But his first job was to clean up Prudential after years of deceptive sales of life insurance and brokerage investments that cost customers dearly and led to payments of more than US$1.6 billion in fines and settlements to state and federal regulators, plus US$2.4 billion in restitution. Many other life insurers were penalized for selling policies in the 1980s and 1990s that customers did not need, but none as heavily as Prudential.
Struggling to change Prudential's corporate culture and to improve its efficiency, Ryan reduced the force of career agents and expanded sales through independent agents working only on commission. He sold several money-losing units, including Prudential's health insurance business, and many real-estate holdings. He expanded in Asia and Latin America.
Ryan has said he thinks Prudential needs to go public so it can raise capital more easily and have shares to use as currency for acquisitions. Analysts say that it will not be long before Prudential begins picking off smaller companies. Prudential will have such size, said Shannon Curley, an insurance analyst at Banc of America Capital Management, that "it will be like a bear coming out of the closet."
Ryan and other Prudential executives are expected to benefit personally from Prudential's transformation, as have executives of other former mutual companies. That is because they will be able to receive stock and options as part of their pay for the first time. Under the terms of the reorganization, however, the most senior executives will have to wait a year to receive their first Prudential shares.
Some policyholders have protested that their compensation in the conversion will be diluted because Prudential plans to give stock to a wider group of customers than those in previous mutual company reorganizations. But Robert Hunter, the director for insurance at the Consumer Federation of America, said he thought the policyholders were being treated fairly. "I'd rather err on giving shares to more people rather than to fewer people," he said.
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