Validus Holdings: A 3% Dividend And A Huge Repurchase Program, Should You Buy It?

OverviewAs a Bermuda-based reinsurer, Validus Holdings Ltd. (NYSE: VR) provides property reinsurance protection to other insurers. At a market cap of $3.6B, this mid-cap company provides property, marine, and specialty reinsurance globally. This company has a healthy 3% dividend yield with a low payout ratio. S&P rates this company highly, and I'd like to dig into the stock to see if it is worthy of investment. This is my first analysis for this kind of company, so I welcome feedback for any bad assumptions or things missed.All the data either came from Thompson Reuters or the latest SEC filings.VR data by YChartsStock AnalysisWhen evaluating an insurance company, the rules of thumb are to look at the P/E, P/B, ROE, the combined ratio, and book value. As a value investor, I regularly review 4 out of 5 of these metrics. I like to start with price and earnings.Since its 2005 inception, the company has grown book value per share plus dividends at 12.4% to end of 2014. That's a huge positive for management's view on returning value to its shareholders. The company trades at a P/E of 8x ttm earnings and an 8.5x on forward earnings. Here, you can find the average P/Es by industry; Yahoo counts VR as a Property and Casualty Insurance company. As you can see, VR's peers trade at a P/E of 20.8x earnings. The 10 analysts watching this stock have a mean target price of $44.60, which represents an upside of 4.1% before dividends. In addition, the P/B value is 1.04, showing... Read more

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