On April 28, 2008, Standard&Poor's Ratings Services affirmed its 'A' insurer financial strength and counterparty credit ratings on Cathay Life Insurance Co. Ltd. Standard&Poor's also affirmed its 'A-' long-term counterparty credit ratings and 'A-2' short-term ratings on Cathay Financial Holding Co. Ltd. (Cathay FHC). The outlooks on both long-term counterparty credit ratings are stable. The ratings affirmation reflects our expectation that Cathay Life's announcement of a preliminary Taiwan dollar (NT$) 6.8 billion net loss in the first quarter of 2008 is unlikely to weaken the insurer's credit profile. The loss is equivalent to 0.3% of the insurer's assets and was mainly due to Cathay Life's surging hedging costs on overseas investments. Significant appreciation in the Taiwan
