The board of property-casualty and life reinsurer – PartnerRe Ltd. (PRE - Analyst Report) approved and authorized a new stock repurchase worth 6.0 million shares. The latest sanction, to be effective immediately replaces the 6.0 million share repurchase authorized in March this year.
PartnerRe bought back about 3.7 million shares for $332 million during the second quarter of 2013. Overall, the company had repurchased 5.5 million shares in the first half of 2013 for $492 million, while an additional 0.4 million shares were bought back for $32 million in the month of July.
This left the company with about 1.1 million shares available for repurchase from the prior authorization. Moreover, PartnerRe has approximately 32.4 million common shares, which were held in treasury and are now available for re-issuance.
Steady Capital Deployment
The decision reflects the company’s trend of returning wealth to its shareholders from time to time, depending on market conditions. PartnerRe continues to return additional value to its shareholders through stock buybacks and dividend payments. Despite the economic turmoil that adversely affected financials in the past, the company returned about $1.1 billion of wealth in 2010, $396.2 million in 2011 and $532.9 million in 2012 through stock repurchases.
Moreover, PartnerRe increased its annual dividend payout by 9% in Apr 2011, followed by a 3% hike in Feb 2012 and another 3% accretion in Feb 2013. The latest hike represents the 21st consecutive year of dividend rise since the company’s commencement.
We believe that low level of debt obligations and no long-term debt appears secure. Additionally, total debt plus preferred interests to total capital ratio is expected to remain modestly around 25% for the next couple of years, making PartnerRe’s balance sheet risk-free and enhancing operating leverage.
A stable ratings outlook affirmation from A.M. Best, S&P, Moody’s Investor Service and Fitch Ratings further validates the company’s overall operational synergies, competitive strength, steady capital generation and risk management capabilities. This is also satisfactory when compared with its peer group.
While PartnerRe carries a Zacks Rank #3 (Hold), other insurers that are outperforming include Global Indemnity Plc , EMC Insurance Group Inc. (EMCI - Snapshot Report) and Everest Re (RE - Analyst Report). All these stocks carry a Zacks Rank #1 (Strong Buy).