insurance

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:

Company Ticker Industry % of shares remaining since 2005
WellPoint, Inc. WLP 0706 – Insurance (Accident & Health)

52%

Infinity Property and Casualty IPCC 0715 – Insurance (Property & Casualty)

56%

Travelers Companies, Inc., The TRV 0715 – Insurance (Property & Casualty)

57%

Aetna Inc. AET 0706 – Insurance (Accident & Health)

58%

Employers Holdings, Inc. EIG 0715 – Insurance (Property & Casualty)

59%

White Mountains Insurance Grou WTM 0715 – Insurance (Property & Casualty)

60%

Torchmark Corporation TMK 0709 – Insurance (Life)

61%

Assurant, Inc. AIZ 0709 – Insurance (Life)

61%

Chubb Corporation, The CB 0715 – Insurance (Property & Casualty)

67%

Erie Indemnity Company ERIE 0715 – Insurance (Property & Casualty)

68%

RenaissanceRe Holdings Ltd. RNR 0715 – Insurance (Property & Casualty)

69%

Endurance Specialty Holdings L ENH 0715 – Insurance (Property & Casualty)

69%

Loews Corporation L 0715 – Insurance (Property & Casualty)

71%

Allied World Assurance Co Hold AWH 0715 – Insurance (Property & Casualty)

71%

W.R. Berkley Corporation WRB 0715 – Insurance (Property & Casualty)

72%

Health Net, Inc. HNT 0706 – Insurance (Accident & Health)

72%

Platinum Underwriters Holdings PTP 0715 – Insurance (Property & Casualty)

72%

Allstate Corporation, The ALL 0715 – Insurance (Property & Casualty)

73%

CIGNA Corporation CI 0706 – Insurance (Accident & Health)

75%

UnitedHealth Group Inc. UNH 0706 – Insurance (Accident & Health)

77%

Progressive Corporation, The PGR 0715 – Insurance (Property & Casualty)

78%

Montpelier Re Holdings Ltd. MRH 0715 – Insurance (Property & Casualty)

78%

Verisk Analytics, Inc. VRSK 0712 – Insurance (Miscellaneous)

78%

American Financial Group AFG 0715 – Insurance (Property & Casualty)

80%

StanCorp Financial Group, Inc. SFG 0706 – Insurance (Accident & Health)

80%

Primerica, Inc. PRI 0709 – Insurance (Life)

80%

Investors Title Company ITIC 0715 – Insurance (Property & Casualty)

81%

Hanover Insurance Group, Inc., THG 0715 – Insurance (Property & Casualty)

83%

Coventry Health Care, Inc. CVH 0706 – Insurance (Accident & Health)

84%

RLI Corp. RLI 0715 – Insurance (Property & Casualty)

84%

Kemper Corp KMPR 0715 – Insurance (Property & Casualty)

84%

Axis Capital Holdings Limited AXS 0715 – Insurance (Property & Casualty)

85%

First Acceptance Corporation FAC 0715 – Insurance (Property & Casualty)

86%

Everest Re Group Ltd RE 0715 – Insurance (Property & Casualty)

89%

Eastern Insurance Holdings Inc EIHI 0709 – Insurance (Life)

90%

Prudential Financial Inc PRU 0709 – Insurance (Life)

91%

Horace Mann Educators Corporat HMN 0715 – Insurance (Property & Casualty)

92%

FBL Financial Group FFG 0709 – Insurance (Life)

92%

AFLAC Incorporated AFL 0706 – Insurance (Accident & Health)

93%

Cincinnati Financial Corporati CINF 0715 – Insurance (Property & Casualty)

93%

Kansas City Life Insurance Co KCLI 0709 – Insurance (Life)

93%

Kingsway Financial Services In KFS 0715 – Insurance (Property & Casualty)

93%

HCC Insurance Holdings, Inc. HCC 0715 – Insurance (Property & Casualty)

94%

Unum Group UNM 0709 – Insurance (Life)

94%

EMC Insurance Group Inc. EMCI 0715 – Insurance (Property & Casualty)

95%

eHealth, Inc. EHTH 0712 – Insurance (Miscellaneous)

95%

OneBeacon Insurance Group, Ltd OB 0715 – Insurance (Property & Casualty)

95%

Aspen Insurance Holdings Limit AHL 0715 – Insurance (Property & Casualty)

96%

Unico American Corporation UNAM 0715 – Insurance (Property & Casualty)

97%

Markel Corporation MKL
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