By Kimberley Kao


U.K. insurer Prudential is planning a $2 billion share buyback as part of its efforts to boost shareholders' returns.

Under the program, $700 million of shares will be repurchased under the first tranche, the insurer said Sunday.

Prudential said it is also exploring the issuance of employee and agent share programs and enhancing the liquidity of common shares held on the Hong Kong stock exchange.

Prudential's Hong Kong-listed stock closed 6.0% higher on Monday, its biggest one-day percentage gain in more than a year. Shares in London jumped 6.4% in early trading.

The insurer's business has witnessed robust growth since pandemic restrictions in China and Hong Kong were lifted in early 2023. Prudential's new-business profit rose 45% to $3.125 billion last year, which the company attributed to its shift in focus to the Asian and African markets.

Prudential, which targets compound annual growth of 15% to 20% for new-business profit over 2022-2027, expects to complete the buyback program by mid-2026.

"Progress towards our financial objectives will increase the potential for further cash returns to shareholders," Chief Executive Anil Wadhwani said. The dividend policy will be unchanged, with this year's annual dividend expected to grow in the 7% to 9% range, he said.

The buyback positively surprised the market, UBS analysts wrote in a research note. The company's updating of its capital-management policy also indicates that more could be returned to shareholders down the line, they said.

Prudential's buyback is double the amount Jefferies analysts had forecast for the second half of the year, though they noted that the program will take place over two years.

The insurer is seeking to operate with a free surplus ratio of 175%-200%, with the rest returned to shareholders, compared with the 242% seen at the end of 2023, they said in a note.

Prudential expects to publish its first-half results on Aug. 28.


Write to Kimberley Kao at kimberley.kao@wsj.com


(END) Dow Jones Newswires

06-24-24 0607ET