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Prudential stops distribution of policy sold through Wells Fargo

12/12/2016 | 10:37pm EDT
Customers approach the Wells Fargo & Co. bank in downtown Denver

(Reuters) - U.S. insurer Prudential Financial Inc (>> Prudential Financial Inc) said on Monday it had suspended the distribution of a low-cost life insurance policy through Wells Fargo & Co (>> Wells Fargo & Co), pending a review of how the product was sold by the bank.

(Reuters) - U.S. insurer Prudential Financial Inc (>> Prudential Financial Inc) said on Monday it had suspended the distribution of a low-cost life insurance policy through Wells Fargo & Co (>> Wells Fargo & Co), pending a review of how the product was sold by the bank.

California Insurance Commissioner Dave Jones told Reuters on Monday he had ordered an investigation into allegations, the latest regarding Wells Fargo's sales practices, that retail bankers signed up customers for life insurance policies from Prudential without their permission.

The New Jersey Division of Insurance is also investigating, according to a Prudential spokesman and a news release from Jones's office. Spokesmen for the New Jersey office had no immediate comment.

The allegations are part of a wrongful termination lawsuit filed by three former managers in Prudential's corporate investigation division. The lawsuit was filed in New Jersey state court last week.

A class action suit against Prudential was also filed Monday in the U.S. District Court for the District of New Jersey on behalf of Wells Fargo customers who say they were unknowingly signed up for Prudential policies.

Prudential spokesman Scot Hoffman said the insurer is "in active discussions with the New Jersey Department of Insurance" about its review of the product Prudential sells through Wells Fargo, called MyTerm, and is responding to the regulators' requests for information.

Regarding the class action suit, Hoffman said "Prudential believes the suit is totally without merit and will vigorously defend itself."

Separately, Wells Fargo & Co (>> Wells Fargo & Co) said on Monday it has suspended referrals of renters' insurance to another carrier, pending a review of how the products were sold by the bank.

Wells Fargo spokesman Mark Folk declined to name the Wells Fargo partner that sells renter's insurance, but the bank's website indicates it offers the policies through Assurant Inc (>> Assurant, Inc.). An Assurant spokeswoman said the company did not comment on clients.

Wells Fargo's sales practices have been under a spotlight since September when regulators ordered the bank to pay $190 million in fines and restitution to settle charges that its employees opened as many as 2 million deposit and credit card accounts without customers' permission.

Prudential has worked with Wells Fargo since 2014 to sell the term insurance policy, known as MyTerm, to the bank's retail customers.

Wells Fargo employees were meant to direct customers to either self-service kiosks in branches or online to buy the insurance, without getting into specifics about the products because bankers are not licensed to sell insurance.

Customer responses in a survey conducted last year did not indicate potential fraudulent activity, Prudential said.

Prudential also said it had asked for Wells Fargo's assistance in gathering all the necessary facts.

Former Wells Fargo employees have blamed the San Francisco-based bank's high-pressure sales environment for its role in creating unauthorized accounts.

Some state and local governments have also suspended business with Wells Fargo, including the Pennsylvania Treasury Department.

(This version of the story corrects headline and first paragraph to show Prudential stopped distribution of its products through Wells Fargo. Moves details of Wells Fargo halting referrals of renters' insurance to paragraphs 8,9)

(Reporting by Richa Naidu, Suzanne Barlyn and Dan Freed; Editing by Martina D'Couto, Jonathan Oatis and Andrew Hay)

Stocks treated in this article : Assurant, Inc., Prudential Financial Inc, Wells Fargo & Co

ę Reuters 2016
Stocks mentioned in the article
ChangeLast1st jan.
ASSURANT, INC. 0.78% 161.16 Delayed Quote.17.40%
PRUDENTIAL FINANCIAL, INC. 0.52% 103.75 Delayed Quote.32.20%
WELLS FARGO & COMPANY 0.25% 47.92 Delayed Quote.58.38%
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Sales 2021 55 223 M - -
Net income 2021 6 437 M - -
Net Debt 2021 12 054 M - -
P/E ratio 2021 5,95x
Yield 2021 4,46%
Capitalization 40 131 M 40 131 M -
EV / Sales 2021 0,94x
EV / Sales 2022 0,93x
Nbr of Employees 41 671
Free-Float 57,9%
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Charlie F. Lowrey Chairman, President & Chief Executive Officer
Kenneth Yutaka Tanji Chief Financial Officer & Executive Vice President
Stacey Goodman Chief Information Officer & Executive VP
Timothy L. Schmidt Chief Investment Officer & Senior Vice President
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