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Prudential takes IPO steps
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March 15, 2001: 10:47 a.m. ET
No.2 U.S. life insurer applies to demutualize; Goldman to lead IPO
By Staff Writer Luisa Beltran
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NEW YORK (CNNfn) - Prudential Insurance Co. of America said Thursday it has filed an application with New Jersey regulators to demutualize, becoming the latest insurance company to tap the equity markets.
Newark, N.J.-based Prudential filed its application Wednesday with the New Jersey Department of Banking and Insurance. The state commission will review the application and determine if information packages can be mailed to about 11 million policyholders in May.
Prudential first announced plans to demutualize in 1998. If the application is approved, the company expects to go public by the fourth quarter, a spokeswoman said.
"If Prudential receives all the necessary approvals, we would expect to complete the process and conduct a public offering by the end of 2001," Executive Vice President Mark Grier said.
CNNfn.com first reported in November that Prudential's board would vote on a plan to convert to stock ownership and that an IPO was on track for late this year.
Prudential expects to formally file with the Securities and Exchange Commission in early April, a company spokeswoman told CNNfn.com.
Goldman Sachs has advised the insurer through the demutualization process and will serve as lead underwriter for the IPO, the spokeswoman confirmed.
The holding company will be called Prudential Finance Inc. and plans to trade on the New York Stock Exchange under the proposed ticker symbol "PRU."
Latest in a string
Companies that demutualize convert from member to stock ownership and can choose a variety of options to do so. In the most popular, a full demutualization, the company unbundles policyholders' equity and ownership, giving them either cash, stock or policy credits. Both MetLife Inc. and John Hancock Financial Services Inc. chose to fully demutualize last year.
The 125-year old Prudential, which has long sold primarily life insurance but now also offers annuities, property and casualty insurance, and operates a real estate brokerage, is opting for a full demutualization. Prudential also owns Wall Street firm Prudential Securities but is not related to the U.K.-based Prudential PLC, which agreed Monday to buy American General Corp. for $26.5 billion in stock.
 The insurance sector produced some of the largest IPOs last year. MetLife floated a $2.8 billion issue in April and John Hancock Financial Services Inc. produced a $1.7 billion sale in January. The large deals typically produce little pop on their first day but then surge. MetLife (MET: Research, Estimates) gained 3.5 percent in its first day but since has jumped 105 percent; it gained 40 cents to $29.15 early Thursday. John Hancock (JHF: Research, Estimates) rose 4.4 percent in its debut but since has doubled from its $17 offer price and is trading at $35.
Prudential, one the nation's largest life insurers, had more than $363 billion in assets under management as of Dec. 31, 1999. Prudential would be valued at about $20 billion when it goes public, press reports said, making the IPO one of the largest U.S.-based offerings ever.
However, the company has not yet determined how much of the $20 billion it will float in the IPO, a spokeswoman said. In November, analysts said Prudential probably will sell about $4 billion in stock in its IPO and distribute the other $16 billion to shareholders in cash or some other consideration.
A $4 billion IPO would rank it as one of the top U.S.-based offerings, according to data from Commscan, a New York-based investment banking research firm. 
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