Tong Yang Life's profit prospects strong under new ownership

Woori FG is supported by Woori Bank, one of Korea’s domestic systemically important banks.

Moody’s Ratings eyes a potential improvement in Tong Yang Life's financial flexibility following its acquisition by Woori FG. Under Dajia Insurance Group's ownership, Tong Yang Life's financial flexibility has been limited due to restricted financial support. 

Moody's views Woori FG's robust capitalisation and adequate liquidity, supported by Woori Bank—one of Korea's domestic systemically important banks (DSIBs)—as factors that could enhance the insurer's financial stability.

However, the completion of the transaction remains to be determined, pending regulatory approvals from both Korean and Chinese authorities, including the domestic approval of Woori FG's eligibility as a major shareholder. 

Moody's assessment will focus on the successful completion of the transaction, the impact of the ownership change on Tong Yang Life's strategy and capitalisation, and Woori FG's commitment to supporting the insurer post-acquisition.

The positive outlook also reflects expectations that Tong Yang Life will sustain strong profitability over the next 12 to 18 months, driven by solid recurring investment income and increased sales of high-margin protection products. 

Additionally, the insurer is expected to reduce the mismatch between its asset and liability duration during this period.

Moody's considers the potential change in ownership as an ESG consideration, particularly in terms of governance, due to its implications for the insurer's organisational structure and management credibility.