Longevity hedging news

Anticipating further growth in the longevity risk transfer and pension plan de-risking sector, UK insurer Legal & General has added four to its Bulk Annuity & Longevity Insurance business to prepare it for serving clients longevity risk needs.

The UK government announced changes to the pension regime which could result in significantly lower amounts of annuities being purchased as well as a reduction in longevity risks at pension schemes and life insurers.

The Joint Forum, a forum established to deal with issues common to the banking, securities and insurance sectors, has published its final report and recommendations to policymakers and supervisors on longevity risk transfer markets.

UK insurance and investment group Legal & General is partnering with Club Vita, an initiative of Hymans Robertson, the independent consultancy and actuarial firm with a focus on pension risk, on longevity risk analysis.

A new research effort will now get underway to investigate and develop a method for assessing the basis risk in longevity risk transactions, after Cass Business School and Hymans Robertson successfully won the bid for the research work.

As it attempts to kick-start a liquid market in longevity risk, Deutsche Bank is set to perform the first trade of a new longevity risk transfer instrument, which it calls the Longevity Experience Option (LEO), by the end of this year according to a report.

A consultation document on longevity risk transfers has been published by the Joint Forum, a forum established by the Basel Committee on Banking Supervision (BCBS), the International Organization of Securities Commissions (IOSCO) and the International Association of Insurance Supervisors (IAIS) to deal with issues common to the banking, securities and insurance sectors.

Analysis from PwC questions the ability and capacity of traditional reinsurers to support the potential growth of the longevity hedging market over the next few years. PwC predicts the market for risk transfer in the form of longevity swaps and hedging in the UK could triple over the next three years.

The smallest longevity swap deal that we’ve seen has been completed, according to an article on Professional Pensions today. The £400m longevity risk transfer deal hedges the risk of pensioners living longer for luxury car manufacturer Bentley’s UK pension scheme. The size of the deal shows that longevity swaps can be transacted for smaller pension […]

According to an article published on Dow Jones, and available here via the Wall Street Journal, the market for longevity risk transfer through the issuance of bonds or securitization may be about to come out of hibernation. The article says that two longevity bonds are currently being marketed to investors by banks in recent weeks […]