Life insurers to show criteria for voting as shareholders

Kyodo

Major life insurers will release by the end of this month guidelines detailing how they will try to reflect their opinions at shareholders’ meetings for the companies in which they hold stakes, industry sources said Wednesday.

The move is in line with recent guidelines set by the Financial Services Agency for institutional investors, modeled after Britain’s Stewardship Code. It seeks to enhance companies’ corporate value and growth through constructive dialogue with investors.

The guidelines would, for example, prompt the life insurers to disclose that they have opposed proposals at shareholders’ meetings, to show they have used their voting rights to improve management of the company, instead of complacently sitting through the sessions.

As huge shareholders, life insurers wield a major influence on markets and the management of companies.

The government, for its part, is urging institutional investors, including life insurers, to get involved in the management of the companies in their portfolios.

Nippon Life Insurance Co., the country’s leading life insurer, will release a list of items to be examined when deciding on how it will vote on proposals at shareholders’ meetings, the sources said.

For example, the insurer may consider opposing management proposals if a company does not pay dividends even though its business is profitable, or if the ratio of funds allotted for dividends payout is less than 15 percent of a company’s profits.

Rival Dai-ichi Life Insurance Co. plans to oppose a company’s proposal to give company auditors the right to purchase its shares or offer them retirement benefits, because doing so would weaken their monitoring of board directors, according to the sources.

Sumitomo Life Insurance Co. will exercise its voting rights at shareholders’ meetings after examining such factors as whether new shares have been issued for proper reasons, the sources said.

The agency said in June that most of the country’s major institutional investors, such as life and nonlife insurers, and trust banks have accepted the country’s version of the Stewardship Code, which was finalized in February.