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RLI to Share More Profits, Approves Special Cash Dividend

Shares of RLI Corp. RLI gained 0.7% in the last trading session, reflecting shareholders’ optimism as the board of directors approved a special cash dividend of $2.00 per share. This Zacks Rank #2 (Buy) specialty property-casualty insurer has been paying special dividends since 2011 and the latest approval marks the 12th straight special dividend.

RLI estimates to pay out $90 million for the special dividend, which is well-supported by its strong financial position. The underwriter maintains a solid balance sheet, with sufficient liquidity and strong cash flow. Over the last 10 years, the P&C insurer’s total cumulative dividends amounted to more than $1.1 billion.

Concurrently, the board of directors announced a regular quarterly cash dividend of 25 cents per share. In May 2021, RLI raised its quarterly dividend by 4.2%. It has been increasing the dividend for the past 46 years, which has grown at an average of 5.2% in the past 10 years. RLI’s dividend yield of 2.5% betters the industry average of 0.4%.

Both the special and the quarterly dividends will be paid out on Dec 20 to shareholders of record as of Nov 30, 2021.

RLI is one of the industry’s most profitable P&C writers, with an impressive track record of delivering 25 consecutive years of underwriting profitability. The insurer stays focused on maintaining long-term industry-leading combined ratios and book value growth. RLI’s diversified product portfolio, a strong local branch-office network, a focus on specialty insurance lines growth via organic opportunities and acquisitions, and financial strength should continue to help boost shareholders’ returns.  RLI boasts shareholders’ returns of 16.5% in the past 20 years, outperforming the S&P 500 average of 9.5% and the S&P P&C Index’s 8.4%.

Given the solid capital level of the insurance industry and an improving operating backdrop favoring strong operational performance, insurers like Assurant Inc. AIZ, American Financial Group AFG and W.R. Berkley Corporation WRB have resorted to effective capital deployment to enhance shareholders value.

While Assurant recently hiked its dividend by 3%, American Financial and W.R. Berkley approved a special dividend of $4 and $1 per share, respectively.

Assurant has a dividend yield of 1.6% and boasts a strong-performing Global Lifestyle business, a growing Service business, and solid capital management that should boost shareholders’ value.

American Financial Group’s 1.5% dividend yield betters the industry average, making the stock an attractive pick for yield-seeking investors. AFG’s robust operating profitability at the property and casualty segment and effective capital management support shareholder returns.

W.R. Berkley’s dividend yield of 0.6% also betters the industry average. WRB should be able to continue to boost shareholders’ return banking on a solid balance sheet with sufficient liquidity and robust cash flows.

Shares of RLI have gained 7.3% year to date, compared with the industry’s increase of 19.7%. Superior underwriting discipline and sound capital structure should help shares trend higher.

Image Source: Zacks Investment Research

Shares of Assurant, American Financial and W.R. Berkley have gained 17.7%, 65.5% and 22.4%, respectively, in the same time frame.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
RLI Corp. (RLI): Free Stock Analysis Report
W.R. Berkley Corporation (WRB): Free Stock Analysis Report
Assurant, Inc. (AIZ): Free Stock Analysis Report
American Financial Group, Inc. (AFG): Free Stock Analysis Report
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