Japan’s Financial Services Agency (FSA) plans to widen its ongoing investigation into Prudential Life Insurance Co. to include an on-site inspection of its domestic holding company, Prudential Holdings of Japan Inc., as early as April, amid continued scrutiny of misconduct by sales employees. The move would shift regulatory attention from the life insurance operating company to the governance and supervisory role of its parent, raising the prospect that administrative measures could be applied at multiple levels of Prudential’s Japan operations.
The FSA has been carrying out an on-site inspection of Prudential Life since late January, focusing on whether a performance-driven culture, weak internal controls, and insufficient monitoring of sales practices contributed to long-running misconduct. According to The Asahi Shimbun’s report, regulators are now preparing to examine how Prudential Holdings oversaw the life unit’s business model, incentive structures, and compliance systems. The agency is expected to assess whether the holding company identified emerging problems and whether it took timely and effective steps to require corrective action at the subsidiary.
If the inspection concludes that Prudential Holdings bears responsibility for governance failures at Prudential Life, the FSA could extend administrative sanctions such as a business improvement order to the parent, in addition to any measures imposed on the operating company. The regulator is also reviewing where management responsibility lies across the group and what corrective actions are needed to prevent a recurrence, including potential changes to governance frameworks, reporting lines, and risk management processes.
Prudential Life disclosed on Jan. 16 that 107 current and former employees had, between 1991 and 2025, defrauded 503 customers through fictitious investment solicitations or by borrowing funds from customers and failing to repay them. The amount improperly obtained totalled about ¥3.14 billion (US$20 million), much of which has not yet been returned. Separately, the insurer found that 69 current and former employees had introduced customers to external investment firms in violation of internal rules and received kickbacks from those entities.
In February 2026, Prudential Life Insurance Company, Ltd. (“Prudential of Japan” or “POJ”) and its ultimate parent, Prudential Financial, Inc. (“PRU”), announced a voluntary 90-day suspension of new sales at Prudential of Japan, effective Feb. 9, 2026. The halt in new business is intended to allow the company to implement changes to operations, governance, and organizational structures in response to previously disclosed misconduct, and to address harm to affected policyholders.
“I would like to deeply apologize for the harm this matter has caused to our customers and stakeholders. The decision to enter into a voluntary suspension of new sales activity is an important step to rebuild trust and implement necessary changes to our organization,” said Hiromitsu Tokumaru, president and chief executive officer of Prudential of Japan. Prudential of Japan has said it will establish an independent customer reimbursement program, introduce measures to compensate impacted customers, restructure employee incentive compensation, and strengthen oversight of sales practices, governance, and risk management. The company also plans to revise education, training, and recruitment standards for its agents and employees.
The misconduct disclosures have coincided with leadership changes at both the operating life insurer and the Japan holding company. Kan Mabara, president and CEO of POJ, left Prudential of Japan as of Feb. 1, 2026, and will not be an advisor to the company. He was succeeded by Tokumaru, formerly president and CEO of Prudential Gibraltar Financial Life. Prudential has stated that Tokumaru had not previously been involved in the management of Prudential of Japan.
At Prudential Holdings of Japan, former chairman and CEO Motofusa Hamada stepped down in October. In the market, his resignation has generally been viewed as an act of taking responsibility for the series of scandals involving the group’s Japanese life operations. However, the company did not publicly explain the reasons for his departure, prompting questions among some corporate governance observers about transparency in the group’s board-level response.
Senior executives at the holding company and at Prudential Financial have issued public apologies and described planned corrective measures. “On behalf of Prudential of Japan, we apologize for letting our customers down. The conduct that led to this outcome is completely unacceptable and inconsistent with the standards of excellence we set for ourselves. We are taking focused actions intended to prevent future misconduct; support and reimburse our impacted customers; and restore the deep trust that is the cornerstone of our business,” said Brad Hearn, president and chief executive officer of Prudential Holdings of Japan.
Andy Sullivan, chief executive officer of Prudential Financial, said: “Doing right by our customers is core to who we are at Prudential and we take this matter extremely seriously. We are taking decisive actions to address the compliance, operational, and governance issues identified by the investigation. Rebuilding customer trust is a top priority. For nearly 40 years, Prudential has been a symbol of exceptional customer care in Japan, and we are committed to restoring the standing that has long set us apart.”
The FSA’s handling of the Prudential case indicates ongoing supervisory focus on sales conduct, incentive schemes, and group-wide governance, including the role of holding companies in overseeing risk and culture at operating subsidiaries. Life insurers, both domestic and foreign-owned, are likely to monitor the outcome of the expanded on-site inspection and any resulting business improvement orders for signals on the regulator’s expectations regarding parent-level accountability, remediation frameworks, and long-term changes to sales organisations and control environments.
