Dive Brief:
- An internal investigation into sales of some 180,000 Aflac insurance policies sold through Japan Post Holdings Co., is affecting the ability of the company to estimate revenue, Aflac’s finance chief says.
- Company CFO Frederick Crawford told the Wall Street Journal Friday he has limited information “on the trajectory of our sales forecast” while up to 20% of its policies sold through Japan Post are being reviewed to see whether improper sales tactics were used.
- “There are limits to the information that we have in relation to Japan Post,” Crawford told the Journal.
Dive Insight:
Since last month, Japan Post’s insurance unit has been reviewing whether sales people were engaging in improper practices such as charging premiums twice or not letting customers switch policies.
Japan Post is majority-owned by the Japanese government and sells Aflac’s products in more than 20,000 post offices, accounting for about a quarter of the company’s medical and other insurance products, according to reports.
Aflac has opened up its own review of policies sold through Japan Post between May 2018 and May 2019, according to an 8-K filing the company made to regulators last week.
“We are conducting a rigorous, voluntary review of postal channel sales,” Aflac said in the filing. “Should we become aware of any practices that are inconsistent with our compliance standards, we will take the necessary action and steps to address it immediately.”
Aflac revenue last year was about $22 billion, about 70% of that from sales in Japan. The company said its sales could fall by 50% this year, Bloomberg reported.
Crawford told the Journal he expects any decline to be temporary.
Late last month, responding to concerns over its Japan channel, Aflac issued a statement that Japan Post would continue offering its products to buyers. "Japan Post Group does not plan to halt the sales of Aflac Japan's cancer insurance through the Japan Post Group system," the statement said.
Japan Post late last year announced plans to invest $2.6 billion to acquire 7-8% of Aflac shares as part of a plan to expand overseas.
