Prudential 2002 Annual Report Download - page 10

8Growing and Protecting Your W ealth
Our acquisition strategy is disci-
plined. We’re not looking to
diversify, and we don’t make long
bets. Rather, we look for attractively
priced companies that meet two key
criteria: They must enhance our
ability to grow and protect our
clients’ wealth, and they must be
positioned to help us improve our
return on equity. We call these
companies “bolt-on” companies,
because they fit comfortably into our
existing business structure and add to
our financial strength.
Acquisitions add
strength to strength
One of our biggest headlines in 2002
was the December announcement of our intent to
acquire American Skandia, the largest distributor of
variable annuities in the United States through inde-
pendent financial planners. When completed, we
expect the acquisition to propel us from 14th to
fourth in the annuities marketplace based on assets
under management, and from 22nd to sixth in vari-
able annuity sales.
It will add significant distribution capability, with
52 external wholesalers and more than 1,350 distri-
bution arrangements with brokerages and other
financial institutions. That’s a valuable channel
through which to distribute our own annuity, mutual
fund and life insurance products.
International markets continue to present growth
potential for us. We increased our presence in Europe,
Asia and Latin America through several acquisitions
and joint ventures. These moves enhanced our ability
to grow and protect wealth for both retail and institu-
tional clients. They spanned a wide range of
disciplines, including real estate investment and advi-
sory services, mutual funds, relocation services,
private banking, private pension management and
asset management.
Adding valuable new
distribution capabilities
Acquisitions are an excellent way
for us to grow our businesses when
the opportunity is there, but they
constitute just one avenue for
growth. Expanding our distribution
capabilities is another. We have
placed important focus on growing
our third-party distribution chan-
nels to allow U.S. retail customers
to access us through the distribution
methods of their choice, including
independent financial advisors and
the Internet.
Third-party distribution has
become an integral part of our
overall product and market strategies.
As part of those strategies, we set out to unbundle
manufacturing, asset management and distribution of
our products so that we’d no longer be an organiza-
tion that relied solely on proprietary resources. By
entering into agreements with third parties in each of
these categories, we can meet customers’ needs in
virtually any situation.
In life insurance, for example, we have broadened
the focus of Prudential Select, our third-party distri-
bution channel. Historically this channel has served
the insurance needs of an affluent clientele. Today,
Prudential Select is expanding its reach to meet the
needs of the mass affluent market—households with
income or investable assets between $100,000 and
$250,000—as well.
As a result of our strategy, third-party sales have
become the fastest growing of all of our distribution
channels. In 2002, third-party sales of individual life
insurance products grew 29 percent, and annuity sales
through this channel increased nearly eight-fold. We
also ended the year with more than 1,000 third-party
selling agreements and with access to nearly 60,000
third-party representatives.
Our distribution expansion has encompassed
Growing our business
We believe that strategic acquisitions will play an important role in
Prudential Financial’s near-term growth. In 2002, with global
markets in relative decline, we capitalized on the opportunity to
strengthen our foothold in key markets around the world with a
number of compelling acquisitions and joint ventures.