Business / Corporate

Japan Post Holdings' sales dropped 4.8% for April-September amid insurance scandal

JIJI

Japan Post Holdings Co. said Thursday its group revenue in the April-September half dropped 4.8 percent from a year earlier to ¥5.96 trillion.

The fall was chiefly caused by a suspension in the promotion of insurance products from mid-July, following revelations of inappropriate insurance sales practices by the Japan Post Insurance Co. unit.

The number of new insurance contracts declined 30,000, to 580,000, in the first half of the current business year.

After the sales promotions were halted, the number of new insurance deals plunged to about 10 percent the level seen a year before, a senior Japan Post Insurance official said.

Meanwhile, Japan Post Holdings’ consolidated net profit rose 5.8 percent, to ¥236.5 billion, as labor costs at the Japan Post Co. unit, which sells the so-called Kanpo insurance policies at post offices, decreased in line with a voluntary sales restriction.

“We have a sense of crisis about the fact we can’t secure new insurance contracts,” said Noboru Ichikura, Japan Post Holdings’ senior managing executive officer, at a news conference.

Although the Japan Post group aims to resume its sales promotions in January, it has yet to set a specific date, a senior Japan Post official said.

The insurance firm’s revenue fell 6.1 percent, to ¥3.66 trillion, due to the results of the misconduct, but it saw net profit grow 11.0 percent, to ¥76.3 billion, thanks to steady returns from asset investment and a drop in insurance sales commission fees paid to the postal unit.

The company allocated ¥3.5 billion for investigations into over 180,000 policies suspected to be detrimental for their holders.

At Japan Post, revenue fell 1.0 percent to ¥1.87 trillion due to a smaller income from commission. But its net profit doubled to ¥38.4 billion on the back of a reduction of personnel expenses linked to the sales of insurance.

Meanwhile, Japan Post Bank suffered revenue and net profit drops, due chiefly to a decline in yields on its Japanese government bond holdings as the Bank of Japan continues its negative interest rate policy.