LG Insurance, one of Korea's largest insurers with over KRW40 trillion (USD34.5 billion) in assets, is considering making its first investment in synthetic collateralized debt obligations in the coming months. The insurer is now piecing together its investment strategy for the year, which may include CDOs, according to an LG official.
"We're monitoring the CDO market," said the official, noting it is reviewing CDOs on global portfolios of credit default swaps. It expects to wrap up its investment plan by the end of the month. LG Insurance was intending to invest in the product last year (DW, 7/7) but senior management decided instead to divert a portion of the KRW2.5 billion fixed income portfolio into domestic loans, which have been a traditional and more understood investment avenue for insurers in Korea. Given the low yields in typical fixed income investments, however, the official noted that CDOs are back on the radar screen. It is again speaking with international investment houses about the products, he said, declining to further elaborate.
