In a concerted effort to return more value to shareholders,
the board of directors of
XL Group plc
) approved a share repurchase program along with a hike in
AMER FINL GROUP (AFG): Free Stock Analysis
ASSURED GUARNTY (AGO): Free Stock Analysis
ALLIED WORLD AS (AWH): Free Stock Analysis
XL GROUP PLC (XL): Free Stock Analysis Report
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The board approved a dividend of 14 cents per share, which
represents a 27% increase over the last paid dividend. The
increased dividend will be paid on Apr 1, 2013 to the
shareholders of record as of Mar 15, 2013. This amounts to an
annualized dividend yield of nearly 2% based on the closing share
price of $28.99 on Feb 22, 2013.
This is also ahead of other property and casualty insurers like
Allied World Assurance Company Holdings, AG
) with a dividend yield of 1.7%, and
American Financial Group Inc
) with a dividend yield of 1.75%, among others.
Recently, the board of directors of
Assured Guaranty Ltd
), a multi-line-insurer, approved an 11% increase in its
quarterly dividend. Assured Guaranty will now pay a quarterly
dividend of 10 cents per share, up from 9 cents.
Based on 310 million shares outstanding as of Dec 31, 2012, the
company requires $43.4 million for the payment of the quarterly
Concurrently, with the new buyback approval, the company is now
authorized to repurchase shares worth $850 million. The new
buyback approval automatically replaces the $250 million worth of
shares still available for repurchase. This remaining amount was
a part of the $750 million share buyback program approved in Feb
In the fourth quarter, XL Group spent $51.7 million to buy back
2.1 million shares taking the full year tally to 18.3 million
shares repurchased for $41.7 million. Subsequently through Feb 7,
XL Group bought back 3.8 million shares for $98.3 million.
It is likely that the news of the dividend increase as well as a
new share buyback program helped the share price move up 1.9%.
With a strong balance sheet and its ability to generate healthy
cash flow, we expect the company to indulge in more buybacks or
increase dividend payout going forward, thereby sharing more
profits with the shareholders.
Over the last 7 days, only 1 out of 17 analysts raised estimates
for 2013, while no estimates were raised for 2014. We believe
that the company's effort to return more value to shareholders
might encourage analysts to pull their estimates upward. The
Zacks Consensus Estimate for 2013 and 2014 are currently pegged
at $2.54 and $2.76 per share, respectively.
XL Group carries a Zacks Rank #1 (Strong Buy).