Prudential 2002 Annual Report Download - page 4

of swift changes it takes to grow and become more
competitive in today’s business environment.
Insurance D ivision
Our core segment in this division—Individual Life and
Annuities—reflects a unit in the midst of a turnaround.
We transformed our product portfolio. We repriced
or introduced about 30 products last year to make our
portfolio more competitive and better balanced
between fixed and variable offerings. It’s our most
extensive product development effort over such a
short time frame.
We improved both productivity and retention
among our agents. We also stabilized our agency force
after 10 years of decline.
We continued to implement substantial expense
cuts. Among other benefits, this enabled us to bring
more competitive product offerings to market.
We continued to grow our third-party distribution
channels. In fact, we increased our third-party annuity
sales nearly eight-fold.
We announced our agreement to acquire American
Skandia, the largest distributor of variable annuities in
the United States through independent financial plan-
ners. The deal, when closed, is expected to put us
among the top 10 in terms of variable annuity assets
under management and variable annuity sales.
We implemented a repricing strategy in our group
insurance business. We also made significant service
enhancements and have doubled the profit level in
this business.
We implemented more than 80 rate increases in
our property and casualty business. We also revised
our underwriting guidelines to more effectively
manage risk and volatility, and we shut down some
distribution channels, which helped to improve our
expense ratios.
Investment D ivision
While our investment businesses were undeniably
affected by the toughest market cycle in years, the
breadth and depth of our investment capabilities helped
us weather the storm. And we’ve taken a number of
steps to better position our brokerage business.
We maintained an unusually broad asset mix
compared to most of our competitors. In turbulent
times such as these, that is a strength. And we’re a top
player in several asset classes: We’re No. 1 in private
fixed income. We’re a top-10 player in both public
fixed income and real estate asset management, and
we’re in the top 20 in public equity.
A significant portion of our assets is in relatively
stable asset classes, like fixed income and real estate.
In fact, equities make up just 20 percent of our assets
under management in the investment management
business.
We strengthened our position as a global asset
manager through the acquisition of TMW Immobilien
AG in Germany, one of Europe’s leading real estate
investment managers.
We broadened access to our investment manage-
ment products. For example, our managed account
program is now being sold through ING Advisors
Network, which serves more than 10,000 registered
representatives.
Our investor-driven strategy in our financial advi-
sory business has proved to be the right one. Tw o
years ago, we launched our investor-focused business
strategy—exiting the investment banking business and
repositioning our research to cater to investors, not
issuers. Today, while other securities firms are under
intense scrutiny about the objectivity of their research,
ours has been heralded as unbiased.
We’ve been aggressive in cutting expenses in our
brokerage business. These cost-cutting efforts have
enabled us to improve our operating leverage.
International Insurance
and Investments D ivision
Our international division remains our fastest
growing, and our life insurance business is at the heart
of that growth. We continued to build on this divi-
sion’s strengths in 2002.
Our international insurance business continued its
exceptional performance. Despite a very competitive
environment and significant life insurance rate increases
in many of the countries we operate in, over the last five
years we have grown the number of policies in force at
a compound annual growth rate of 22 percent, and new
annualized premiums have increased 17 percent. Our
life planner force has also grown 18 percent annually.
This excludes Gibraltar Life operations.
We successfully integrated Gibraltar Life into our
operations in Japan. The life advisor force and in-
force insurance business are stabilizing, and the
company is poised for growth in 2003.
We had more than $740 million of new annualized
premiums in our international insurance operations
last year, including Gibraltar. If this were a stand-
alone company in the United States, it would rank in
the top five.
2Growing and Protecting Your W ealth