Prudential plans to exit P-C business

Rough Notes, Jul 2003

Prudential Financial will get out of the property and casualty business by the end of this year, selling the business it writes in 47 states and the District of Columbia to Liberty Mutual, and its New Jersey business to Palisades Group. The business assumed by Liberty Mutual, totaling $1.1 billion in auto and homeowners premiums, will boost that carrier's P-C business by almost 25%, making Liberty the eighth largest writer of personal lines in the United States.

The sale of Prudential's P-C business includes a long-term distribution agreement enabling eligible Prudential agents to sell personal lines property and casualty products through Liberty, Palisades and Homesite, a strategic partner of Palisades.

Liberty Mutual writes personal lines business through approximately 360 local sales offices and three call centers in the United States and Canada. It also offers group-sponsored voluntary auto and homeowners programs to employees and members of more than 8,500 companies, credit unions, professional associations and alumni groups.

The New Jersey business being acquired by Palisades (PRUPAC-NJ) represents 8% of the state's auto market and 10% of the state's homeowners market. Palisades will operate the company as a separate insurer with its own employees and management team.

Prudential previously agreed to sell its specialty auto business, THI Holdings, to Nationwide in a transaction that is expected to close at the end of the third quarter. Prudential will continue to explore options regarding its remaining P-C business-payroll deduction group products, sold through Merastar.