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Continuing its long-standing trend of increasing dividend annually, RenaissanceRe Holdings Ltd. (RNR - Analyst Report) announced a 3.7% hike in its quarterly dividend to 28 cents per share from 27 cents paid earlier. The hike was approved by the company’s board of directors on Feb 20, 2013.
This marks the 18th consecutive annual dividend increase by RenaissanceRe. The company has maintained this tradition ever since it went public in 1993. The increased dividend will be paid on Mar 18, 2013 to shareholders of record as of Mar 15. The increased dividend implies an annual yield of 1.33%.
Concurrently, the board also approved an increase in RenaissanceRe’s share repurchase authorization. As a result, the amount outstanding in the company’s share buyback program surged to $500 million, including the balance outstanding previously.
RenaissanceRe has not set any expiry date for the repurchase authorization. Moreover, the company can use the authorization according to its need, depending on its capital requirements, cash flow and share price, among other things. The shares can be bought back through private placement or from the open market.
RenaissanceRe regularly deploys its excess capital to enhance shareholders’ wealth. During the fourth quarter of 2012, the company repurchased 2.8 million equity shares at an average price of $80.03, totaling $222.5 million.
Moreover, during 2012, RenaissanceRe repurchased 6.4 million shares at an average price of $77.26, totaling 494.4 million. Further, from Jan 1, 2013 through Feb 5, 2013 the company repurchased 1.4 million shares at an average price of $81.29, aggregating $111.3 million.
RenaissanceRe had earlier increased its share buyback program to $500 million in Nov 2012 from $406.7 million available on Jul 30, 2012.
RenaissanceRe solid cash position is well supportive of its efforts to buyback shares as well as increase dividend. Also, returning value to shareholders consistently along with steady improvement in liquidity should help retain the market confidence amid the ongoing economic volatility.
Currently, RenaissanceRe carries a Zacks Rank #3 (Hold). Other property & casualty insurers worth considering are XL Group plc (XL - Analyst Report), ProAssurance Corporation (PRA - Analyst Report) and Cincinnati Financial Corp. (CINF - Analyst Report). All these companies carry a Zacks Rank #1 (Strong Buy).