Longevity hedging and longevity risk transfer is a growing market with new products and methodologies springing up all the time. So far a lot of interest has been related to pension funds and the risks of their members living longer but there is also growing interest amongst investors in life insurance who want to hedge the longevity risks associated with their investment portfolio.
Madison Strategic Partners, an asset manager specialising in longevity products, has announced (press release below) a new product to enable life insurance investors to hedge their risks. We expect to see more specialist companies of this type coming forwards with longevity risk transfer products as the sector receives increasing coverage and attention.
Madison Strategic Partners Announces New Longevity Hedge for Life Insurance Portfolios
NEW YORK, Sept. 27 /PRNewswire/ — Madison Strategic Partners, a specialty finance and longevity products asset manager, announced today the launch of a longevity hedge product designed for life insurance investors. The hedge is issued in conjunction with a high investment grade, US counterparty and is designed to mitigate longevity extension past the life expectancy date, one of the most substantial risks associated with investments in life assets.
“After one year of development, our structuring team is pleased to introduce this unique and innovative product to the marketplace,” said Louis Kreisberg, CEO of Madison Strategic Partners. “The hedge is available to both existing portfolio holders and new market entrants. It offers investors the ability to backstop longevity risk and increase the certainty of portfolio cash flows while utilizing a product that is issued by an extremely credit-worthy counter-party.”
“This is substantially different from earlier hedge products, many of which were designed as ‘put’ options. Madison’s product allows the asset owner to retain 100% ownership of the death benefit while also retaining the right to transfer the hedge in the event of a future sale. This portability inherently makes the policies substantially more valuable,” Kreisberg continued. “The hedge payment streams can be structured with a high degree of flexibility and customized to meet each investor’s specific cash flow needs.”