Netherlands likely next for a longevity risk transfer market?

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We’ve been saying since last November that the Netherlands looks like a good candidate to be the next European country to see an active longevity risk transfer and longevity swap market emerge. To date, all longevity swap deals have been completed in the UK over the last couple of years but the signs are there that this could expand to new countries.

The news in November that life expectancy forecasts had changed and that they had been underestimated in the past saw billions of extra longevity linked liabilities added to Dutch pension schemes. Now Risk.net are also reporting an increasing interest in the Netherlands from companies such as Credit Suisse, Swiss Re, Aegon and Societe General (SGCIB) among others.

The recent, groundbreaking deal between JPMorgan and Pall has also likely increased interest from the pension funds in the Netherlands and sources we are close to suggest that at least one of the big funds is actively discussing ways to hedge their longevity risks. How quickly a deal comes to market is so far anyone’s guess, but market participants we speak with feel it is certain to be this year.

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