Lotte Insurance Acquisition Review by Woori Financial: "We Will Not Make Excessive Expenditures"

Woori Financial Group, which is considering the acquisition of Lotte Insurance to strengthen its non-bank competitiveness, has stated its principle of not paying an excessive price.

Lee Sung-wook, Vice President and Chief Financial Officer (CFO) of Woori Financial Group, said during the Q1 earnings conference call on the 26th, “We are reviewing the acquisition of Lotte Insurance to enhance the group’s non-bank competitiveness,” but added, “The basic principle is not to pay an excessive price.”

He also said that concerns in the market about capital ratio burdens are unnecessary. He explained, “For insurance companies, the capital ratio calculation standards are different. Under Basel III, a 250% risk weight is applied to common equity tier 1 capital within 10% of the invested amount,” and added, “Currently, Woori Financial Group has about KRW 1.8 trillion in available capital.”

He continued, “For example, if the acquisition cost is KRW 500 billion, it can be seen as an increase of KRW 1.25 trillion in risk-weighted assets, so the market’s concerns about (capital ratio decline, etc.) are unlikely to materialize.”

Regarding Woori Financial Group’s offer of a price in the KRW 1 trillion range for the acquisition, he drew a clear line by saying, “The mentioned price is not considered at all.”

Earlier, Woori Financial Group submitted a Letter of Intent (LOI) for the acquisition of Lotte Insurance. Detailed due diligence will begin next week through a Virtual Data Room (VDR), and the main bidding will take place in June.

Meanwhile, Woori Financial Group also announced plans to strengthen its securities division. Regarding the acquisition of Korea Post Securities, it said, “Since it is progressing regionally, it is difficult to comment specifically,” but added, “There is no change in the priority of insurance and securities acquisitions, but if non-bank assets become available, we are reviewing them comprehensively. The principles of M&A are sound management within appropriate capital ratios, maximizing shareholder value, and maximizing synergy among affiliates.”