Prudential Financial wants to make sure its position near the top of the life insurance summit is set in stone. Prudential, known for its Rock of Gibraltar logo, is one of the top US life insurers and also one of the largest life insurance companies worldwide. The firm is perhaps best known for its individual life insurance, though it also sells group life and disability insurance, as well as annuities. Prudential also offers investment products and services, including asset management services, mutual funds, and retirement planning. In Asia, the company operates through its
Gibraltar Life Insurance
unit. Prudential has some $1.2 trillion in assets under management.
Prudential operates through four primary divisions encompassing seven segments, as well as its corporate operations.
Its US Retirement Solutions and Investment Management division -- the largest, bringing in 34% of revenue in 2015 -- comprises the Individual Annuities, Retirement, and Asset Management segments. The Individual Annuities segment provides variable and fixed annuity products, primarily to affluent US customers. Meanwhile, the Retirement segment provides investment and income products and services to retirement plan sponsors. Finally, the Asset Management segment offers investment management and advisory services through institutional and retail portfolio management, private lending, and other means.
The second-largest division, which also brought in some 34% of revenue in 2015, is International Insurance. That division provides individual life insurance and retirement products, including certain health policies.
Next, the US Individual Life and Group Insurance division (18% of 2015 revenue) includes the Individual Life and Group Insurance segments. The Individual Life segment distributes variable life, term life, and universal life policies, largely to middle-class, affluent, and wealthy clients in the US. The Group insurance segment offers group life, group disability, and corporate-, bank-, and trust-owned life insurance to institutional clients, who use them in concert with employee plans and affinity groups.
The fourth division, Closed Block, brought in 12% of revenue in 2015. It includes certain in-force policies and annuities (issued prior to its demutualization in 2001) as well as related assets and liabilities.
Prudential's US operations account for nearly two-thirds of sales. The company also offers international products in more than 40 countries in regions including Asia, Latin America, and Europe.
The International Insurance division owns offices in Argentina, Brazil Japan, Korea, Malaysia, and Taiwan; and leases offices in Italy, Mexico, and Poland. The Asset Management segment, which includes international investment operations, leases offices in Australia, France, Germany, Hong Kong, Japan, Luxembourg, Mexico, Portugal, Singapore, South Korea, Taiwan, and the UK.
Sales and Marketing
Prudential distributes its insurance and annuity products through independent brokers and agencies as well as through
and Prudential's own force of internal agents. The company's investment products are marketed through an in-house sales force, while its retirement products are primarily sold through third-party financial advisors, benefit consultants, and brokers.
Individual life products are offered through third-party channels including independent brokers, banks, general agencies, and producer groups.
Gibraltar Life distributes its products through affinity groups, banks, and from an in-house fleet of Life Planners who target affluent customers and small businesses.
Revenue for Prudential has generally grown over the last five years, including a 73% jump in 2012 to some $84.8 billion, primarily due to a legal settlement in the retirement segment. So it wasn't surprising when revenue fell the following year; revenue has since been going back up.
In 2015, revenue increased 6% to $57.1 billion thanks to increased earnings from the Corporate and Other division, which saw lower losses related to a restructuring of the Closed Block division. However, that gain was partially offset by a decline in the International Insurance division, primarily due to the unfavorable impact of foreign currency exchange rates.
Net income has been fluctuating for the past few years. In 2015 it jumped 309% to $13.8 billion on higher sales (despite higher income tax expenses). Cash flow from operations fell 28% to $13.8 billion, largely due to changes in derivatives and future policy benefits and other liabilities.
The company pursues growth in its current business lines, both organically as well as through acquisitions, joint ventures, and investments.
Prudential has pursued intensive international growth in recent years, with a focus on expanding its insurance and retirement operations in emerging markets. It is concentrating on deepening its presence in markets where it already operates, such as Japan. To reach that objective, the company has spent about a decade building up its holdings in Japan through a series of acquisitions. To expand in China, Prudential is also carefully working on a 50/50 joint venture with a unit of the Chinese conglomerate Fosun Group. The company has already established a joint venture in India, which it also considers a high-growth market. Expanding in Europe, Prudential opened a new office in Milan in 2015.
In the US market, Prudential seeks to provide wealth protection products to individual and group customers. It is expanding both its US insurance and its US retirement and investment management divisions through increased distribution and marketing efforts, as well as through occasional acquisitions. In 2015, the group's mutual fund business Prudential Investment launched the Prudential Core Bond Fund, a fixed-income platform investing in such assets as US government securities, mortgage-related securities, and corporate debt.
Mergers and Acquisitions
In 2014 the company acquired UniAsia Life Assurance in Malaysia (since renamed Gibraltar BSN Life), expanding its presence in Southeast Asia. The following year it acquired a 40% stake in Chilean retirement services provider Administradora de Fondos de Pensions Habitat (AFP Habitat). Also in 2015, Prudential Real Estate Investors bought a 49-story Class A office building in Chicago and a new residential high-rise in Cambridge, Massachusetts.
Prudential Investment Management in 2016 acquired the Indian asset management business of