RLI (NYSE:RLI) Has Another Stellar Quarterly Result

RLI Corp. (NYSE:RLI) continues on its long run of solid quarterly results, and the business model of the company churns out revenue and profit on its pay strategy.

FBR says, "Few underwriting companies have been able to produce the stellar results that RLI has been able to generate over the years and 4Q10 was certainly no exception, as operating EPS of $1.66 came in significantly higher than the $0.98/share consensus estimate. The strong bottom-line performance should come as little surprise, as RLI pays its underwriters based on underwriting experience over a number of years, essentially until reserves mature. This formula has led to 15 years in a row of underwriting profit.

"We are raising our 2011 operating EPS estimate to $4.30 from $4.10 to account for accretion to top-line growth from the acquisition of CBIC, which is expected to close in 1Q11. We are also introducing our 2012 forecast of $4.35. However, we are decreasing our price target to $53 from $55 to account for the drop in forecasted book value."

FBR Capital reiterates a "Market Perform" rating on RLI Corp. (RLI), which closed Wednesday at $54.29, gaining $1.25, or 2.36 percent.