Prudential Financial is America’s third-largest issuer of advisor-sold variable annuities. It is number 84 on the Forbes 500 list of the largest firms in the U.S. and number 74 on the Fortune 500, with a market value exceeding $9 billion. It is an affiliate of the Prudential Life Insurance Co., the nation’s second-largest life insurer.
The Prudential companies are an important part of the worldwide financial structure. They employ over 41,000 individuals in 37 different countries. Prudential Financial ranks 114th on Fortune’s Global 2000 list of public companies. It boasts over 50 million individual and institutional customers in the U.S., Asia, Europe and Latin America.
The Prudential was founded in 1875 by John Fairfield Dryden. Over the succeeding century, it became one of America’s most popular and recognized corporations. Its use of the Rock of Gibraltar as a corporate symbol and the advertising slogan “Own a piece of the Rock” created a public identity that still survives today.
This is attested to in a recent survey by Fortune Magazine, which listed the company as the world’s fourth-most-admired. This suggests that Prudential has overcome unfavorable publicity stemming from disciplinary actions taken against it by regulators in the mid-1990s. The actions responded to allegations of inappropriate practices by its sales representatives.
Ratings of financial strength issued by the nation’s four top ratings agencies give Prudential companies high marks. PRUCO Life Insurance Company, issuer of most Prudential annuities, receives A.M. Best’s second-highest rating, A+, and Standard & Poor’s fourth-highest rating, AA-, as well. Fitch’s gives the company its fifth-highest rating, A+, while Moody’s gives it its sixth-highest ranking of A2. The Prudential Life Insurance Company of America earns the same financial-strength scores, as does the Prudential Retirement Insurance Annuity Co. Some other Prudential affiliate companies are not rated by Moody’s but enjoy the above-listed ratings bestowed by the other three ratings agencies.
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Annuity Product Offerings
Prudential annuities are dominated by its variable offerings, which consist of over 20 different products including over 50 subaccounts. Fixed and immediate annuities play a subordinate role in the company’s annuity-product structure.
In October, 2008, Prudential Financial applied to participate in the federal government’s Capital Purchase Program (CPP), in which the Treasury made capital available to financial institutions by purchasing preferred stock and equity warrant shares in the companies. (Preferred stock is an equity share that lacks voting rights but has seniority over common stock in receiving dividends; it is a hybrid security having elements of both debt and equity, or fixed and residual income. Warrants are similar to call options but issued by individual companies, often for the purpose of compensating for lower yield on debt. Their duration can last for years and their exercise dilutes the value of existing shares.) In mid-May of 2009, the Treasury announced that Prudential Financial was one of six major U.S. life insurers whose applications for participation had been granted. Officials of the company were reportedly reviewing their options in light of this development.
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