In an effort to boost shareholder value, the board of directors of ProAssurance Corporation (PRA) approved a $100 million increase in the company’s share buyback program. With this, the company’s total authorization now stands at $202 million.
ProAssurance has repurchased shares worth $100.6 million year-to-date, including $83.7 million deployed in the first quarter of 2014. The aforementioned program is an extension of the previous authorization under which the company was left with approximately $102 million for repurchase. Previously, in Dec 2013, ProAssurance had approved a $100 million extension to its $300 million share repurchase program that was initiated in Nov 2010.
ProAssurance has remained focused on repurchasing shares to enhance shareholders’ value. This is evident from the $453.7 million deployed toward share repurchases since Jan 2007 through May 27, 2014. This is inclusive of the effect of the 2:1 stock split implemented in Dec 2012.
ProAssurance reported operating earnings per share of 73 cents in the first quarter of 2014, that was lower than the year-ago quarter earnings of 97 cents per share. The latest increase in the share buyback program should reduce share count, thereby helping the company to improve bottom-line results.
Additionally, ProAssurance declared a quarterly dividend of 30 cents per share payable on Jul 11, 2014 to shareholders of record as of Jun 27, 2014. In Dec 2013, the company had increased its quarterly dividend by 20% from 25 cents paid earlier. Moreover, the company has regularly paid dividends, including the $18.4 million paid in the last quarter.
Increasing its share buybacks twice within a period of 6 months and the continued dividend payouts reflect ProAssurance’s robust financial position and its commitment to shareholders as well. As of Mar 31, 2014, the company’s cash and cash equivalents were $296.2 million, up almost 129% from year-end 2013 and cash from operations was $30.4 million, which compared favorably with cash outflow of $13.1 million in the year-ago quarter.
Currently, ProAssurance has a Zacks Rank #3 (Hold). However, better-ranked players in the property and casualty insurance space include Allied World Assurance Company Holdings, AG (AWH), AmTrust Financial Services, Inc. (AFSI) and Endurance Specialty Holdings Ltd. (ENH). All these stocks sport a Zacks Rank #1 (Strong Buy).
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