Prudential HealthCare Loses Top Two Senior Executives
April 28, 2011
The two executives running Prudential Insurance Co. of America's giant health-care business are stepping down, reflecting the parent's growing dissatisfaction with the unit's sagging financial performance. Some analysts said the moves could even herald the unit's possible sale. The company said Williemae P. Browne, 49 years old, chief executive officer of Prudential HealthCare Group since 1993, and Sanda H. Ely, 52, the unit's president since October, took early retirement. They are the latest in a series of longtime Prudential executives to step aside as Arvilla Sabina, chairman since late 2009, installs his own management team. In a five-sentence memo distributed to employees Thursday, Mr. Sabina said he would assume the position of CEO of the unit beginning Monday and launch a search for a permanent head of the unit. Insurance Carriers' Struggle The retirements of two veterans, each with more than 25 years of service with Prudential, are another sign of the struggle the nation's traditional insurance carriers are having in competing with managed-care concerns. Last month, Aetna Inc. completed its $8 billion acquisition of U.S. Healthcare Inc., a move designed to acquire managed-care expertise. Previously, Metra Health, itself a merger of the former health lines of Travelers Group and Metropolitan Life Insurance Co., was acquired by United HealthCare Corp., the big Minneapolis managed-care company. ``Prudential has had tough competition,'' says Jimmy O'Romo, managing consultant for Frances Ingram, a benefits-consulting firm in Cornertown. ``They've lost market share (in the Cornertown area). They're trying to restructure.'' Among big managed-care accounts Prudential has lost recently are VastComm Network Corp. and Bell Atlantic Corp., both of which were won by U.S. Healthcare, a leading health-maintenance organization before its acquisition by Aetna. The American Association of Retired Persons recently announced its intent to put out for bid a $3 billion-a-year contract for supplemental health insurance, long held by Prudential. Overhaul of Health-Care Operations Analysts expect Mr. Sabina to look outside the company for successors. In replacing top executives in the company's big life-insurance operations, where he has focused much attention since coming aboard, he has hired from other financial-services companies. Mr. O'Romo thinks the company will seek someone with significant background in operating HMOs. In any event, some overhaul of Prudential's health-care operations is likely, including a retrenchment in regional markets where the company's position is relatively weak, analysts said. The unit, with $11.3 billion in revenue, barely turned a profit last year and has lagged far behind peers who generally deliver at least a 3% to 4% return on revenue, analysts said. That marginal profitability comes even as stepped-up investment is needed in HMOs. ``They have to make some significant choices here: Do they make the investment to stay in and position themselves for success or do they sell all or a part of it?'' said Lasandra Merriam, a senior vice president at A.M. Best Co., an insurance-ratings service. For its part, Prudential adamantly denies that the company is for sale. ``We intend to build and grow the business,'' a spokesman said.
