Insurance companies are among the market's busiest investors but a new phenomenon taking root is transforming their own business into collateral for securitizations.

Trust preferred securities, or TruPS, have been harnessed as collateral for CDOs in recent years, primarily by the banking institutions which pioneered the process. Issuing these securities raises new sources of funding, provides balance-sheet relief and offers investors the opportunity to capture long-term notes from assets once difficult to access. Five CDOs backed by bank TruPS have been issued already in 2004, totaling about $2.0 billion.

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