The Toa Reinsurance Co., one of Japan's largest reinsurers with over JPY455.2 billion (USD3.64 billion) in assets, has stepped up its examination of the synthetic collateralized debt obligation arena with an eye to investing in a deal next year. Ohura Kazuhido, manager in the investment department in Tokyo, said the department is currently planning next year's investment strategy for its USD700 million portfolio and is considering synthetic CDOs to enhance yield. "It's possible we'll invest within six months," he added. The department, which invests in a wide array of products from Japanese government bonds to weather derivatives, has looked at CDOs before, (DW, 12/8) but is patiently studying the product rather than making a plunge, said Kazuhido. "We're conservative."
Kazuhido said he has been speaking to a number of banks about the products, which he declined to name. The CDO would likely be based in yen on domestic credits. He declined further comment.
A number of insurers in Japan are looking at credit derivatives to boost the performance of their investment portfolios, including Tokio Marine & Fire Insurance Co. (DW, 6/23) and The Yasuda Fire & Marine Insurance Co (DW, 3/31).
