Prudential Plc said it plans to generate at least 10 billion pounds ($16 billion) in cash in the four years through 2017, raising speculation the U.K.’s largest insurer by market value may increase its dividend.
The shares rose as much as 2.2 percent after Chief Executive Officer Tidjane Thiam announced new cash and growth targets before an analyst and investor meeting in London today. The insurer is also targeting 1.1 billion pounds of underlying free surplus generation in Asia and annual pretax operating profit growth at the region’s life and asset management business of at least 15 percent through 2017, according to a statement.
“We interpret this to mean significant returns of surplus capital for shareholders,” said Barrie Cornes, a London-based analyst at Panmure Gordon & Co. in a note to clients. “There is significant scope to rebase the dividend and in our view a real possibility of special dividends.”
Panmure increased its share price estimate by 9.6 percent to 1,592 pence and reiterated its buy recommendation on the stock. The stock, which has more than doubled since Thiam became CEO in October 2009, rose 1.7 percent to 1,287 pence in London. It has gained 49 percent this year, compared with a 25 percent increase for the FTSE 350 Insurance Index.
Prudential on Aug. 12 raised its first-half dividend by 15.8 percent to 9.73 pence per share, when reporting a 22 percent jump in operating profit to 1.42 billion pounds for the year’s first six months. That was above analysts’ estimates.
Thiam said the insurer has achieved five of its six 2013 growth and cash objectives and remains on track to double 2009 Asia new business profits by the end of the year. The company said it’s looking to invest in Saudi Arabia, a fifth market in two years after Cambodia, Myanmar, Poland and Ghana, giving access to a combined population of 175 million.
“Our strategy is unchanged,” Thiam said in the statement. “We will continue to invest in the medium to long-term future of the group and are well positioned to deliver compelling returns to shareholders.”