Japan Post Group is planning to expand its business collaboration with American Family Life Assurance Co. (Aflac) by sharply increasing sales outlets handling the U.S. insurer’s cancer policies and jointly developing cancer insurance products, sources said.
The move by Japan Post, controlled by the government, is apparently intended to take into account U.S. concerns about Japan’s insurance market, coming in the wake of U.S. opposition to a diversification plan envisaged by Japan Post’s own insurance unit.
The opposition was expressed in the course of preliminary bilateral talks on the Trans-Pacific Partnership, a multilateral free-trade agreement.
Japan Post and Aflac are expected to reach a broad agreement later this week and make an announcement, the sources said Wednesday. Their plan calls for increasing the number of post offices selling Aflac cancer policies from 1,000 now to around 20,000 in phases from this fall as well as joint development of cancer insurance for sale by Japan Post possibly from fall next year.
Aflac is the largest provider of cancer policies in Japan, with around 15 million contracts, after introducing such policies for the first time in the country in 1974.
Japan Post Insurance Co., a wholly owned unit of Japan Post Holdings Co., was aiming to develop its own cancer products for sale. But the latest move would effectively force Japan Post Insurance to abandon that plan.
Given the strong U.S. opposition, Japan Post Holdings President Taizo Nishimuro indicated when he was chairing the government’s postal privatization panel last November that he would not approve any request by the postal insurance unit for selling cancer policies, effectively scuttling efforts to develop its own products.
Separately, in a joint interview Wednesday, Nishimuro said it plans to sell shares through an initial public offering by April 2015, six months earlier than it targeted.
The company, the country’s biggest holder of bank deposits, had said it was preparing for the offering by October 2015 as it moves closer toward exiting government control. Japan Post, which is also the largest holder of Japan’s debt, wants to announce a detailed listing plan by around September next year, Nishimuro told reporters in Tokyo.
“Deregulation and privatization are pillars of ‘Abenomics,’ ” said Nishimuro, 77, referring to the moniker for Prime Minister Shinzo Abe’s policies to revive economic growth. “Our IPO could be considered Japan’s big commitment and we want to work it out at all costs.”
In the early 2000s, then-Prime Minister Junichiro Koizumi drove efforts to privatize the postal system, which had ¥176.1 trillion in deposits as of March 31. The government has said proceeds from the sale would help pay for rebuilding from the 2011 earthquake and tsunami.
The offering may exceed ¥4 trillion, the previous administration’s postal reform minister, Mikio Shimoji, said in October.
In the run-up to the IPO, Japan Post Holdings will next month begin to report quarterly consolidated earnings, with the first report covering April to June this year, Nishimuro said.
The company will also release a three-year business plan in late September, including the realignment of the Japan Post group, he said.
In the realignment, the group’s mail delivery division, Japan Post Co., will reduce the number of post offices in large cities while refraining from closing rural offices, Nishimuro said. The nationwide number of post offices stands at around 24,000 at present.
Nishimuro became president one month ago at Japan Post Holdings, which owns Japan Post Bank Co. and Japan Post Insurance Co. as well as Japan Post Co.
The insurance unit is likely to obtain government approval on its new educational insurance product but the timing for the banking unit’s planned expansion into the housing loan market is still uncertain, he said.