W. R. Berkley Corp.
) announcement on Feb 19, that its board of directors has
increased its share repurchase authorization to 10 million
shares, helped the stock price to gain 0.8% with shares closing
at $40.76 on Feb 20.
The share buyback translates into about 8% of the company's
outstanding shares as of Dec 31, 2013.
Share buybacks increase a company's earnings per share by
reducing the number of shares outstanding. Besides, it also
testifies a company's financial position is strong enough to
enhance shareholder value.
W. R. Berkley Corp. has been aggressively repurchasing shares
for quite some time now. Since 2007, it has bought back nearly
30% of its outstanding shares.
The latest share repurchases approval marks the first share
buyback program adopted by the company for this year. The last
time it took a similar action was in Dec 2013.
W. R. Berkley Corp. has been actively involved in share
buybacks to support its bottom line. Moreover, a quiet hurricane
season has allowed the company to use cash saved from paying out
cat claims to further share buybacks. A benign cat season has
also allowed other players like
Montpelier Re Holdings Ltd.
AXIS Capital Holdings Ltd
) to upgrade their share buyback programs.
Going forward, we expect improving operating fundamentals in
the industry to allow W. R. Berkley Corp. to continue with its
disciplined share repurchase strategy. The company has witnessed
improvement in insurance rates in certain lines of businesses.
Moreover, the increase in interest rates expected soon, will
relieve pressure of investment income.
W. R. Berkley Corp. also announced to pay a regular quarterly
cash dividend of 10 cents per share on its common stock on Apr 1,
2014, to shareholders of record at the close of business on Mar
19, 2014. At the current dividend level the dividend yield stands
Along with buying back shares, W. R. Berkley Corp. also
rewards its shareholders with increased dividend payouts. In May
last year, the company had approved an 11% dividend hike,
representing a new annualized rate of 40 cents per share, which
marked the company's eighth dividend increase since
With more share buybacks on board, that in turn will boost the
bottom line, we expect analysts to raise their estimates exerting
upward pressure on the Zacks Rank. W. R. Berkley Corp. presently
carries a Zacks Rank #3 (Hold).
ACE LIMITED (ACE): Free Stock Analysis Report
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MONTPELIER RE (MRH): Free Stock Analysis
BERKLEY (WR) CP (WRB): Free Stock Analysis
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