Weiss Offers Prudential Policyholders Advice On Demutualization
Common Stock of Many Large Demutualizations Performed Well

PALM BEACH GARDENS, Fla., June 27, 2001 - The 11 million policyholders of Prudential Insurance Company of America should carefully consider the consequences before voting on demutualization, according to Weiss Ratings, Inc., the only provider of independent insurance company ratings and analyses.

The demutualization - a conversion from a policyholder-owned company to a stock company - was initiated by the company's board of directors on December 15, 2000, and it now requires an approval from policyholders before proceeding. The deadline for voting is July 31, 2001.

In April of this year, Prudential began mailing packets of information and voting instructions containing the details of the conversion. Each packet identifies the compensation options available to the policyholder, voting instructions, and an explanation of the benefits of the demutualization.

Weiss advises the following steps for Prudential policyholders:

Step #1: Consider the impact on you as a policyholder. Shareholders want strong earnings that will drive up the stock price, while policyholders want low rates and good service; balancing these conflicting interests is often difficult after demutualization. If future low rates and good service are more important to you, vote against. If profit potential is your primary goal, vote in favor.

Step #2: Recognize that the information from Prudential is inadequate making it impossible to determine whether or not the deal is fair. Card 4 of your voting guide shows the amount of compensation Prudential plans to give you in exchange for your ownership in the company. However, this figure is based upon an undisclosed formula that seeks to determine how much profit your policy has generated for the company in the past and how much it is expected to generate in the future. You cannot reproduce the calculation. If you object to this procedure, it is additional grounds to vote against the demutualization.

Step #3: Decide if the form of compensation is acceptable to you. Card 4 of your voting guide tells the type of compensation for which you are personally qualified. There are three:

Policy Credits-issued for retirement policies or annuities that are part of tax-qualified plans.

Cash-issued for policies subject to a judgment lien, policies outside of the U.S., or policies denominated in Canadian dollars.

Common Stock-issued to all policyholders who would not otherwise receive cash or policy credits. If the number of shares designated is 50 or fewer, policyholders may opt for cash instead.

The compensation breakdown appears to be fair. If the compensation method is acceptable to you, it is reason to vote for the demutualization plan. If it is unacceptable, it's a reason to vote against.

Step #4: If you are entitled to 50 shares or fewer, you can decide if you want to get cash or stock. Prudential is splitting its business between financial services and insurance; the shares you would receive are strictly in the financial services side. Determine if you want to invest in financial service stocks at this time. If the answer is "yes," lean toward taking the stock. If the answer is "no," the cash would probably be your best choice.

Here are some additional factors to consider in favor of taking the shares:

The largest insurers that have demutualized in recent years have performed very well in the stock market. (Warning: This trend could reverse in the event of a general market decline or a decline in this particular sector.)


You would not have to pay capital gains taxes until you sell your shares at some later date.

You pay no broker commissions when you receive the shares, and you can sell up to 99 shares commission-free, provided you wait at least 90 days after the IPO.

Plus, if you've received 99 or fewer shares, you can buy additional stock, bringing your holdings up to 100 shares without paying a commission.

On the other hand, here are some factors in favor of taking cash:

You will receive an additional payment to compensate for the cost savings Prudential will reap by avoiding the future administration of your account. But don't expect it to be very much.

If the value of the issued stock increases by more than 10% within the first 20 trading days, you will receive additional compensation equal to 10% of the IPO price.

The company estimates the IPO price could range from $22 to $38 per share. Therefore, if you receive 50 shares, their value would range from $1,100 to $1,900. If you do not return Card 3, you will automatically get a check for the value of the shares.

If you prefer to take the shares, check the box on Card 3 and return it with your vote. (Important: The vote for or against demutualization in Card 1 is totally separate from your choice of compensation on Card 3.)

Step #5: Send back the materials. Cast your vote in Card 1. Return Card 2 to avoid unnecessary IRS withholding. Return Card 3 if you want stock instead of cash.

According to state law, approximately one million of Prudential's 11 million policyholders must vote on the company's demutualization plan in order for the vote to be valid. Furthermore, at least two-thirds of those one million policyholders must vote in favor of the plan for it to pass.

We urge you to vote and have your wishes counted. Be sure to get the materials in the mail in time to be received by the Prudential's office by 4:00 p.m. on July 31, 2001.

Weiss issues safety ratings on more than 15,000 financial institutions, including HMOs, life and health insurers, Blue Cross Blue Shield plans, property and casualty insurers, banks, and brokers. Weiss also rates the risk-adjusted performance of more than 11,000 mutual funds. Weiss Ratings is the only major rating agency that receives no compensation from the companies it rates. Revenues are derived strictly from sales of its products to consumers, businesses, and libraries.

Consumers needing more information on the financial safety of a specific company can purchase a rating and summary analysis for as little as $7.95 through the Weiss Ratings web site at www.WeissRatings.com, or starting at $15 by calling (800) 289-9222.

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