After raising its forecast for full-year profit, Chubb Corp. reported that it's repurchasing 30 million shares, the company’s biggest buyback.
The repurchase program equals almost 10 percent of the 304.9 million Chubb shares outstanding as of Sept. 30 and would cost about $1.8 billion. Chubb’s largest buyback announced before Thursday was in December 2007 when the company said it would repurchase 28 million shares.
“It’s a pretty heavy buyback,” Paul Newsome, an analyst with Sandler O’Neill & Partners LP, said when asked before the announcement about the potential for a record repurchase. The move could be “a signal that they’re healthier than people think.”
Chubb joins insurers including Allstate Corp. and Travelers Cos. in returning capital to shareholders after the U.S. escaped major hurricanes this year. Allstate said in November that it will repurchase $1 billion in shares by March 31, 2012, and Travelers boosted its 2010 stock buyback program in September to a range of $4.5 billion to $5 billion in shares, compared with its previous projection of $4 billion.
Operating income per share for 2010 will be $5.75 to $5.85, up from a previous forecast of $5.15 to $5.55, Chubb said in October. The insurer bought 10.2 million shares for $555 million in the third quarter.
The insurer approved a dividend of 37 cents a share, the same as in the prior quarter. The payout may be lifted to 39.5 cents in the first quarter of next year, according to data compiled by Bloomberg.
“Today’s actions reflect the board’s continued confidence in Chubb’s strong financial condition,” Chief Executive Officer John Finnegan said in a statement.?Third-quarter operating income was $1.69 a share, beating the $1.41 average estimate of 22 analysts surveyed by Bloomberg. The insurer had catastrophe costs of $58 million in the period, compared with more than $500 million in the third quarter of 2005 when Hurricane Katrina struck. The U.S. and its oil and gas platforms in the Gulf of Mexico have escaped a direct strike from hurricanes this year.