AXIS Capital to Buy Back Shares - Analyst Blog

As part of its concerted effort to enhance value for its shareholders, the board of directors of AXIS Capital Holdings Limited (AXS) has approved an additional $750 million share buyback program. The current buyback approval is in addition to the $121 million available as of September 23, 2010, under the previous share repurchase authorization. The shares can be bought back through December 31, 2012. The initial share repurchase program to buy back share worth $400 million was authorized on December 2007.
 
Previously, in December 2009, the company's board had authorized an additional share repurchase worth $500 million.
 
AXIS Capital ended the second quarter 2010 with cash and cash equivalents of $1.1 billion. Cash from operations for the first half of 2010 totaled $538.2 million. The company leverages its strong liquidity via timely share repurchases and dividend payments.
 
Earlier, in July, AXIS Capital repurchased 0.3 million common shares for $10 million at an average price of $29.56. The company had spent $121 million in the second quarter of 2010 to buy back 4 million common shares at an average price of $30.59.
 
The company's share repurchases help lower share count subsequently increasing earnings for its shareholders.
 
The Zacks Consensus Earnings Estimate for fiscal third-quarter 2010 is 78 cents per share. For full years 2010 and 2011, the Zacks Consensus Estimates are, respectively, $3.97 per share and $4.27 per share.
 
Following the share repurchase program, the board of directors declared a quarterly dividend of 21 cents to shareholders of record as on September 30, 2010. The company will pay the dividend on October 15, 2010.

The board of directors also authorized dividends on preferred shares. The details are as follows:

Dividend of 45.3125 cents per Series A 7.25% Preferred Share, payable on October 15, 2010, to shareholders of record at the close of business on September 30, 2010.

We believe the company's conservative underwriting practices, solid capital position, and positive ratings from rating agencies, coupled with share buybacks and dividend hikes, position AXIS Capital favorably, going forward.

However, the low investment yield environment as well as a challenging property and casualty market keeps us on the sidelines.
 
We maintain our “Neutral” recommendation on AXIS Capital. The quantitative Zacks #3 Rank (short-term Hold rating) for the company indicates no clear directional pressure on the shares over the near term.
 
Headquartered in Pembroke, Bermuda, AXIS Capital Holdings Limited is a global provider of specialty lines insurance and treaty reinsurance.

Dividend of $1.875 per Series B 7.5% Preferred Share payable on December 1, 2010, to shareholders of record at the close of business on November 15, 2010.