The market for trading and securitization of longevity risks has never really taken off as much as we initially thought it would. Most market participants have been waiting for capital to flood in as companies and pension fund managers discovered how easily they could hedge the risk of longevity amongst the members of pension schemes. Now, pension fund managers are all investing in other forms of insurance-linked securities (demonstrating the great returns to be had on catastrophe bonds at the moment) but they still haven’t all dived into longevity.
The Financial Times carries a great article on this topic in which they say that asset managers are set to start trading in longevity risk and that the involvement of specialists and hedge funds could provide the market with just the lifeline it needs to encourage liquidity and stimulate the market.
Read the full article on the FT.com website here.