With the incorporation of Tongyang and ABL Life Insurance into Woori Financial Group, Woori Asset Management is analyzed to be one of the biggest beneficiaries. As of the first quarter of this year, there is a possibility that about 50 trillion won, consisting of the management assets of TONGYANG Life Insurance at 32.6834 trillion won and ABL Life Insurance at 16.6208 trillion won, will be entrusted to Woori Asset Management. Woori Asset Management can experience a doubling effect on its total assets under management (AUM).
According to the financial sector on the 25th, Tongyang and ABL Life Insurance have completed their incorporation into Woori Financial Group. Accordingly, forecasts suggest that the two insurers can create synergies by entrusting their management assets to Woori Asset Management, a subsidiary of Woori Financial Group. Since the asset management of these two insurance companies entrusted to the controlling shareholder (Woori Financial Group) and a subsidiary (Woori Asset Management) does not count as credit provision under insurance regulations, there is no upper limit. The proportion of funds invested in Woori Asset Management's bonds and stocks must not exceed the regulations under insurance law.
Woori Asset Management's total assets under management stand at 53 trillion won as of the first quarter of this year. If the management assets of the two insurers are added, it will exceed 100 trillion won, moving up from 10th to 6th in the asset management ranking. An increase in total assets under management brings various advantages, such as lower transaction costs. Moreover, insurers pay fees while entrusting and managing their assets with affiliated asset management companies. Even with a simple calculation at 0.01%, this would increase operating profit by 50 billion won, which is four times the operating profit of 12.6 billion won that Woori Asset Management achieved at the end of last year.
However, it has not yet been determined whether the two insurers' management assets will be entrusted to Woori Asset Management. A financial sector official noted, "Insurance companies often entrust only part of their special accounts to external asset management firms while managing the rest directly."
Attention is focused on whether Woori Financial Group's senior business will also expand. KB Financial Group and Shinhan Financial Group are entering the senior care industry by establishing nursing facilities in urban areas, starting with KB Life Insurance and Shinhan Life Insurance, respectively, aiming to expand into senior-related services. However, this business is challenging without the capital that supports insurance firms like Woori Financial Group, as the enterprise must directly acquire land and buildings. The acquisition of insurers opens up possibilities for Woori Financial Group to expand its senior business, while the insurers have secured the capital necessary to enter the business.
The effects of bancassurance (selling insurance at bank counters) are also expected. This is because Tongyang and ABL Life Insurance products can be primarily sold through Woori Bank branches nationwide. In the first quarter of this year, TONGYANG Life Insurance's bancassurance premium income was 153.8 billion won, accounting for 15.5% of the total premium income. This marked a decline from the previous year's same period (17.8%), but it has established a growth foundation with Woori Bank.
An increase in net profit is also anticipated. Woori Financial Group plans to reflect the revenues from Tongyang and ABL Life Insurance in its financial statements starting from the second half of this year. Earlier, Korea Investment & Securities forecasted that Woori Financial Group's capital ratio would decline, while group profits could increase by around 10%. Last year, the net profits of TONGYANG Life Insurance and ABL Life Insurance were 310.2 billion won and 104.8 billion won, respectively.