In its concerted effort to enhance shareholders’ value, the board of directors of Markel Corp. (MKL) approved a new buyback program authorizing the company to repurchase upto $300 million worth of shares.
The recent approval replaces the earlier program approved in Nov 2010. Under the earlier authorization, Markel bought back about $101 million worth of shares within a span of three years. In the first nine months of 2013, the company spent $56.9 million in share repurchases, registering more than threefold year-over-year increase.
The new authorization by Markel is duly supported by the company’s sturdy financial position. While cash and cash equivalents soared to $2.1 billion at third quarter-end (up 145% from 2012-end level), cash from operations in the first nine months came in at $542 million (up 126% year over year).
A sustained solid operational performance continues to cushion Markel’s sturdy financial position. The company delivered earnings surprises in 3 of the last 4 quarters with an average beat of 90.1%.
Several insurers are in the news for approving share repurchase authorizations, in an intention to boost the bottom line and enhance shareholders’ value. While ACE Ltd (ACE) is authorized to repurchase $2 billion worth of shares through Dec 31, 2014, Montpelier Re Holdings Ltd. (MRH) increased its share buyback authorization by $150 million. The board of directors of Assurant Inc. (AIZ) also approved an increase of $600 million of share repurchase.
There was no earnings momentum over the last 7 days. With the approval of the new buyback authorization, we expect analysts to raise their estimates exerting upward pressure on the Zacks Rank. Markel presently carries a Zacks Rank #2 (Buy).
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