Prudential Financial is halting new sales at a Japanese subsidiary as it aims to “reset the business model” there, the company’s CFO said Tuesday.
On Tuesday, Prudential announced that it’s extending a previously enacted pause on new sales at its Prudential of Japan unit by 180 more days. In February, the insurance giant had initiated an initial 90-day pause in the wake of an internal investigation into alleged employee misconduct.
In a call with analysts on Tuesday night, Prudential Financial's CEO and Chairman Andy Sullivan said that the “scope and complexity of the required changes was greater than previously anticipated,” and that such changes would “take additional time to design and implement.”
The call included remarks from Sullivan and CFO Yanela Frias. For her part, Frias maintained that Prudential of Japan “will emerge as a stronger, more resilient business that is better positioned to serve consumers over the long term.”
“That said,” she continued, “we expect the recovery to take time as we reset the business model.”
Sullivan said the shutdown is expected to result in a $525 million to $575 million impact on pretax operating income in 2026.
Prudential’s earlier investigation found instances of “improper investment solicitation” by employees. The company said “there were cases where sales managers did not sufficiently manage the activities of sales employees, leading to incidents of monetary fraud and solicitation of inappropriate investment product through exploitation of close relationships with customers.”
“Furthermore, cases have been reported in which sales employees request loans from customers due to the instability of their income, as well as fraudulent acts such as sales employees bearing part of the insurance premiums to secure performance,” Prudential said in a January summary of its investigation. “These cases have been reported to the relevant authorities based on laws and regulations.”
Prudential’s latest pause on new sales activity won’t affect existing customers, and it doesn’t apply to the company’s other business units in Japan, such as Gibraltar Life and Prudential Gibraltar Financial Life. On the Tuesday call, Frias said Prudential is not “overly reliant on any single vehicle to deliver cash flow” to the parent company, “either in Japan or across the broader enterprise.”
Sullivan noted that Prudential of Japan has about 2.2 million customers, and that it’s been in the market for 40 years. Frias said that the company’s focus now is “restoring the trust of our consumers and society in Japan through sustained measurable change.”
“Japan is an important market for Prudential, and we are determined to regain the confidence built over decades,” she said.
