Bloomberg News

Prudential Authorizes $1.5 Billion Buyback, First Since 2007

June 07, 2011

(Updates with CEO comment in third paragraph.)

June 7 (Bloomberg) -- Prudential Financial Inc., the second-largest U.S. life insurer, instituted a share-buyback program for the first time since 2007 and said it will purchase as much as $1.5 billion through the middle of next year.

Chief Executive Officer John Strangfeld is expanding outside the U.S. and scaling back commodities operations as he seeks a return on equity of 13 percent to 14 percent.

“The attainment of that is not possible without appropriate capital deployment, and that capital deployment either has to be investing in the business, which would be our natural preference, or it has to be in capital management,” he said at a conference last week.

Prudential, Allstate Corp. and Lincoln National Corp. are among insurers returning capital to investors after unprofitable periods in 2008 or 2009. Newark, New Jersey-based Prudential boosted its annual dividend 64 percent last year to $1.15 a share, its highest payout since 2007.

Prudential’s $1.5 billion could repurchase 25.2 million shares, based on today’s closing price of $59.56 on the New York Stock Exchange. That represents 5.2 percent of the shares outstanding as of April 30, according to data compiled by Bloomberg.

Management will time its repurchases based on “market conditions and other considerations,” the company said in a statement today.

--Editors: Dan Kraut, Peter Eichenbaum

To contact the reporter on this story: Noah Buhayar in New York at nbuhayar@bloomberg.net

To contact the editor responsible for this story: Dan Kraut at dkraut2@bloomberg.net


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