Japanese Insurer Woes Hit Aflac Stock -- WSJ
August 22 2019 - 03:02AM
Dow Jones News
By Nicole Friedman
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (August 22, 2019).
Insurer Aflac Inc. shares slid Wednesday on news reports that a
scandal at Japan Post Holdings Co. included improper sales of Aflac
products.
Last month, Japan Post's insurance unit said that it would look
into 183,000 policies sold over the past five years. The company
said some of those sales may have included improper practices such
as charging premiums twice or not letting customers switch
policies.
Media reports Wednesday said Japan Post improperly sold more
than 100,000 Aflac policies, in addition to the previously
disclosed issue. More than half of Aflac's revenue comes from the
sale of supplemental health and life insurance products in
Japan.
Aflac fell 5.6% to $48.98. Its shares are up 7.5% for the year.
Japan Post stock is down 22% this year.
"We are conducting a rigorous, voluntary review of postal
channel sales, " Aflac said Wednesday. "Should we become aware of
any practices that are inconsistent with our compliance standards,
we will take the necessary action and steps to address it
immediately."
Japan Post couldn't immediately be reached for comment.
Aflac said last month that it wasn't aware of any compliance
issues related to its cancer-insurance policies sold through Japan
Post and that it wouldn't suspend sales.
Japan Post said it wouldn't set sales targets for its products
this year, but Aflac said the sales targets would continue for
Aflac products sold through Japan Post.
Japan Post sells Aflac's products in more than 20,000 post
offices. These sales account for about 25% of Aflac's Japan sales
of cancer, medical and income-support insurance products, according
to Aflac's latest quarterly report.
The media reports indicate that up to 20% of Aflac policies sold
annually through Japan Post could be under scrutiny, said analysts
at Evercore ISI in a note to clients.
"If this large of a percentage of policies had mis-selling
issues, we wouldn't be surprised if Aflac polices were suspended
through Japan Post at least until the systems issues are
rectified," the note said.
Japan Post said in December it would acquire 7% of Aflac. Japan
Post started buying Aflac shares in May, with plans to complete the
acquisition this year.
Japan Post runs a bank and life-insurance company alongside a
unit that delivers the mail. The Japanese government is its
majority owner.
Write to Nicole Friedman at nicole.friedman@wsj.com
(END) Dow Jones Newswires
August 22, 2019 02:47 ET (06:47 GMT)
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