Arthur F. Ryan
1942–

Chief executive officer and chairman, Prudential Financial

Nationality: American.

Born: 1942, in Brooklyn, New York.

Education: Providence College, BA, 1963.

Family: Married Patricia (maiden name unknown; community activist); children: four.

Career: Control Data Corporation, 1965–1972, various positions; Chase Manhattan Bank, 1972–1975, project manager, data processing; 1975–1976, securities processing; 1976–1978, head of securities processing; 1978–1982, oversaw domestic wholesale operations; 1982–1984, head of bank's systems worldwide; 1984–1985, executive vice president, worldwide retail-banking operations; 1985–1990, vice chairman, retail banking; 1990–1994, president and chief operating officer; Prudential Insurance Company of America, 1994–2001, chief executive officer and chairman; Prudential Financial, 2001–, chief executive officer and chairman.

Awards: National Alumni Personal Achievement Award, 75th Anniversary Alumni Services Award, and the Diamond Anniversary Award, Providence College.

Address: Prudential Financial, 751 Broad Street, Newark, New Jersey 07102-3777; http://www.prudential.com.

■ As the first outsider to be named chief executive officer (CEO) and chairman of Prudential Insurance Company of America, Arthur F. Ryan took charge at a time of turmoil. He oversaw the conversion of the company from a mutual form of ownership, in which policyholders owned the insurer, to stock ownership, resulting in the publicly traded Prudential Financial, which gained a listing on the New York Stock Exchange in 2001. Although regarded as unpretentious and possessing a warm and friendly manner, Ryan was also known for his tough management style. While serving as president of Chase Manhattan Bank he earned the nickname "the gorilla." His technology background (he began in Chase's data-processing department) was also seemingly at odds with his people-oriented approach to business. Ryan devoted a good deal of time to charitable works while at Prudential, as the company donated millions of dollars to support the arts and educational activities in its home state of New Jersey. Ryan regarded many of these public works as simply good business, thereby demonstrating his ability to balance the hard-nosed and amiable sides of his personality. If he had not become a chief executive at a major corporation, Ryan claimed he would have become a teacher.

BROOKLYN BORN, LONG ISLAND RAISED

Ryan was born in 1942 in Brooklyn, New York, and raised on Long Island. He graduated from Providence College in 1963, earning a BA in mathematics. It was during his college days that he gained his only sales experience: selling magazines during one summer. He then served a two-year stint as a lieutenant in the U.S. Army, serving in Washington, D.C., with the Army Security Agency. During his time in Washington he furthered his education by taking classes at American University. Following his discharge in 1965, Ryan went to work as a computer-systems designer for Control Data Corporation and later gained managerial experience when he was appointed area manager. He would put this combination of experience to use at Chase when he joined the bank in 1972.

THOMAS LABRECQUE: A CAREER CATALYST

Ryan began his career at Chase as a project manager in the data-processing division and soon began ascending the ranks of the institution. In 1975 he was put in charge of securities processing, and a year later became head of the entire securities processing business. Ryan received a major career break in 1978 when a treasury department executive, Thomas G. Labrecque, recognized his potential and promoted the relatively obscure Ryan to oversee all of the bank's domestic wholesale operations, including check processing, wire transfers, and trust and securities services. More importantly, Ryan formed a close bond with Labrecque, who in 1980 became a surprise choice for president at Chase. Ryan reported directly to Labrecque for the rest of his tenure at the bank. The two men formed a good team, possessing complimentary abilities. Labrecque was described as aloof and "pedigreed," a far cry from the rolled-up-sleeves, straight-talking approach of Ryan.

In 1979 Ryan was appointed to the bank's policy and planning committee, which was composed of 17 top executives who met on a quarterly basis to determine bank policy. In 1982 Labrecque expanded Ryan's job, giving him overview responsibilities for all of the bank's systems worldwide, including those employed by retail operations. The experience he gained on the retail side would be put to good use two years later. In 1984 Chase's consumer-banking business was reorganized, and Ryan was installed as its head with the title of executive vice president, responsible for retail-banking operations around the world. A year later he became a vice chairman. For the personable and down-to-earth Ryan, the move into the consumer area was a welcome change, allowing him to put his own experience as a consumer to good use in determining new product lines. "It's always nice to be in a business where you're one of them," he told American Banker in a 1990 profile. The consumer bank performed well under his leadership, enjoying a compound growth rate of 24 percent over the next four years. Ryan gave much of the credit for the operation's success to the decision of Labrecque and chairman Willard C. Butcher in the late 1970s to aggressively pursue the retail business, at a time "when it wasn't a very popular choice to make." Ryan went on to tell American Banker, "I had the opportunity to demonstrate that if we had the resources and spent them wisely, we could really do something."

"THE GORILLA"

Labrecque succeeded Butcher as chairman in 1990 and named Ryan as his replacement as president and to serve as his second in command. The two faced some major challenges. Along with Butcher they had been instrumental in taking Chase public in October 1989, offering such a promising picture of earnings that Chase was able to raise $625 million rather than the $500 million envisioned. Investors were not pleased, however, when the bank soon developed problems with some real-estate loans and the corporate-financing market went soft, resulting in Chase falling short of its projections. Labrecque and Ryan responded by ruthlessly slashing costs, streamlining the operation by eliminating layers of management, and focusing the bank's resources on its strongest businesses. As a result, they restored Chase to profitability, and Ryan earned his reputation as "the gorilla." He may have been informal and warm, but according to one colleague, "At the end of the day, you deliver or you are history" (BusinessWeek, August 5, 1996).

Ryan, at 52 years of age, had reached a plateau in his career at Chase. With Labrecque only four years older, there appeared little chance that he would ever take the next step and become chairman of the bank. Thus, when presented with the opportunity to become CEO and chairman at Prudential Insurance, Ryan accepted. His appointment marked the first time in the insurer's 120-year history that it had turned to an outsider, and someone without experience in the industry. But given the difficult straits in which Prudential found itself, there was good reason to look outside the company, even if the move risked demoralizing the executive ranks.

CHALLENGES AT PRUDENTIAL

For decades Prudential had traded on a solid reputation, portraying itself as "The Rock." But the mutual company, which came into existence to provide industrial insurance to the working class, paying for funeral and burial costs, expanded in the 1980s into financial products and landed in trouble. By the early 1990s the company was beset by a number of scandals as well as other endemic problems. The insurer had to admit that its securities unit had sold partnerships fraudulently, a mistake that would cost $1.5 billion to correct. Prudential also faced scrutiny on its life-insurance-sales practices, leading to a multistate regulatory investigation. In addition, the company posted a string of disappointing earnings and endured high restructuring costs that—along with $1.6 billion in losses from Hurricane Andrew in 1992 and a drop in the value of its real-estate and bond holdings—hurt profitability. Ryan also faced the difficult challenge of fundamentally changing a staid corporate culture that could in its own way warrant being called "The Rock." BusinessWeek offered one insider's take of the situation in a 1996 article: "This has been a company where the CEO could make a decision and some guy four layers down could derail it" (August 5, 1996).

REBUILDING "THE ROCK"

To address the problems at Prudential, Ryan had to use both the personable and the tough sides of his character, as well as rely on his technical background. To resolve the company's life-insurance-sales problem, Ryan encouraged New Jersey's insurance commissioner to launch an investigation, even though Prudential's home state was not one of the six looking into allegations that Prudential agents had deceived customers into buying new, expensive life-insurance policies as a way to pocket commissions without regard for the needs of the policyholders. Thus, New Jersey examiners led the multistate probe that resulted in Prudential being fined $35 million, the largest fine ever levied against an insurer, and agreeing to a settlement package that would pay $410 million to $1 billion to victimized policyholders. Although on the surface the punishment appeared stiff, critics claimed that Ryan had in fact engineered a sweetheart deal. Given that Prudential held assets worth $219 billion, the $35 million fine was not especially significant, and the terms of the settlement placed the burden of proof on policyholders to show they had been wronged. The day after the settlement was announced, Ryan began the process of repairing Prudential's tarnished image, taking out full-page newspaper ads to apologize for the company's "intolerable" sales practices (BusinessWeek, August 5, 1996). He fired hundreds of agents and managers, restructured the sales system, and established strong internal controls.

Ryan took other steps to improve the financials, both for the short- and long-term. He launched an $800 million annual cost-savings program and sold off more than $1.4 billion in businesses that were not considered core to the company's future. As he had done at Chase, Ryan also streamlined Prudential's management. Although he placed a great deal of emphasis on saving money, Ryan was not averse to making investments that would benefit Prudential over the long haul. He may have been an out-of-date technologist, but he still recognized the need to improve the company's information technology (IT). He spent large sums to upgrade Prudential's IT infrastructure, and under his leadership the company was in the vanguard of providing laptops, and later wireless handheld computers, to sales agents. In 1995 Ryan first began discussing the programming problems associated with the change to the year 2000. According to his chief information officer, Bill Friel, "He recognized all the metrics, the code, the function points and understood the issues associated with that, and how to plan and manage the program" (Insurance and Technology, September 1998). As a result, Prudential was able to get started on the conversion well before its rivals. Ryan's understanding of the role technology could play in business was also evident in the way he incorporated IT functions throughout the company to employ technology for even greater effect. He also looked to technology to help Prudential deal with compliance issues, especially important in light of the sales scandals the company had endured in recent years.

A HANDS-ON APPROACH

Just as Ryan was making progress on some fronts, his momentum in turning around Prudential would be stunted by fresh problems. The company's health-insurance business, for instance, was losing hundreds of millions of dollars. Prudential had been one of the pioneers in health care, establishing a health-maintenance organization in the early 1970s, but with increased competition in the managed-care sector in the 1990s Prudential was unable to keep expenses in line with revenues. As a result the company underperformed the market, leading to the resignations of the division's top two executives. Always the hands-on leader, Ryan stepped in to run the division himself until replacements could be hired. He ultimately decided Prudential needed to leave the health-care industry, aside from providing long-term coverage. Ryan and Prudential also faced continued problems with state regulators, dissatisfied with the life-insurance settlement. The Florida insurance commissioner, in particular, threatened to suspend the company's license to do business in Florida.

CHARITY A PRIORITY

From the start of his tenure at Prudential, Ryan attempted to treat the insurer as a public company in preparation of one day demutualizing it (converting the company from a mutual form of ownership, in which policyholders owned the insurer, to stock ownership). Part of that effort involved good corporate citizenship and involving Prudential in charitable works. For Ryan, whose wife Patricia was a community activist, public work was a personal value as well. Much of Prudential's financial support was devoted to Newark, New Jersey, where the company was headquartered. It spent $6.5 million to have the main concert hall of the New Jersey Performing Arts Center named after it, and coendowed a foundation that would buy and provide master plans for properties surrounding the arts center. Ryan and his wife supplemented the donation to the arts center with personal contributions. Prudential also established a $1 million challenge grant for the city's public schools and donated $200,000 of the $500,000 needed to subsidize the fee-based buses that circled downtown Newark in a further effort to revitalize the city. In addition, Ryan made a personal commitment to educational activities. He served as a trustee to Providence College, where he also established the Arthur Ryan Family Scholarship. In New Jersey, Ryan agreed to help lead New Jersey United, an organization established to improve public education by supporting a standards-based educational approach to public schools. Ryan also procured funding from Prudential for New Jersey United and donated staff time of two Prudential employees.

LEADS PRUDENTIAL'S CONVERSION TO STOCK OWNERSHIP

In the late 1990s Ryan began the formal process of converting Prudential from a mutual to a stock company, following on the heels of other mutual insurers who had taken the step earlier in the decade. An initial bill authorizing the change was passed by the New Jersey legislature in 1998, but it was not until 2001 that the process was completed. A new company, Prudential Financial, was incorporated and taken public to acquire the assets of Prudential Insurance. Ryan retained the CEO post and chairmanship of the new stock company, which on December 13, 2001 began trading on the New York Stock Exchange. With stock at his disposal Ryan was better positioned to move the company forward in a highly competitive environment where insurance and financial products were sold by insurers and bankers alike. Prudential could now supplement pay packages with stock options, an increasingly key element in attracting top-notch executive talent. Moreover, Prudential had the capacity to use stock to fuel growth. After the conversion, Ryan engineered a number of acquisitions, including the purchase of American Skandia, which was the largest distributor of variable annuities through independent financial planners in the United States. Prudential was able to create a retail-brokerage business with Wachovia Corporation. The resulting Wachovia Securities, was one of the largest retail financial-advisory organizations in the United States. In 2004 Prudential paid $2.1 billion for the retirement business of Cigna Corporation, making it the largest manager of stable-value and funding-agreement assets, serving more than 3.3 million active workers and retirees. Prudential also looked overseas, acquiring two South Korean asset-management companies. Ryan, who had come to Prudential Insurance with no experience in insurance, was now taking Prudential Financial into many of the retail-banking areas he had nurtured during his tenure at Chase. At the same time, he continued to repair Prudential's tarnished image.

See also entry on Prudential Insurance Company of America in International Directory of Company Histories.

sources for further information

Applebaum, Alec, "Prudential's Art Ryan Moved Quickly to the Top," Business News New Jersey, September 7, 1998, p. 6.

Bryant-Friedland, Bruce, "Prudential Insurance Rocked by Controversy, CEO's Efforts Overshadowed by Litany of Problems," Florida Times-Union, January 6, 1997.

Kantrow, Yvette D., "Promotions Come Naturally to Chase's Arthur F. Ryan," American Banker, June 25, 1990, p. 2.

"Money-Maker Ryan Heads for No. 2 Spot at Chase," United States Banker, April 1990, p. 46.

Rea, Alison, "Can Art Ryan Move 'the Rock'?" BusinessWeek, August 5, 1996, p. 70.

Scism, Leslie, "Ryan Carves a Fresh Profile for Prudential," Wall Street Journal Europe, January 18, 1996, p. 19.

Scism, Leslie, and Steve Lipin, "Prudential Hires Chase's Ryan as Chairman, Chief Executive Officer," Wall Street Journal, October 21, 1994.

Tauhert, Christy, "The CEO Who's in the Know," Insurance and Technology, September 1998, p. 34.

—Ed Dinger