Woori to acquire Tongyang, ABL Life for $1.16 billion

Woori Financial Group will acquire controlling stakes in Tongyang Life Insurance and ABL Life Insurance for a total of 1.549 trillion won ($1.16 billion), the financial firm said Wednesday.

Woori Financial Group's headquarters in Jung District, central Seoul [WOORI FINANCIAL GROUP]

The board of Woori Financial Group agreed to acquire controlling stakes in Tongyang Life Insurance and ABL Life Insurance for a total of 1.55 trillion won ($1.16 billion), the financial firm said Wednesday.

Woori signed stock purchase agreements to acquire 70 percent of Tongyang's shares for 1.28 trillion won and a 100 percent stake in ABL Life Insurance for 265.4 billion won, according to its regulatory filing.

The price-to-book ratios for Tongyang and ABL were 0.65 and 0.3, respectively, as of their balance sheet dates in March this year.

Woori says it expects the acquisition to facilitate linked projects between the company's banking, brokerage and insurance businesses. The company, Korea's fourth largest financial group, has consistently sought to diversify its portfolio to reduce reliance on its banking business, which currently accounts for 90 percent of its revenue model. Tongyang ranks sixth in premium income among domestic life insurance companies, with total assets amounting to 33 trillion won and net profit of 300 billion won for the fiscal year of 2023. ABL ranks ninth for premium income among mid-sized insurers, with 17 trillion won in total assets and 80 billion won in net profit last year.

In June, the company withdrew from the bidding race for Lotte Insurance after signing a nonbinding agreement with China’s Dajia Insurance Group, the largest shareholder of Tongyang and ABL, to pursue the acquisition of the insurers. Woori Financial Group Chairman Yim Jong-yong said in an executive meeting the same day that the takeover was a pivotal move to improve the company's service portfolio, and asked for shareholders' support as the firm grapples with multiple loan scandals. The acquisition has to be approved by financial authorities, requiring business plans to be submitted for review.

The chairman apologized for Woori Bank's latest loan scandal involving former chairman Son Tae-sung, as recorded in Wednesday's news release. The bank was found by the Financial Supervisory Service (FSS) to have inappropriately granted poorly evaluated loans worth 35 billion won to Son's relatives.

This follows an embezzlement case in June, when an employee was found to have misappropriated loans worth around 10 billion won.

"We must cooperate with the FSS and prosecutors with complete transparency so that the case can be thoroughly investigated," Yim said.

"Executives and employees including me and the bank's CEO will comply with the appropriate measures and procedures ordered in accordance with the results of the investigation."

Update, Aug. 28: Added statements by chairman, details about scandals affecting group.

BY KIM JU-YEON [kim.juyeon2@joongang.co.kr]