RLI (NYSE: RLI) and Hanover Insurance Group (NYSE:THG) are both mid-cap financials companies, but which is the better stock? We will compare the two companies based on the strength of their valuation, dividends, analyst recommendations, institutional ownership, earnings, risk and profitability.

Insider & Institutional Ownership

83.7% of RLI shares are held by institutional investors. Comparatively, 83.9% of Hanover Insurance Group shares are held by institutional investors. 6.1% of RLI shares are held by company insiders. Comparatively, 1.1% of Hanover Insurance Group shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Volatility and Risk

RLI has a beta of 1.27, suggesting that its stock price is 27% more volatile than the S&P 500. Comparatively, Hanover Insurance Group has a beta of 1.14, suggesting that its stock price is 14% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for RLI and Hanover Insurance Group, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
RLI 1 4 0 0 1.80
Hanover Insurance Group 0 1 0 0 2.00

RLI currently has a consensus target price of $43.00, indicating a potential downside of 26.09%. Hanover Insurance Group has a consensus target price of $91.00, indicating a potential downside of 11.69%. Given Hanover Insurance Group’s stronger consensus rating and higher probable upside, analysts clearly believe Hanover Insurance Group is more favorable than RLI.

Profitability

This table compares RLI and Hanover Insurance Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
RLI 0.88% 0.79% 0.24%
Hanover Insurance Group 2.37% 3.35% 0.67%

Valuation and Earnings

This table compares RLI and Hanover Insurance Group’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
RLI $816.33 million 3.14 $114.92 million $1.80 32.32
Hanover Insurance Group $4.95 billion 0.88 $155.10 million $2.82 36.54

Hanover Insurance Group has higher revenue and earnings than RLI. RLI is trading at a lower price-to-earnings ratio than Hanover Insurance Group, indicating that it is currently the more affordable of the two stocks.

Dividends

RLI pays an annual dividend of $0.84 per share and has a dividend yield of 1.4%. Hanover Insurance Group pays an annual dividend of $2.16 per share and has a dividend yield of 2.1%. RLI pays out 46.7% of its earnings in the form of a dividend. Hanover Insurance Group pays out 76.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. RLI has increased its dividend for 40 consecutive years and Hanover Insurance Group has increased its dividend for 5 consecutive years.

Summary

Hanover Insurance Group beats RLI on 11 of the 16 factors compared between the two stocks.

RLI Company Profile

RLI Corp. is a specialty insurance company. The Company underwrites selected property and casualty insurance through subsidiaries, as well as offers insurance coverages in both the specialty admitted, and excess and surplus markets. It operates through Casualty, Property and Surety segments. Its Casualty segment consists of commercial and personal umbrella, general liability, commercial transportation, professional services, small commercial, executive products, medical professional liability and other casualty businesses. Its property segment consists of commercial property, marine, specialty personal, property reinsurance and crop reinsurance businesses. Its surety segment consists of miscellaneous, commercial, contract and energy businesses. The Company conducts its operations principally through three insurance companies: RLI Insurance Company (RLI Ins.), Mt. Hawley Insurance Company (Mt. Hawley) and Contractors Bonding and Insurance Company (CBIC).

Hanover Insurance Group Company Profile

The Hanover Insurance Group, Inc. is a holding company. The Company is engaged in providing property and casualty insurance products and services. The Company has four segments: Commercial Lines, Personal Lines, Chaucer and Other. It markets its domestic products and services through independent agents and brokers in the United States, and conducts business internationally through a subsidiary, Chaucer Holdings Limited, which operates through the Society and Corporation of Lloyd’s (Lloyd’s). Its Commercial Lines product suite provides agents and customers with products designed for small, middle and specialized markets. Its Personal Lines coverages include other personal lines, which consist of umbrella and fire, among others. The Chaucer segment consists of international business written through Lloyd’s, including marine and aviation, and property. The Other segment consists of Opus Investment Management, Inc. (Opus), which provides investment advisory services to affiliates.

Receive News & Stock Ratings for RLI Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for RLI and related stocks with our FREE daily email newsletter.