W.R. Berkley Corp.
) announced that its board of directors has increased its share
repurchase authorization to 10 million shares. This translates
into approximately 7% of the company's outstanding shares as of
Sep 30, 2013.
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Share buybacks increase a company's earnings per share by
reducing the number of shares outstanding. They also indicate
that the company's financial position is strong enough to enhance
W.R. Berkley has been aggressively repurchasing shares for quite
some time now. Since 2007, it has bought back nearly 30% of its
The latest share repurchase marks the first share buyback program
adopted by the company for this year. The last time it took a
similar action was in Aug 2012.
W.R. Berkley 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 Limited
) to upgrade their share buyback programs.
Going forward, we expect improving operating fundamentals in the
industry to allow W.R. Berkley to continue with its disciplined
share repurchase strategy. The company has witnessed improvement
in insurance rates in certain lines of businesses. Moreover, Fed
taper expected early next year will likely push up interest rates
thus relieving pressure on investment income.
Along with buying back shares, W.R.Berkley also rewards its
shareholders with increased dividend payouts. In May, 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 2005.
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 presently carries
a Zacks Rank # 3 (Hold).