CASE STUDY
details of our general account portfolios.
• Outline in detail our approach to asset and liability
management as well as strategic and tactical asset allocation, with holdings quantified, categorized, and presented by
type, asset class, industry, investment grade and region.
The clarity and fact-based nature of this information
would be strikingly different from the often emotional and
speculative reporting that many clients were seeing in the
media. This sort of detail wouldn’t be amenable to five-sec-ond sound-bites nor immediately apparent from a dense
and essentially unstructured listing of 20,000 individual
holdings. In short, we took information that was overwhelming and not terribly helpful and recast it into
useful, easy-to-understand segments and structures.
Crisis Mode
At the end of October 2008, after securing approval
from the company’s top leadership and risk management committee, about 25 people in a Prudential Retirement working group – from marketing to
legal to compliance to investment-management and
finance – effectively took on second jobs for six weeks,
including nights and weekends. Their charge: Prepare
the new portfolio reports for Prudential’s general accounts and make sure that the end product would be easy
to understand but also sufficient in quantity, facts, and details to help sponsors become more comfortable with their
plans’ guaranteed and stable-value products.
The first reports, for the third quarter 2008, were finished
in early December. Copies were distributed, with a separate
narrative “Guide to the General Account” and a Q&A document, to all institutional clients and to plan intermediaries and advisers. The result? Clients reported that the new
reports were an effective response to the extraordinary crisis
everyone was witnessing, and the new documents have subsequently become the foundational tool Prudential uses to
engage clients in conversations about stable-value products.
In a live webinar produced to share the new reports, some
800+ clients and advisers logged on from across the country
and submitted 66 questions, which were subsequently answered in writing and provided to all clients and advisers,
regardless of who had asked the questions. The information
and live webinar dealt so effectively with the concerns and
issues that fewer than 200 clients and advisers logged on for
the webinar covering fourth quarter reports, and there were
only four questions.
Total Investments, PRIAC (in millions, unaudited)
$76
$426
$50
$59
$814
$1,255
Short Term 6%
Commercial Mortgage-
Backed Securities (CMBS) 12%
Commercial Mortgage Loans
(CMLs) 23%
Corporate Securities 49%
Asset-Backed Securities 4%
Residential MBS 4%
Other 2%
Equity 0%
US Government 0%
Foreign Government 0%
A sample chart in one of Prudential’s General Account guides informed clients and advisers at a glance that turmoil in the equities
market had little direct impact on the overall portfolio. In subsequent charts, sub-segments of the total portfolio are addressed individually, with key underlying data such as debt-service coverage and
loan-to-value ratios highlighted. (See note on next page.)
