Prudential Financial ( PRU) signed a definitive agreement to sell its property and casualty insurance companies that operate nationally in 47 states, outside New Jersey, to Liberty Mutual Group.

The company also reached a deal with Palisades Group for the sale of its New Jersey property and casualty insurance companies. Previously, Prudential signed a pact with Nationwide Mutual Insurance to sell its specialty automobile insurance business, THI Holdings, for a total consideration of $142 million. The sale is expected to close in the third quarter.

Prudential will sell its national property and casualty insurance companies for $413 million of notes issued by Liberty Mutual. The proceeds will represent a loss of $149 million, or 27 cents a share.

The transaction will result in Prudential receiving the proceeds of the pending sale of the specialty automobile business. The specialty automobile business is currently owned by the main entity conducting the national property and casualty insurance business.

Total proceeds from the New Jersey business should amount to around $260 million, including a return of capital of about $230 million and cash and a note from the purchaser. The proceeds will represent a loss of $113 million, or about 21 cents a share. Prudential expects to close both property and casualty transactions by the end of the year.

Prudential also said it will continue to explore options regarding the remaining personal lines business, Merastar.

The total proceeds from the national, New Jersey, and specialty auto insurance transactions will amount to about $815 million, Prudential said.

Additionally, Prudential reaffirmed its expectation of after-tax adjusted operating income in the range of $2.25 to $2.40 a share for 2003, which takes into account the sales and the planned merger of its retail securities brokerage business with Wachovia Securities. The 2003 expectation includes charges of roughly 25 cents a share from the combination of the retail securities brokerage operations and assumes appreciation in the S&P 500 of 8% for the year.

The loss on the sale of the national and New Jersey property and casualty businesses, and the results of operations of these businesses, will be excluded from Prudential's adjusted operating income and reported as results from divested businesses.

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