ACE Limited Chief Executive Officer Evan Greenberg, who typically shunned share repurchases as he focused on expansion and buyouts, said the authorization of additional buybacks won’t halt his commitment to growth.
“We have plenty of firepower and flexibility,” Greenberg said today during an earnings call with analysts.
ACE, the insurer with operations in more than 50 countries, said in November that it would target $1.5 billion in buybacks through the end of 2014. Its previous authorization was in 2011, for $300 million. Rival insurer Travelers Cos. has increased book value per share partly by repurchasing more than half its stock since 2006, including $2.4 billion of shares last year.
Greenberg, 59, has used acquisitions to expand in markets including Indonesia, Malaysia and Latin America. The Zurich- based insurer announced this month it would buy a majority stake in Thailand’s Siam Commercial Samaggi Insurance PCL. Last year, Greenberg bought Ally Financial Inc.’s Mexican insurance business for $865 million.
“If we find a great growth opportunity that uses capital, that would be our preferred way to use it,” Greenberg said today. “The secondary option is when we can’t put it to work, then we will return it to shareholders.”
Analysts including Jay Gelb of Barclays Plc and Morgan Stanley’s Greg Locraft pressed for more specifics on the company’s approach to capital deployment beyond 2014. Locraft said increased clarity would help him prepare his models for results at ACE, which last year said it would no longer give annual earnings guidance.
Locraft’s Hell
“You know, Greg, we have to each live in our own hell,” Greenberg told Locraft.
“If we find opportunities–which we’re always on the hunt for, organically or through acquisition–to deploy that capital at a rate of return favorable to shareholders, we will do that as opposed to a buyback,” the CEO said. “We can’t project the unknowable.”
Profit climbed 30 percent to $998 million in the fourth quarter from a year earlier, ACE said yesterday after the close of trading. Shares slipped 0.6 percent to $94.03 at 4:15 p.m. in New York. ACE has advanced 11 percent in the past year, compared with the 12 percent gain of the Bloomberg World Insurance Index.
–Editors: Dan Kraut, Steve Dickson