NU Online News Service, July 19, 2:05 p.m. – A public hearing on Prudential Insurance Company of America's demutualization plan, ended Wednesday in Trenton, N.J., after two days of volleys of conflicting testimony.
Some policyholders, former employees and consumer advocates argued that the plan may not compensate policyholders as fairly as it should.
Art Ryan, Prudential's chief executive officer, and a battery of other Prudential executives provided a vigorous defense.
All told, about 35 people testified, according to an unofficial count from the state's Department of Banking and Insurance, which held the meeting.
If New Jersey Banking and Insurance Commissioner Karen Suter agrees, the demutualization plan would take ownership of Prudential out of the hands of policyholders and put it in the hands of public stockholders.
Ryan testified that demutualization would promote the best interests of Prudential's policyholders.
Converting to a publicly owned entity would enable the company to provide shares of stock to its policyholders, giving their interest in the company a tangible value, Ryan said.
Converting would also give the company an infusion of capital that it could use to expand, Ryan added.
"These changes will enable Prudential to continue to grow both through internal means and through being better positioned to take advantage of opportunities," Ryan testified.
Ryan said Prudential needs capital to add new products, acquire other companies, and compete globally in a world where insurers, banks and other financial services companies are continuing to consolidate.
"Furthermore, demutualization will enable us to use stock-based compensation programs to recruit and retain high-quality employees," he said.
One critic of the plan argued it was unfair to most policyholders.
Thomas P. Tierney, a consulting actuary called to testify by an attorney representing three Prudential policyholders, said the allocation of shares under the plan would credit recent customers with too large a value for their policies, thereby depriving long-term policyholders of their fair share of the Prudential pie.
