Long Bon Development Co. Ltd. Rated 'twBBB+'; Outlook Stable

RATIONALE
Taiwan Ratings Corp. today assigned its 'twBBB+' long-term and 'twA-3' short-term corporate credit ratings to Long Bon Development Co. Ltd. (Long Bon). The outlook is stable.

The ratings reflect the investment holding company's conservative financial policy and the creditworthiness of Taiwan Life Insurance Co. Ltd. (Taiwan Life Insurance, twAA-/Stable/--) in which the company has a large stake and which constitutes 70% of its investment portfolio. These strengths are offset by that portfolio's limited diversity.

Long Bon was established in 1988 as a real estate developer. The company transformed itself into an investment holding company in 1998-2000. As at Feb. 28, 2005, the company's portfolio was estimated at NT$11.8 billion. Long Bon's portfolio is 70% comprised of the company's stake in Taiwan Life Insurance. The company's other main investment is 80%-owned real estate developer, Chant Construction Co. Ltd. (Chant Construction), which accounts for about 13% of the value of the company's portfolio.

The ratings on Long Bon are constrained by the company's dependence on its investment in Taiwan Life Insurance, even though the life insurer has a satisfactory financial and investment profile, as well adequate capitalization. In addition, Taiwan Life Insurance has a good record of profit generation and has been consistent with its dividend payout to shareholders, despite its modest position in Taiwan's competitive life insurance sector. Taiwan Life Insurance's operating performance remained satisfactory in 2004, generating net income of NT$2.14 billion. Chant Construction, which has a niche position in Taiwan's urban real estate industry, generated a return on capital of more than 30% in 2003-2004, enabling it to pay recurring dividends to Long Bon. In 2001-2004, Chant Construction generated net profit of NT$805 million.

Long Bon reduced its debt to NT$1.6 billion in 2004 from NT$3.7 billion in 2000, as a result of prudent investments, recurring dividends from its main investments, and the sale of legacy real estate inventory. The company's ratio of net debt to estimated portfolio value was conservative at 13.1% at the end of February 2005, and its cash protection measures were adequate. Long Bon's ratio of received cash dividends to net debt was a comfortable 24.5% in 2004, while its received cash dividends comfortably covered interest and general expenses 3x.

Liquidity.
As at Dec. 31, 2004, Long Bon's cash and liquid short-term investments totaled NT$186 million, while long-term debt due within one year amounted to NT$310 million. The company also had untapped short-term bank facilities of NT$220 million and medium-term bank facilities of NT$350 million at the end of 2004. In addition, 42.5% of Long Bon's investment in Taiwan Life Insurance, which is not pledged to banks, provides additional financial flexibility, if required.

OUTLOOK: STABLE
The outlook reflects Taiwan Ratings' expectation that Long Bon will continue to receive steady cash dividends from its investments, adhere to the company's prudent investment policy, and maintain its credit protection measures. Moreover, the company's liquid investment in Taiwan Life Insurance, which is estimated to cover the company's net debt 5.4x, is likely to support the current ratings over the medium term.

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1. Taiwan Life Insurance Co. Ltd. (2006/8/9)

2. Ratings On Long Bon Development Co. Ltd. Withdrawn (2006/3/9)

3. Taiwan Life Insurance Co. Ltd. (2005/6/24)

4. Long Bon Development Co. Ltd. (2005/5/27)

5. Long Bon Development Co. Ltd. Rated 'twBBB+'; Outlook Stable (2005/3/10)