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3 Insurance Stocks to Watch on Share Buyback Spree
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An effective and prudent way to increase shareholders' wealth is by buying back shares. Companies often use funds to buy back shares from the open market to lower the number of outstanding shares. This helps boost the bottom line, in turn enabling the distribution of more profits to shareholders.
Here we focus on three insurers — Axis Capital Holdings Limited (AXS - Free Report) , Radian Group (RDN - Free Report) and RenaissanceRe Holdings Limited (RNR - Free Report) — whose board of directors recently approved new share buyback programs, banking on the confidence that the companies’ operational expertise will boost liquidity. Companies generally repurchase their own stock when they are undervalued, as it enables them to buy back more shares.
Stocks in Focus
Axis Capital is a leading specialty insurer and global reinsurer aiming for leadership in specialty risks. Its board of directors recently approved a $300 million share repurchase program. This is in addition to the previously approved $100 million share repurchase program. This Zacks Rank #3 (Hold) insurer bought back $76 million worth of shares in the first quarter of 2024 and another $2 million worth of shares in April.
Axis Capital has an impressive history of distributing wealth to shareholders via dividends and share buybacks. While the insurer prioritizes investing in growth initiatives that ramp up specialty businesses, it has also hiked its dividend for 18 consecutive years. The insurer boasts one of the highest dividend yields among its peers.
Its focus on specialty lines, continuous investment in growth areas, including wholesale insurance and lower middle markets, exit from the volatile catastrophe and property reinsurance space and reduction of risk exposure while concentrating on accident and health, casualty, credit and surety, and specialty reinsurance lines should help the insurer deliver impressive results. This, in turn, should poise the company well with sufficient liquidity and aid in boosting shareholders' value. It has a VGM Score of B. The expected long term earnings growth is pegged at 25.2%. Shares gained 29.1% year to date.
Radian Group is a credit enhancement company providing a suite of private mortgage insurance and related risk-management products and services. The board increased the authorization by $600 million to $900 million. The program remains active through Jun 30, 2026. This Zacks Rank #2 (Buy) mortgage insurer bought back 1.8 million shares worth $50 million, including commissions, in the first quarter of 2024.
Radian Group maintains a solid balance sheet with sufficient liquidity and strong cash flows. A strong capital position helps Radian deploy capital via share repurchases and dividend hikes that enhance shareholders’ value. Radian declared a 9% increase in its quarterly dividend in the first quarter of 2024. This is the fifth consecutive year where RDN has increased the quarterly dividend with a total increase of 96% over the past four years. Its current dividend yield of 3.1% betters the industry average of 2.5%.
An improving mortgage insurance portfolio, declining claims, a well-performing homogenous segment and a solid capital position should help the insurer deliver impressive results. This, in turn, should poise the company well with sufficient liquidity and aid in boosting shareholders' value. It has a VGM Score of B. The expected long term earnings growth is pegged at 5%. Shares gained 7.5% year to date.
RenaissanceRe primarily provides property-catastrophe reinsurance to insurers and reinsurers globally on the basis of excess of loss (coverage of losses over a specified limit). Its board approved a renewal of the authorized share repurchase program, bringing the total current authorization to $500 million. It carries a Zacks Rank #3.
RenaissanceRe boosts shareholder value by banking on its ability to generate free cash flow. It has been raising dividends for the past several years and is expected to keep doing so. In February 2024, the company’s board of directors approved a 2.6% hike in the quarterly dividend. The increased dividend marked the 29th straight year of a dividend hike. Its dividend yield of 0.7% remains higher than the industry average of 0.3%.
Improving premiums in specialty lines given market dislocation and rate increases, higher demand for reinsurance in Florida, and the acquisition of Validus Re, AlphaCat and the Talbot Treaty reinsurance business from AIG enhance the scale of its global property and casualty reinsurance business. These also boost profitability and lower exposure to uncertain lines such as D&O insurance. It has a VGM Score of B. The expected long term earnings growth is pegged at 4%. Shares gained 16.8% year to date.
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3 Insurance Stocks to Watch on Share Buyback Spree
An effective and prudent way to increase shareholders' wealth is by buying back shares. Companies often use funds to buy back shares from the open market to lower the number of outstanding shares. This helps boost the bottom line, in turn enabling the distribution of more profits to shareholders.
Here we focus on three insurers — Axis Capital Holdings Limited (AXS - Free Report) , Radian Group (RDN - Free Report) and RenaissanceRe Holdings Limited (RNR - Free Report) — whose board of directors recently approved new share buyback programs, banking on the confidence that the companies’ operational expertise will boost liquidity. Companies generally repurchase their own stock when they are undervalued, as it enables them to buy back more shares.
Stocks in Focus
Axis Capital is a leading specialty insurer and global reinsurer aiming for leadership in specialty risks. Its board of directors recently approved a $300 million share repurchase program. This is in addition to the previously approved $100 million share repurchase program. This Zacks Rank #3 (Hold) insurer bought back $76 million worth of shares in the first quarter of 2024 and another $2 million worth of shares in April.
Axis Capital has an impressive history of distributing wealth to shareholders via dividends and share buybacks. While the insurer prioritizes investing in growth initiatives that ramp up specialty businesses, it has also hiked its dividend for 18 consecutive years. The insurer boasts one of the highest dividend yields among its peers.
Its focus on specialty lines, continuous investment in growth areas, including wholesale insurance and lower middle markets, exit from the volatile catastrophe and property reinsurance space and reduction of risk exposure while concentrating on accident and health, casualty, credit and surety, and specialty reinsurance lines should help the insurer deliver impressive results. This, in turn, should poise the company well with sufficient liquidity and aid in boosting shareholders' value. It has a VGM Score of B. The expected long term earnings growth is pegged at 25.2%. Shares gained 29.1% year to date.
Radian Group is a credit enhancement company providing a suite of private mortgage insurance and related risk-management products and services. The board increased the authorization by $600 million to $900 million. The program remains active through Jun 30, 2026. This Zacks Rank #2 (Buy) mortgage insurer bought back 1.8 million shares worth $50 million, including commissions, in the first quarter of 2024.
Radian Group maintains a solid balance sheet with sufficient liquidity and strong cash flows. A strong capital position helps Radian deploy capital via share repurchases and dividend hikes that enhance shareholders’ value. Radian declared a 9% increase in its quarterly dividend in the first quarter of 2024. This is the fifth consecutive year where RDN has increased the quarterly dividend with a total increase of 96% over the past four years. Its current dividend yield of 3.1% betters the industry average of 2.5%.
An improving mortgage insurance portfolio, declining claims, a well-performing homogenous segment and a solid capital position should help the insurer deliver impressive results. This, in turn, should poise the company well with sufficient liquidity and aid in boosting shareholders' value. It has a VGM Score of B. The expected long term earnings growth is pegged at 5%. Shares gained 7.5% year to date.
RenaissanceRe primarily provides property-catastrophe reinsurance to insurers and reinsurers globally on the basis of excess of loss (coverage of losses over a specified limit). Its board approved a renewal of the authorized share repurchase program, bringing the total current authorization to $500 million. It carries a Zacks Rank #3.
RenaissanceRe boosts shareholder value by banking on its ability to generate free cash flow. It has been raising dividends for the past several years and is expected to keep doing so. In February 2024, the company’s board of directors approved a 2.6% hike in the quarterly dividend. The increased dividend marked the 29th straight year of a dividend hike. Its dividend yield of 0.7% remains higher than the industry average of 0.3%.
Improving premiums in specialty lines given market dislocation and rate increases, higher demand for reinsurance in Florida, and the acquisition of Validus Re, AlphaCat and the Talbot Treaty reinsurance business from AIG enhance the scale of its global property and casualty reinsurance business. These also boost profitability and lower exposure to uncertain lines such as D&O insurance. It has a VGM Score of B. The expected long term earnings growth is pegged at 4%. Shares gained 16.8% year to date.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.