Prudential Financial (NYSE:PRU) has expanded its group insurance coverage in the U.S. to include dental coverage to offer a more lucrative product offering.  The company’s group insurance division did not fare well in the first quarter of 2012, observing a loss of $38 million. (see Prudential Worth $54 Despite Group Insurance Underperformance) This new initiative is part of the restructuring process within the division to improve future results.
Dental Inclusion to Attract More Customers
Group Insurance accounts for 5% of our price estimate for Prudential Financial, and has performed well historically, with the exception of last quarter. We expect the reforms made by the company to have a positive effect on the revenues generated through increased insurance sales, especially for employee benefit plans. The company has established a solid base for its dental coverage, with over 190,000 provider locations throughout the U.S.
Dental coverage is a highly sought after product, and we believe that its inclusion along with the reasonable prices offered by Prudential will attract a large number of customers, particularly small businesses. Group Insurance also covers life, disability, and long term insurance, and the company’s strong reputation and effective communications network will hold it in good stead.
Growth Continues Elsewhere
Prudential Financial continues its penetration into the promising Asian markets including India and China and will seek to capitalize on the economic boom observed in this geography. (See Prudential Sharpens Focus on Asian Growth Potential) The company has a good reputation in the region, with solid presence in Japan and Korea and is one of the prime suitors for ING Asia’s life insurance division, along with competitors MetLife (NYSE:MET) and Manulife (NYSE:MFC).
We will keep a close eye on the proceedings of the sale and also on Prudential Financial which recently stopped the sales of individual long-term care coverage. (See Prudential Exits Individual Long-Term Care Market)
We have a price estimate of $54.02 on Prudential’s stock, about 15% above the current market price.Notes: