Prudential Financial
Encyclopedia
Fortune Global 500
The Fortune Global 500 is a ranking of the top 500 corporations worldwide as measured by revenue. The list is compiled and published annually by Fortune magazine....
and Fortune 500
Fortune 500
The Fortune 500 is an annual list compiled and published by Fortune magazine that ranks the top 500 U.S. closely held and public corporations as ranked by their gross revenue after adjustments made by Fortune to exclude the impact of excise taxes companies collect. The list includes publicly and...
company whose subsidiaries provide insurance
Insurance
In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the...
, investment management
Investment management
Investment management is the professional management of various securities and assets in order to meet specified investment goals for the benefit of the investors...
, and other financial products and services to both retail
Retail
Retail consists of the sale of physical goods or merchandise from a fixed location, such as a department store, boutique or kiosk, or by mail, in small or individual lots for direct consumption by the purchaser. Retailing may include subordinated services, such as delivery. Purchasers may be...
and institutional customers throughout the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
and in over 30 other countries. Principal products and services provided include life insurance
Life insurance
Life insurance is a contract between an insurance policy holder and an insurer, where the insurer promises to pay a designated beneficiary a sum of money upon the death of the insured person. Depending on the contract, other events such as terminal illness or critical illness may also trigger...
, annuities, mutual funds, pension
Pension
In general, a pension is an arrangement to provide people with an income when they are no longer earning a regular income from employment. Pensions should not be confused with severance pay; the former is paid in regular installments, while the latter is paid in one lump sum.The terms retirement...
- and retirement
Retirement
Retirement is the point where a person stops employment completely. A person may also semi-retire by reducing work hours.Many people choose to retire when they are eligible for private or public pension benefits, although some are forced to retire when physical conditions don't allow the person to...
-related investments, administration and asset management, securities brokerage services, and commercial and residential real estate
Real estate
In general use, esp. North American, 'real estate' is taken to mean "Property consisting of land and the buildings on it, along with its natural resources such as crops, minerals, or water; immovable property of this nature; an interest vested in this; an item of real property; buildings or...
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
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
, Asia
Asia
Asia is the world's largest and most populous continent, located primarily in the eastern and northern hemispheres. It covers 8.7% of the Earth's total surface area and with approximately 3.879 billion people, it hosts 60% of the world's current human population...
, Europe
Europe
Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting...
and Latin America
Latin America
Latin America is a region of the Americas where Romance languages – particularly Spanish and Portuguese, and variably French – are primarily spoken. Latin America has an area of approximately 21,069,500 km² , almost 3.9% of the Earth's surface or 14.1% of its land surface area...
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. The company uses the Rock of Gibraltar
Rock of Gibraltar
The Rock of Gibraltar is a monolithic limestone promontory located in Gibraltar, off the southwestern tip of Europe on the Iberian Peninsula. It is high...
as its logo
Logo
A logo is a graphic mark or emblem commonly used by commercial enterprises, organizations and even individuals to aid and promote instant public recognition...
.
Logo
Prudential's logo, The Rock of Gibraltar, is one of the most recognized corporate symbols in the world. The use of the rock began after an advertising agent passed Laurel HillSnake Hill
Snake Hill is an igneous rock intrusion jutting some 150 feet up from the floor of the Meadowlands in Secaucus, New Jersey, USA. It was largely obliterated by quarrying in the 1960s that reduced its height by one-quarter and its base area by four fifths...
, a volcanic neck, in Secaucus, New Jersey
Secaucus, New Jersey
Secaucus is a town in Hudson County, New Jersey. As of the 2010 United States Census, the town population was 16,264. Located within the New Jersey Meadowlands, it is the most suburban of the county's municipalities, though large parts of the town are dedicated to light manufacturing, retail, and...
on a train in the 1890s. The related slogans "Get a Piece of the Rock" and "Strength of Gibraltar" are also still quite widely associated with Prudential, though current advertising uses neither of these. In 1984, 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
Doyald Young
Doyald Young was an American typeface designer and teacher who specialized in the design of logotypes, corporate alphabets, and typefaces.-Work:...
and based on the Century Schoolbook typeface.
History
Started in Newark, New JerseyNewark, New Jersey
Newark is the largest city in the American state of New Jersey, and the seat of Essex County. As of the 2010 United States Census, Newark had a population of 277,140, maintaining its status as the largest municipality in New Jersey. It is the 68th largest city in the U.S...
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
John F. Dryden
John Fairfield Dryden was president of the Prudential Insurance Company and a United States Senator from New Jersey. He was known as the "father of industrial insurance".-Biography:...
, who later became a U.S. Senator. It sold one product in the beginning, burial insurance. John F. Dryden was president of Prudential until 1912. He was succeeded by his son Forrest F. Dryden
Forrest F. Dryden
Forrest Fairchild Dryden was the President of Prudential Insurance Company of America from 1912 until 1922. Prudential was founded by his father, John F. Dryden, who was also a United States Senator, representing New Jersey.-Youth and Education:Dryden was born in Bedford, Ohio on December 26,...
, who was the president until 1922.
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. 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. The rest lost their entire investment. Prominent lawyer and future Supreme Court
Supreme court
A supreme court is the highest court within the hierarchy of many legal jurisdictions. Other descriptions for such courts include court of last resort, instance court, judgment court, high court, or apex court...
Justice Louis Brandeis
Louis Brandeis
Louis Dembitz Brandeis ; November 13, 1856 – October 5, 1941) was an Associate Justice on the Supreme Court of the United States from 1916 to 1939.He was born in Louisville, Kentucky, to Jewish immigrant parents who raised him in a secular mode...
helped pass a 1907 Massachusetts law to protect workers by allowing savings banks to sell life insurance at lower rates. Like many corporations of its time, Prudential's record of corporate responsibility would not meet today's standards.
Prudential has evolved from a mutual insurance
Mutual insurance
A mutual insurance company is an insurance company which has no shareholders but instead is owned entirely by its policyholders. The primary form of financial business set up as a mutual company in the United States has been mutual insurance. Under this idea, what would have been profits are...
company (owned by its policyholders) to a joint stock company
Joint stock company
A joint-stock company is a type of corporation or partnership involving two or more individuals that own shares of stock in the company...
. It is now traded on the New York Stock Exchange
New York Stock Exchange
The New York Stock Exchange is a stock exchange located at 11 Wall Street in Lower Manhattan, New York City, USA. It is by far the world's largest stock exchange by market capitalization of its listed companies at 13.39 trillion as of Dec 2010...
under the symbol PRU. The Prudential Stock was issued and started trading on the New York Stock Exchange
New York Stock Exchange
The New York Stock Exchange is a stock exchange located at 11 Wall Street in Lower Manhattan, New York City, USA. It is by far the world's largest stock exchange by market capitalization of its listed companies at 13.39 trillion as of Dec 2010...
on December 13, 2001. On October 16, 2007 the Fox Business Channel picked Prudential as part of its Fox50 Index.
Prudential Headquarters
Prudential Financial, as it is known today, began as The Widows and Orphans Friendly Society in 1875. For a short was called the Prudential Friendly Society, and for many years after 1877 was the Prudential Insurance Company of America, a name still widely in use...
in Newark, New Jersey
Newark, New Jersey
Newark is the largest city in the American state of New Jersey, and the seat of Essex County. As of the 2010 United States Census, Newark had a population of 277,140, maintaining its status as the largest municipality in New Jersey. It is the 68th largest city in the U.S...
, prompting large-scale security measures such as concrete barriers and internal security changes such as X-ray
X-ray
X-radiation is a form of electromagnetic radiation. X-rays have a wavelength in the range of 0.01 to 10 nanometers, corresponding to frequencies in the range 30 petahertz to 30 exahertz and energies in the range 120 eV to 120 keV. They are shorter in wavelength than UV rays and longer than gamma...
machines.
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.
In 2001 Mark Wood (Financial Figure) moved from AXA
AXA
AXA S.A. is a French global insurance group headquartered in the 8th arrondissement of Paris. AXA is a conglomerate of independently run businesses, operated according to the laws and regulations of many different countries. The AXA group of companies engage in life, health and other forms of...
to join Prudential to become its UK and European Chief Executive until 2005, when he founded and became chief executive of Paternoster; a regulated insurance company that takes on the risks associated with companies’ final salary/defined benefit pension schemes.
On November 28, 2007, Prudential Financial board of directors
Board of directors
A board of directors is a body of elected or appointed members who jointly oversee the activities of a company or organization. Other names include board of governors, board of managers, board of regents, board of trustees, and board of visitors...
elected a new CEO, John R. Strangfeld, to replace retiring Arthur F. Ryan.
Acquisitions and divestitures
In 1981, the company acquired Bache & Co.Bache & Co.
Bache & Company was a securities deim that provided stock brokerage and investment banking services. The firm, which was founded in 1879, was based in New York, New York....
, a stock broker
Stock broker
A stock broker or stockbroker is a regulated professional broker who buys and sells shares and other securities through market makers or Agency Only Firms on behalf of investors...
age 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. In 1999, Prudential sold its healthcare division, Prudential HealthCare, to Aetna
Aetna
Aetna, Inc. is an American health insurance company, providing a range of traditional and consumer directed health care insurance products and related services, including medical, pharmaceutical, dental, behavioral health, group life, long-term care, and disability plans, and medical management...
for $1 billion.
On May 1, 2003, Prudential formalized the acquisition of American Skandia
Skandia
Skandia is a Swedish insurance company that was started in 1855. It has operations in Europe, Latin America, Asia and Australia. Skandia also operates an internet bank called Skandiabanken....
, the largest distributor of variable annuities through independent financial professionals in the United States. The CEO of American Skandia, Wade Dokken
Wade Dokken (author)
Wade Dokken is an American financial writer and businessman.Wade Dokken was raised in rural North Dakota and attended the University of North Dakota, where he studied political science and journalism. After graduating, Dokken became an account executive at Paine Webber...
, partnered with Goldman Sachs
Goldman Sachs
The Goldman Sachs Group, Inc. is an American multinational bulge bracket investment banking and securities firm that engages in global investment banking, securities, investment management, and other financial services primarily with institutional clients...
and sold the division to Prudential for $1.2 billion. 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.
Investor fraud
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. 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. 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. In all, some 400,000 individual investors lost money on the deals.Prudential financial eventually settled with investors for $330 million. 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. The settlement also resolved investigations of the firm by the National Assn. of Securities Dealers and 49 states, including California, where 52,000 investors lost money in Prudential limited partnerships. Further investigation was conducted by the SEC into the executives of the company to determine the extent of the fraud.
US military life insurance lawsuit
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 soldiersServicemembers' Group Life Insurance
Servicemembers' Group Life Insurance is a life insurance available to all active duty and reserve members of the uniformed services of the United States...
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. 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.
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. 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. Military Times
Army Times Publishing Company
Gannett Government Media, formerly the Army Times Publishing Company, is a United States company which publishes newspapers, magazines, Web sites, and other publications about the U.S. and other militaries. Founded in 1940, it was purchased by the Gannett Company in August 1997.It publishes four...
noted that prior lawsuits against insurance companies pertaining to the use of retained asset accounts have been dismissed in federal courts without action.
Ratings, awards and The Prudential Foundation
Prudential has received a 100% rating on the Corporate Equality IndexCorporate Equality Index
The Corporate Equality Index is a report published by the Human Rights Campaign Foundation as a tool to rate American businesses on their treatment of gay, lesbian, bisexual and transgender employees, consumers and investors. Its primary source of data are surveys but researchers cross-check...
released by the Human Rights Campaign
Human Rights Campaign
The Human Rights Campaign is the United States' largest LGBT advocacy group and lobbying organization; according to the HRC, it has more than one million members and supporters...
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. It is still achieving that list, as of 2010. 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. 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.
The foundation also supports the Abraham Lincoln Bicentennial Commission
Abraham Lincoln Bicentennial Commission
The Abraham Lincoln Bicentennial Commission was the Congressionally created 14-member federal commission focused on planning and commemorating the 200th birthday of the United States' 16th president on February 12, 2009. The commission served for ten years, from 2000 to 2010...
.
See also
- List of United States insurance companies
- Prudential plcPrudential plcPrudential plc is a multinational financial services company headquartered in London, United Kingdom.Prudential's largest division is Prudential Corporation Asia, which has over 15 million customers across 13 Asian markets and is a top-three provider of life insurance in mainland China, Hong...
—an unrelated United KingdomUnited KingdomThe United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
-based company.
External links
- Prudential Financial Services
- Yahoo! – Prudential Financial, Inc. Company Profile
- Prudential on Google FinanceGoogle FinanceGoogle Finance is a website launched on March 21, 2006 by Google. The service features business and enterprise headlines for many corporations including their financial decisions and major news events. Stock information is available, as are Adobe Flash-based stock price charts which contain marks...
- Prudential Financial stock performance chart by GstockGstockGStock is a distributed computing project formed in 2006 for stock market analysis. It is enabled by users that volunteer to download and run a software client and donate some idle capacity of their computer processing unit . The gathered computing power is used to search for an investment strategy...
- Prudential Case Study an analysis of Prudential's demutualization
- Prudential Financial 2006 Fortune 500 Ranking
- Prudential Financial 2007 Fortune Global 500 Ranking
- Prudential Financial 2008 Fortune 500 Ranking
- Independent Profile of Prudential Life Insurance