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Chairman’s Statement on the plan for the listing of three companies of the Japan Post group

26 December, 2014

 

Japan Post Holdings (JP Holdings) presented a plan for the “listing of three companies of the Japan Post group” on December 26, 2014. In this plan, it is stated that JP Holdings plans to be listed as early as the second half of the next fiscal year along with its two subsidiaries: Japan Post Bank and Japan Post Insurance (JP Insurance). The Life Insurance Association of Japan (LIAJ) recognizes this as a big step toward the complete privatization of these companies.

The LIAJ has repeatedly argued that, in order to develop a sound life insurance market, we cannot agree to any increase in the cap on the amount of insurance coverage and any expansion of business scope of JP Insurance without “ensuring a level playing field” in order not to impede proper competition with private firms which provide similar services, and without “having an appropriate system in place” in terms of underwriting and payouts.

The Postal Service Privatization Act provides that “JP Holdings shall strive to dispose of all shares as soon as possible for the complete disposal of shares”, and also, an additional resolution adopted by the House of Councilors states that “JP Holdings shall seek to deliver promptly and concretely on its specific accountability for the complete disposal of shares.”

However, the published plan for the listing only states that JP Holdings plans to dispose of JP Insurance shares in stages until it goes down to about 50% ownership, but does not indicate concrete schedule for the complete disposal of its shares.

Given that the credit capability generally creates competitive advantage in the financial services business, we are concerned that permanent virtual government ownership of JP Insurance can impede a “level playing field” as consumers may believe that the government will eventually provide some kind of support.

Therefore, JP Holdings should ensure a level playing field with private life insurance companies by indicating concrete action plans to eliminate the virtual government ownership of JP Insurance and carrying out them, such as by setting an appropriate time limit for the complete disposal of JP Insurance shares. Besides, although it is also stated that the listing is expected to increase the freedom of its business management, we cannot agree to any increase in the cap on the amount of insurance coverage and expansion of business scope of JP Insurance without “ensuring a level playing field” through the complete disposal of shares.

In order to develop the sound life insurance market, we request that the measures toward the complete privatization of JP Insurance be surely taken in accordance with the Japan Post Privatization Act.

Koichiro Watanabe
Chairman
The Life Insurance Association of Japan