Willis Towers (WLTW) Ups Share Buyback Authorization by $4B
The board of directors of Willis Towers Watson plc WLTW approved a $4 billion increase in its share buyback program to return more value to investors. The latest authorization is in addition to the $500 million remaining under its earlier authorization.
Earlier this month, this Zacks Rank #2 (Buy) insurance broker summarized a growth strategy, with a focus on improving operating margins, higher free cash flow conversion, and driving sustainable revenue growth. The strategy was intended to spur long-term growth and return more value to shareholders.
The recent increase in authorization follows the approval of an increase of $1 billion after the termination of the merger agreement between Willis Towers and Aon in July 2021.
Willis Towers has been improving its liquidity while maintaining a solid balance sheet. A strong balance sheet and steady cash flow are expected to help the company engage in capital deployment for buybacks, dividend payouts apart from debt repayments, acquisitions, and investments that drive and support growth. Willis Towers aims to return capital to shareholders, beginning with the execution of more than $4 billion in share buybacks between 2021 and 2022.
The insurance broker expects to generate higher free cash flow conversion to deliver $5-$6 billion in free cash flow, which, when combined with the after-tax proceeds from the Willis Re divestiture and current cash balances, will provide the company $10-$11 billion of available cash by 2024 end to help drive shareholder value.
Willis Towers’ focus on core opportunities with the highest growth and return, solid customer retention levels, growing new business, and cost reduction initiatives to drive margin expansion supporting a strong capital position should help the insurance broker to effectively deploy capital to return more value to shareholders.
Shares of this Zacks Rank #2 (Buy) company have gained 9.7% year to date, compared with the industry’s growth of 12.3%. Its growth initiatives should help shares move higher.
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Given a favorable operating environment and a solid capital position, insurers are deploying capital to enhance shareholders value. Last month the board of directors of Radian Group RDN approved a $200 million increase in its share buyback program. While the board of directors of Old Republic International Corporation ORI approved a one-time cash dividend of $1.50 per share, American Financial Group’s AFG board of directors approved a special cash dividend of $2.00 per share.
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