TOKYO (Reuters) - The heads of Japan Post Holdings Co Ltd (6178.T) and two affiliates said on Friday they will resign over the improper sales of insurance policies, after the regulator announced administrative punishments against the companies.
Japan Post Holdings said it had picked Hiroya Masuda, a former minister of Internal Affairs and Communications, as successor to current CEO Masatsugu Nagato.
Japan Post Insurance Co Ltd (7181.T) President Mitsuhiko Uehira will be replaced by Tetsuya Senda, deputy president of the company, while Japan Post President Kunio Yokoyama will be taken over by Kazuhide Kinugawa, senior managing executive officer of Japan Post Holdings.
The changes will take effect on Jan. 6, the companies said.
“I accepted this job because I thought I could contribute to the country but I eventually caused troubles. I feel deep sorrow,” Nagato said at a press conference, adding that he had considered resigning from August.
Japan’s financial regulator earlier in the day ordered Japan Post Insurance and Japan Post to halt sales of insurance products for three months from Jan. 1 through end-March, after they were found to have improperly sold thousands of policies.
The postal service group said this month the number of improper sales cases had reached 12,836, of which 670 involved violations of the law or internal rules.
The two units have set sales goals that lack “feasibility and rationality”, the regulator said in a statement, adding there was dysfunction of corporate governance at the group.
The Financial Services Agency also issued a business improvement order to the two units and the parent.
Revelations of the misconduct have cast a shadow over the government’s plan to sell $10 billion worth of its shares in Japan Post Holdings to pay for reconstruction in areas hit by an earthquake and tsunami in 2011.
Japan Post Insurance said in August it had sold about 183,000 policies over five years through fiscal 2018 that may have been disadvantageous to holders.
A committee set up to investigate the matter said last week it had looked over around 82% of those policies and it would submit an additional report in March.
The three companies have said some of the cases that fell foul of the law involved false explanations provided to clients.
Reporting by Takashi Umekawa; Editing by Himani Sarkar and Louise Heavens