The question is whether bringing the two major life insurers to Woori Financial will help the perennial No. 4 player better compete with its bigger rivals, including KB, Shinhan, and Hana. Photo by ldensity67/Pixabay
South Korea’s Woori Financial Group has officially acquired two South Korean life insurance companies, Tongyang and ABL, from China’s Dajia Insurance Group for $1.1 billion.
Subsequently, the country’s fourth-largest financial services provider appointed industry veterans Kwak Hee-pil and Sung Dae-kyu as chief executives of ABL and Tongyang, respectively.
Dajia, formerly Anbang, acquired Alliance Life Insurance Korea in 2016 and renamed the company to ABL. It took over Tongyang the previous year.
Now, the question is whether bringing the two life insurers to Woori Financial will help the perennial No. 4 player better compete with its bigger rivals, including KB, Shinhan, and Hana.
“Woori Financial Group, which became Korea’s first financial holding company in April 2001, announced that it has once again completed a full-service financial group structure encompassing banking, securities, insurance, and credit cards,” Woori Financial Chairman Yim Jong-yong said in a statement.
“Today marks a major step forward in our journey to emerge as a top-tier financial group again,” he said. “We will deliver innovation for both our customers and shareholders by creating synergies across various areas like bancassurance, asset management, and the AI transformation.”
Unlike the industry norm, Woori Financial lacked a diverse business portfolio, as it has mostly depended on the banking industry. In particular, it did not have presence in the brokerage and insurance businesses.
Woori Financial established a securities affiliate last year and now has added Tongyang and ABL. Their combined assets amount to $40 billion, which is enough to place them among the top five life insurance firms in the country.
ABL and Tongyang are also expected to boost the bottom line of Woori Financial.
Last year, ABL netted $77 million in profit, up 14.9% from 2023, while Tongyang’s net income reached $228 million, up 17.1%. Combined, they accounted for 13.1% of Woori Financial’s overall profit.
Observers point out that Woori Financial is finally ready to go head-to-head with bigger players.
“Woori has a set of tasks to rise to the top of Korea’s financial powerhouse league and one of them was to complete its business portfolio. The group finished the job this time, and that means something,” Seoul-based consultancy Leaders Index CEO Park Ju-gun told UPI.
“However, the business portfolio itself is not enough. Woori needs to come up with something differentiated from other players, like success in overseas markets or innovative services,” he said.
Economic commentator Kim Kyeong-joon, formerly vice chairman at Deloitte Consulting Korea, concurred.
“The banking industry is lucrative, but does not have strong growth potential. That’s why domestic financial groups have sought growth opportunities in the brokerage and insurance sectors,” Kim said in a phone interview.
“As Woori has entered the two segments, it can now compete on a level playing field. To nudge past its bigger rivals, however, it should do more like introducing out-of-the-box services,” he said.
Suh Yong-gu, an economics professor from Sookmyung Women’s University in Seoul, urged Woori to go global in a more proactive way.
“Korean financial corporations have failed to make their presence felt in the overseas market. As the domestic market reaches saturation, they should go global to keep growing,” Suh said.
“For instance, Woori may concentrate on the so-called Global South markets, including India, Indonesia and Brazil, where the financial sectors are growing rapidly. It may partner with local outfits there to ensure more stable growth,” he said.
In 2023, Woori Financial’s flagship unit, Woori Bank, set a goal of expanding the share of its global revenue by 10% to 25% through 2030. Yet, its net profits from 11 overseas branches fell 21% in 2023 and another 7.9% in 2024 year-on-year.
Among the 11 countries, Woori Bank has prioritized Indonesia, Vietnam and Cambodia. Notably, Bank Woori Saudara in Indonesia plays a central role in its global strategy. Woori invested $192 million in the Indonesian lender last year to raise its stake from 84.2% to 90.7%.
