In an effort to boost shareholder confidence in
), the board of this life and health insurer sanctioned a new
share repurchase program for 40 million shares, to commence with
immediate effect. As expected, markets also responded well to the
announcement as the stock rose 1.6% to $66.27 on Nov 13.
Under its prior authorization, Aflac bought back about 308,000
shares worth $18.5 million during the third quarter of 2013.
Overall, the company repurchased $298 million worth of shares in
the first three quarters of 2013.
Consequently, about 16.9 million shares were available for
repurchases as of Sep 30, 2013. Including this, Aflac can now buy
back close to 56.9 million shares. Further, the share buyback
will be executed through open market operations, subject to
market conditions, and thus do not have an expiry period.
Concurrent with its earnings release in Oct 2013, Aflac had
expanded its share repurchases to $800 million in 2013, up from
the prior estimate of $600 million. Meanwhile, shares between
$800 million and $1.0 billion are expected to be bought back in
2014, up from the earlier projection of $600-900 million.
Moreover, the latest extension of the share buyback came soon
after Aflac hiked its dividend payout by 5.7%, in late Oct 2013,
from prior 35 cents a share. Hence, the increased quarterly
dividend of 37 cents per share is payable on Dec 2, 2013 to the
company's shareholders of record as on Nov 20, 2013.
Overall, Aflac's capital and liquidity levels remain
impressive. We expect the company to benefit from its
industry-leading position, diversification, new product suite,
pricing discipline and an improving economy in the long run.
However, we apprehend that the uncertain economic environment
in Japan will continue to affect Aflac's premium writings and
investment risk in the upcoming quarters, as reflected by the
dismal financial results in the first nine months of 2013. Hence,
returning excess wealth to shareholders will not only lower share
count and be accretive to earnings per share, but also retain
investors' confidence in the stock.
While Aflac carries a Zacks Rank #3 (Hold), outperformers in
the insurance industry include
Hilltop Holdings Inc.
Employers Holdings Inc.
). All these stocks carry a Zacks Rank #1 (Strong Buy).
AFLAC INC (AFL): Free Stock Analysis Report
EMPLOYERS HLDGS (EIG): Free Stock Analysis
HILLTOP HLDGS (HTH): Free Stock Analysis
PARTNERRE LTD (PRE): Free Stock Analysis
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