To zero policy stocks: a capital-policy break with P&C cross-shareholdings (2024)

The P&C insurer on the far side of unwinding cross-holdings

The pith of this decision is that Tokio Marine swung hard toward letting go of the policy-holding stocks the P&C industry had long carried, using outside pressure as the catalyst. A scandal over price-rigging in corporate insurance, and the Financial Services Agency’s charge that cross-shareholdings amounted to mutual reliance, ironically became the push that unwound holdings built up over years. To set out ahead of the industry not merely to reduce but to hold none is no small thing. Yet the sale gains, while they thicken near-term profit, are also a once-only fruit; and once the shares are gone, another question remains — how to keep relations with business partners intact.

As of this writing the zero policy is still in progress. Between here and the March 2030 target lie uncertainties — share-price swings, dialogue with the companies invested in, the one-off nature of the sale gains. How a P&C insurer that holds no policy stocks builds a competitive edge on the strength of price and product alone — the shape of the insurer once the old adhesive of cross-holdings is peeled away has not yet come into focus. How far this choice, recasting an entrenched practice as capital policy, changes the form of competition in the industry is a question the next several years will answer.