The Hanover Insurance Group announces $150m buyback and $100m dividend
The Hanover Insurance Group has entered into an accelerated share repurchase agreement (ASR agreement) to buy back $150 million of its common stock. In addition, the company's board of directors has declared a special cash dividend of $2.50 per share and increased its regular quarterly dividend to $0.65 per share.
With the $150 million ASR agreement and the $100 million in aggregate value of the $2.50 per share special dividend, the company has completed the deployment of $850 million of capital generated through the sale of Chaucer, its Lloyd's business, at the end of 2018.
"We are pleased with the execution of the capital deployment and return of the remaining $250 million in capital to shareholders from the sale of Chaucer," said Jeffrey Farber, executive vice president and chief financial officer at The Hanover. "It is a testament to our diligent capital allocation and management framework, and it reinforces our commitment to deliver value for our shareholders. In addition, the 8.3 percent increase in our regular quarterly dividend highlights our board's confidence in our overall financial condition and our increasing earnings capacity. We will continue to allocate our capital with the best interest of our shareholders in mind."
Both the regular quarterly dividend of $0.65 per share and the special cash dividend of $2.50 per share on the issued and outstanding stock of the company will be payable on December 27, 2019, to shareholders of record at the close of business on December 16, 2019.
The company's board of directors has also increased the company's existing share repurchase authorisation to $900 million. After accounting for the $150 million ASR and shares previously repurchased during the year, the company will have approximately $335 million remaining under the authorisation. Pursuant to the repurchase authorisation, the company may, following the completion of the ASR agreement announced today, which will occur by the end of the first quarter of 2020, repurchase its common stock from time to time, in amounts, at prices and at times the company deems appropriate in its sole discretion, subject to market conditions and other considerations.
The company's stock repurchases may be executed using open market repurchases, accelerated repurchase programs or other transactions. The company may establish trading plans under the Securities and Exchange Commission's (SEC) rule 10b5-1 that will provide additional flexibility as it buys back its stock.
Pursuant to the $150 million ASR agreement with Wells Fargo Bank, the company expects to receive 80 percent, or approximately 900,000 shares, of the total shares expected to be delivered as of the initial settlement date of December 9, 2019. The company will receive the remaining shares by the end of the first quarter of 2020.
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