Review
Financial management
Managing equity capital for shareholders
We focus our financial performance management on delivering a cross cycle return on equity of at least 15%. Given the Group’s cyclical underwriting approach we also recognise that this will lead to the Group holding ‘surplus’ equity capital for periods. So managing that surplus equity is important. In order to enhance our return on equity, as actual levels of capital in the business exceed our foreseeable capital requirements, we will look to return surplus capital to shareholders.
This commitment to capital management was clearly demonstrated in 2007 by paying a £42.7 million special dividend and announcing a £120.4 million B share issue. In 2008 we had a share buy-back programme in place and purchased 10.8 million shares at an average price of 256.6 pence per share. However, with an expected turn for the better in trading conditions in a number of our key markets, while the buy-back authority from the Board remains, we do not expect to make further purchases in the short term.
Importantly we have also been able to continue to enhance our dividend to shareholders. The following chart shows the steady increase in our dividend over time. We intend to grow dividend per share consistently over the next few years.
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