RLI Corp to Share More Profits with $3 Special Dividend - Analyst Blog

With its noble intention of sharing more profits with shareholders, the board of directors of RLI Corp. (RLI) has approved a special dividend of $3 per share.

RLI Corp. has been paying special dividends to its shareholders over the past few years. This is in addition to the company's regular dividend payout. The special dividend was primarily supported by continued solid operational performance. RLI delivered positive surprise in three of the last four quarters with an average beat of 11.9%.

Based on approximately 43.7 million shares outstanding as of Sep 30, RLI Corp. will have to dish out roughly $129 million for the special dividend. Its sufficient liquidity will comfortably cushion the payout.

RLI Corp. has built a solid capital base through strong investments and underwriting results. The company's focus on expanding its business, new products and niche underwritings continue to boost its capital base. The company exited the third quarter with a strong cash balance of $77 million which nearly doubled from the 2013-end level. Retained earnings were also impressive at of $886.5 million as of Sep 30, 2014, increasing 9% from the 2013-end level. Cash from operation through the first three quarter improved about 5%.

In addition, RLI Corp will also pay the regular quarterly dividend of 18 cents per share to its shareholders. This would the company's 154th regular payout without any break. It has also increased dividends in each of the last 39 years.

Both the special and quarterly cash dividends will be paid on Dec 22 to stockholders of record as of Nov 28, 2014.

RLI Corp.'s quarterly dividend currently yields 1.47%. This dividend yield is better than that of other property and casualty insurers such as United Insurance Holdings Corp. (UIHC) (yield of 0.85%) and Platinum Underwriters Holdings Ltd. (PTP) (yield of 0.52%).

These efforts not only retain investor confidence but also attract potential investors. In about 5 years the company has returned $720 million to its shareholders.

RLI corp. presently carries a Zacks Rank #1 (Strong Buy). Another property and casualty insurer, AmTrust Financial Services, Inc. (AFSI), sporting the same Zacks Rank is also worth considering.

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