Prudential Financial Inc.
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Case Code : BSTR114
Case Length : 31 Pages
Period : 1875 - 2002
Organization : Prudential Financial Inc.
Pub Date : 2002
Teaching Note :Not Available
Countries : USA
Industry : Financial Services
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
In 1875, John Dryden (Dryden), an American senator, founded a life insurance company, the Prudential Friendly Society (Prudential Friendly) in Newark, New Jersey, USA. He founded the company with the revolutionary idea of offering coverage to the industrial workers and people with low incomes.
He believed that poor people, who were on daily wages, were the ones who really needed insurance. In its initial years, the company's operations were limited to Newark. Prudential Friendly settled claims within 24 hours, which no other company did in those days. In 1877, the Prudential Friendly Society was renamed Prudential Insurance Company of America. (Prudential Insurance). As the fame of the company spread, the company decided to open branches in other towns New Jersey in as well. In April 1878, the company opened its first branch office in Paterson, New Jersey.
In 1879, the John Hancock Mutual Life Insurance Company7 and the Metropolitan Life Insurance Company (MetLife)8
of New York also entered the industrial insurance business.
Prudential Insurance and these two companies experienced exceptional growth. In
1885, Prudential Insurance reached the 'one million policies' mark, which was
commemorated by issuing the one millionth policy to its founder, Dryden.
In 1886, Prudential Insurance opened an agency in Missouri. By 1891, Prudential, Hancock and MetLife were called the 'Big Three' and held about 95% of the entire industrial insurance business in the US. MetLife was the leader with 4,855,766 policies, followed by Prudential Insurance with 3,406,189 policies, and John Hancock with 1,069,197 policies. With the business proving very successful, Dryden decided to establish the company's status by constructing the 'Prudential Building' in 1890. The Prudential Building was New Jersey's largest office building at that time, with new facilities like electric lights, hot and cold running water, elevators, etc. In 1898, Prudential Insurance entered into the largest transaction in the insurance industry until that time...