UPDATE: Compass Point Initiates Coverage on RLI Corp. with Neutral Rating, $65 PT on Low Loss Ratio

In a report published Tuesday, Compass Point analyst Ken Billingsley initiated coverage on RLI Corp.

with a Neutral rating and $65.00 price target. In the report, Billingsley noted, “RLI is rated A+ by A.M. Best and has one of the most enviable track records in the P&C industry. A consistently low loss ratio has allowed RLI to have a combined ratio below 100% for the past 17 years, and is one of only six publicly traded insurers with a combined ratio below 100% for the past eleven years. This solid track record of positive underwriting results has allowed the company to take more risk in regards to its investment strategy which has helped grow book value at a faster pace than its peers. Book value has also grown from the company's underwriting as RLI has released significant amounts of reserves over the past nine years. This success has also allowed the company to pay a special dividend of over $5 for the past three years. The P/B multiple of the company remains high in our opinion as investors expect further sizable reserve releases and special dividends. While we believe both will continue, we expect the size of reserve releases and special dividends may be below investor expectations, and the current P/B multiple could decline from current levels.” RLI Corp. closed on Monday at $70.41.