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AXIS Capital (AXS) Boosts Shareholder Value, Hikes Dividend

The board of directors of AXIS Capital Holdings Limited AXS recently approved a 2.5% hike in its quarterly dividend to enhance shareholder value. The company will now pay a dividend of 41 cents per share compared with 40 cents paid on Oct 15, 2019.

Shareholders of record as of Dec 31, 2019 will receive the increased dividend on Jan 15, 2020. Based on the closing share price of $58.39 on Dec 5, the raised payout represents a dividend yield of 2.7%, better than its industry’s average of nearly 0.4%. Prior to this, the company had raised quarterly dividend by 2.6% to 40 cents per share last December.

AXIS Capital has an impressive track of annual dividend hike. The insurer continues to boost shareholder value through stock buybacks and dividend hikes. This can be attributed to its operational efficiency. The company beat expectations in each of the three reported quarters in 2019. The recent hike marks the 15th consecutive dividend increase by the company.

This dividend hike is a positive move by the company, which has sustained a decline in earnings and premium in the first nine months of this year.

In the first nine months of 2019, the company’s gross premium written declined 6% due to lower gross writings of less attractive business by more than 40% in the company’s insurance book.

However, the company has grown its more attractive business by more than 13% year to date. Indeed, in markets that the company considers highly attractive, its growth rate has been well in excess of 20%, including cyber, primary and excess casualty, marine and design professionals and environmental business.

The company also witnessed strong growth in Canada and in U.K. liability business. In addition, it is shifting more of its insurance portfolio toward SME exposure, which tends to exhibit less volatility.

Despite the subdued results for 2019, so far, the company has strategically positioned itself for strong growth, which should aid its earnings and help it to maintain its dividend disbursements.

Other insurers also aim to enhance shareholder value via share buybacks, dividend hikes and special payouts. Last month, the board of directors of Everest Re Group, Ltd. RE approved an 11% hike in its quarterly dividend to $1.55 per share while Assurant, Inc. AIZ approved a 5% hike in its quarterly dividend to 63 cents per share. The board of directors of W.R. Berkley Corporation WRB approved a special dividend of 75 cents in its effort to share more profit with shareholders.

Shares of this Zacks Rank #5 (Strong Sell) company have gained 13.1% year to date, outperforming the industry’s increase of 9.3%.

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