Prudential Financial — BrandWiki

Prudential Financial

Overview

Prudential Financial, Inc.

trade name	The Prudential Insurance Company of America
type	Public
traded as	nyse: PRU S&P 500 component
foundation	1875 in Newark, New Jersey, U.S.
founder	John F. Dryden
hq location	Prudential Plaza
hq location city	Newark, New Jersey
hq location country	U.S.
key people	Andy Sullivan (CEO)
industry	Financial services
products	Insurance Mortgage loans Investment management Asset management Wealth management Pensions
revenue	US$70.41 billion (2024)
operating income	US$3.209 billion (2024)
net income	US$2.727 billion (2024)
aum	US$1.512 trillion (2024)
assets	US$735.6 billion (2024)
equity	US$27.87 billion (2024)
num employees	38,196
num employees year	2024
parent	Prudential Group
subsid	PGIM
homepage	prudential.com
footnotes	‡R1R‡

Prudential Financial, Inc. is an American financial services company whose subsidiaries provide insurance, retirement planning, investment management, and other products and services to both retail and institutional customers throughout the United States and in over 40 other countries. In 2019, Prudential was the largest insurance provider in the United States with $815.1 billion in total assets. The company is included in the Fortune Global 500 and Fortune 500 rankings.

Logo

Prudential's symbol, the Rock of Gibraltar, originated in the 1890s after an advertising agent saw Laurel Hill, a volcanic neck, in Secaucus, New Jersey.[2] The image became associated with the company's advertising slogans, including "Get a Piece of the Rock" and "Strength of Gibraltar".[3]

The symbol has been revised several times. A simplified pictogram version was adopted in 1989, and the logotype was updated in 1996 using a proprietary font, Prudential Roman, designed by

History

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

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.

In the early 20th century, Prudential and other insurers derived much of their profits from industrial life insurance sold door-to-door in urban working-class neighborhoods.[8] Policyholders often paid higher premiums than those for ordinary life insurance, and high lapse rates meant relatively few policies reached maturity.[9] Reforms supported by Louis Brandeis led to a 1907 Massachusetts law allowing savings banks to offer lower-cost life insurance.[10]

In 1954, Prudential, along with Equitable Holdings, declared a policy stating they would not insure mortgages to white families in racially integrated neighborhoods.[11] This came in the wake of blockbusting in East Palo Alto after a white family sold their home to a Black family. This decision facilitated white flight and realignment of East Palo Alto's demographics. Their policy was according to the position of U.S. government agencies like the Federal Housing Administration and the Veteran's Administration who not only refused insured mortgages to Black families, but white families in predominantly Black communities.

Prudential has evolved from a mutual insurance company (owned by its policyholders) to a joint stock company (as it was prior to 1915[12]). 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 August 1, 2004, the U.S. Department of Homeland Security announced the discovery of terrorist threats against the Prudential Headquarters in Newark, New Jersey, prompting large-scale security measures that included concrete barriers outside the premises and internal X-ray machines.[13] In the same year, a joint venture was formed between Prudential and China Everbright Limited.[14]

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

Controversies

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.[24] 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.[25] 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.[26] In all, some 400,000 individual investors lost money on the deals.[25]

In 1993, Prudential Financial eventually settled with investors for $330 million.[26] 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.[25] 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.[25][26] Further investigation was conducted by the SEC into the executives of the company to determine the extent of the fraud.[27]

Class action lawsuit over sales practices

In 1997, Prudential settled a class action lawsuit by millions of its customers who had been sold unnecessary life insurance by Prudential agents over a 13-year period ending in 1995. The settlement called for Prudential to repay an estimated $2 billion to customers through direct refunds and enhancements to existing policies. The settlement had been the subject of extensive negotiations involving not only Prudential and its customers, but also insurance regulators in 30 states. Prudential had agreed in early 1997 to pay a fine of $35 million to settle state allegations of deceptive sales practices. Prudential acknowledged that for more than a decade its agents had improperly persuaded customers to cash in old policies and purchase new ones so that the agents could generate additional sales commissions.[28]

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 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 Prudential was making profits of up to 4.2% in its general account in early 2010, they paid out 0.5% interest in these non-FDIC insured "Alliance" accounts.[29] 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.[30]

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.[31] 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.[32]