In order to boost shareholders' value,
Assurant Inc. (
) has approved an increase of $600 million of share buyback. The
news resulted in 0.73% increase in share price that closed at
$61.80 on Nov 18.
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This program is an extension to the previous authorization under
which Assurant was left with $152 million for repurchases as of
Oct 31, 2013. The company spent $351 million to buyback 7 million
shares from beginning of the year through Oct 2013. Its
repurchases in the last quarter totaled 1.9 million shares for a
total of $104.9 million.
Previously in May 2012, Assurant had announced an increase of
$430 million in its share buyback program.
Assurant's financial strength with a moderate debt and sufficient
cash on hand allows it to continue with its buyback
program. As of Sep 30, 2013, cash and cash equivalents
stood at $1.3 billion and cash from operations stood at $377.3
Assurant is well known for its disciplined capital management and
efforts aimed at boosting shareholder returns via share buyback
as well as dividend increase. Since its initial public offering
the company has bought back 50% outstanding shares every year. It
has also maintained a trend of dividend increase every year since
The share buyback sends a positive signal about the long term
prospects of Assurant which has a diverse product base and
distribution platform, established presence in various niche
markets, adequate risk-adjusted capitalization, and solid
operating earnings. Lower share count due to share buyback is
expected to boost the bottom line. Earnings per share are
expected to grow 15.5% in 2013.
This Zacks Rank #2 (Buy) stock has also witnessed an increase in
earnings estimates over the past 30 days. The Zacks Consensus
Estimate for 2013 went up by 4.1% to $6.08 as 10 out of 11
estimates moved north. The same for 2014 was up by 1.8% as 7 out
of 11 estimates were raised higher.
Last week another property and casualty insurer,
Montpelier Re Holdings Ltd.
) increased its share buyback authorization by $150 million.
Principal Financial Group Inc.
), among other, both with Zacks Rank #2 (Buy) also follow a
prudent share repurchase strategy.