Japan Post to acquire 7-8% stake in US insurer Aflac for $2.6 billion: Nikkei
13 December 2018
Japan Post Holdings is set to acquire a 7-8 per cent stake in US insurer Aflac for about 300 billion yen ($2.6 billion), to seek expansion outside postal services and to markets outside as the domestic market shrinks, the Nikkei Shimbun daily reported today.
Japan Post Holdings plans to make Aflac an affiliate after four years, as part of the strategy, Nikkei reported.
Japan Post, the former state postal service, will carry out the purchase through a trust bank and make Aflac an equity affiliate, whereby its earnings will be accounted for on Japan Post Holdings' books in proportion to the percentage stake, according to Nikkei.
Japan Post Holdings remains majority state-owned and hence the use of a trust bank.
Aflac Life Insurance Japan, the company's local operation, sells cancer insurance.
Japan Post Holdings hopes to approve the plan by the end of the month and complete the share purchase by the end of next year.
The two companies will remain separately managed entities without any transfers of executives to each other.
US law also prohibits foreign governments from influencing life insurers. Shareholding in Aflac means that the voting rights of the holder increase to a maximum of 20 per cent after its stake is held for a specified period.
Japan Post Holdings aims to take advantage of this rule to become the de facto largest shareholder when roughly four years on from the purchase and make the insurer a member of its group.
After making the investment, the holding company plans to expand Aflac's cancer insurance products sold at post office counters, jointly develop new products and collaborate in asset management with the insurer. Another idea being considered is to make joint investments in Japan and overseas in areas where the two companies can create synergies.
Japan Post Holdings has set the goal of making business acquisitions worth hundreds of billions of yen over the next three years ending March 2021. In the meantime, the company will also sell its holdings in Japan Post Bank and Japan Post Insurance as called for in the Postal Service Privatisation Act. The holding company expects the postal service's long-term profitability to deteriorate.