Prudential board approves demutualization plan
Prudential Insurance Co.'s board of directors has unanimously approved a plan to demutualize, a process where an insurance company transfers ownership from its policyholders to stockholders.
|Prudential has set up a toll-free demutualization information center to answer policyholders' questions: (800) 716-4052. You can also find information on Prudential's Web site.|
The Prudential board voted on Dec. 15, 2000, to approve the demutualization plan. If the demutualization process goes smoothly, Prudential's initial public offering (IPO) could occur in the last quarter of 2001, according to spokesperson Mary Flowers. Prudential will trade on the U.S. Stock Exchange under the ticker symbol "PRU."
Prudential's decision to convert to a stock company comes nearly two years after the insurer first made it known it was considering going public and follows MetLife and John Hancock Financial Services, which held IPOs earlier this year. Prudential, the nation's second largest life insurer, had more than $363 billion in assets under management as of Dec. 31, 1999.
Prudential Chairman Arthur F. Ryan says that while the insurer's mutual status has served the company and policyholders well for many years, changes in the financial services arena dictate the reorganization. "By converting to a stock company, Prudential will be able to better meet customer demands in a changing marketplace," says Ryan.
|By converting to a stock company, Prudential will be able to better meet customer demands.|
There are still several hurdles that the insurer must clear before the IPO. State insurance regulators and policyholders must approve the plan in order to go forward. According to Flowers, Prudential will formally submit the reorganization plan by the end of February to New Jersey Commissioner of Banking and Insurance Karen Suter. Prudential is domiciled in New Jersey.
If the plan is approved by regulators, Prudential's policyholders will receive informational packets on the demutualization process, including voting materials. Policyholders who have eligible policies in force on Dec. 15, 2000, will be entitled to receive stock, cash, or policy credits in the demutualization.
The New Jersey Demutualization Statute requires that at least one million policyholders and contract holders vote and the conversion must be approved by at least two-thirds of those who vote.