Your Association Meets with Prudential

By Edward Stone, Esq.

On August 9, 2021, I joined a number of Association of BellTel Retirees board leaders in a meeting to discuss concerns about recent Prudential announcements regarding the sale of billions of dollars in its retirement businesses. Specifically, Prudential agreed to sell $31 billion of variable annuity contracts to Fortitude Re, a reinsurer owned by Fortitude Group Holdings, which is, in turn, owned in large part by two private equity firms: The Carlyle Group and T&D Holdings.

This is part of a disturbing trend of Private Equity firms muscling into the traditional insurance business in search of “sticky assets,” like your pension. Prudential also recently agreed to sell its full-service retirement business to Empower, a business unit of Great-West Life Insurance Company, Inc.

These two sales raised serious concerns we had about Prudential’s long-term commitment to its annuity business and your Association of BellTel Retirees board wanted first-hand assurances from senior Prudential executives that your pensions would not be adversely impacted in any way.

I was joined in the meeting by the late Jack Cohen and now Acting-Association Chairman, Lionel Brandon. Prudential representatives included Margaret (Peggy) McDonald, David Hozempa, and Prudential in-house employee benefits attorney Todd Moffett.

Your Association team was assured that Prudential was still committed to the Pension Risk Transfer business and that no changes to their servicing staff were contemplated.

In other words, it is business as usual from the perspective of The Association of BellTel Retirees and more than 40,000 of our members whose pension assets were previously transferred to the insurer.

We were assured that everything Verizon retirees had come to expect from Prudential would continue. I further took the opportunity of our meeting to also inquire about Prudential’s use of wholly-owned reinsurers to offload risk to captive reinsurers located outside of the State of New Jersey.

In this discussion and questioning, I pointed out that such related party transfers could make it difficult to assess Prudential’s ability to make good on its long duration liabilities – like your pensions. While nobody had any real substantive answers to these concerns, Prudential attorney Moffett promised to look into these matters with management and get back in touch. So far – radio silence!

Stay tuned as we strive to search for answers to difficult questions and do whatever we can to protect your retiree earned benefits.

 

This article was first published in the 2021 Winter Newsletter.