On Wednesday, the board of property-casualty and life reinsurer PartnerRe Ltd. approved and authorized a new stock repurchase program worth 6.0 million shares. The latest sanction will be effective immediately. The decision reflects the company’s trend of returning wealth to shareholders from time to time, depending on market conditions.
During the fourth quarter of 2012, PartnerRe bought back about 2.7 million shares for $218 million, under the previous authorization of repurchasing 6.0 million shares that was approved in Aug 2012. In 2012, the company repurchased 7.1 million shares for $532.9 million, higher than $396.2 million of stock bought back in 2011.
An additional 0.4 million shares have been repurchased for $37 million so far in the first quarter of 2013, until Feb 5, 2013. This left about 2.7 million shares available for repurchases under the previous authorization. Moreover, PartnerRe had approximately 26.6 million common shares at 2012-end, which were held in treasury and are now available for re-issuance.
Efficient Capital Deployment
PartnerRe seeks to elevate its capital position through meaningful business opportunities. In Dec 2012, the company acquired Presidio Reinsurance Group for about $72 million plus tangible book value.
On the other hand, management utilizes the company’s excess capital by deploying it via share repurchases and dividend payouts, in order to generate adequate capital returns. The accretive impact of share repurchases also enhances book value and earnings on a per share basis.
Last month, PartnerRe hiked its regular dividend by 3% to 64 cents per share from the prior payout of 62 cents. The latest hike represents the 21st consecutive year of dividend rise since the company’s commencement.
A stable ratings outlook affirmation from A.M. Best, S&P, Moody’s Investor Service of Moody’s Corp. (MCO - Analyst Report) and Fitch Ratings further validates the company’s overall operational synergies and risk management in order to augment its long-term growth profile. This is also satisfactory compared with its peer group.
While PartnerRe carries a Zacks Rank #3 (Hold), Moody’s has a Zacks Rank #1 (Strong Buy). Other strong performers in the insurance sector include XL Group Plc (XL - Analyst Report) and EMC Insurance Group Inc. (EMC - Analyst Report), both of which carry a Zacks Rank #1 (Strong Buy).