Compass Point reiterated a Neutral rating on RLI Corp. (NYSE: RLI), and raised the price target to $53.00 (from $50.00), following 2Q15 results. RLI reported operating EPS of $0.77 versus the consensus of $0.55. Analyst Ken Billingsley says that RLI has the ability to continue to pay a special dividend again in 2015.

Billingsley commented, "RLI continues to trade at a high P/TB multiple which is supported by their strong underwriting history and ability to continue to pay a special dividend again in 2015. While top line growth has slowed (still impacted by exited crop insurance business), underwriting results remain positive. And despite increased competition and pricing pressure - lower reinsurance costs are benefiting earnings. The company’s accident year loss ratio improved despite falling premium rates, which enhances the company’s long track record of successful underwriting. We would be concerned that some of the improvement in the accident year loss ratio may reduce future reserve releases that the market has begun to expect on a quarterly basis. We believe RLI remains a best of breed insurer and given recent M&A transactions would have to be considered an attractive candidate given their low leverage. While we do not believe anyone would be willing to pay a significant premium over the company’s current multiple, foreign buyers may not be put-off by a single digit ROIC that would be inferred by a higher multiple."

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Shares of RLI Corp. closed at $56.61 yesterday.