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 Financial earns a majority of revenues from premiums and fees on insurance policies and retirement products. Overall, the company has some $3.5 trillion in gross life insurance policies in force around the globe, as well as more than $1 trillion in assets under management.
The company's domestic operations are conducted through two divisions: US Retirement Solutions and Investment Management (individual and group annuities, retirement, and asset management) and US Individual Life and Group Insurance (personal and commercial insurance). US Retirement Solutions and Investment Management accounted for 34% of revenues in 2014, while US Individual Life and Group Insurance accounted for 19% of revenues.
Prudential's International Insurance business offers individual life insurance policies through Tokyo-based Gibraltar Life Insurance to affluent and middle income customers in Asia. Elsewhere it maintains a smaller presence in other parts of Europe and Latin America. International Insurance accounted for 35% of revenues in 2014.
For accounting purposes, Prudential has separated any dividend-producing policies issued prior to its demutualization in 2001. That segment, known as its Closed Block business segment, accounts for about 10% of the company's revenues.
Prudential's US operations account for 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 segment 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 India, Japan, and Taiwan.
Sales and Marketing
Prudential distributes its insurance and annuity products through independent brokers and agencies as well as through Allstate and Prudential's own force of some 2,600 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 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 51% to $41.5 billion as the company had closed several transactions at the end of 2012. Revenue recovered by 30% to $54 billion in 2014 as the company saw growth in its US Retirement Solutions and Investment Management and Asset Management divisions. US Individual Life and Group Insurance also grew, but international operations declined that year.
Higher revenues helped the company return to black, as it reported profits of $1.4 billion (versus a loss of $667 million in 2013). Cash flow from operations more than doubled to $19.2 billion, as net income and cash generated from future policy benefits and other insurance liabilities rose.
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 agreed to buy an indirect ownership stake of between 34% and 40% in Adminisradora de Fondos de Pensions Habitat (AFP Habitat), which provides retirement services in Chile. It also acquired UniAsia Life Assurance in Malaysia (since renamed Gibraltar BSN Life), expanding its presence in Southeast Asia.
Giving some attention to its domestic operations, in early 2013 Prudential completed the acquisition of the individual life insurance operations of The Hartford for some $615 million. The purchase added some 700,000 policies to Prudential's roster and broadened its distribution network and product offerings in the US market.
In 2015 Prudential Real Estate Investors bought a 49-story Class A office building in Chicago on behalf of institutional investors.