What takes 20 million staples, 13 million pounds of paper, and 7,500 pounds of ink?

Answer: An insurance company demutualization. Those are just a fraction of total expenses for Prudential Insurance Co., which has spent $217 million before taxes on the process of converting from a mutual insurance company to a stock company.

Where does it all go? Those staples, paper, and ink are a start — they're the main components of mailings to 11 million policyholders who will receive compensation when Prudential goes public.

"Just printing all of that information is a big-ticket item," says spokesperson Mary Flowers, who says the company has "literally hundreds" of employees working on demutualization. That includes actuaries, lawyers, accountants, corporate relations specialists, and employees in the operations and systems department, which is responsible for compiling and mailing the 11 million policyholder-information packages. Once those packages are sent out, Prudential will set up call centers to field policyholders' questions about demutualization.

Teams of external professionals, from lawyers to investment bankers to printing firms, are also working on the demutualization in untold numbers. "The sheer magnitude of this project is what's driving the cost," Flowers says

Prudential spent $24 million on demutualization in 1998, the year it first announced its intent to convert. Part of that money went into its victorious effort to enact a new state law that would make demutualization legal in New Jersey, where Prudential is domiciled, according to Flowers. In 1999, the company spent $74 million on demutualization, and spent $119 million in 2000.

"Our intention is to return the full value of the company to policyholders," Flowers says. Prudential has not completed a valuation of policyholders' share of the company, so policyholders' exact compensation is uncertain, nor is there an estimate of the eventual IPO price of Prudential stock.

The company hopes to hold its IPO during the last quarter of 2001. Before that can happen, however, its reorganization plan needs the approval of New Jersey's insurance commissioner. Flowers says that by the beginning of April, Prudential should have approval for the reorganization plan and for the documents it will mail to its eligible policyholders.

After that, state law dictates that at least one million policyholders must vote on demutualization, and two-thirds of those voting must approve the plan. If approved, Prudential will "watch the market" to determine a promising IPO date. Its stock will trade under the symbol "PRU" on the New York Stock Exchange.