Prudential 2002 Annual Report Download - page 16

planner force, also had a strong year. It ended the year with a
12-month life planner retention rate of nearly 90 percent and
averaged 6.2 life insurance policies in place per month, per life
planner in 2002.
While many of our competitors have tried to emulate our unique
life planner business model, none have been able to match our
productivity levels. Our international life insurance operations
around the world remain well-positioned for continued future
growth.
A disciplined approach to expense management
We have set aggressive targets in the areas of growth, profitability
and return on equity. Critical to achieving those goals is a sound and
disciplined approach to cutting costs and managing our capital.
At the start of 2002, we pledged to lower our expense levels
companywide by $250 million over the course of the year. We
exceeded that goal with a total of more than $300 million in cost
reductions in our three operating divisions by year’s end. We will
continue to focus on smart expense management to strengthen our
businesses and move closer to our financial targets.
Our diligent expense management had positive impacts in several
business areas, but nowhere were the effects more profound than in
our individual life insurance business. Much of the performance
improvement in this business is attributable to significant expense
reductions in our agency distribution channel. In addition to the
short-term bottom-line effects, the expense reductions have enabled
us to deliver more competitive product offerings.
Redeploying capital to boost shareholder value
Prudential Financial and its subsidiaries are highly capitalized. We
ended 2002 with unused corporate debt capacity of approximately
$3 billion and excess equity in our insurance subsidiaries. We are now
focused on redeploying that capital prudently to take full advantage
of growth opportunities and boost shareholder value, while main-
taining or enhancing our financial strength and credit ratings.
Our pending acquisition of American Skandia is an excellent
example of this redeployment. The transaction improves our earnings
per share and our return on equity. Equally important, it supports our
strategy of growing and protecting clients’ wealth. Our capital
position provides us the flexibility to explore additional acquisi-
tions. We will look closely at opportunities—both domestic and
international—that complement our business model and improve
our return on equity.
We will also put capital to work in our existing businesses,
particularly those with solid prospects for growth. We plan to
redeploy capital in order to grow our winners and reduce our capital
commitment to underperforming units. To the extent that their
growth meets our return on equity hurdle rates, we will also devote
additional capital to our fundamentally sound businesses.
Finally, we do not believe in holding more capital than needed to
fund growth or meet ratings requirements, so buying back stock
14 Growing and Protecting Your W ealth
An industry
leader in Korea
For five consecutive years,
our international life insurance
operation in Korea has been
rated the best company in
the industry at meeting
customers’ needs. According
to the N ational Customer
Satisfaction Index—
co-sponsored by the Korea
Productivity Center, the
Chosun Ilbo daily newspaper
and the University of
Michigan— Prudential of Korea
topped all other insurers in
the country in each of the
survey’s six categories,
which range from strongest
customer loyalty to fewest
customer complaints.
For the fiscal year ending
March 31, 2002, Prudential
of Korea was also recognized
as a leader in the industry
in other notable areas:
No. 1 in policy persistency
No. 1 in agent retention
No. 1 in agent productivity