Prudential Japan CEO Resigns as Internal Probe Reveals Financial Misconduct Involving Over 100 Employees
Prudential Life Insurance of Japan announced a sweeping leadership overhaul and a comprehensive restructuring of its governance framework, following the revelation of widespread financial improprieties among its sales force.
Hiroshi Mahara, Representative Director and CEO of Prudential Life, will step down on February 1, 2026, to take managerial responsibility for the scandal. He will be succeeded by Hiromitsu Tokumaru, currently the CEO of Prudential Gibraltar Financial Life Insurance (PGF Life).
The shakeup follows the conclusion of an extensive "Customer Confirmation" investigation launched in August 2024. The probe, which involved contacting millions of policyholders, uncovered not only instances of direct fraud but also a pervasive culture of unauthorized financial dealings by sales staff, totaling billions of yen.
The Scale of the Scandal
The investigation identified two distinct categories of misconduct:
- Direct Fraud: Three former employees were found to have misappropriated approximately ¥60 million from eight clients while employed. These agents utilized fabricated company documents or fake investment schemes to deceive policyholders. In one case, a Tokyo-based agent solicited investments for fictitious financial products, leading to losses of ¥53 million. In another, a Kumamoto-based agent fraudulently used the name of the company’s employee stock ownership plan to gather funds.
- Unsanctioned Financial Dealings: beyond direct theft, the probe revealed a far wider issue: 106 employees (current and former) were involved in unauthorized financial activities unrelated to insurance products. These activities involved the receipt of approximately ¥1.63 billion while employed and an additional ¥1.45 billion post-retirement.
- Schemes included: Soliciting investments in unregistered companies, cryptocurrency scams, unauthorized factoring services, and personal borrowing from clients.
- Impact: The company confirmed that agents introduced unapproved investment vehicles to at least 240 clients, leading to significant financial losses when third-party operators failed or ceased business.
"Excessive Respect" for Top Earners Blamed
In a candid assessment of its internal failings, Prudential attributed the misconduct to a corporate culture that placed "excessive respect" on high-performing sales agents and viewed its commission-based business model as "absolute."
The company admitted that its compensation structure, which heavily incentivized sales volume, attracted risk-taking individuals and created income instability that drove some agents toward illicit financial schemes. Furthermore, the report highlighted a lack of effective oversight, noting that the "three lines of defense" in risk management were non-functional, as management hesitated to challenge the autonomy of top salespeople.
Reforms and Path Forward
Incoming CEO Hiromitsu Tokumaru, a veteran with experience ranging from insurance operations to sales management, is tasked with executing a "fundamental reform" of the organization.
Key remedial measures announced include:
- Compensation Overhaul: A radical restructuring of sales incentives to incorporate compliance and customer after-care into performance evaluations, moving away from a purely sales-driven model.
- End of the "Silo" System: The company will increase direct contact between headquarters and clients, ensuring that sales agents are no longer the sole point of contact for policyholders.
- Stricter Hiring and Monitoring: Enhanced vetting processes for new hires and the implementation of mandatory activity reporting systems to monitor agent behavior more closely.
"We take this situation extremely seriously," the company stated in the release. "We are committed to eradicating financial misconduct through the rigorous implementation of these prevention measures and doing our utmost to restore the trust of our customers and stakeholders."
The company has compensated victims of direct fraud and is cooperating with police authorities regarding criminal complaints against the former employees involved.
Norbert Gehrke
