INSURANCE AND TAX EFFICIENT

Cutwater recognizes that Insurance Portfolio Management and Tax Efficient Strategies can differ significantly from other investment management products. A key element is properly identifying the underlying goals and requirements of the portfolio and the liability that it supports. Specifically, portfolio design must consider at least one client "liability", along with yield enhancement and cash-flow matching considerations. Liabilities may be specific to the client's business objectives, such as gain-loss budgets and cash-flow defeasances, or be general to the regulations imposed within a client's industry, such as state imposed insurance legislation or industry defined capital requirements. Understanding our client's liability is critical to managing a successful asset portfolio.

Each Insurance client and Tax Efficient portfolio strategy is therefore unique. We believe that in order to successfully meet your objectives and exceed your expectations, we must promise to:

• Design asset portfolios that meet all client-directed or industry guidelines
• Overlay client risk tolerances and unique business objectives
• Balance principal protection with income enhancement and portfolio liquidity
• Deliver consulting and customized reporting services
• Provide full access to Cutwater's portfolio managers as business partners

We are also aware that ratings stability for insurance portfolios and turnover stability for tax efficient portfolios are critical performance metrics. As such, we ensure that our analysis is deep enough to formulate a view on all three key performance characteristics; near-term relative value, return of principal at maturity, and importantly, the credit stability during the time between. This dictates a team approach to security analysis, requiring that all of the appropriate resources are brought to bear on each client portfolio.

Reporting and Consulting

Customized reporting is necessary for all Insurance and Tax Efficient strategy clients. Cutwater Asset Management has a dedicated team responsible for meeting client reporting expectations. Examples of customized reporting may include cash flow and book yield projections, sensitivity analyses to changes in interest rates and credit spreads, factor-based and returns-based attributions, taxable to tax-exempt ratio analysis, and taxable arbitrage bond rebate reporting. Our experience with insurance regulators such as the NY State Insurance Department and with industry-specific guidelines, like ratings agency and Regulation 114 capital requirements, provides valuable insight for clients facing similar rules. We view our client relationships not just as a fee for service contract, but a strategic partnership where Cutwater's fully integrated asset management platform is available for your use.