Prudential Financial's ($371 billion in assets, Newark, NJ) initial public offering, opening at a price of $29.10 on the morning of Thursday, December 13, marked the end of a massive technology effort that began soon after the firm's March 1998 announcement of its intention to demutualize. Carrying out the demutualization involved the tremendous data challenges of identifying each policyholder eligible to vote on the resolution, plus generating accurate evaluations of all customers' Prudential portfolios before soliciting their participation, as mandated by the state.
"We spent significant efforts building the platform and capabilities to allow us to effect the board adoption mailing"which went out to 10.5 million policyholders in December 2000"as well as to be ready for the IPO," says Joseph Pecoraro, vice president information systems, and lead technologist for demutualization.
The mailing package contained a ballot to vote on the demutualization, a W9 form for verifying the policyholder's Social Security number, a stock election form (for policyholders below a threshold to opt for stocks over cash) and a policyholder card for the customer's own records. To avoid costly redundancy in the mailing, Prudential embarked on what Pecoraro calls a "massive data-cleansing effort" involving inference-based technologies. "We built a data enhancement facility DEF, which was a front-end database to allow operations to make any necessary changes to records outside the policy admin systems, as well as feeding those changes back into the systems," he says. This "client consolidation" process to remove redundancies in policyholder information was important not only for purposes of demutualization, Pecoraro adds, but also because the process ensured that the firm had "a pristine set of data to service our customers going forward."
Prudential subsequently built a central repository of the normalized data, pulled from more than 30 policy administration systems, to both support the mailing and to execute distribution of value, or the assessment of each customer's portfolio.
An Internet/IVR First
The firm also took extra measures to encourage policyholder responses, Pecoraro explains, noting that state regulations require a minimum of one million policyholder votes, of which two-thirds must be affirmative. In addition to the standard return envelope sent to policyholders, Prudential also gave the option to respond by Internet or IVR (interactive voice response). "We were the first demutualizing insurer to use those technologies for inbound processing," Pecoraro notes. "It afforded the policyholders the ability to respond in a mode other than paper." Internet responses accounted for an average of 3.3 percent of responses and IVR for 5.3 percent.
Calling the demutualization process a "Herculean effort" from a technology perspective, Pecoraro says, "We formed a true partnership with business to allow for a successful execution in this transaction."
Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio