecutive quarter.
Despite efforts to maintain conservative underwriting, the margins have been pressured by slower favorable reserve releases in the auto casualty book, reflecting increased severity and a challenging legal environment. While a mid- to upper-80s combined ratio is seen as achievable, the uncertainty surrounding reserve releases due to higher litigation rates and severity poses a downside risk to RLI’s earnings growth. These factors contribute to the Hold rating, as they present potential challenges to the company’s future performance.
Klauber covers the Financial sector, focusing on stocks such as Progressive, GooseHead Insurance, and Baldwin Insurance Group. According to TipRanks, Klauber has an average return of 10.9% and a 56.12% success rate on recommended stocks.
In another report released today, Compass Point also downgraded the stock to a Hold with a $76.00 price target.