Wall Street has a one-size-fits-all answer for what insurance companies should do with any extra capital - buy back shares. Hartford Financial (HIG)
had frustrated the Street's push for a buyback all year, and at least
some investors and analysts were disappointed that the company didn't
announce a buyback with second quarter earnings, and now they've gone
and announced a $2.1 billion acquisition of another insurance company
(specialty insurer The Navigators Group (NAVG), or Navigators). As you might expect, the shares sold off on the announcement.
I'm
not completely sold that Navigators is the right deal at the right
price, but I don't believe it is liable to destroy shareholder value to
any large extent. As I believed Hartford to be undervalued before the
deal announcement, I still believe that to be the case, but sentiment is
going to be an even greater obstacle now and it's going to take
noticeably better than expected results from Hartford and Navigators to
move the shares.
Continue here:
Hartford Defies The Market And Announces A $2.1 Billion Deal For Navigators
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