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News > Companies
Prudential to settle?
September 24, 1996: 12:10 p.m. ET

Report: Insurance firm to pay up to $1B over questionable sales practices
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NEW YORK (CNNfn) - Prudential Insurance Co. of America will reportedly pay at least $410 million -- and perhaps $1 billion -- to settle lawsuits brought by policyholders who claim agents duped them into buying costly insurance coverage.
     The Wall Street Journal said Tuesday that the class-action settlement will pay perhaps 220,000 policyholders at least $2,300 each, plus punitive damages.
     The final price tag for Prudential could reach $1 billion, but sources told the Journal that a $770 million price tag appears more likely.
     At the minimum, sources told the paper, Prudential expects to pay at least $410 million.
     Even then, the company will still face dozens of lawsuits brought by individuals who do not want to participate in a class-action settlement.
     Additionally, a settlement, which the Journal said Prudential could announce as early as Tuesday, would need approval from a Newark, N.J., federal judge.
     Plaintiffs claim that over a 15-year period, some Prudential agents -- using a practice called "churning" -- duped many customers into using existing policies' cash value to buy even more expensive coverage.
     Many of the alleged victims had been elderly.Back to top

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.