JLT Announced Share Buyback

by Stewart Douglas

Story link: JLT Announced Share Buyback

Insurer JLT has today announced it is looking to buy back capital equity to the value of £40 million, as part of a wider share buy back strategy designed to manage the capital makeup of the firm with a view to funding future strategic investment moves.

The news comes following several other similar moves by insurance companies, feeling they are presently undervalued and looking to preserve allowable capital reserves in cash surplus times, with a view to having the ability to raise finance later down the line, potentially to fund acquisitions pre-Capital Gains Tax reform.

The move will see JLT look to reacquire shares from ordinary share holders in a bid to narrow down its issued and allotted outside equity stakes. The knock on effect for this on other shares will be to improve share strength and increase dividend rights per share by virtue of the thinning of capitalisation.

The company is expected to buy back in excess of £40 million worth of issues capital up to the end of June next year, providing it receives ratification of its practices by the shareholders at the next AGM to enable it to continue with the process.

Speaking today on the move, Chief Executive Dominic Burke said that the move was designed to improve shareholder value and increase active involvement in the management, and participation in the successes of the company. By increasing the potency of each ordinary share, the company today suggested this was further evidence of their efficient management of capital procedures.

Shares will be reacquired at a value of 105% average closing share prices over the preceding working week, thus the amount of buy back possible can still fluctuate greatly before acquisitions occur.

It remains to be seen whether the buy back programme will extend beyond the initial move, and whether the shareholders will continue to authorise the campaign into the new year.