The Big Insurers--No Corporate Governance Here
Amidst more active voting of proxies by the public pensionfunds, the 15 major life and nonlife insurance companies opposed proposals put forward by firms at shareholders' meetings in June less than 1% of the time, according to the Nikkei. Taiyo Life Insurance Co. (8796) voted against proposals put forward by the highest number of companies at 11.
Mitsui Mutual Life Insurance Co., Daido Life Insurance Co. (8799), Tokio Marine, Mitsui Sumitomo Insurance Co. (8752) and Aioi Insurance Co. (8761) did not voice any opposition to any proposal.
(TT's Take) The life insurers in particular are in no position to make demands on companies whose stocks they own. For one, there is a significant amount of cross gearing with the banks to prop up each others' capital base. Secondly, it would crimp the life insurers typical means of selling. The life insurers send armies of women to visit individuals inside the companies right at their desk. This is true even for many foreign capital firms.
If the life insurers were to become aggressive with their proxy voting, it is likely that their little insurance ladies would not be so welcome inside those companies they are trying to hawk insurance to. That would be a welcome development for the employees at the companies, as the visits by the little insurance ladies do get annoying. In addition, they are also open to questions from their policy holders as to; a) why they continue the practice of inefficient cross gearing with the banks, and b) why they cannot produce their promised returns on policies.
Both life and nonlife insurers turned in poor investment performances in fiscal 2002 due to the stock market decline.
If returns on their equity investments remain low, it will hurt their corporate earnings and dividend payouts, thereby disadvantaging policyholders.
Such companies prioritized insurance sales to their investment targets and refrained from offending them by exercising their rights as investors.
The 15 insurers, including Nippon Life Insurance Co. and Tokio Marine & Fire Insurance Co., are major shareholders at most of listed companies in Japan.
