Will Dongyang and ABL Life, embraced by Woori Financial, enter a new phase... Spotlight on the launch timing of the integrated corporation

Resolution to Acquire Approved at Temporary Board Meeting on Morning of 28th
Regulatory Approval Review Remains a Major Hurdle
If Deal Fails, Responsibility Costs Fall on Woori Financial Group

With Dongyang Life Insurance and ABL Life Insurance joining Woori Financial Group, a new turning point is expected to be established. The two insurers, which had limited influence in the domestic market under the ownership of the Chinese multilateral insurance group, will become part of a major financial holding company through this acquisition, enabling various synergy effects such as strengthened capital and expanded sales channels.

On the morning of the 28th, Woori Financial held an extraordinary board meeting and resolved to acquire Dongyang Life and ABL Life Insurance, signing a Stock Purchase Agreement (SPA). Initially, Woori Financial pursued this acquisition to overcome the situation of being the only one among the top five domestic financial holding companies without a life insurance affiliate since selling Woori Aviva Life Insurance in 2014. However, concerns have arisen that the final acquisition may face difficulties as financial authorities have taken action amid allegations of improper loans involving former Chairman Sohn Tae-seung’s relatives.

Multilateral Insurance Achieves Long-Awaited Sale... When Will Dongyang + ABL Integration Happen?

This board decision fulfilled the five-year-old wish of the parent company of the two insurers, the Multilateral Insurance Group. Multilateral Insurance was established in 2019 during the Chinese financial authorities’ entrusted management of the troubled Anbang Insurance, and from its inception, it has been engaged in selling major quality assets and privatization efforts. During this process, the sale of Dongyang and ABL Life Insurance was continuously pursued but faced difficulties due to the lack of suitable buyers.

The acquisition is also expected to change the landscape of the life insurance market. As large financial holding companies increase their market share in insurance, small and medium-sized insurers will inevitably need to target niche markets or develop specialized strategies. In particular, bancassurance (selling insurance products through banks) is likely to be activated by leveraging Woori Bank’s extensive branch network. Additionally, the acceleration of digital transformation using Woori Financial’s IT infrastructure is expected to enhance product development and customer service competitiveness. An industry insider predicted, "As insurance sales through bank channels increase, existing insurers’ sales strategies will also change."

However, concerns about organizational restructuring and corporate culture changes have also been raised. Last month, the unions of both companies held a press conference in front of the Financial Services Commission at the Government Seoul Office, demanding job security and guarantees of independent management after the acquisition from Woori Financial Group. An insurance industry official said, "Dongyang Life has strong GA (General Agency) and TM (Telemarketing) channels and diversified sales channels, and as the sixth largest in the industry, it is a highly valuable asset," adding, "Since there is a significant size difference with ABL Life, it is expected that the integrated corporation will be centered around Dongyang Life."

With the signing of the Stock Purchase Agreement (SPA) for the acquisition, the timing of the integrated corporation’s establishment is also drawing attention. An insurance industry insider said, "The integrated corporation must be launched after approval from financial authorities for a fresh start," adding, "It will take about one to two years to establish the corporation." Particularly, interest is focused on whether the new CEO of the integrated corporation will come from Woori Financial Group, one of the two insurers, or be an external recruit.

Financial Authorities’ Approval Review Emerges as a Variable

However, the final approval from financial authorities is still pending, making the acquisition uncertain. Especially, the recent allegations of illegal loans involving relatives of the former chairman of Woori Financial may act as a variable due to possible sanctions by the authorities. Under the Financial Holding Companies Act, when a financial holding company acquires a new subsidiary, it must obtain approval for subsidiary incorporation from the Financial Services Commission. The Financial Supervisory Service’s Financial Supervision Office is responsible for the approval review. A Financial Supervisory Service official explained, "We verify the management and financial status of both the acquiring company and the target company."

When a non-holding financial company incorporates a subsidiary, it must obtain major shareholder change approval (major shareholder suitability review) under the Financial Company Governance Supervision Regulations, rather than subsidiary incorporation approval, and in this case, there must be no institutional warnings or similar actions in the past year. Legally, for financial holding companies, morality or corrective actions have less impact on passing the review compared to general financial companies. However, it can still partially affect management evaluation, and since the final approval is granted by the Financial Services Commission, the authorities’ pressure on Woori Financial remains a potential risk factor regardless of official regulations. Recently, Financial Supervisory Service Governor Lee Bok-hyun strongly criticized the current management, and the prosecution conducted a search and seizure at Woori Financial’s headquarters and branches a day before the extraordinary board meeting. If the acquisition fails, Woori Financial will have to bear the responsibility costs.