FOLLOW US

Prudential Financial shareholders have filed a request in New Jersey federal court seeking final approval of a $10 million derivative settlement, resolving claims that the company misrepresented cost assumptions tied to life insurance policies acquired in a prior business deal.

The motion, filed Monday by Prudential investors Donel Davidson and Robert Lalor, urges U.S. District Judge Stanley R. Chesler to approve the settlement. If granted, the $10 million will be paid to Prudential by the company’s officers and directors named in the suit. This amount is expected to offset nearly one-third of the $35 million out-of-pocket payment Prudential agreed to in a separate class action concerning the same conduct.

The settlement aims to end derivative litigation that began in 2020 and arose from Prudential’s revised mortality assumptions, which led to a $208 million writedown and a $25 million quarterly reduction in earnings for its individual life insurance segment. These developments triggered a 12.5% drop in Prudential’s share price, falling from over $101 to under $89.

Counsel for the investors emphasized that the deal is in Prudential’s best interests, stating that “continued litigation would pose substantial costs, delays, and business distractions, with a high risk of no recovery.” The legal team has requested $2.5 million in attorneys’ fees—25% of the settlement amount—in recognition of their efforts in bringing the derivative matter to resolution.

In June 2024, Judge Chesler granted final approval of a related $36 million securities class action settlement for investors who purchased Prudential stock between June 5 and August 2, 2019.

Plaintiffs’ attorneys highlighted that the decision to settle was based on a thorough review of public records, as well as confidential findings from a special committee of Prudential’s board, which investigated the events surrounding the company's $615 million acquisition of Hartford Financial Services Group Inc.'s life insurance business in 2013.

The plaintiffs are represented by Robbins LLP, Bragar Eagel & Squire PC, Herman Jones LLP, and Moore Kuehn PLLC. Prudential and the individual defendants are represented by Debevoise & Plimpton LLP and Walsh Pizzi O’Reilly Falanga LLP.

The case is titled In Re Prudential Financial Inc. Derivative Litigation, case number 2:20-cv-12772, in the U.S. District Court for the District of New Jersey.