Prudential Financial

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This article is about the American company. For the British company, see Prudential plc. For places named after the company, see Prudential (disambiguation).
Prudential Financial, Inc.
Type Public
Traded as NYSEPRU
S&P 500 Component
Industry Financial Services
Genre Financial
Founded 1875
Founder(s) John F. Dryden
Headquarters Prudential Plaza
Newark, New Jersey
, U.S.
Area served Nationwide
Key people John Strangfeld
Chairman and CEO
Products Life Insurance
Mutual Funds
Retirement
Annuity
Real Estate
Revenue DecreaseUS$ 41.461 billion (2013)[1]
Operating income Decrease US$ -1.684 billion (2013)[1]
Net income DecreaseUS$ -560 million (2013)[1]
Total assets IncreaseUS$ 731.781 billion (2013)[1]
Total equity Decrease US$ 35.881 billion (2013)[1]
Employees 47,355 (Dec 2013)[1]
Website www.prudential.com
Newark skyline with the Prudential Financial headquarters at right.

Prudential Financial, Inc., also known by its primary subsidiary The Prudential Insurance Company of America, is a Fortune Global 500 and Fortune 500 company whose subsidiaries provide insurance, investment management, and other financial products and services to both retail and institutional customers throughout the United States and in over 30 other countries. Principal products and services provided include life insurance, annuities, mutual funds, pension- and retirement-related investments, administration and asset management, securities brokerage services, and commercial and residential real estate in many states of the U.S. It provides these products and services to individual and institutional customers through distribution networks in the financial services industry. Prudential has operations in the United States, Asia, Europe and Latin America and has organized its principal operations into the Financial Services Businesses and the Closed Block Business.

Prudential is composed of hundreds of subsidiaries and holds more than $2 trillion of life insurance.[2] The company uses the Rock of Gibraltar as its logo.

[edit]

Prudential's logo, The Rock of Gibraltar, is one of the most recognized corporate symbols in the world.[3] The use of the rock began after an advertising agent passed Laurel Hill, a volcanic neck, in Secaucus, New Jersey on a train in the 1890s.[4] The related slogans "Own a Piece of the Rock" and "Strength of Gibraltar" are also still quite widely associated with Prudential,[5] though current advertising uses neither of these. In 1985, the Rock of Gilbraltar image was changed to a lined 2D plainer version for the logo, but by 1989, the original illustration of the Rock of Gilbraltar returned. The type was designed by Doyald Young and based on the Century Schoolbook typeface.[6]

History[edit]

Started in Newark, New Jersey in 1875, Prudential Financial was originally called The Widows and Orphans Friendly Society and then the Prudential Friendly Society and was founded by John F. Dryden, who later became a U.S. Senator. It sold one product in the beginning, burial insurance. Dryden was president of Prudential until 1912. He was succeeded by his son Forrest F. Dryden, who was the president until 1922.[7]

Old advert of the Prudential Insurance Co. of America (1909).

A history of The Prudential Insurance Company of America up to about 1975 is the topic of the book Three Cents A Week, referring to the premium paid by early policyholders.

At the turn of the 20th century, Prudential and other large insurers reaped the bulk of their profits from industrial life insurance, or insurance sold by solicitors house-to-house in poor urban areas.[8] For their insurance, industrial workers paid double what others paid for ordinary life insurance, and due to high lapse rates, as few as 1 in 12 policies reached maturity.[9] Prominent lawyer and future Supreme Court Justice Louis Brandeis helped pass a 1907 Massachusetts law to protect workers by allowing savings banks to sell life insurance at lower rates.[10]

Prudential logo from 1948.
Homeland Security secured the Prudential Headquarters in August, 2004.

Prudential has evolved from a mutual insurance company (owned by its policyholders) to a joint stock company (as it was prior to 1915[11]). It is now traded on the New York Stock Exchange under the symbol PRU. The Prudential Stock was issued and started trading on the New York Stock Exchange on December 13, 2001. On October 16, 2007 the Fox Business Channel picked Prudential as part of its Fox50 Index.

On August 1, 2004, the U.S. Office of Homeland Security announced the discovery of terrorist threats against the Prudential Headquarters in Newark, New Jersey, prompting large-scale security measures such as concrete barriers and internal security changes such as X-ray machines.[12] In the same year, a joint venture is formed between Prudential Financial and China Everbright Limited.[13]

On August 28, 2006, federal and state securities regulators and the Department of Justice announced parallel settlements and a total of $600 million in monetary sanctions against Prudential Securities, Inc. (now known as Prudential Equity Group ) for misconduct relating to improper market timing.[14]

On November 28, 2007, Prudential Financial board of directors elected a new CEO, John R. Strangfeld, to replace retiring Arthur F. Ryan.[15]

Acquisitions and divestitures[edit]

In 1981, the company acquired Bache & Co., a stock brokerage service that operated as a wholly owned subsidiary until 2003, when Wachovia and Prudential combined their retail brokerage operations into Wachovia Securities, with Prudential a minority stake holder.[16][17] In 1999, Prudential sold its healthcare division, Prudential HealthCare, to Aetna for $1 billion. On May 1, 2003, Prudential formalized the acquisition of American Skandia, the largest distributor of variable annuities through independent financial professionals in the United States. The CEO of American Skandia, Wade Dokken, partnered with Goldman Sachs and sold the division to Prudential for $1.2 billion.[18] The combination of American Skandia variable annuities and Prudential fixed annuities was part of Prudential’s strategy to acquire complementary businesses that help meet retirement goals.

In April 2004, the company acquired the retirement business of CIGNA Corporation. In late 2009, Prudential sold its minority stake in Wachovia Securities Financial Holdings LLC to Wells Fargo & Co.[19] In 2011, Prudential sold Prudential Bache Commodities, LLC to Jefferies. Also, in 2011, Prudential acquired the Star and Edison life insurance companies in Japan from AIG, combining them with their Gibraltar Life Insurance subsidiary.

Investor fraud[edit]

During the 1980s and 1990s, Prudential Securities Incorporated (PSI), formerly a division of Prudential Financial, was investigated by the Securities and Exchange Commission (SEC) for suspected fraud.[20] During the investigation, it was found that PSI had defrauded investors of close to $8 billion, the largest fraud found by the SEC in US history to that point.[21] The SEC charged that Prudential allowed rogue executives to cheat customers on a large scale and blithely ignored a 1986 SEC order to overhaul its internal enforcement of securities laws.[22] In all, some 400,000 individual investors lost money on the deals.[21][23]

Prudential financial eventually settled with investors for $330 million.[20] Prudential said it would repay customers across the U.S. who lost money on the company's limited partnerships in the 1980s. In addition, the firm was required to pay another $41 million in fines.[21] The settlement also resolved investigations of the firm by the National Association of Securities Dealers and 49 states, including California, where 52,000 investors lost money in Prudential limited partnerships.[22][24] Further investigation was conducted by the SEC into the executives of the company to determine the extent of the fraud.[25]

US military life insurance lawsuit[edit]

In 2010, various media outlets noted allegations that the Prudential Life Insurance Company was manipulating the payout of life insurance benefits due to the families of American soldiers in order to gain extra profits. The company provided life insurance to people in the armed forces under a government contract. Rather than paying the full amount due to the families at once, the company would instead deposit the funds into a Prudential corporate account. These accounts are referred to as 'retained asset accounts' and are essentially an I.O.U. from the company to the payee (in many cases a fallen service members' family). While in early 2010 Prudential was making profits of up to 4.2% in its general account, they paid out 0.5% interest in these non-FDIC insured "Alliance" accounts.[26][27] In some cases, when families requested to be sent a full payout in the form of a check, the family was sent a checkbook, rather than the amount due.[26]

It is not clear if the practice was in violation of law or the contract. In August 2010, the company was sued by a number of the bereaved families.[28] The company's response included an open letter to the military community in which it addressed what it characterized as "misinformation" about the nature of the accounts.[29][30] Military Times noted that prior lawsuits against insurance companies pertaining to the use of retained asset accounts have been dismissed in federal courts without action.[29]

Ratings, awards and The Prudential Foundation[edit]

Prudential has received a 100% rating on the Corporate Equality Index released by the Human Rights Campaign every year since 2003, the second year of the report. In addition, the company is in the "Hall of Fame" of Working Mothers magazine among other companies that have made their "100 Best Companies for Working Mothers" list for 15 or more years.[31] It is still achieving that list, as of 2013.[32] According to Business Week's The Best Places to Launch a Career 2008, Prudential Insurance was ranked #59 out of 119 companies on the list.[33] In 2007, The Prudential Foundation provided over $450,000 in Prudential CARES Volunteer Grants to 444 nonprofit organizations worldwide. The Prudential CARES Volunteer Grants Program recognizes individual and team volunteers based on a minimum of 40 hours of volunteer service per individual. Grants range from $250 to $5,000 for each award winner's charitable organization.[34]

The foundation also supports the Abraham Lincoln Bicentennial Commission.

See also[edit]

References[edit]

  1. ^ a b c d e f Prudential Financial, Inc. Form 10-K, Securities and Exchange Commission, February 27, 2014
  2. ^ "Prudential Financial 2007 Annual Report". .prudential.com. Retrieved 2010-07-09. 
  3. ^ "Prudential Employment Snapshot". Vault, Inc. Retrieved 2007-01-23. 
  4. ^ "The Meadowlands: History and Baseline Data" (PDF). New Jersey Meadowlands Commission. Retrieved 2007-01-20. [dead link]
  5. ^ http://www.prudential.com/view/page/public/9384
  6. ^ Author: Doyald Young. "Tutorials | Doyald Young Logotype Designer". Lynda.com. Retrieved 2012-01-19. 
  7. ^ "The Prudential Insurance Company of America - Company History". Fundinguniverse.com. Retrieved 2012-01-19. 
  8. ^ Mason, A (1946). Brandeis: A Free Man's Life. p. 153
  9. ^ Ibid., p. 156
  10. ^ Ibid. p. 171
  11. ^ "The Prudential". The Independent. Dec 14, 1914. Retrieved July 24, 2012. 
  12. ^ George, Jason; Cave, Damien (August 3, 2004). "A Surprise at Prudential: It's a Terror Target". New York Times. Retrieved April 9, 2010. 
  13. ^ "Fosun and Prudential hunt together". January 14, 2011. Retrieved Jun 24, 2013. 
  14. ^ "NASD News Release". Finra.org. Retrieved 2010-07-09. 
  15. ^ Prudential Announces New CEO: Financial News – Yahoo! Finance[dead link]
  16. ^ Boyd, Roddy (April 30, 2007). "Global 'Bache' for Pru". New York Post. Retrieved October 20, 2010. 
  17. ^ Terry, Juliet A. (July 18, 2003). "Prudential, Wachovia Complete Corporate Merger". The State Journal. Retrieved October 20, 2010. 
  18. ^ "Wade Dokken: Bibliography". Retrieved 25 February 2011. 
  19. ^ "Prudential completes sale of Wachovia brokerage stake". Atlanta Business Chronicle. December 31, 2009. Retrieved October 20, 2010. 
  20. ^ a b "SEC News Digest, 10-21-1993" (PDF). Retrieved 2010-07-09. 
  21. ^ a b c "Socking the Rock". Time. November 1, 1993. Retrieved April 9, 2010. 
  22. ^ a b "Prudential to Pay at Least $371 Million in Fraud Settlement : Securities: In agreeing to the accord, CEO says the brokerage 'fully recognizes the valid claims of investors.' - Los Angeles Times". google.com. Retrieved 2010-07-09. 
  23. ^ "Socking the Rock". Time. November 1, 1993. Retrieved April 9, 2010. 
  24. ^ "Socking the Rock". Time. November 1, 1993. Retrieved April 9, 2010. 
  25. ^ Eichenwald, Kurt (October 29, 1993). "Prudential May Face Civil Suits". The New York Times. Retrieved April 9, 2010. 
  26. ^ a b Evans, David (3 October 2010). "U.S. pays as Prudential invests troop death benefits". Washington Post. Bloomberg News. Retrieved 14 October 2010. 
  27. ^ "Retained asset accounts: Prudential sets the record straight". Prudential. 27 August 2010. Retrieved 14 October 2010. 
  28. ^ Frosch, Dan (30 August 2010). "Families of Dead Soldiers Sue Insurer Over Its Handling of Survivors’ Benefits". New York Times. Retrieved 14 October 2010. 
  29. ^ a b Jowers, Karen (24 September 2010). "Prudential letter responds to SGLI controversy". Retrieved 14 October 2010. 
  30. ^ "An Open Letter to the Military Community from Prudential Financial". Prudential. 23 September 2010. Retrieved 14 October 2010. 
  31. ^ "Focus on the 100 Best - 2006 Hall of Fame". Working Mothers. Retrieved 26 October 2010. 
  32. ^ "2013 Working Mothers 100 Best Companies: Prudential Financial". Working Mothers. Retrieved 1 October 2013. 
  33. ^ "Best Places to Launch a Career 2008". Business Week. 
  34. ^ "2010 Prudential CARES Volunteer Grants Program Overview" (Press release). Prudential. Retrieved 26 October 2010. 
  • Scannell’s New Jersey’s First Citizens 1917–1918, Page 138

External links[edit]