Prudential May Go Public to Increase Value

Prudential Insurance Co. of America, the nation’s largest life insurer, said Thursday that it is considering becoming a publicly traded company to increase its value to policyholders who suffered from the firm’s billion-dollar scandals.

The 125-year-old insurer would follow rival Equitable Cos., which in 1992 became a shareholder-owned company instead of a mutual owned by policyholders.

“Demutualizing” would “distribute the full value of the company,” said Chairman and Chief Executive Arthur Ryan. Prudential could be worth $30 billion as a public company, according to some analysts.

Prudential, once called “The Rock” for its financial stability, lost its AAA credit rating and reputation as one of the nation’s most admired companies following a series of government investigations in the 1990s. The Newark, N.J.-based company admitted to bilking brokerage and insurance customers and agreed to pay more than $1.4 billion to settle claims.

The cost of resolving improper sales practices at Prudential Insurance and its Prudential Securities Inc. unit reduced the money the parent had for paying dividends to its policyholders.

There’s no guarantee that the company will complete the so-called demutualization plan. Even if it does, analysts question whether investors would want to own the company.

“There are two conflicting situations here,” said Charles Vincent, an analyst at PNC Asset Management. “One is that Prudential is a great name and people see it as a huge financial company with immense resources. On the other hand, the name has been tarnished by questionable practices by the sales staff. That could be a hidden liability.”

The company said policyholders would get stock, cash or increased policy benefits should it go public.

Prudential would be large compared with such rivals as American General Corp., now valued at $13.8 billion. On the other hand, it would be dwarfed by the likes of American International Group Inc., which has a market value of $83.3 billion.