In its concerted effort to enhance shareholders' value, the
board of directors of
AmTrust Financial Services, Inc.
) approved a new buyback program authorizing the company to
repurchase upto $150 million worth of shares.
AMTRUST FIN SVC (AFSI): Free Stock Analysis
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This approval comes after a hiatus of six years. The earlier
approval dates back to Nov 2007, where the board authorized
AmTrust Financial to buy back 3 million shares. The company
bought back 0.77 million from its authorization through 2013 and
is left with 2.23 million shares to be bought back. The recent
approval hence not only covers up the remaining earlier
authorization but leaves the company with room for additional
The news boosted investors' sentiment, as was evident in the
share price increase. Shares of AmTrust Financial increased 1.3%
to close at $33.12 yesterday.
The new authorization by AmTrust Financial is duly supported by
the company's solid financial position, with cash and cash
equivalents of $485.5 million at third quarter-end (up 17% from
2012-end level) and cash from operations in the first nine months
amounting to $604.8 million (up 50% year over year). Retained
earnings also stood solid at $538.2 million. A sustained solid
operational performance continues to cushion AmTrust Financial's
sturdy financial position. The company delivered earnings
surprises in the last 4 quarters with an average beat of 11.7%.
Several insurers are in the news presently for approving share
repurchase authorizations, in an intention to boost the bottom
line and enhance shareholders' value. While
) has a new $750 million share repurchase authorization through
Jun 12, 2015,
AXIS Capital Holdings Limited
) has a $750 million buyback authorization through Dec 31, 2014.
W.R. Berkley Corp.
) announced that its board of directors has increased its share
repurchase authorization to 10 million shares.
With respect to AmTrust Financial, there was no earnings momentum
over the last 60 days leaving the Zacks Consensus Estimate for
2014 unchanged at $3.67. With the approval of the new buyback
authorization that in due course should favorably impact the
bottom line, we expect analysts to raise their estimates. AmTrust
Financial presently carries a Zacks Rank #1 (Strong Buy).