The property and casualty (P&C) insurance and reinsurance provider ACE Limited (ACE) announced that its board of directors has authorized an aggregate buyback of $500 million of common stock, including the previous authorization. The company will have to repurchase the shares within December 31, 2012, as per the new authorization.
Earlier, in November 2010, the board of directors authorized a buyback of $600 million of common stock and out of which the company has utilized $400 million for the purpose till date. So, the new authorization is adding another $300 million to the share repurchase coffer.
Through the share repurchase, ACE Limited intends to offset the potential dilution of shareholder value resulting from the exercise of stock options and granting of restricted stock under its equity-based incentive plans.
ACE Limited continues to create shareholder value through repurchase and payment of dividend. The company has been consistently paying dividends to its shareholders and has increased the quarterly dividend rate thrice in the trailing ten quarters. A quarterly dividend of 35 cents is scheduled on October 21, 2011, to shareholders of record of common stock on September 30, 2011.
ACE Limited reported strong results of $2.01 per share in the recently concluded quarter, comfortably surpassing our expectation. During the earnings call, ACE Limited raised its full-year earnings estimate in the range of $6.00 to $6.20 per share, expecting a higher run rate for investment income and an increase in underwriting results in the last six months of the year.
The Zacks Consensus Estimates for third quarter 2011, fiscal year 2011 and fiscal year 2012 are currently pegged at $1.78, $6.49 and $7.50 per share, respectively.
ACE Limited presently retains a Zacks #3 Rank, which translates to a short-term Hold rating. The company competes with The Travelers Companies, Inc. (TRV) and American International Group, Inc. (AIG).
Based in Zurich, Switzerland, ACE Limited, the holding company of ACE Group of Companies, is one of the world’s largest providers of P&C insurance and reinsurance.
ACE LIMITED (ACE): Free Stock Analysis Report
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