Japan Post CEO Vows to Restore Trust After Insurance Scandal
Japan Post CEO Vows to Restore Trust After Insurance Scandal
(Bloomberg) -- Japan Post Holdings Co.’s top executive vowed to restore public confidence in the postal giant, which has been rocked by a scandal over missold insurance.
In an interim report released Monday, Japan Post said it found about 6,300 cases of insurance sales at post offices that possibly violated the law or company rules.
“Customers’ trust has been gravely hurt, and I don’t think we can restore it quickly,” Chief Executive Officer Masatsugu Nagato said at a news briefing in Tokyo.
The scandal came to light in June with revelations that customers were potentially getting worse terms after switching to new policies recommended by Japan Post salesmen. Some were made to pay premiums for both old and new products concurrently.
The affair has shocked the Japanese public, especially in rural areas, where the nation’s 24,000 post offices are part of the social infrastructure providing financial as well as mail services.
Chief Cabinet Secretary Yoshihide Suga said that Japan Post needs to make drastic changes to prevent further damage. Japan’s financial regulator and internal affairs ministry will respond to the matter, Suga told reporters on Monday.
Japan Post has suspended active policy sales while it investigates the issue. U.S. insurer Aflac Inc., a close ally of the postal giant whose biggest market is Japan, has seen its sales slump as a result.
The affair has also clouded the outlook for the government’s latest divestment of Japan Post, a former state monopoly that went public in 2015. Nagato said that any share sale may be difficult considering the stock has slumped.
“It’s tough to do with this share price, I guess,” he said. “It’s up to the government to decide, not us, but I’m sorry that with this stock price, proceeds cannot be achieved.”
Shares of Japan Post Holdings have dropped 21% this year and are down about 29% since they were listed. The company owns almost two thirds of Japan Post Insurance Co., which has slid 36% in 2019.
Japan’s government owns 57% of the holding company, and the finance ministry in May picked underwriters for a third share sale that’s expected to be conducted later this year. Past offerings were heavily marketed to individual investors.
--With assistance from Takashi Hirokawa.
To contact the reporters on this story: Taiga Uranaka in Tokyo at turanaka@bloomberg.net;Yuki Hagiwara in Tokyo at yhagiwara1@bloomberg.net
To contact the editors responsible for this story: Marcus Wright at mwright115@bloomberg.net, Russell Ward
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