Insurance Companies Where Buybacks Are Key: Travelers

Shrinking the Share Count

This post was prompted by this post from Avondale Asset Management on how the share count from The Travelers Companies, Inc. (NYSE:TRV) has shrunk since 2005 (two years after their merger with The St. Paul, a company that I once worked for).  Only 57% of the shares remain.  Way to go.

Now, buying back stock is not a panacea.  It is only good when the shares are trading below or not much above fair market value.  What’s fair market value, you ask?  Well, that’s not an easy question to answer in most places, but in insurance, it means around 1.3x book value, adjusting for intangibles that have no economic significance.

Now if a company has some proprietary products, technologies or methods that give it a sustainable competitive advantage, that multiple can rise —  AFLAC Incorporated (NYSE:AFL) might be an example of that.  But sustainable competitive advantages in a mature and competitive industry like insurance are rare.  Above the 1.3x book value hurdle, it would be better to do special dividends.

Avondale was spot-on to feature The Travelers Companies, Inc. (NYSE:TRV).  They are in the upper end of those that bought back shares 2005-2012.  Here’s my list:

1, 23  - View Full Page
CompanyTickerIndustry% of shares remaining since 2005
WellPoint, Inc.WLP0706 – Insurance (Accident & Health)

52%

Infinity Property and CasualtyIPCC0715 – Insurance (Property & Casualty)

56%

Travelers Companies, Inc., TheTRV0715 – Insurance (Property & Casualty)

57%

Aetna Inc.AET0706 – Insurance (Accident & Health)

58%

Employers Holdings, Inc.EIG0715 – Insurance (Property & Casualty)

59%

White Mountains Insurance GrouWTM0715 – Insurance (Property & Casualty)

60%

Torchmark CorporationTMK0709 – Insurance (Life)

61%

Assurant, Inc.AIZ0709 – Insurance (Life)

61%

Chubb Corporation, TheCB0715 – Insurance (Property & Casualty)

67%

Erie Indemnity CompanyERIE0715 – Insurance (Property & Casualty)

68%

RenaissanceRe Holdings Ltd.RNR0715 – Insurance (Property & Casualty)

69%

Endurance Specialty Holdings LENH0715 – Insurance (Property & Casualty)

69%

Loews CorporationL0715 – Insurance (Property & Casualty)

71%

Allied World Assurance Co HoldAWH0715 – Insurance (Property & Casualty)

71%

W.R. Berkley CorporationWRB0715 – Insurance (Property & Casualty)

72%

Health Net, Inc.HNT0706 – Insurance (Accident & Health)

72%

Platinum Underwriters HoldingsPTP0715 – Insurance (Property & Casualty)

72%

Allstate Corporation, TheALL0715 – Insurance (Property & Casualty)

73%

CIGNA CorporationCI0706 – Insurance (Accident & Health)

75%

UnitedHealth Group Inc.UNH0706 – Insurance (Accident & Health)

77%

Progressive Corporation, ThePGR0715 – Insurance (Property & Casualty)

78%

Montpelier Re Holdings Ltd.MRH0715 – Insurance (Property & Casualty)

78%

Verisk Analytics, Inc.VRSK0712 – Insurance (Miscellaneous)

78%

American Financial GroupAFG0715 – Insurance (Property & Casualty)

80%

StanCorp Financial Group, Inc.SFG0706 – Insurance (Accident & Health)

80%

Primerica, Inc.PRI0709 – Insurance (Life)

80%

Investors Title CompanyITIC0715 – Insurance (Property & Casualty)

81%

Hanover Insurance Group, Inc.,THG0715 – Insurance (Property & Casualty)

83%

Coventry Health Care, Inc.CVH0706 – Insurance (Accident & Health)

84%

RLI Corp.RLI0715 – Insurance (Property & Casualty)

84%

Kemper CorpKMPR0715 – Insurance (Property & Casualty)

84%

Axis Capital Holdings LimitedAXS0715 – Insurance (Property & Casualty)

85%

First Acceptance CorporationFAC0715 – Insurance (Property & Casualty)

86%

Everest Re Group LtdRE0715 – Insurance (Property & Casualty)

89%

Eastern Insurance Holdings IncEIHI0709 – Insurance (Life)

90%

Prudential Financial IncPRU0709 – Insurance (Life)

91%

Horace Mann Educators CorporatHMN0715 – Insurance (Property & Casualty)

92%

FBL Financial GroupFFG0709 – Insurance (Life)

92%

AFLAC IncorporatedAFL0706 – Insurance (Accident & Health)

93%

Cincinnati Financial CorporatiCINF0715 – Insurance (Property & Casualty)

93%

Kansas City Life Insurance CoKCLI0709 – Insurance (Life)

93%

Kingsway Financial Services InKFS0715 – Insurance (Property & Casualty)

93%

HCC Insurance Holdings, Inc.HCC0715 – Insurance (Property & Casualty)

94%

Unum GroupUNM0709 – Insurance (Life)

94%

EMC Insurance Group Inc.EMCI0715 – Insurance (Property & Casualty)

95%

eHealth, Inc.EHTH0712 – Insurance (Miscellaneous)

95%

OneBeacon Insurance Group, LtdOB0715 – Insurance (Property & Casualty)

95%

Aspen Insurance Holdings LimitAHL0715 – Insurance (Property & Casualty)

96%

Unico American CorporationUNAM0715 – Insurance (Property & Casualty)