Provider Overview: Prudential Annuities

Prudential Financial, Inc (NYSE: PRU) is a financial services provider that has approximately 50 million individual and institutional customers. The company is based in Newark, New Jersey, but has operations in Asia, Europe, and Latin America, as well as the United States. The company has approximately $542 billion in assets under its management, as of March 2009.

Prudential prides itself on helping people meet their financial goals, so much so, that they use the Rock of Gibraltar in their company literature. The rock symbolizes strength and security. Prudential has been in the business of providing financial services to clients for over 130 years. The original company was founded in 1875 and was the first company to make life insurance products available to the working classes.

Today, Prudential annuities are just one of the many products and services offered by the company. Prudential also offers products in the following areas: mutual funds, investment management, life insurance, and real estate services.

In terms of annuities, Prudential offers four basic types, according to their classifications:
• Variable Annuities
• Fixed Annuities
• Immediate Income Annuities
• Modified Guaranteed Annuities

The majority of the Prudential annuities are variable products. With a Prudential variable annuity, the investor can choose between three different groups of annuities: B Series, L Series, and X Series. Each offers different charges and fee structures. Annual costs for mortality expense and administration fees range between 0.65% and 1.65%. Additional fees for the investment options also apply. No matter which annuity series is selected, Prudential provides management services and a guaranteed death benefit.

Prudential also offers a fixed annuity called the Discovery Classic R Fixed Annuity. For the first year of the contract, Prudential offers an additional interest rate credit for this annuity. The minimum initial purchase payment is $5,000. The interest rate of the annuity will change at each purchase payment anniversary date.

The third Prudential annuity product is the Prudential Income Annuity. It can be set up as an immediate or a deferred annuity. With this annuity a life option is available, which guarantees a level of income that the client cannot outlive. The main difference between the Prudential Income Annuity and the Discovery Classic R Fixed Annuity is that with the Income Annuity only one payment is made. The minimum payment is $3,500.

The final type of annuity offered by Prudential is a modified guaranteed annuity. Prudential defines this as an annuity that offers predictable earnings for a guaranteed period of time - five, seven, or ten years. This annuity is called the Strategic Partners Horizon Annuity. To earn the guaranteed rate, the contract must be held until the end of the guarantee period.

If an investor is considering purchasing an annuity from Prudential, or any company, it is important to understand the financial strength of the company. The top rating agencies have given Prudential ratings toward the higher end of the scales. For example, Standard & Poors has rated the company AA- (Stable). This is the 4th highest category of 21. A.M. Best has rated Prudential as A+ (Superior) which is the 2nd highest category of 15. Finally, Fitch has rated the company as A+ (Strong) which is the 5th highest rating of 21.