TOKYO (Reuters) - Japan Post Insurance Co Ltd (7181.T) said on Monday it discovered 6,327 cases of improper sales in a previously flagged misconduct matter that is still under investigation and that 1,400 cases among them are suspected of violating the law.
This is the first time the unit of Japan Post Holdings (6178.T) has said some of the cases have broken the law.
Another group company, Japan Post Bank Co Ltd (7182.T), separately said earlier this month it had improperly sold investment trust products to elderly customers in about 19,500 cases.
The misconduct cases have rocked the Japan Post Group and some of their affiliates, pummelling their shares. Japan Post Insurance has suspended sales of insurance policies.
The admissions cast a shadow over the government’s plan to sell $10 billion worth of its shares in parent Japan Post Holdings to pay for reconstruction in areas hit by the 2011 earthquake and tsunami.
Japan Post Insurance had said in August it possibly sold a total of about 183,000 insurance policies that could have been disadvantageous to policy holders, over the five years through fiscal 2018.
It said on Monday most of the cases that fell foul of the law involved false explanations provided to customers. The company has so far scrutinized about 68,020 cases, accounting for about 37% of total misconduct, it said, releasing an interim report on the investigation.
“I will lead from the front to restore our trust from customers,” Mitsuhiko Uehira, president of Japan Post Insurance, said at a news conference. He, Masatsugu Nagato, chief executive at Japan Post Holdings, and other senior executives who attended the briefing, bowed in apology.
“We will continue to investigate with the view that even a single case of misconduct cannot be tolerated,” Uehira said.
Once their internal investigation is concluded, Japan Post Insurance will consider imposing punishments such as disqualifying insurance agents who violated law or internal rules, the company said.
While it had aimed to restart selling insurance policies in October, the company postponed it to January 2020.
The Financial Services Agency’s (FSA) division that monitors Japan Post Group declined to comment as the investigation is not over.
Japan Post Insurance shares have slumped about 20% since July, while Japan Post Holdings and Japan Post Bank shares have fallen 16% and 6%, respectively, over the same period.
The group’s U.S. affiliate Aflac’s (AFL.N) shares have also fallen since the news of the misconduct emerged on worries about its sales in Japan.
Reporting by Takashi Umekawa and Takaya Yamaguchi; Editing by Muralikumar Anantharaman