Prudential addresses concerns with the Department of Veterans Affairs

NEWARK, N.J.--(BUSINESS WIRE)--Prudential Financial today announced that it is in talks with the Department of Veterans Affairs to address the concerns that have been raised in connection with the Servicemembers Group Life Insurance Program.

“Given the questions raised over the life insurance program we administer for the Department of Veterans Affairs, we welcome an opportunity to address the concerns and to set the record straight.”

“It is important that the beneficiaries of our fallen service men and women are treated with dignity and respect during a very difficult time,” said Prudential Chairman and CEO John Strangfeld. “Given the questions raised over the life insurance program we administer for the Department of Veterans Affairs, we welcome an opportunity to address the concerns and to set the record straight.”

The company noted:

• Beneficiaries are vulnerable targets for abusive sales tactics. We believe that the Alliance Account takes the pressure off beneficiaries to do something with the money—a situation that may lead to imprudent and expensive investment decisions.
  • Our program provides a secure, conservative option and access to an independent advisor.
  • Beneficiaries who feel confident about making decisions right away have full access to their funds, which may be deposited in the financial institution of their choice, with funds earning interest until presented for payment.
  • We do not think it makes sense to force people to make decisions in a difficult and complex financial environment during a very emotional time in their lives.
• Beneficiaries who find a better interest rate can move the money by simply writing a draft.
• Beneficiaries receive the entire amount they are owed plus interest in their account. Prudential does not in any way take money from beneficiaries.
• More than 40,000 Prudential Alliance Account drafts cleared last year. We receive few complaints from beneficiaries about difficulties.
• It is “apples and oranges” to compare the rate paid on the Alliance Account to either the historical rate on our total portfolio or to a rate that requires investing in long-term assets.
  • Prudential pays a competitive rate compared to other options that involve funds that are readily available and do not put principal at risk.
  • The Alliance Account assets constitute less than 1 percent of our General Account assets, and the rate that we earn on the Alliance Account assets is not comparable to the rate earned on the General Account as a whole.
• On the subject of safety, while our Alliance Accounts are not FDIC insured (a fact that is fully disclosed in our material), these accounts are protected by State Guaranty Funds that provide protection of at least $250,000 in most states.

Prudential Financial, Inc. (NYSE: PRU), a financial services leader with approximately $693 billion of assets under management as of March 31, 2010, has operations in the United States, Asia, Europe, and Latin America. Prudential’s diverse and talented employees are committed to helping individual and institutional customers grow and protect their wealth through a variety of products and services, including life insurance, annuities, retirement-related services, mutual funds, investment management, and real estate services. In the U.S., Prudential’s iconic Rock symbol has stood for strength, stability, expertise and innovation for more than a century. For more information, please visit www.news.prudential.com.