Japan Post insurer plans 300b yen buyback from parent

[TOKYO] Japan Post Holdings' insurance unit plans to buy back about 300 billion yen (S$3.85 billion) of shares from its parent, giving the insurer more freedom to expand its business, according to people with knowledge of the matter.

The holding company, which owns about 64 per cent of Japan Post Insurance Co., will sell some shares to shrink its stake to 50 per cent or less, the people said, asking not to be identified because they're not authorised to discuss the deal before it's announced. The insurer's shares jumped.

Japan Post Insurance is seeking to rebuild its business after a sales scandal last year ended with the resignation of senior management and a regulatory penalty.

In March, a panel of external lawyers commissioned to investigate the matter said the firm should overhaul its business model and develop products to fit customer needs.

The insurer's board will meet as early as this month to discuss the buyback, the people said. The company also plans to raise about 100 billion yen in subordinated bonds, Bloomberg News reported earlier this week.

SHARES JUMP

Japan Post Insurance shares surged as much as 8.9 per cent in Tokyo on Thursday morning, the biggest gain since March. The stock has risen about 10 per cent this year. Japan Post Holdings rose 3.5 per cent, paring this year's decline to 21 per cent.

"While we are constantly studying our capital policy and ways to enhance shareholder returns, nothing has been decided," Japan Post Insurance said in a statement late on Wednesday. "We will make a timely disclosure when any decision is made."

A spokesperson for Japan Post Holdings declined to comment.

Japan Post Insurance is currently governed by a strict privatisation law, which limits activities such as sales of new products, as well as mergers and acquisitions. Such restrictions will be eased if the holding company's stake drops to 50 per cent or less.

In a business plan announced last month, Japan Post Holdings said it plans to cut its stakes in its insurance unit and Japan Post Bank to 50 per cent or lower.

BLOOMBERG