In an effort to return more value to its shareholders, the board of directors of White Mountains Insurance Group, Ltd. recently authorized the buyback of up to an additional 0.5 million shares. However, shares of the company witnessed a 0.6% decline in the last trading session.
With the new authorization, the company now has 0.9 million shares left under its current share repurchase authorization. Notably, it has repurchased 1.1 million shares worth $878 million year to date through Oct 31, 2016.
This marks the second time this year that the board of directors has increased the company’s share buyback authorization. Earlier in Feb 2016, the board of directors of the property and casualty (P&C) insurer authorized the company to buy back up to an additional 1 million shares. This share buyback authorization was in addition to the 0.4 million shares remaining under the insurer’s existing share repurchase authorization.
White Mountains’ financial strength allows it to execute share repurchases successfully. The company expects to deploy available cash to buy back the shares. As of Sep 30, 2016, the company had cash worth $244.7 million, up 41.4% from the end-2015 level. Thus, a strong liquidity position enables the company to engage in share buybacks and boost shareholder value.
Share repurchases benefit the company’s earnings per share, book value as well as shareholder equity as shares outstanding reduce. Therefore, share buyback programs raise optimism among investors and boost their confidence in a stock. Also, the company’s strong capital position is reflected through its regular share repurchases. Recently, the board of directors of Primerica, Inc. (PRI - Free Report) authorized a share buyback program that will allow the company to spend up to $200 million to repurchase its common stock through Jun 30, 2018. Also, the board of directors of Chubb Limited (CB - Free Report) approved a share buyback program that authorizes the company to buy back $1 billion worth shares through Dec 31, 2017.
Stocks that Warrant a Look
Investors might consider stocks from the same space like Mercury General Corporation (MCY - Free Report) and First American Financial Corporation (FAF - Free Report) ,). Both 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 is a P&C insurer engaged in writing personal automobile insurance in the U.S. The company delivered positive surprises in two of the last four quarters but with an average miss of 21.04%.
First American Financial, offering financial services, delivered positive surprises in all of the last four quarters, with an average beat of 14.32%.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>