Top Japanese Insurers to sell off Honda shares worth $3.1bn

Four of Japan’s leading property and casualty insurers, along with other financial firms, are set to offload approximately 500 billion yen ($3.1 billion) in Honda Motor shares. This comes as part of a broader trend to unwind cross-shareholding arrangements, according to sources familiar with the matter.

The firms involved in this massive sell-off include Tokio Marine Holdings, Sompo Holdings, and two units of MS&AD Insurance Group. “This sale marks a pivotal step in reducing cross-shareholding practices that have been prevalent in Japan for decades,” said a source who requested anonymity due to the sensitivity of the information.

Other financial institutions are also expected to reduce their stakes in Honda, bringing the total sale to a substantial 500 billion yen figure based on current market prices. Honda has indicated it will soon authorize the insurers to proceed with the sale, the sources added.

In a strategic move likely aimed at mitigating the market impact of this sale, Honda has previously announced plans to repurchase up to 300 billion yen of its shares within the current financial year.

“Honda’s share buyback plan is a proactive measure to cushion the blow from the insurers’ sell-off,” remarked an industry analyst.

While Honda declined to comment directly on the insurers’ plans, stating the information had not been publicly announced by the company itself, spokespeople for Tokio Marine, Sompo, and MS&AD also refrained from making any comments.

The insurers, including MS&AD units Mitsui Sumitomo Insurance and Aioi Nissay Dowa Insurance, have committed to eliminating all cross-shareholding arrangements, a move in line with broader governance reforms.

“Honda is among the top five cross-shareholding entities for these insurers, except Aioi Nissay Dowa Insurance,” noted the sources, referencing recent securities filings.

The unwinding of cross-shareholding, where companies hold shares in each other to solidify business relationships, is accelerating. This practice has faced criticism from governance experts and foreign investors who argue it can lead to poor management oversight.

As Japan continues to modernise its corporate practices, this divestment by top insurers signals a significant shift towards more transparent and accountable business operations.

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