A majority of the largest publicly traded U.S. property and casualty insurers stepped up share repurchases in the third quarter, according to an S&P Global Market Intelligence analysis.
In terms of total value, Berkshire Hathaway Inc. accounted for the lion's share of the repurchases covered by this analysis, buying back $7.63 billion of its stock in the period. That was up 28% compared with the second quarter but down 15% from a year ago.
The conglomerate repurchased $24.7 billion worth of its shares in 2020 and $20.2 billion worth in the first nine months of 2021, much higher than in previous years, as it sees its stock trading below its intrinsic value, S&P Global Ratings analyst Hardeep Manku said in a research note. Manku expects Berkshire share buybacks to rise to $25 billion for full year 2021 and to remain elevated in 2022.
CFRA analyst Cathy Seifert noted that while Berkshire's share repurchase program gives significant discretion in allocating capital, Berkshire remains committed to maintaining a cash position of $20 billion.
American International Group Inc. also actively repurchased shares during the quarter, as its buybacks jumped 360% on a sequential basis to $1.06 billion. Piper Sandler analyst Paul Newsome noted that AIG management indicated the company will spend at least $2 billion on buybacks and about $2.5 billion in debt repurchases in the second half of 2021.
The Hartford Financial Services Group Inc. and Chubb Ltd. were the only insurers to log sequential declines in share repurchases. The latter saw buybacks slide 21.9% to $1.50 billion, while the former's repurchases fell 10% to $510 million.
Chris Swift, CEO of The Hartford, during the company's latest earnings call indicated M&A is a lower priority than buybacks. The company in October said it was increasing its share buyback authorization through the end of 2022 by $500 million.
"I think our portfolio of capabilities [and] products is robust," Swift said. "And we want to mature that, grow it organically and focus on the activities more from an organic mindset as opposed to M&A. That's why, again, we feel it appropriate to make a repurchase commitment."
