Jefferies analysts downgraded RLI Corp. (NYSE:RLI) from Buy to Underperform, slashing the price target on the stock from $95 to $61. The revision reflects mounting concerns over the company’s forward outlook, particularly regarding its margins and growth potential.

The analysts highlighted growing conservatism in casualty lines as a key factor, which has prompted a deterioration in projected underlying segment margins. Additionally, anticipated premium reductions in the high-margin property business are expected to weigh heavily on earnings growth prospects for 2025 and 2026.

The analysts also pointed to intensifying competition in specialty lines and a more subdued premium growth trajectory as further headwinds. These challenges are compounded by continued loss trend inflation, creating a difficult environment for RLI to sustain its current valuation levels.

The analysts project a contraction in RLI’s valuation multiple, expecting it to decline from the current 4x price-to-book ratio to below 3x. This adjustment aligns with an anticipated mid-teens return on equity, underscoring a less favorable setup for the stock moving forward.