Tokio Marine and Sompo Collectively Offload Honda Shares worth JPY 535B

Japanese financial groups, including Tokio Marine, Sompo, and two units of MS&AD, will sell Honda Motor shares worth 535 billion yen ($3.3 billion) to unwind cross-shareholdings, according to a regulatory filing on Thursday. Mitsubishi UFJ and Mizuho, Japan's first- and third-largest financial groups, also plan to join the sale, reflecting the increasing pace of unwinding cross-shareholdings as part of Japan's corporate governance reforms. Reuters had reported the insurers' plans earlier in the week.

Cross-shareholding, where companies hold shares in each other, has traditionally reinforced business ties in Japan. However, governance experts and foreign investors criticize this practice for leading to lax governance by shielding management from shareholder accountability. The secondary share offering, involving 10 financial institutions, will amount to 300 million shares, including over-allotment, though the price is yet to be determined. Honda's shares closed at 1,791 yen on Thursday, valuing the offering at about 535 billion yen.

The four non-life insurers, which include MS&AD Insurance subsidiaries Mitsui Sumitomo Insurance and Aioi Nissay Dowa, previously committed to reducing their entire cross-shareholdings to zero within a few years following a price-fixing scandal last year. Honda has announced plans to buy back up to 300 billion yen's worth of its own shares during the current financial year, though no further share buyback was announced on Thursday. Honda was one of the top five cross-shareholding companies for the insurers, except for Aioi Nissay Dowa Insurance, as per securities filings in March.