W.R. Berkley Corporation’s WRB board of directors approved a special cash dividend of 50 cents per share. This, along with two more special dividends paid in January and October 2023, will bring the year’s tally to $1.50 per share.
Concurrently, the board also approved a quarterly cash dividend of 11 cents. Shareholders, as of the close of business on Dec 18, 2023, will receive the quarterly dividend on Dec 27, 2023.
W.R. Berkley has a solid balance sheet with sufficient liquidity and strong cash flows, given its operational strength. A strong capital position enables the nation’s largest commercial lines property casualty insurance provider to deploy capital via share repurchases, special dividends and dividend hikes that enhance shareholders' value.
In June 2023, this Zacks Rank #1 (Strong Buy) insurer’s board approved a 10% hike in its quarterly dividend, marking the 18th consecutive increase since 2005. Its dividend yield of 0.7% is higher than the industry average of 0.3%. Apart from dividends, the company resorts to regular share buybacks as another way to enhance shareholder value. You can see the complete list of today’s Zacks #1 Rank stocks here.
Improved pricing, expansion of international business, reserving discipline, a solid balance sheet and a prudent capital management policy should help WRB maintain its streak of dividend hikes and special dividends. The insurer will dish out $932 million for special, regular quarterly cash dividends and share buybacks in 2023. The company targets a return on equity of 15% over the long term.
Shares of WRB have gained 12.7% in the last three months, outperforming the industry’s 2.1% decline. Solid insurance business, strong international business and a sturdy financial position continue to drive shares.
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Other Shareholder-Friendly Moves in the Same Space
Given a solid capital level in the insurance industry and an improving operating backdrop favoring strong operational performance, insurers like Erie Indemnity ERIE, The Hanover Insurance Group, Inc. THG and RLI Corporation RLI have resorted to effective capital deployment to enhance shareholders’ value.
The board of directors of Erie Indemnity approved a 7.1% hike in its dividend. With the approval, the new payout is $1.275 per Class A share compared with the earlier payout of $1.19 per share and $191.25 per Class B share compared with the earlier payout of $178.50 per share. Erie Indemnity has been paying dividends since 1933. Improvement in premiums for homeowners and commercial multi-peril products, given continued rate increases and strong retention, strengthening of business platforms, as well as identification and development of new sources of revenues, should help this insurer sustain dividend hikes.
RLI’s board of directors approved a special cash dividend of $2.00 per share, marking the 14th straight special dividend. This insurer has also been paying dividends for 187 consecutive quarters and has increased regular dividends in the last 48 straight years. Its dividends increased at a seven-year (2016-2023) CAGR of 3.9%. RLI’s dividend yield of 0.8% is better than the industry average of 0.3%. Over the last 10 years, the P&C insurer’s total cumulative dividends amounted to more than $1.37 million, supported by sufficient liquidity and strong cash flow.
The board of directors of Hanover Insurance approved a 5% hike in its quarterly dividend to 85 cents. Banking on operational excellence, Hanover Insurance has increased dividends for the 19th straight year. Growth in the Core Commercial and Specialty segments, higher retention, improved pricing, loss control, risk prevention measures and a strong market presence should help the insurer maintain the streak. The company aims for a long-term return on equity target of 14% or higher by 2026.
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