Our fellows across the pond are making a move to shift longevity risk to capital markets. The Life and Longevity Markets Association is a group of banks, insurers and pension experts working to develop a "series of standardised indices that can be used as a global benchmark for trading longevity and mortality risk," Reuters reports.
Companies participating in the new association include AXA, J.P. Morgan, U.K.-based Prudential plc, Deutsche Bank and RBS.
Initially, risk will be traded as swap structures, with a goal to create longevity bonds in the future, similar to catastrophe bonds in the insurance-linked securities market. The Association wants to transfer ?2 trillion, or approximately $3.3 trillion, in pension liability assets to capital markets to "help pension schemes and insurers manage the financial pressure of increased life expectancy," the news agency writes.
