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's US operations account for about two-thirds of sales. The company also offers international products in more than 35 countries in regions including Asia, Latin America, and Europe.
Prudential Financial earns a majority of revenues from premiums and fees on insurance policies and retirement products. Overall, the company has some $3.6 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 and asset management) and US Individual Life and Group Insurance (personal and commercial insurance). Prudential's International Insurance and Investments 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.
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 less than 10% of the company's revenues.
Sales and Marketing
Prudential distributes its insurance and annuity products through independent brokers and agencies as well as through its 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.
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.
Revenues for Prudential have 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. A 34% jump in international insurance revenues (from 2011 acquisitions) and increased sales of annuities and individual life policies in the US also contributed to growth. Revenues climbed 28% to $49.0 billion in 2011 due to hefty international acquisitions made that year.
Net income has fluctuated in recent years, making a modest increase up to $3.6 billion in 2011, but falling by 87% in 2012 as a result of higher policyholder benefit payouts.
Prudential has pursued intensive international growth in recent years, with a focus on expanding its insurance and retirement operations in emerging markets. It is particularly intent on growing its Asian operations, and plans to double its business there by 2014. To reach that objective, the company has spent close to ten years 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.
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.
Following a growing trend among life insurers, the company quit writing new long-term care insurance policies in 2012. While Prudential explained the decision as a desire to focus on its core business, it is likely that it found the business to be too expensive to sustain.
Another event that might become a trend: In 2012 Prudential agreed to take over maintenance of parts of General Motors' pension trust. The move will relieve GM of the work and add to Prudential's payout annuity business. The company struck a similar agreement with Verizon later that year.
Mergers and Acquisitions
Prudential's splashiest move was the 2011 purchase of AIG's two Japanese life insurance companies as that company trimmed its international operations. Prudential paid $4.7 billion to acquire AIG Star Life Insurance and AIG Edison Life Insurance and placed them in its Gibraltar Life unit.
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.