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Prudential has announced a $2bn share buyback, exceeding some analysts’ expectations and providing a boost to its flagging share price.
Shares in the insurance group were up 6 per cent in early trading in London on Monday, against a flat wider market, as investors greeted Prudential’s announcement on Sunday of the buyback, to be completed by “no later than mid-2026”.
“Progress towards our financial objectives will increase the potential for further cash returns to shareholders,” said chief executive Anil Wadhwani. But the group would “continue to prioritise investment in organic new business at attractive returns”, he said, and would pursue partnerships to accelerate growth in its key markets.
The company’s London-listed shares have fallen about 13 per cent this year despite recovering demand from mainland Chinese customers purchasing insurance policies in Hong Kong. Its chair described the stock price performance as “frustrating and disappointing” at its annual general meeting in May.
This has fed growing anticipation over whether Prudential would announce extra shareholder returns in the short term, and to what degree, against deploying that capital to expand the business.
The group said sales trends in the second quarter were similar to the first, but that the sales surge after the reopening of the Hong Kong-mainland China border had made for a strong historical comparator in the first half of the previous year.
Growth in its core Asia markets, and its smaller operations in Africa, have become crucial to the group since a significant restructuring in recent years saw Prudential shed its European and US operations. It retains a UK domicile and joint primary listing in London and Hong Kong.
It was then hit hard by Covid-19 restrictions in its core market. Wadhwani has also pointed to Africa as a longer-term area of growth.
Analysts at Citi, who had forecast a $1bn buyback, said it expected the announcement to be “taken well” by investors given the “very weak” sentiment on the stock. Jefferies analysts said it was double what they had factored in, but flagged that the buyback was to be spread over two years.
Prudential said its dividend policy remained unchanged, with this year’s annual dividend expected to grow in the region of 7 to 9 per cent, but also provided further guidance over how it would share surplus capital in future, above a newly set ratio.
