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Issuer Flash: Tongyang Life Insurance

Issuer: Tongyang Life | Document: Issuer Flash | Date: 2026-11-02 | Event: Q3 2026 Results

Report date: 2026-11-02 Event date: 2026-10-23 Event title: Q3 2026 Results and Capital Decline

1. Flash Conclusion

Tongyang Life's preliminary K-ICS ratio fell to 172.0% at September 2026 from 205.4% at June, reversing much of the comfort provided by its first-half capital position. Eligible capital declined while required capital increased, and third-quarter investment losses reduced reported consolidated subsidiary profit. The weaker buffer increases the importance of capital management and future market sensitivity; it does not, on the evidence available, establish a breach or an immediate need for external support. Woori Financial Group's completed full ownership strengthens the strategic case for support, but does not itself guarantee Tongyang's obligations. Our prior view of meaningful capital sensitivity and expected, discretionary group support therefore remains relevant, with a more cautious assessment of the available buffer.

2. Capital: A Smaller Buffer

Woori's Q3 presentation reports preliminary eligible capital of KRW 4,440 billion and required capital of KRW 2,581 billion, against KRW 4,881 billion and KRW 2,377 billion respectively at June. These imply 172.0% and 205.4%, a decline of approximately 33.4 percentage points using the displayed ratios. The presentation reports a 33.3-point decline. Rounding may explain the difference, but the source does not establish its cause. Eligible capital fell about 9% and the requirement rose about 9%. Both changes compressed the ratio; the disclosure does not establish their underlying causes.

This weakens the favorable direction noted in the July Flash. The figures are preliminary, and we have not independently obtained Tongyang's standalone Q3 regulatory filing. Consequently, the final ratio, its components and the drivers of the change need confirmation. The available presentation does not by itself substantiate a claim that market rates, a particular investment, a capital distribution or supervisory action caused the movement.

3. Profitability and Operating Indicators

Woori's presentation labels Tongyang's income statement as consolidated. It shows third-quarter net profit of KRW 25 billion, down from KRW 67 billion in the second quarter. Insurance profit declined to KRW 37 billion from KRW 75 billion, while investment profit turned to a KRW 63 billion loss from a KRW 12 billion gain. Operating profit was a KRW 26 billion loss versus a KRW 87 billion profit in the preceding quarter. The presentation does not provide enough detail to attribute the investment loss to a specific cause.

Nine-month net profit was KRW 117 billion on the presentation's basis, versus KRW 110 billion in the comparison period. The latter includes earnings before group consolidation, limiting a simple group-contribution comparison. A separate Woori news release states KRW 121.6 billion for Tongyang's cumulative net profit; its difference from the presentation figure has not been reconciled, so these figures should not be treated as interchangeable. The period-end contractual service margin was KRW 2,694.8 billion, up from KRW 2,646 billion at June, and third-quarter new-business CSM was KRW 190 billion versus KRW 148 billion in the previous quarter. CSM is not cash or immediately available regulatory capital.

4. Credit and Bondholder Implications

A lower reported capital ratio leaves less capacity to absorb adverse movements before the buffer is rebuilt. The issuer's exposure to changes in financial markets, liability assumptions and capital requirements remains central to the credit assessment, although the release does not quantify their individual contributions to this quarter's decline. The loss on the investment line and reduced equity also warrant attention: reported equity fell to KRW 2,017 billion from KRW 2,337 billion at June. The equity figure is from Woori’s consolidated subsidiary statement of financial position; accounting equity and K-ICS eligible capital are different measures and should not be equated. The issuer’s separate legal-entity accounts have not been independently verified or reconciled to these consolidated figures.

Woori disclosed that it completed a share exchange on 11 August 2026, making Tongyang a wholly owned subsidiary. Full ownership can facilitate group coordination and reinforces the strategic rationale for support, but support remains subject to group decisions, resources and applicable regulation. It is not equivalent to a parent guarantee. Holders of Tongyang's subordinated debt remain exposed to the issuer's own capital position and the contractual ranking and loss-absorption terms of their instruments.

5. What To Watch Next

Obtain the issuer's Q3 regulatory disclosures and reconcile final K-ICS, eligible and required capital with Woori's preliminary presentation. Establish the reasons for the capital movement, investment loss and the difference between the two nine-month earnings figures. Monitor subsequent capital generation, investment and liability sensitivity, any capital measures and evidence of actual group support. The available presentation provides limited detail on the underlying drivers, and the separate issuer filing has not been retrieved; these information constraints limit the depth of this Flash. A broader issuer-summary update should also reassess the outstanding discussion on Woori support and K-ICS; this Flash does not close that separate summary review.

6. Sources