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Prudential May Be on the Hunt for Acquisitions, Says Wells Fargo Analyst

A recent report by Wells Fargo analyst John Hall makes you wonder if he knows something you don't - and how he found out.

According to an article in the Star-Ledger, a newspaper in Newark, New Jersey-based Prudential Financial's home town, Hall upgraded the stock based on "the insurer's capacity to do mergers." But unlike a lot of reports on possible mergers, Hall's was very specific. He pointed out that Prudential, which according to Fortune is the No. 2 ranked life insurer behind MetLife, emerged from the financial crisis with plenty of capital and is inclined to use it for acquisitions. While Prudential, through a spokesman, declined to comment on Hall's report, it appears that, at the very least, he had his ear pressed to the keyhole of the chief executive's door.

Hall also named companies targeted by Prudential, with the most likely being American International Group. AIG just put its foreign life units into special purpose vehicles (SPV) with a view toward selling or spinning them off and gave the Federal Reserve first dibs on the profits.

But Hall says a more likely target could be ING's U.S. retirement and Asian insurance businesses, which are more manageable in size and represent a less-complicated deal in terms of transparency and cross-ownership.

But Prudential wouldn't have things its own way, since MetLife and Axa Equitable could also be potential bidders for these same assets, he says.

Speculation? Perhaps. But don't forget that earlier this year MetLife had designs on Alico, one of the AIG units now in that SPV. There's gold in them thar hills, and John Hall is speculating on it.

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