PRUDENTIAL'S STATE LICENSE MAY GET PULLED.

Byline: Jeffrey Gold Associated Press 

California's insurance commissioner Thursday threatened to bar Prudential Insurance Co. of America from conducting business in the state if policyholders do not get fair compensation for the company's admittedly deceptive sales practices.

Prudential, the nation's largest life insurer, responded that its compensation program is fair and that it would ``vigorously resist'' any attempt to pull its license in California, its second-largest market.

California's Insurance Department has issued one subpoena to the company and formed its own investigative task force ``to develop the final pieces of evidence necessary to suspend Prudential's license,'' Commissioner Chuck Quackenbush said.

Quackenbush said ``the progress of discussions with Prudential about this matter convinces me that we need to finalize our case against Prudential as soon as possible.''

Newark-based Prudential said it was ``surprised and disappointed by the announcement'' and it expects talks to continue.

California is one of five states, along with Florida, Texas, Massachusetts and Virginia, that have not joined a settlement reached in July following a yearlong probe of Prudential by a multistate task force, which included California.

In that agreement, Prudential acknowledged that its agents used improper sales tactics and agreed to pay a $35 million fine. That fine has already been divided among the 45 states and the District of Columbia. The agreement also provides some compensation for policyholders.

If any of the five dissenting states negotiate a better deal for policyholders, then policyholders in all states are to get the same deal.

All of those states, except Virginia, have also filed objections to a proposed settlement in a related class-action lawsuit. Their opposition does not bar their residents from participating in the class-action settlement, which could bring at least $410 million - and perhaps more than $1 billion - to 10.7 million people who bought policies from 1982-95.

Florida's insurance commissioner has ordered Prudential to show why it should continue to be allowed to do business there in light of its sales practices, and the Florida attorney general is investigating document shredding in that state.