The board of directors of Chubb Limited (CB - Free Report) approved a share buyback program in an effort to enhance its shareholders’ value. The company is now authorized to buy back $1 billion worth shares through Dec 31, 2017.
Share repurchases benefit a the company’s earnings per share, book value as well as shareholder equity, by lowering outstanding share count. We note that Chubb had no authorization remaining under its prior buyback program after exhausting its $1.5 billion buyback authorization by Dec 2015.
Concurrently, the board of directors approved a quarterly dividend of 69 cents per share. The dividend will be paid on Jan 20, 2017 to shareholders on record as of Dec 30, 2016. This is the third installment of the increased annual dividend approved by the board in May this year. The approval was for a 3% increase in dividend, which marked the 23rd straight annual payout hike at the company. Notably, Chubb has more than doubled its quarterly dividend since 2010. The company has a track record of paying regular quarterly dividends. Chubb aims to achieve a dividend payout ratio of 30% of its operating earnings.
Chubb boasts a strong capital position. In fact, the insurer’s solid capital and liquidity position enables it to engage in effective capital deployment to enhance its shareholders’ value. This makes the stock an attractive pick for yield seeking investors.
Chubb carries a Zacks Rank #2 (Buy).
Other Stocks to Consider
Other well-ranked Property & Casualty (P&C) insurers are Alleghany Corporation (Y - Free Report) , Arch Capital Group Ltd. (ACGL - Free Report) , and Mercury General Corporation (MCY - Free Report) . Each of these stocks sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Mercury General, engaged in writing personal automobile insurance in the U.S., has returned 25.4% year to date. This is substantially above 7.0% returned by S&P 500.
Alleghany, a provider of P&C reinsurance and insurance businesses in the U.S. and internationally, has returned 18.7% year to date – substantially above 7.0% returned by the S&P 500.
Arch Capital offers property, casualty, and mortgage insurance and reinsurance products worldwide, has returned 15.6% year to date – substantially above 6.5% returned by the Nasdaq.
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