RLI Corporation: Strong Q4 Boosted by Low Cat Losses, but Slowing Premium Growth and Rising Loss Costs Justify Hold Rating

William Blair analyst Adam Klauber has maintained their neutral stance on RLI stock, giving a Hold rating today.

Adam Klauber has given his Hold rating due to a combination of factors tied to RLI’s current performance and near-term outlook. While the company delivered fourth-quarter operating EPS meaningfully above consensus, this upside was largely attributable to unusually low catastrophe losses rather than sustainable operating improvements. At the same time, premium growth has softened, with overall written premiums declining as weakness in the property segment more than offsets modest expansion in casualty lines. Klauber expects only low- to mid-single-digit top-line growth through 2026, even assuming a later recovery in both casualty and property, which tempers the growth profile.

Klauber also notes that underwriting profitability showed some deterioration, as both the expense ratio and underlying loss ratio moved higher despite RLI’s conservative stance. He anticipates continued upward pressure on loss costs, driven by rising claim severity, a more challenging legal environment in casualty, an unfavorable shift in business mix toward higher-loss casualty lines, and less benefit from reserve releases. Although he believes RLI can maintain a combined ratio in the high 80s, this would still translate into earnings contraction in 2026. Given these headwinds to forward earnings growth and the balance of risk versus reward, he maintains a Market Perform (Hold) rating on the shares.

In another report released today, Jefferies also upgraded the stock to a Hold with a $52.00 price target.