Swiss Re Insurance-Linked Fund Management

PCS - Emerging Risks, New Opportunities

Life and Longevity Markets Association formed to promote longevity risk market


The market for life insurance securitization and longevity risk trading has now got a champion to help it grow and mature. The Life and Longevity Markets Association has been founded ‘as a not-for-profit venture in order to promote a liquid traded market in longevity and mortality-related risk’.

Companies involved include AXA, Deutsche Bank, Swiss Re, RBS and others. Having the weight of these large financial companies (who are all involved in this market) behind the growth of the market will help it become viewed as a more mainstream financial market rather than as some exotic market as it is often now viewed. This will help to attract investors.

The association aims to create standardised contracts, develop indices on which mortality could be traded and determine a valuation model for contracts based on life insurance. Predictions for the life market are that it will grow substantially over the coming years so any move to standardise and remove barriers to entry are really positive.

The catastrophe bond market could do with a similar thing in our opinion. With the huge amount of press coverage and positive sentiment behind cat bonds right now, a trade organisation would help to utilise that momentum to push it forwards. We hope to see this happen in the life and longevity markets and it would be nice to see the catastrophe linked market follow suit if it succeeds.

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