The Genworth Mortgage Insurance Australia Ltd (ASX: GMA) share price is pushing higher in late afternoon trade. The mortgage insurance company released an announcement regarding an on-market share buyback.
At the time of writing, Genworth shares are swapping hands for $2.32, up 6.42%.
Genworth set to commence share buy back
In today’s statement, Genworth advised it intends to begin an on-market share buyback from 8 December. The maximum value the company is willing to spend on taking a portion of shares off the market is $100 million.
Based on Genworth’s closing share price of $2.18 yesterday, this buyback would represent 11.1% of the total issued capital. This equates to roughly 45.9 million shares.
The company noted that, depending on business and market conditions, the number of shares to be purchased may change. However, the buyback will not exceed more than 10% of Genworth ordinary shares without shareholder approval.
The reason for the buyback is that the board is trying to bring Genworth’s solvency ratio within a target capital range of 1.32 to 1.44 times the Prescribed Capital Amount (PCA) on a Level 2 basis.
Genworth CEO and managing director Pauline Blight‐Johnston said:
The on‐market share buyback is consistent with Genworth ensuring we have an efficient capital structure and helps us to deliver improved returns to our shareholders.
Genworth share price snapshot
It’s been a disappointing 12 months for Genworth shares, falling 2% in that time. Year-to-date, its shares are hovering 3% below for the last 11 months.
Based on today’s price, Genworth commands a market capitalisation of about $952.91 million and has approximately 412.51 million shares outstanding.