Prudential Financial

THE SCOOP

Rocking the insurance industry

Prudential’s logo, the Rock of Gibraltar, is one of the most recognizable corporate symbols.  For years, Prudential has tried to capitalize on its image of solidity as one of the largest and most reputable insurance companies in the United States.  The firm’s business is organized into two main units: financial services and closed block.  The financial services business operates through three operating divisions: insurance, investment and international insurance and investments.  The closed block business established in December of 2001 at the time of demutualization is managed separately from the financial services businesses.  Closed block business includes the firm’s participating assets and insurance and annuity products that are used for the payment of benefits and policyholder dividends on these products; it also includes other assets and equity that support these products and related liabilities.  Due to the demutualization, Prudential no longer offers these participating products.

Solid as a rock

Prudential can trace its history to the Prudential Friendly Society founded in 1875.  The next year, Prudential issued its first death claim for $10 and adopted the familiar image of the Rock of Gibraltar as its corporate logo.  In 1943, Prudential mutualized, becoming a company owned by its policyholders.  By 1966, Prudential had grown significantly, outstripping Metropolitan Life as America’s largest insurance firm.  In 1981, it diversified into the investment business through the acquisition of the securities brokerage firm Bache Halsey Stuart Shields which led to the creation of Prudential Securities.  The 1990s were less halcyon: several states began to investigate Prudential’s sales practices, including allegations of “churning†clients.  Despite active efforts by the company to correct any abuses, 30 states determined that Prudential had knowingly permitted wrongdoing by 1996, and by 2000, the company had paid out $2.8 billion in settlement fees.

Buying and selling

In addition to the divisional restructuring and the retail brokerage merger of 2003, Prudential has been very active in both acquiring and divesting assets and businesses.  In 1998, Prudential sold much of its $6 billion worth of its national real estate holdings, including the its Prudential Center in Boston and the Embarcadero Center in San Francisco to Mortimer Zuckerman’s Boston Properties group for $1.74 billion.  It also sold its health care business to the Hartford-based Aetna Corp. in 1999 in a transaction worth $1 billion.  Meanwhile, the company acquired insurance firms Gibraltar Life in April 2001 and American Skandia, the U.S. division of Sweden’s Skandia Insurance Company, in May 2003.  Both have positively affected Prudential’s bottom line.  Moreover, the Prudential Real Estate Investors (PREI) unit acquired Berlin’s ewerk office and the Videojet Technologies headquarters building in Chicago in March 2007.  

Legal wrangle

In December 2006, Prudential agreed to pay $19 million to settle a New York State investigation into its group insurance business and to change its business practices.  The settlement was won by outgoing New York Attorney General Eliot Spitzer (who later served as governor of New York) as part of an investigation into alleged price fixing and bid rigging in the insurance industry.  Prudential paid $2.5 million in penalties to New York State and $16.5 million to certain group insurance policyholders.  Spitzer had been fighting to do away with contingent commissions which insurers offer to brokers who steer business toward their company.  The commissions represent a potential conflict of interest for the brokers who might not be getting the best price for their clients.

Taking the helm

In January 1, 2008, John R. Strangfeld, Prudential’s vice chairman and a 30-year veteran of the company, took over as chairman and chief executive officer.  Strangfeld succeeded Arthur F. Ryan who retired at the end of 2007.  Strangfeld became chairman of the board when Ryan retired from that position in May 2008.  In addition, Prudential Vice Chairman Mark Grier who controls all of Prudential’s international businesses was named to the board of directors.  In September 2009, the company appointed Tim Seifert as National Sales vice president and director of its domestic annuity business, Prudential Annuities.  The following month, James Mallozzi was named chairman and CEO of Prudential Real Estate and Relocation Services, Inc.

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Prudential Financial


751 Broad Street
Newark, NJ 07102-3777
Phone: (973) 802-6000
Fax: (973) 802-4479
www.prudential.com

STATS


  • Employer Type: Public
  • Stock Symbol: PRU
  • Stock Exchange: NYSE
  • Chairman, CEO & President: John R. Strangfeld
  • 2008 Employees: 41,884

Major Office Locations

  • Newark, NJ
  • New York, NY

Key Financials

  • 2008 Revenue: $29,275 million

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