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Taiwan Insurer Eyes Credit Debut

Shin Kong Life Insurance Co., one of Taiwan's largest life insurers with assets totaling over TWD528 billion (USD15.29 billion), is planning to make its first credit derivatives foray for its USD3 billion fixed income portfolio. "We've been watching the credit market," said James Kao, manager in the international investment department in Taipei. Kao explained that after a restructuring effort in the coming months, the insurer will move to mark-to-market accounting and likely look for alternative products for its fixed income portfolio, such as credit-linked notes. Kao noted that once systems and accounting policies are set, the insurer could purchase the products within 12 months.

The investment portfolio is primarily government debt and mortgage-backed securities. As it is in the early stages, Kao declined comment on a possible investment size but noted that Shin Kong is reading up on the instruments

"We've got many bankers in Hong Kong and Singapore," said Kao, noting that the firm's main counterparties include Citigroup, Credit Suisse First Boston and Morgan Stanley.


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