In its concerted effort to enhance shareholders’ value, the board of directors of ACE Limited (ACE) approved a $1.5 billion share repurchase program for 2015.
The new authorization will replace the current one when it expires on Dec 31, 2014. Under its current authorization, the company already bought back $1.1 billion shares through Oct 20, with $0.9 million remaining.
The board simultaneously announced a quarterly dividend of 65 cents per share to shareholders of record on Dec 17, 2014. The dividend will be paid on Jan 5, 2015.
A solid liquidity position driven by sustained operational strength has always supported ACE Limited in its share buybacks or dividend hike. The property and casualty insurer exited the third quarter with cash of $806 million (up 39% from the 2013 end level) and retained earnings standing solid at $16.1 billion (up 17% from 2013 end level). Cash from operations improved 18% year over year in the first nine months to $3.2 billion.
ACE Limited has always returned capital to its shareholders. In the last quarter, the company returned $617 million of which share repurchases totaled $450 million and dividends comprised $220 million.
Share repurchases benefit the company’s earnings per share, book value as well as shareholder equity,as these reduce the number of shares outstanding.
ACE Limited also boasts a track of delivering positive surprise every quarter with the last four-quarter surprise averaging 10.9%. The strength seen in last quarter’s financial performance was backed by improved underwriting and investment income.
ACE Limitedcurrently carries a Zacks Rank #2 (Buy). Investors interested in property and casualty insurers may also look at AmTrust Financial Services, Inc. (AFSI), Arch Capital Group Ltd. (ACGL) and Alleghany Corporation (Y). All the three stocks sport a Zacks Rank #1 (Strong Buy).
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