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Wednesday July 11, 2012
Buyback bets: Insured favorites
by David Fried, editor The Buyback Letter Among the latest addition to our buyback portfolio are two insurance stocks: The Allstate Corp. (ALL), the nation's biggest publicly traded U.S. home and auto insurer, and The Chubb Corp. (CB), the 11th largest property and casualty insurer in the U.S. Analysts say Allstate's strengths can be seen in its revenue growth and largely solid financial position with reasonable debt levels by most measures. The stock also has attractive valuation levels, solid price performance and growth in earnings per share. They also note that it appears to be trading at a price below its fair value. For the first quarter ended March 31, Allstate met expectations on revenues (reported revenue of $6.63 billion) and crushed expectations on earnings per share (EPS was $1.42 vs. anticipated $1.10 per share). It posted its largest profit since 2007 -- net income rose to $766 million ($1.53 a share), from $524 million (98 cents), a year earlier, as catastrophe costs declined and policy sales increased. In the last 12 months, management has reduced shares outstanding by 6%. We last bought Chubb Corp. a couple of times in 2009, and it has floated to the top of our filters again. Chubb has grown from a marine insurance underwriting business in 1882 to a leading, multi-billion dollar, global property and casualty insurance firm. Chubb has had nearly a half-century record of annual dividend increases, making it attractive to those seeking stability and conservative business practices in their portfolio. The company said it bought back 4.4 million of its own shares at a total cost of $301 million in the first three months of the year. As of March, the company still had $963 million left for its stock-buyback program. Management has reduced shares outstanding by 7.7% in the last 12 months. Learn more about this financial newsletter at David Fried's The Buyback Letter. Related articles: 
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