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 recently traded down 4.3% to $49.62. Its shares are up 8.9% 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 [email protected]
Source: Read Full Article