Prudential extends Japan life sales pause, pulls growth target

[NEW YORK] Prudential Financial is extending a voluntary suspension of new life insurance sales in Japan that the company undertook in February in a bid to restore trust following a regulatory probe into employee misconduct.

The sales pause, which was initially expected to end on May 10, will continue till Nov 5. Prudential said that the complexity of the operational, governance and organisational changes it needs to make before resuming sales is greater than previously expected, according to a statement on Tuesday (Apr 21).

An independent third-party review of Prudential of Japan’s (POJ) management system is still ongoing and is expected to take another several months to complete.

“As we said earlier this year, we would not resume new sales until we were comfortable that POJ’s compliance and oversight environment supports doing so,” Prudential CEO Andy Sullivan said.

Prudential walked back its objective to grow earnings per share by as much as 8 per cent by 2027. It expects to take a hit of as much as US$575 million in 2026 and US$450 million in 2027 from the sales pause.

In February, the insurer announced a 90-day sale pause after misconduct by employees prompted a regulatory probe.

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At the time, Prudential said an internal investigation found that more than 100 former employees in its Japanese unit engaged in improper investment solicitation. The misconduct resulted in more than 3.1 billion yen (S$24.8 million) in damages to the insurer’s local clients at the time.

The actions ranged from fraud to borrowing money from customers, the insurer found. In one case, an employee solicited customers to invest in a fictitious financial product before resigning in 2023. In another case, a worker received money from multiple customers by using the name of the employee stock ownership plan. Both incidents were referred to the police.

The life insurer has said that the misconduct was facilitated by insufficient oversight and a compensation system that was excessively linked to performance. To avoid any similar wrongdoing in the future, Prudential intends to restructure its incentive mechanisms and improve its local management’s sensitivity to risk. BLOOMBERG