On May 21, following its annual meeting Chubb announced that its board authorized a new $7.5 billion share repurchase program. In January, Travelers authorized a $5 billion share buyback, bringing its share repurchase capacity to $7 billion. The Hartford and broker W.R. Berkley are also embarking on a program to purchase their own shares. Insurers are revisiting an old playbook from past down cycles, repurchasing stock to prop up earnings per share by shrinking the share count. But Bank of America analysts said those buybacks could destroy shareholders’ value over the long term. In a research note published May 26, analyst Joshua Shanker and his team acknowledged the strategy worked 20 years ago, when insurers, similar to today, were stymied by “stagnating revenue growth, flattish earnings and declining cash flows.” Back then the buybacks were cheap: They were at, or below, book value. Now, insurers are paying two to three times book value, which makes those buybacks potentially dilutive to long-term capital — even if they boost EPS in the short term. A look at the numbers shows that Chubb, Hartford and W.R. Berkley are all trading at book values well above their 10-year averages. Bank of America said sometimes buybacks do work. The firm pointed to the discipline shown by Arch Capital purchasing $8.5 billion in buybacks over 20 years at a cost on average of 1.2x its book value. Alternately, in the fourth quarter of 2024, Arch announced a “$5 per share special dividend when its price-to book valuation was approaching 2x” rather than buying back shares. Still, its stock price has suffered. ACGL 1Y mountain Arch Capital, 1 year Progressive prefers an annual special dividend and returned $7.9 billion to shareholders by dividend in the fourth quarter of 2025, though it does engage in share repurchases. AIG has bought back nearly 25% of its company over a little more than two years — at 1x book value. Shanker wrote, “We expect this to be, with almost no reservations, its best use of capital.” Everest Group and RenaissanceRe are seen as creating value, buying stock at lower multiples or even discounts to book. For its part, Travelers indicated in its earnings call that its balance sheet and underwriting results support both the sizeable buyback program and a dividend. In Chubb’s third quarter 2025 earnings call, CEO Evan Greenberg said the company increased share buybacks “because we are an excellent investment with our stock trading well below intrinsic value.” He promised more buybacks while building capital and invested assets. In a softening insurance market, investors may want to focus less on headline EPS and more on whether management is actually allocating capital like owners.
