British insurance company Prudential has launched a $2bn (£1.6bn) share buyback programme, signalling its commitment to enhancing shareholder value.
The first tranche of the programme will see $700m worth of shares repurchased.
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The terms of share buyback are set to follow the approval granted at 2024 Annual General Meeting (AGM), with adherence to any subsequent approvals at 2025 AGM, according to the company’s statement on 23 June.
Share repurchases will occur on London Stock Exchange and other venues, with the intention to cancel the acquired shares.
In addition to the buyback, Prudential is considering the release of employee and agent share programmes and aims to improve the liquidity of its common shares on the Hong Kong stock exchange.
Following the announcement, the insurer’s stock in Hong Kong grew 6% on 24 June, marking the largest one-day percentage rise in over a year, The Wall Street Journal reported.
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By GlobalDataConcurrently, its London shares registered a 6.4% increase in early trading, the report added.
The insurer has experienced growth, particularly after the easing of pandemic restrictions in China and Hong Kong in early last year.
In 2023, Prudential reported a 45% increase in new-business profit to $3.12bn, a result of its strategic pivot towards Asian and African markets.
With a target of 15% to 20% compound annual growth in new-business profit from 2022 to 2027, Prudential anticipates the completion of the buyback programme by mid-2026.
It aims to maintain a free surplus ratio between 175% and 200%, with intentions to return excess capital to shareholders, especially given the 242% ratio achieved at the end of 2023.
The company also has plans to more than double its new business profit by 2027.
Prudential CEO Anil Wadhwani said: “Consistent with our capital allocation framework, we are today announcing a $2bn share buyback programme to return capital to shareholders. The buyback will be completed by no later than mid-2026.
“Progress towards our financial objectives will increase potential for further cash returns to shareholders. Our dividend policy remains unchanged, with Board continuing to expect the 2024 annual dividend to grow in the range of 7-9%.”
