A credit derivative structured as a swap. One party is a lender facing a credit risk from a third party and the counterparty in the swap agrees to insure this risk in exchange for regular periodic payments (essentially an insurance premium). If the third party defaults the counterparty insurer will have to purchase from the the insured defaulted asset. In turn, the insurer pays the insured the remaining interest on the debt as well as the principal. See CREDIT EVENT.