Tongyang Life Insurance Issuer Summary

Report date: 2026-05-14
Issuer: Tongyang Life Insurance Co., Ltd.
Sector: Korea life insurance
Primary credit focus: Issuer credit, capital adequacy as a Korean life insurer, support expectations following inclusion under Woori Financial Group, and the ranking and loss-absorption features of Tier II subordinated debt

1. Business Snapshot and Recent Developments

Tongyang Life Insurance Co., Ltd. ("Tongyang Life" or the "company") is a Korean life insurance company listed on KOSPI under ticker code 082640. In English-language disclosures, the company is sometimes referred to as "Tong Yang Life Insurance"; this report uses Tongyang Life as the company name. The starting point for credit analysis is not simply to view the company as an "insurance company acquired by Woori Financial Group", but as an insurance issuer with Korean life insurance liabilities, long-duration investment assets, K-ICS capital regulation, IFRS 17 profit recognition, and expectations of parent support.

The company was established in 1989 and offers protection insurance, savings and survival insurance, endowment insurance, and variable / separate-account products. In FY2025, death and protection-type insurance accounted for KRW 3,174,438 million, or 65.9% of total premiums; variable and separate-account products accounted for KRW 905,782 million, or 18.9%; survival insurance accounted for 10.1%; and endowment insurance accounted for 5.1%. As such, the company's insurance liabilities are more sensitive to long-duration protection, surrender behaviour, interest rates, investment performance, ALM, and movements in contractual service margin than to simple short-tail non-life insurance risk.

The most significant development since 2025 has been Woori Financial Group's ("Woori FG") acquisition of Tongyang Life and ABL Life. According to public reports, Woori FG completed the acquisition of a 75.34% stake in Tongyang Life and 100% of ABL Life in July 2025. Woori FG then announced a comprehensive share exchange in April 2026 to make both companies wholly owned subsidiaries. The disclosed scheduled share-exchange date is 2026-08-11, and the scheduled issuance and listing date of new Woori shares is 2026-08-31. From a credit perspective, the standalone insurance company's earnings, capital and ALM are now overlaid with Woori FG's support expectations, strategic importance, and potential future business collaboration.

FY2025 results show that the company's credit profile cannot be described simply as "improved". On a consolidated basis, total assets were KRW 35,347,237 million, total liabilities were KRW 33,798,362 million, and total equity was KRW 1,548,875 million, indicating a large balance sheet. However, operating profit was KRW 198,812 million and net profit was KRW 124,494 million, representing a sharp decline from FY2024 operating profit of KRW 368,058 million and net profit of KRW 314,293 million. Insurance profit also declined from KRW 274,408 million in FY2024 to KRW 113,771 million in FY2025. Scale and the move under Woori provide credit support, but the most recent earnings level is clearly weak.

On capital, the FY2025 K-ICS ratio was reported at 177.3%. This improved from 155.5% in FY2024, but remained below 193.4% in FY2023. FY2025 eligible own funds were KRW 4,015,166 million, and required capital was KRW 2,264,745 million. A ratio of 177.3% is comfortably above the regulatory minimum, but given the significant interest-rate, credit and market risk borne by a life insurer, it should be viewed as a manageable but still watchful mid-range capital buffer rather than a thick surplus capital position. Capital policy, capital injections, use of subordinated debt, and ALM improvement after the Woori acquisition will be key areas of focus.

In the capital markets, the company issued U.S.$500 million of 6.250% Tier II Subordinated Sustainability Notes due 2035 in May 2025. The issue date was 2025-05-07, the maturity date is 2035-05-07, the first reset date is 2030-05-07, and the notes were listed on SGX. At issuance, the expected ratings were BBB by Fitch and Baa3 by Moody's. These are not ordinary senior bonds, but subordinated bonds with capital characteristics under Korean insurance regulation. Optional redemption is subject to regulatory approval and capital conditions. In addition, principal write-down may occur in certain failure, non-viability, liquidation or similar circumstances. When analysing issuer credit, the notes should be distinguished clearly between their role as a positive factor for the company's capital-raising capacity and the recovery-ranking and loss-absorption risk borne by subordinated bond investors.

Key indicators are as follows.

2. Ownership, Strategic Importance and Group Support

The most important change in Tongyang Life's credit assessment is its inclusion under Woori FG. Woori FG is one of Korea's major financial holding companies and, through its core subsidiary Woori Bank, has a large banking franchise, deposit base, corporate and retail customer access, and capital-market access. For an insurance company, becoming part of a strong financial group means more than a change in shareholder. It can affect brand, management control, internal controls, capital policy, product distribution, funding, dialogue with regulators, and the support assessment used in ratings.

Woori FG's acquisition of Tongyang Life and ABL Life in 2025 reflected its strategy of strengthening non-bank businesses including banking, securities, cards and insurance. For Korean financial holding companies, life insurers complement banking channels, retirement and pension products, protection products, wealth-transfer solutions for affluent customers, long-term asset management, and customer life-cycle management. Tongyang Life should be viewed not merely as an investment asset for Woori FG, but as a strategic subsidiary that fills a gap in the group's business portfolio. This strategic importance is an important basis for support expectations.

Public summaries by rating agencies also treat the move under Woori FG as credit positive. Public reporting related to Moody's states that Tongyang Life's insurance financial strength rating was upgraded to A3. Fitch's public summary states that, in January 2026, the insurance financial strength rating of A-, long-term IDR of BBB+, and Tier II rating of BBB were affirmed with a stable outlook.

That said, support expectations have degrees. What can be confirmed for Tongyang Life is a situation that strengthens expectations of support through ownership reputation, strategic involvement, capital policy, and normal-course funding, distribution and risk-management support. The probability of capital injection or liquidity support under stress has also increased, but the amount, timing and conditions are unconfirmed and should be distinguished from a legal guarantee or debt assumption. Therefore, credit language should refer to "support expectations", "support capacity" and "strategic importance", and should not state that "Woori guarantees the debt".

The planned full ownership may further strengthen support expectations. If Tongyang Life becomes a wholly owned subsidiary and is delisted through the comprehensive share exchange announced by Woori FG, minority-shareholder coordination would no longer be needed, making it easier to pursue capital policy, organisational restructuring, distribution cooperation, and a future integration policy with ABL Life within the group. Independence as a listed company would decline, but integration as a strategic subsidiary of the financial holding company would deepen. This direction is generally credit positive.

At the same time, full ownership and cooperation with ABL Life also involve integration risk. Acquiring multiple life insurers at the same time and coordinating distribution, products, IT, risk management, asset management, capital policy, personnel and brands is not straightforward. In life insurance in particular, existing policy crediting rates, CSM, reinsurance, sales commissions, surrenders, medical claims, ALM, and K-ICS capital requirements differ by company. If integration is rushed, operational burden and confusion among customers and agents could emerge before business efficiency improves. Therefore, the move under Woori is credit positive, but the quality and speed of integration remain monitoring items.

Capital constraints at the parent level should not be ignored. Woori FG is a bank-centred financial group, and the acquisition of insurance subsidiaries affects group capital. Acquisition funding, goodwill, the share exchange with minority shareholders, future capital injections, and cooperation with ABL Life may compete with group CET1, total capital ratio, dividend policy, and growth investment. Woori FG's status as a strong financial group indicates support capacity, but willingness and capacity to support can change over time. If the insurance subsidiary's K-ICS declines, the speed and extent of Woori's capital support will be important for future credit assessment.

The central credit issue is the extent to which Tongyang Life will be positioned as a "strategic subsidiary to be protected" by Woori FG. Given the recent acquisition and planned full ownership, support expectations are high. Insurance is important for Woori's non-bank expansion, and a sharp deterioration in Tongyang Life's credit profile would also affect Woori FG's reputation. However, support expectations are not absolute. If Tongyang Life's own capital, earnings and ALM continue to deteriorate, the support burden may constrain ratings or market perception. The company's credit strength therefore depends not only on Woori, but also on its standalone ability to improve without relying excessively on Woori support.

3. Korean Life Insurance Industry Context

The Korean life insurance market has long-term demand from population ageing, household savings, medical and protection needs, and retirement preparation, while also facing slower growth, competition, interest-rate volatility, IFRS 17, K-ICS, sales regulation, medical claims, and surrender risk. Large players such as Samsung Life, Hanwha Life and Kyobo Life have strong franchises, with bank-affiliated and financial-holding-company-affiliated insurers and mid-sized insurers competing below them. Tongyang Life has meaningful scale in this market, but it does not have the dominant franchise of the top three. A conservative assessment places it in the mid-sized to near-large category.

A life insurer's creditworthiness is driven more by the quality of the in-force book, future profits, asset-liability management, capital adequacy, and sales discipline than by a single year's sales volume. In Korea, legacy high-crediting-rate policies, competition in savings products, variable insurance, medical and health insurance, growth in protection products, sales commissions, and surrender behaviour affect profitability and capital. Under IFRS 17, future profits from insurance contracts are measured as CSM, while under K-ICS, insurance risk, market risk, credit risk and operational risk are reflected in capital requirements. As a result, premium income and asset size under the old accounting framework alone do not provide a correct view of a life insurer's credit strength.

The interest-rate environment is highly important for Korean life insurers. Higher interest rates raise yields on new investments and reduce the present value of long-duration liabilities, but they also generate valuation losses on bonds, OCI volatility, capital fluctuations and hedging costs. Lower interest rates support bond valuations, but increase liability-side pressure through guaranteed-rate burdens and lower reinvestment yields. Under K-ICS, changes in interest rates, credit spreads, equities, real estate and FX are more readily reflected in capital ratios. Tongyang Life's K-ICS ratio has moved significantly from 193.4% in FY2023 to 155.5% in FY2024 and 177.3% in FY2025, illustrating the volatility of capital metrics.

For Korean life insurers after IFRS 17 implementation, the quality of CSM and the sustainability of CSM release have become important. CSM represents a stock of future profit, but it is not cash itself. New business increases CSM, but its value changes with acquisition costs, capital requirements, medical loss ratios, surrenders and assumption changes. For issuer credit, it is necessary to examine not only the amount of CSM, but also which products generate it, how conservative the assumptions are, and how steadily it can be released into profit. For Tongyang Life, media reports indicate that the Q1 2026 CSM balance was around KRW 2.5108 trillion, but until it is confirmed by product and assumption in official quarterly materials, it should be treated as a supplementary indicator.

Across the industry, a shift toward protection-type insurance can be either credit positive or credit negative. Protection-type insurance tends to generate higher CSM and profitability than savings products, but is sensitive to medical and health-related claims ratios, sales competition, surrender recapture, and assumption changes. In Tongyang Life's FY2025 premium mix, death and protection-type insurance is large. This is a source of profitability, but also indicates risk from future insurance service expenses and assumption changes. To improve profitability, not only new-business volume but also claims ratios, persistency, sales commissions, repricing, and the use of reinsurance will be important.

From a regulatory-capital perspective, companies with K-ICS ratios in the 150% to 180% range are clearly above the regulatory minimum, but cannot be said to have the thick cushion of stronger large insurers. Tongyang Life's FY2025 ratio of 177.3% can be viewed positively in light of the improvement from the prior year, but given the decline in earnings and market volatility, its defensive capacity is moderate. If falling interest rates, wider credit spreads, weaker valuations of equities and overseas assets, higher insurance loss ratios, and increased surrenders occur simultaneously, K-ICS could again come under pressure. For this reason, even with support expectations from Woori FG, the company's standalone K-ICS must be monitored continuously.

4. Franchise, Product Mix and Distribution

Tongyang Life's franchise should be assessed by separating scale, product mix, distribution base, and future cooperation with the Woori group. Being a life insurer with total assets of KRW 35.3 trillion indicates meaningful scale in the Korean market. Its premium mix also shows a certain business base centred on protection-type insurance. At the same time, the company is not a dominant market leader, but rather a mid-sized life insurer in a restructuring phase after gaining a strong parent. From a credit perspective, the analysis should consider both the strength of the existing franchise and the extent to which distribution, product mix and capital efficiency can improve following inclusion in the Woori group.

The FY2025 premium mix is as follows.

In this mix, protection-type insurance is the credit core. If priced appropriately, protection-type insurance can support long-term insurance service profit and CSM release. However, if medical and health protection is material, earnings can move significantly with morbidity, medical-cost inflation, claims frequency, policy terms at sale, and future assumption changes. A large share of protection-type insurance is positive in itself, but can become negative if it is not accompanied by disciplined loss-ratio management and repricing. The sharp decline in Tongyang Life's FY2025 insurance profit shows that product mix alone does not guarantee earnings stability.

The 18.9% share of variable and separate-account products is also important. Variable insurance and separate accounts have risk characteristics on the insurer's balance sheet that differ from general-account business, but they are linked to the market value of customer assets, fee income, surrender behaviour, sales suitability, and reputational risk. When markets are strong, fee income and sales may be supported, but during market volatility, surrenders, complaints and sales slowdowns can occur. In issuer credit analysis, variable and separate accounts should not be treated simply as low risk; they need to be reviewed from the perspectives of fees, sales quality and customer behaviour.

On distribution, inclusion under Woori FG will be an important future change. Woori Bank's customer base, branch network, digital channels, and corporate and retail relationships could give Tongyang Life opportunities in bancassurance and group cross-selling. Cooperation among banking, securities and insurance can be effective particularly in retirement and pensions, protection insurance, asset formation, insurance products for affluent customers, and corporate employee benefits. However, given Korean insurance sales regulation, consumer protection, commission regulation, and product suitability, sales expansion must be pursued carefully. A rapid increase in sales volume would not be credit positive if it later results in higher surrenders, complaints or loss ratios.

A franchise weakness is that the post-parent-change business model has not yet built a sufficient track record. Tongyang Life's move under Woori FG occurred in 2025, and full ownership is scheduled for August 2026. Therefore, as of May 2026, it remains unconfirmed how much sales growth, cost efficiency, capital management, and synergy with ABL Life will be realised through Woori cooperation. From a credit perspective, it is appropriate to confirm synergies gradually rather than front-loading all expected future benefits.

5. Financial Profile and Profitability

Tongyang Life's FY2025 results combined an improved capital ratio with weaker earnings. From a credit perspective, the improvement in the K-ICS ratio should be recognised, but the quality and sustainability of earnings warrant caution. For life insurers, accounting profit, insurance service profit, investment profit and loss, OCI, K-ICS and CSM do not necessarily move in the same direction. Therefore, reading FY2025 simply as "improved because of Woori ownership" would be too crude. A more accurate reading is that capital management improved, but earning power needs to be reconfirmed.

Key income statement indicators are as follows.

Insurance operating revenue increased slightly, but insurance profit fell sharply. This shows that revenue volume alone does not explain profitability. Insurance service expenses, claims, operating expenses, reinsurance, contract assumptions, CSM release, loss ratios and product mix may have contributed. A more detailed breakdown of drivers would require additional review of the notes to the official annual report, but from a credit perspective the weakening of core earnings as an insurance company in FY2025 should not be overlooked.

Investment profit was KRW 85,041 million, slightly lower than KRW 93,650 million in FY2024. Investment operating revenue increased, but investment operating expenses also rose. The components include insurance finance expenses, interest expenses on financial liabilities, gains and losses related to fair-value financial assets, foreign-exchange gains and losses, and derivative-related gains and losses. A life insurer's investment profit is driven not only by interest income on bond holdings, but also by the interaction of rates, FX, hedging, FVOCI, FVTPL, and insurance finance expenses. Tongyang Life's investment profit remained positive, but it is not a simple earnings stream composed only of stable coupon income.

Net profit was KRW 124,494 million, down 60.4% from FY2024. This is a clear credit constraint. An insurer's credit strength depends not only on capital, but also on internal capital generation. Even if the K-ICS ratio improves, a decline in net profit limits future loss absorption, dividends, growth investment, redemption of capital securities, and earnings contribution to the parent. Woori FG's ownership has increased expectations of external support, but the company's standalone ability to generate stable profit needs to be reconfirmed.

Total comprehensive income returned to a small positive amount of KRW 3,441 million in FY2025. This was positive for capital stability after a large negative amount of KRW -844,390 million in FY2024. However, FY2025 total comprehensive income was very small even relative to net profit, and other comprehensive income remains sensitive to rates and valuation gains and losses. Accounting total equity declined from KRW 2,903,967 million in FY2023 to KRW 1,548,875 million in FY2025, so both K-ICS capital and accounting capital need to be reviewed.

Media reports state that the K-ICS ratio at the end of Q1 2026 was 185.8% and that the CSM balance was around KRW 2.5108 trillion. At the same time, media reports also indicate that Q1 net profit declined year on year. These figures provide a recent directional indication, but this report treats them only as supplementary because they have not been fully verified against official quarterly disclosures. In the next update, the Q1 2026 DART quarterly report should be checked directly, and the official values for insurance profit, investment profit, CSM, new business and K-ICS should be incorporated.

In summary, the company's financial profile includes sufficient asset scale, regulatory capital that is comfortably above the minimum, and improved expectations of external support following inclusion under Woori FG. However, the FY2025 earnings decline is a clear weakness, and it is still difficult to say that internal capital generation is sufficiently stable. In the credit assessment, the improvement in K-ICS to 177.3% should be recognised, while insurance profit recovery, investment-profit stability, containment of OCI volatility, and earnings improvement after Woori cooperation should be confirmed.

6. Investment Portfolio, ALM and Capital Adequacy

One of the largest drivers of a life insurer's credit strength is the relationship between investment assets and insurance liabilities. Tongyang Life is no exception. Most of the company's KRW 35.3 trillion of total assets are financial assets, and they are linked to insurance contract liabilities, investment contract liabilities, subordinated debt, derivatives, hedges and OCI. Because insurers have long-duration liabilities, investment yield, duration, credit risk, FX, liquidity and valuation gains and losses directly affect capital and earnings.

The FY2025 investment assets and securities mix is as follows.

The large amount of domestic government bonds is a credit-stabilising factor. High-grade and highly liquid government bonds are important assets for an insurer's ALM and K-ICS, and credit-loss risk is relatively low. On the other hand, large rate movements affect valuations and OCI. If liability duration and asset duration are well matched, interest-rate risk is mitigated; if mismatches remain, K-ICS and accounting capital can fluctuate. Media reports indicate that the company has worked to reduce its duration gap, which is credit positive. However, formal ALM indicators need to be reviewed on an ongoing basis.

Overseas securities of KRW 7.25 trillion are important in assessing the company's investment risk. Overseas securities can contribute to higher yield and diversification, but they carry FX, hedging-cost, overseas-rate, foreign-currency liquidity, credit-spread, regional and issuer-concentration risks. Korean life insurers have in the past been affected by overseas bonds and foreign-currency hedging, and higher hedging costs or FX volatility can affect earnings. In analysing Tongyang Life's investment profit, the rating distribution, currency, hedging policy, and FVTPL / FVOCI / amortised-cost classification of overseas securities should be reviewed.

K-ICS capital metrics are as follows.

In FY2025, the company issued U.S.$500 million of Tier II subordinated debt and redeemed hybrid capital securities, changing its capital structure. Subordinated debt can contribute to K-ICS capital, but for the issuer it involves future interest payments and redemption / refinancing risk. Insurers' regulatory capital may include not only shareholders' equity but also subordinated debt and hybrid securities, so the quality of capital needs to be checked. For a company whose K-ICS ratio remains in a mid-range position, maintaining market access for capital securities is important.

For ALM, interest-rate sensitivity is central. Life insurers match long-duration guaranteed and protection liabilities using bonds, loans, overseas securities and derivatives. If asset duration is too short, reinvestment yields fall when rates decline and the liability burden becomes heavier. If asset duration is too long, valuation losses increase when rates rise. Hedging can reduce risk, but creates hedging costs and accounting volatility. Tongyang Life's return to slightly positive total comprehensive income in FY2025 is a sign of improvement, but given the large decline in accounting capital, interest-rate and OCI risk remain important.

7. Liability Profile and Policyholder Behaviour

Tongyang Life's liability structure is centred on insurance contract liabilities, as is typical for a life insurer. FY2025 insurance contract liabilities were KRW 28,145,079 million, representing the majority of total liabilities of KRW 33,798,362 million. These are supplemented by investment contract liabilities of KRW 3,702,749 million, debentures of KRW 1,210,212 million, derivative liabilities, and other financial liabilities. In credit analysis, looking only at bonds or subordinated debt is insufficient. It is necessary to consider the nature of policyholder liabilities, claims, surrenders and maturity payments, liquidity of investment contracts, and regulatory policyholder protection.

Insurance contract liabilities include participating insurance, non-participating insurance and variable insurance. Non-participating insurance tends to be directly linked to issuer profitability, while participating insurance has policyholder-dividend and profit-sharing characteristics. Variable insurance is affected by the market value of separate accounts and customer behaviour. These liabilities are not simple borrowings; they involve insurance risk, financial risk, surrender risk, policyholder behaviour and regulation. Bond investors need to recognise that insurance liabilities are subject to policyholder protection that is expected to rank ahead of bonds.

For FY2025 insurance payments and claims, total insurance benefits and related payments were reported at KRW 4,167,990 million. Death and protection-type insurance benefits and related payments were KRW 1,334,931 million, endowment insurance was KRW 1,514,362 million, and separate accounts / variable products and others were KRW 889,573 million. While protection-type insurance accounts for a high share of premiums, endowment and separate-account products are also large from a payment perspective. This indicates that the company's liabilities include not only protection risk, but also maturity, survival-benefit and investment-related payments.

Surrender and lapse behaviour is an important risk for life insurers. If surrenders are higher than assumed, CSM, future profits, recovery of sales expenses, and liquidity are affected. When interest rates rise, if existing policies appear to offer lower returns than market rates, customers may surrender and move to higher-yielding products. When interest rates fall, the burden of high guaranteed-rate policies on insurers increases. For protection-type insurance, policyholders' protection needs, premium affordability, and the quality of agency sales affect persistency. Given Tongyang Life's premium mix, persistency and surrender rates are essential for assessing the sustainability of CSM and insurance profit.

Risk in medical, health and protection products is also important. In the Korean life insurance market, competition in health insurance, cancer insurance, dementia-related products, medical benefits and long-duration protection products affects profitability. If future medical costs or claims frequency are underestimated at sale, profitability may deteriorate in later years through higher claims ratios or assumption changes. Protection-type insurance can build CSM, but if pricing and underwriting quality are poor, apparent new-business value can later be eroded. The decline in FY2025 insurance profit requires further analysis of products and claims ratios.

Policyholder-protection schemes and insurance regulation also affect bond investors. If an insurer comes under stress, regulators are likely to prioritise policyholder protection and may require capital preservation, dividend restrictions, restrictions on subordinated-debt interest payments or redemption, capital injections, business transfers or rehabilitation measures. Subordinated debt, by its nature, ranks below policyholders and senior creditors. Tongyang Life's Tier II subordinated notes contain provisions under which principal write-down may occur upon non-viability and other circumstances. It is important to recognise clearly that these are capital securities of a company with insurance liabilities.

8. Capital Structure, Liquidity and Funding

Tongyang Life's capital and funding structure needs to be assessed by combining accounting equity, regulatory capital, subordinated debt, hybrid capital, and expectations of parent support. At FY2025-end, accounting total equity was KRW 1,548,875 million, down from KRW 1,969,113 million at FY2024-end. By contrast, K-ICS eligible own funds were KRW 4,015,166 million, larger than accounting equity. This shows that, in assessing insurer capital, it is necessary to look not only at accounting net assets but also at regulatory-capital adjustments, inclusion of subordinated debt and hybrid capital, and valuation of insurance liabilities.

The important features of the FY2025 capital structure were the issuance of U.S.$500 million of Tier II subordinated debt and the redemption of existing hybrid capital securities. Cash-flow disclosures show an inflow of KRW 906,123 million from subordinated-debt issuance and an outflow of KRW 400,847 million from redemption of hybrid capital securities. This suggests that the company replaced capital-like liabilities and strengthened K-ICS capital. From an issuer-credit perspective, maintaining capital-market access is positive. At the same time, interest payments on foreign-currency subordinated debt, future reset, optional redemption, refinancing, and FX / hedging management become new monitoring items.

Liquidity is supported by premium income, investment assets, cash and deposits, securities liquidity, and expectations of parent support as a life insurer. FY2025 operating cash flow was positive at KRW 2,645,772 million, while investing cash flow was negative at KRW 3,135,256 million. This reflects the large funding cycle of an insurer through premiums, claims and investment management. No signs of a short-term liquidity crisis are evident, but insurer liquidity depends on policyholder surrenders, maturity payments, the ability to sell assets, collateral and hedging, and foreign-currency liquidity.

In assessing Tongyang Life's liquidity, the perspectives of subordinated bond investors and policyholders should be separated. For policyholders, the central issue is the ability to pay claims, maturities and surrenders, and regulators also prioritise policyholder protection. Even if company-wide liquidity is sufficient, deterioration in regulatory capital can restrict optional redemption and the treatment of capital securities. The normal-course conditions for coupon payments and whether payments can be suspended or deferred should be checked in the relevant provisions of the Offering Circular. At a minimum, in non-viability, liquidation or rehabilitation scenarios, principal write-down and subordinated recovery ranking should be assumed.

The presence of parent Woori FG is a material credit positive for funding. An insurer under a major financial group is more likely than a standalone mid-sized insurer to benefit from capital-market confidence, investor access through banking and securities affiliates, and expectations of capital support if needed. Public rating-agency summaries in fact indicate that Woori's support capacity and strategic importance were reflected in the ratings. However, Woori support does not eliminate the need for standalone liquidity analysis. At the time of redemption or refinancing of capital securities, regulatory approval, K-ICS, group capital policy and market conditions all matter simultaneously.

Capital policy after full ownership will be important. After delisting, Woori FG may be able to design Tongyang Life's dividends, capital injections, restructuring, integration with ABL Life, asset management and product strategy more flexibly. From a credit perspective, the focus will be the K-ICS target range Woori sets for Tongyang Life, how far it uses subordinated debt and hybrid capital, whether it prioritises retained earnings, and whether it seeks dividends to the parent. If excessive dividends are extracted from a company with a K-ICS ratio of 177.3%, that would be credit negative; if capital preservation is prioritised, it would be credit positive.

Funding cost also needs to be monitored. The fixed coupon on the U.S.$500 million Tier II notes is 6.250%, and from 2030 onward it resets to a rate based on the U.S. five-year Treasury yield plus the initial spread. If the coupon after reset rises, the incentive for optional redemption strengthens, but redemption requires capital conditions and regulatory approval. If market conditions deteriorate and equivalent or better-quality capital cannot be raised at a reasonable cost, the first call may not be exercised. Investors should avoid treating the 2030 call as too firm a base case, and should consider the 2035 maturity and reset risk.

9. Subordinated Debt and Structural Considerations

Tongyang Life's U.S.$500 million 6.250% Tier II Subordinated Sustainability Notes due 2035 are securities that require especially careful treatment in this report. The securities demonstrate the issuer's capital-raising capacity, but for investors they carry ranking, payment and loss-absorption risks that differ from senior bonds. Life insurer Tier II subordinated debt is not an ordinary unsecured bond, but a product issued with regulatory-capital characteristics. Credit analysis needs to distinguish between the issuer's credit strength and the security-specific possibility of loss.

Key terms are as follows.

The first key point of the subordinated notes is payment ranking. If the issuer becomes subject to bankruptcy, rehabilitation, liquidation or other similar subordination events, noteholders' claims rank below the issuer's senior obligations. For a life insurer, policyholders, senior creditors and regulatory protection are likely to be prioritised. Therefore, even if Tongyang Life's issuer credit is investment grade, recovery prospects for subordinated debt are lower than for senior debt. The fact that the security rating is lower than the issuer or insurance financial strength rating reflects this difference in ranking.

The second point is the optional redemption conditions. From the first reset date in 2030, the issuer can redeem the notes voluntarily subject to certain conditions, but approval by the FSS and regulatory capital conditions are required. The Offering Circular at issuance states that the Solvency Margin Ratio immediately after redemption must be at least 150%, or that certain conditions, such as qualifying replacement capital issuance, must be met. In other words, the call expected by investors depends not only on the issuer's economic incentives, but also on regulatory-capital adequacy and the regulator's judgement. If K-ICS declines, callability may be constrained.

The third point is principal write-down and non-viability risk. The Offering Circular includes provisions to the effect that, in circumstances such as liquidation, closure, bankruptcy or inability to recover, the Governor of the FSS may require all or part of the principal to be written down. Written-down principal is not restored, and interest does not accrue on the written-down portion. This means that the security functions as loss-absorbing capital. Investors need to reflect this loss-absorption feature in pricing, rather than looking only at coupon level or parent-support expectations.

The fourth point is the relationship between Woori FG support and foreign-currency funding. Woori FG ownership and support expectations reduce the issuer's probability of failure, but they are not a direct guarantee to subordinated noteholders and do not change legal ranking or principal write-down provisions. In addition, while the issuer conducts premium collection, claims payment and capital management in Korean won, it has U.S.$500 million of foreign-currency subordinated debt. U.S. dollar rates, FX hedging, foreign-currency liquidity and refinancing cost therefore need to be monitored.

Accordingly, investors looking at this Tier II subordinated debt should base their analysis on Tongyang Life's issuer credit while applying at least four discounts. The first is the ranking discount from subordination to policyholders and senior obligations of an insurance company. The second is the possibility that optional redemption may be constrained if K-ICS deteriorates. The third is the principal write-down provision in non-viability and similar circumstances. The fourth is U.S. dollar reset and refinancing risk. In light of these factors, Woori ownership has improved the credit profile, but the subordinated notes cannot be treated as senior-equivalent debt.

10. Rating Agency View

Public rating-agency summaries provide useful reference points for understanding Tongyang Life's credit profile. However, this report does not hold the full paid rating reports, so the rating discussion is based on public summaries. In future updates, if direct reports from Moody's, Fitch, NICE, KIS, Korea Ratings and others can be reviewed, the rating rationale, rating sensitivities and parent-support notching should be examined in detail.

The rating map based on public information is as follows.

Positive rating factors include Woori FG's support capacity and strategic importance, a certain scale in the Korean life insurance market, the FY2025 K-ICS ratio of 177.3%, track record of issuing foreign-currency Tier II debt, and room for deeper integration after full ownership.

11. Key Credit Strengths and Constraints

Tongyang Life's strengths are support expectations following its inclusion under Woori FG, asset scale of KRW 35.3 trillion, a business base centred on protection-type insurance, the FY2025 improvement in K-ICS to 177.3%, and capital-market access demonstrated by the U.S.$500 million Tier II issuance. Constraints are the 60.4% decline in FY2025 net profit to KRW 124,494 million, a mid-range K-ICS buffer, investment-asset risk including overseas securities, ALM and OCI sensitivity, execution risk in Woori full ownership and cooperation with ABL Life, and the ranking, principal write-down and call constraints of the Tier II subordinated notes.

12. Downside Scenarios and Monitoring Triggers

The main downside risks are a renewed decline in K-ICS, failure of insurance profit to recover, delays in Woori full ownership and cooperation with ABL Life, investment-asset and ALM stress, and deterioration in the refinancing environment for subordinated debt and capital securities. In particular, if K-ICS decline and weaker insurance profit occur simultaneously, parent-support expectations alone may not fully absorb credit deterioration, putting pressure on ratings and subordinated-debt valuations.

Key monitoring triggers are as follows.

13. Credit View and Monitoring Focus

Tongyang Life's current credit strength, including support expectations from Woori Financial Group, can be placed in the mid-to-upper part of investment grade for a Korean life insurer, but a more cautious view is needed based only on its standalone earnings and capital metrics. The direction is mildly improving if full ownership and group cooperation proceed as scheduled and if K-ICS and insurance profit stabilise, but the pace of improvement is not fast given the large FY2025 earnings decline. Under normal conditions, the probability of a rapid short-term change in level or direction is not high, but a reassessment would be needed if a decline in K-ICS, deterioration in investment-asset valuations, changes in Woori's support policy, integration burden, and activation risk of subordinated-debt provisions occur together.

This view is supported by Woori FG's acquisition of Tongyang Life and ABL Life and the planned full ownership in August 2026. Woori's support capacity, banking franchise, capital-market access and strategic importance within the group clearly strengthen the company's standalone credit. However, Woori support is not a legal guarantee, and Tongyang Life's own FY2025 earnings decline, mid-range K-ICS buffer, investment and ALM sensitivity, and the ranking and principal write-down provisions of the Tier II subordinated notes remain.

Monitoring from here should focus first on whether the July 2026 shareholder meeting and August share exchange proceed as scheduled, second on whether K-ICS stabilises around 180%, and third on whether insurance profit, net profit and CSM recover from the weakness in FY2025. In addition, overseas securities, OCI, hedging, duration gap, the refinancing environment for subordinated debt, and Woori's capital policy should be reviewed. If K-ICS declines toward 150%, insurance profit remains depressed, Woori support expectations weaken, or optional-redemption / principal write-down risk on the Tier II notes becomes more salient, the credit view should be reconsidered in a negative direction.

14. Short Summary & Conclusion

Tongyang Life is a mid-sized Korean life insurer with more than KRW 35 trillion of assets, centred on protection-type insurance, and became part of Woori Financial Group in 2025. The current credit view, including support expectations from Woori FG, is in the mid-to-upper part of investment grade for a Korean life insurer, but a more cautious view is needed on standalone credit given the FY2025 earnings decline and the mid-range K-ICS buffer. If full ownership and group cooperation proceed as scheduled and K-ICS and insurance profit stabilise, the direction is mildly improving, but the pace of improvement is not fast. The most important point is not to treat Woori support as a legal guarantee, and to continue monitoring K-ICS, insurance profit, investment / ALM, and the ranking and principal write-down provisions of the Tier II subordinated notes.

15. Sources