Prudential Life Unclaimed Life Insurance Policy Payouts and Demutualization Compensation
Prudential Life Insurance
On December 15, 2000, Prudentialís Board of Directors unanimously adopted a Plan of Reorganization to convert from a mutual life insurance company to a stock company. The conversion occurred on November 16, 2001, after regulatory and policyholder approvals - 36% of eligible policyholders voted.
Demutualization is the process of converting a mutual life insurance company, owned by its policyholders, to a publicly traded stock company owned by shareholders, pursuant to a plan of conversion approved by government regulators.
The amount paid to each policyholder is based on a number of factors, including length of time the policy has been in force, face value of the policy, and total premiums paid. For many policyholders, the windfall arising from demutualization can be substantial, but millions of missing policyholders and heirs aren't aware they are entitled to receive compensation.
Most eligible policyholders (including private employers - both for profit and not-for-profit, labor organizations, trusts, employee benefit plans, governments - federal, state, and local, schools, churches and associations) received 110 million shares of stock worth - $3.025 billion - in the new company, Prudential Financial, in exchange for their ownership interest. Other eligible policyholders received cash or policy credits. Prudential was unable to locate 1.2 million policyholders entitled to receive compensation.
Compensation consisted of a fixed component of 10 Prudential Financial common shares, as well as a variable component based on policy value. Lost policyholders received cash compensation of $28.44 per share entitlement. The shares were offered to the public at $27.50. In the first year after the initial public offering, the price of a Prudential common share increased 16%.
Between one-quarter and one-half of all life insurance policies go unclaimed, because it is generally up to family members to notify the insurance company when a policyholder dies, and virtually no effort is made to find lost beneficiaries.
In addition, millions of missing policyholders aren't aware they are entitled to receive this demutualization compensation. Contact efforts were unsuccessful, due to name changes after marriage or divorce, unreported changes of address, expired postal forwarding orders and non-current beneficiary information.
By law, unclaimed policy benefits, including demutualization compensation, are remitted to the custody of a government trust account until claimants come forward. Last year government custodians collected $22.8 billion, of which less than $1 billion was claimed.
It is highly recommended that current and former policyholders and heirs - the majority of whom are unaware they're entitled to unclaimed policy benefits, stock & cash - initiate an Unclaimed Life Insurance Policy Search
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