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PRUDENTIAL PLACED UNDER REVIEW BY A.M. BEST COMPANY

 OLDWICK, N.J., Dec. 10 /PRNewswire/ -- Effective immediately, A.M. Best Company has placed the "A++" (Superior) Best's Rating of The Prudential Insurance Company of America, Newark, N.J., under review.
 This action follows discussions with senior management of the Prudential companies regarding the financial implications and uncertainties that have arisen from the settlement by Prudential Securities with respect to improper sales tactics utilized in the marketing of its limited partnerships in the early 1980s, the allegations of improper appraisal practices in its Prudential Property Investments Separate Account (PRISA) unit and the possible disruption this may have on its institutional pension fund clients. Additionally, this action reflects the substantial level of catastrophe risk in its property/casualty business, the significant exposure to and performance of its real estate holdings and the negative impact that all of these issues may have on the overall financial strength and ongoing business activities of The Prudential.
 In October, Prudential Securities reached an agreement with the Securities and Exchange Commission and state regulatory authorities to settle various investor claims of fraud with respect to the sales practices of limited partnerships marketed in the 1980s. An open-ended settlement was reached for a minimum of $371 million. While the exact financial impact of this agreement is uncertain, A.M. Best believes that the ultimate cost of litigation will be manageable in that 200,000 of the possible 340,000 claimants have had their claims satisfied. However, in addition to the financial implications of the settlement, A.M. Best will continue to monitor the impact that the negative publicity surrounding the ongoing legal proceedings may have on future marketing activities and existing business of The Prudential.
 A.M. Best continues to recognize the company's financial flexibility, diversity and leadership position in its business operations, as well as its substantial earnings capacity and favorable capitalization.
 "In the next several weeks, we will continue our discussions with senior management of The Prudential regarding the financial and operational implications and uncertainties related to the limited partnership scandal and PRISA, its ability to adequately downsize the catastrophe exposure in its property/casualty business and the underlying impact this could have on its distribution force, the sale of a minority stake in its reinsurance operations, as well as the performance of and outlook for its mortgage and real estate holdings," said Larry G. Mayewski, senior vice president of the life/health division of A.M. Best. In addition, Mr. Mayewski noted that "due to the developing status of many of these issues we will have a much clearer picture of the overall situation in early 1994." However, he emphasized that "if upon completion of our review a decision is made to reduce the Best's Rating of The Prudential, we believe that the company will continue to maintain superior financial strength."
 The "A++" (Superior) Best's Ratings of Pruco Life Insurance Company and Pruco Life Insurance Company of New Jersey, strategic subsidiaries of The Prudential Insurance Company of America, were also placed under review in conjunction with the parent's rating. Both these companies provide specialty marketing and distribution capabilities for the Prudential Insurance Company of America, mainly variable annuity and universal life products. The ratings of The Prudential Property and Casualty Insurance Company (PRUPAC) and The Prudential Reinsurance Company, both property/casualty insurers, are unaffected by this action.
 -0- 12/10/93
 /CONTACT: Larry G. Mayewski of A.M. Best Company, 908-439-2200/


CO: The Prudential Insurance Company of America ST: New Jersey IN: INS SU: RTG

SH -- NY019 -- 2535 12/10/93 10:10 EST
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Publication:PR Newswire
Date:Dec 10, 1993
Words:590
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