Anbang liquidation to help smooth sailing of Woori's Tongyang, ABL acquisitions

Woori Financial Group Chairman Yim Jong-yong / Yonhap

By Lee Kyung-min

• Published Aug 8, 2024 3:56 PM KST
• Updated Aug 9, 2024 9:50 AM KST

Woori Financial Group's acquisitions of Tongyang Life and ABL Life are expected to proceed without difficulty, underpinned by recent bankruptcy of China’s Anbang Insurance, market watchers said Thursday.

Advancing the view is China’s growing sense of exasperation toward the long-stalled, drawn-out selloff of the life insurance unit, to the advantage of Woori Financial in negotiations.

The liquidation of Anbang squanders years of efforts of state-owned Dajia Life Insurance Group to rescue the troubled firm. Dajia holds over 42 percent of Tongyang Life shares and a 100 percent stake in ABL Life. Dajia will be liquidated, soon after its subsidiaries are sold off.

Win-win

“It can be a win-win for both Woori and Dajia,” a Woori official said.

Woori Financial’s non-banking business will be significantly fortified, as indicated by the total combined assets of Tongyang and ABL standing at 49.9 trillion won ($36 billion) as of end-March.

The joined forces of the two will translate into the sixth-largest market player by asset size after Samsung, Kyobo, Hanwha, Shinhan and NH NongHyup.

Whether the life insurance business will thrive to outgrow Woori Aviva Life remains to be seen. Woori sold off the Aviva entity in 2014 to NH HongHyup Group, and has since remained lukewarm about acquiring a life insurance firm.

Woori and Dajia signed a memorandum of understanding last month. Due diligence for the acquisition of Tongyang and ABL is in progress, according to Woori.

Woori denied reports of the deal being close to inking a stock purchase agreement (SPA) of 2 trillion won late this month.

“Many local media outlets reported stories about SPA developments, but it has not been finalized,” the official added.

The acquisition of the two will prove an apt strategy for Woori Financial backing out of an acquisition deal for Lotte Insurance, June 28. Many said the last-minute withdrawal was to prime the Tongyang and ABL acquisitions.

A reason for Woori to opt out was JKL Partners with a 77 percent stake in Lotte not budging from the 3 trillion won ($2.1 billion) acquisition price.

The private equity firm said Lotte's market cap of over 1.1 trillion won and premium justify the hefty price tag, a price Woori considered too high.

Meanwhile, unionized workers of Tongyang and ABL said they would elicit the assistance of Korean Finance & Service Workers’ Union, a chapter of the Korea Confederation of Trade Unions, one of the country’s two powerful umbrella unions.

The 70,000 members of the financial services union will mobilize all available means, according to the workers, if the Financial Services Commission (FSC) fails to take the demands of workers into consideration in the sales of the two Chinese life insurers.

“We will take collective action against the government-sanctioned disruption in the insurance market as well as violation of rights to labor and job security,” they said.