Jefferies downgraded RLI Corp. to Underperform from Hold on Tuesday, citing valuation concerns and downward revisions to earnings estimates. The brokerage set a price target of $53 per share, implying a potential decline of roughly 20% from the insurer’s closing price of $66.62 on Monday.
The downgrade reflects Jefferies’ view that RLI’s shares are trading near a 52-week high of $68.69, yet its valuation remains elevated compared to peers. The firm assigned a price-to-book ratio of 2.6x, below RLI’s historical average of 4x but above the 1.9x multiple of traditional property and casualty insurers. InvestingPro data shows RLI’s price-to-book at 3.49x and price-to-earnings at 13.96x.
Jefferies also reduced its earnings per share estimates for RLI across 2026, 2027 and 2028, projecting $2.70, $2.55 and $2.60 respectively. These figures sit about 7% below consensus, with property loss ratios expected to exceed consensus by 2.5 percentage points in 2026 and 2 points in 2027. Liability loss ratios are projected to trail consensus by 0.4, 0.7 and 1.3 points over the same period.
The downgrade contrasts with an upward revision from Keefe, Bruyette & Woods, which raised its price target to $74 from $70 while maintaining an Outperform rating. KBW also adjusted its 2026 EPS estimate to $2.90 from $2.80 and lowered its 2027 forecast to $2.85 from $2.95.
RLI reported second-quarter operating income of $0.83 per share, beating Wall Street’s $0.71 estimate, on revenue of $575.6 million. The company returned over $200 million to shareholders via dividends and buybacks during the period. RLI’s operational return on equity remains near 13%, though Jefferies’ valuation critique centers on the stock’s premium to both historical and peer-based metrics.
