The Financial Services Agency (FSA) on Friday ordered Prudential Life Insurance and Gibraltar Life Insurance, both part of the U.S. Prudential Financial group, to suspend some operations for more than three months over fraud committed by their employees.
The FSA also issued a business improvement order to Prudential Holdings of Japan, the parent company of the two Tokyo-based life insurers, calling for stronger corporate governance.
Under the partial business suspension order, which runs from Tuesday to the end of January 2027, the two insurers will be prohibited from entering into new insurance contracts or selling insurance products, so that they can focus on rebuilding their management and oversight systems.
Prudential Life has voluntarily refrained from making new sales since February, and the FSA’s order will further delay the resumption of its sales activities.
In January, Prudential Life said that more than 100 of its current and former employees had improperly received a total of ¥3.1 billion ($19.6 million) from customers, prompting the resignation of then-President Kan Mabara and an on-site inspection by the FSA.
According to a third-party investigation report released Thursday, the total amount of losses reported by victims exceeded ¥6.1 billion. The report cited a corporate culture that placed excessive emphasis on sales performance as one of the causes of the misconduct.
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Prudential Life plans to review its compensation system, which relies heavily on commissions linked to sales performance, and introduce a minimum guaranteed salary. Prudential Life President and CEO Hiromitsu Tokumaru and two executives will voluntarily return 30% of their monthly remuneration for three months.
