Japan Post’s Insurance Unit to Buy Back About $4 Billion of Shares

Japan Post Holdings Co.’s insurance unit plans to buy back up to 29% of its shares for about 439.8 billion yen ($4 billion) as its parent company reduces its stake, giving the insurer more freedom to expand its business.

Japan Post’s stake in the insurance unit will fall to 49.9%, according to a statement Friday. The acquisition of the stock will improve capital efficiency, boost shareholder returns and advance the privatization of the postal service, the statement said.

Investors had been anticipating a buyback as Japan Post Insurance Co. builds its business following a sales scandal in 2019 that resulted in the resignation of senior management. The company, which is currently governed by a strict privatization law that limits new product sales and any merger activity, will see restrictions ease if the holding company’s stake falls to 50% or less.

Shares of the insurer closed 1.7% higher on Friday before the announcement, taking its advance over the past 12 months to 72%.

Photograph: Pedestrians walk past signage for Japan Post Group in Tokyo, Japan, on Thursday, Jan. 9, 2020. Photo credit: Kiyoshi Ota/Bloomberg.

Related:

Japan Post’s Insurance Unit Plans $2.9 Billion Buyback of Shares from Parent