On Feb. 16, specialty insurance company RLI Corporation
- Net income more than tripled to $56 million from $18 million, thanks to an absurdly low loss ratio of 32.6% (compared to 64.3% in the prior-year period).
- Operating earnings (which excludes a $14 million gain on the sale) grew to $41 million from $17 million.
- Book value per share grew 15% for the year to $31.17 per share, up from $27.12.
- Favorable loss reserve development for the fourth quarter was $25.1 million. If I exclude that, on a current accident year basis, the loss ratio increases to 50.7% from 32.6%.
- RLI carries a two-star rating in Motley Fool CAPS.
(Figures in thousands, except per-share data)
Income Statement Highlights
Q4 2006 |
Q4 2005 |
% Change |
|
---|---|---|---|
$138,839 |
$117,464 |
18.2% |
|
Investment Income |
$18,745 |
$16,508 |
13.6% |
Net Income |
$55,683 |
$18,105 |
207.6% |
EPS |
$2.23 |
$0.68 |
227.9% |
Get back to basics with a look at an insurer's income statement.
Ratio Checkup
Q4 2006 |
Q4 2005 |
Change |
|
---|---|---|---|
Loss Ratio |
32.6% |
64.3% |
(31.70%) |
Expense Ratio |
38.7% |
36.1% |
2.60% |
71.3% |
100.4% |
(29.10%) |
|
Return on Equity |
19.1% |
16.2% |
2.90% |
What do these ratios mean?
Balance Sheet Highlights
Assets |
Q4 2006 |
Q4 2005 |
% Change |
---|---|---|---|
Investments |
$1,828,241 |
$1,697,791 |
7.7% |
Total Assets |
$2,771,296 |
$2,735,870 |
1.3% |
Liabilities |
|||
---|---|---|---|
Loss and Loss Adjustment Expense Reserve |
$1,318,777 |
$1,331,866 |
(1.0%) |
Unearned Premiums |
$387,811 |
$383,683 |
1.1% |
Long Term Debt |
$100,000 |
$100,000 |
0.0% |
Learn your way around an insurer's balance sheet.
Related Companies:
- XL Capital (NYSE: XL)
- AXIS Capital (NYSE: AXS)
- Arch Capital Group (Nasdaq: ACGL)
- St. Paul Travelers (NYSE: STA)
Related Foolishness:
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