In an effort to widen its exposure in the reinsurance marketplace, RLI Corp. (RLI) has created a new Property Treaty Group within its RLI Reinsurance Division. A select group of insurance companies will be offered tailor-made assumed property reinsurance solutions.

The group will offer per risk, quota share and catastrophe coverages. It is led by George Dragonetti and is based in Stamford, Connecticut.

In the fourth quarter, RLI Corp. wrote higher premiums in Property. We expect such new initiatives will likely add to the already existing operations, thereby enabling the company to fuel further growth.

RLI Corp. is also focused on expanding its business with new products. Of late, It has diversified into crop and other assumed property reinsurance along with expanding its underwriting team. This diversification has helped the company to cope with the declines in premiums at the Casualty segment.

Also, to remain focused on new market and product expansion opportunities, it acquired Contractors Bonding Insurance Company. The acquisition will also broaden its client base. Hence, with some early signs of economic recovery and stability in the rate environment, we believe that the company is positioned for meaningful growth in the upcoming quarters.

RLI Corp. reported a strong fourth-quarter with operating earnings of $1.66 per share, beating the Zacks Consensus Estimate of 99 cents by 67 cents. Lower expenses and better performance at the Property and Surety segment largely attributed to the beat.

The Zacks Consensus Estimate for first-quarter 2011 is 92 cents per share. For both fiscal years 2011 and 2012, the Zacks Consensus Estimates are $3.96 per share.

The quantitative Zacks #1 Rank (short term Strong Buy rating) on the stock indicates upward pressure on the shares over the near term.

Headquartered in Peoria, Illinois, RLI Corp. is a specialty property-casualty (P&C) underwriter that caters primarily to niche markets through its main operating subsidiary, RLI Insurance Company. The company competes with ACE Limited (ACE), CNA Financial Corporation (CNA) and The Travelers Companies, Inc. (TRV).

 
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