The board of directors of White Mountains Insurance Group, Ltd.WTM authorized the company to buy 0.5 million additional shares. This is in addition to 0.2 million shares already remaining under its authorization. The company intends to utilize cash balance available to buy back these shares.
White Mountains has always resorted to share buybacks to give an added boost to its bottom line. A lower share count via share repurchases drives up the bottom line. This new approval comes after a hiatus of three year. In May 2012, the board had authorized the company to buy back 1 million shares
During the first half of 2015, the Zacks Rank #3 (Hold) property and casualty insurer spent $33 million to repurchase 0.05 million shares. The average price translates into 96% of White Mountains' adjusted book value per share as of Jun 30, 2015.The buybacks consisted 0.03 million shares under $17 million authorization, 0.01 shares following the employee
benefit plans and another 0.01 million shares pursuant to the redemption of the Prospector Offshore Fund.
Moreover, its sufficient liquidity backed by solid operational performance supports buybacks.
White Mountains delivered second-quarter operating earnings of $8.30 per share that surpassed the Zacks Consensus Estimate. The company delivered positive surprises in three of the last four quarters, with an average beat of 27.98%.
Yet the Zacks Consensus Estimate witnessed downward revisions in the last 30 days. It decreased 2.5% to $13.70 for 2015 and 13.6% to $18.05 for 2016. We expect analysts to raise their estimates following the new bottom-line booster.
Several property and casualty insurers are treading the same path as White Mountains. This month, the board of directors of XL Group plc XL , authorized the company to buy back up to $1 billion worth shares. Last month, the board of directors of Fidelity National Financial, Inc. FNF approved a three-year 25 million share repurchase program.
Stock to Consider
A better-ranked property and casualty insurer is Hallmark Financial Services Inc. HALL , sporting a Zacks Rank #1 (Strong Buy).
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