Longevity

Longevity risk is clearly a huge growth market.  One has to wonder, though, where the capacity to address this market opportunity will come from.

While the national debate on healthcare comes to a climax in Congress, there is clear evidence of enormous productivity gains in healthcare.

It is reported that the cost of genome sequencing continues to plummet in a Moore's Law fashion.

The total cost of sequencing an entire human genome started at $3 billion.

The global consulting firm Mercer recently launched a pension buyout index.

Demand for longevity risk has been returning to the UK pension market.

High levels of volatility during the financial crisis deterred many players in the pension buyout market.

The return to normalcy in the capital markets may, in fact, be contributing to under-pricing of longevity risk among those who are providing solutions to UK pension plan sponsors who seek to offload longevity-related liabilities.

A worthwhile article in the Financial Times discusses the range of options that are currently available to UK pension plan sponsors:

The United Kingdom has what is arguably the most sophisticated market in the world for financing longevity risk.

The market for pension buyouts is developing and the demand among pension sponsors to off-load longevity risk is srtong.

The issue is that there is a relative lack of capacity or ability to meet the demand.

Reinsurers are active in the buyout market but the capacity is limited, and the longevity derivatives markets are relatively illiquid when compared to more established derivatives markets.

During his campaign, President Obama pledged to remove the stem cell restrictions imposed by the Bush administration.

Initial progress in this regard is underway as thirteen embryonic stem cell lines were approved for use by U.S. funded researchers yesterday.

Human embryonic stem cells are controversial because the embryos are destroyed in the process of extraction.

On the other hand, researchers and other advocates believe that the benefits to society--including the use in regenerative medicine--outweigh such costs.

The Centers for Disease Control and Prevention reports that:

• The number of obese adults in the United States has more than doubled in the past 25 years.
• The number of obese adults in the U.S. now totals 34 percent of the population or 72 million people.
• Obesity related medical costs totaled $147 billion in 2008.
• Obesity accounts for 5 - 15 percent of deaths in the U.S.

Meanwhile, smoking is related to 18 percent of deaths.

Longevity risk has existed as an asset class for quite some time but has primarily been the focus of larger institutions.

In a recent Financial Times article, the author discusses the recent proliferation of longevity and mortality related investment products.

The range of product options include:

Annuities are complex, largely misunderstood, and often misrepresented in popular financial media.

The reality, though, is that these financial products are becoming an increasingly important part of the financial plans of millions of people around the world.  In fact, annuities are a vital component of the retirement planning process.

Aubrey de Gray is a biomedical gerontologist whose efforts are directed towards reversing the aging process--in other words, to enhancing human longevity.

He is also a co-founder and chief scientist of the Methuselah Foundation, a non-profit organization dedicated to extending healthy human life.

There are numerous resources that illuminate his goals and work. 

The recent interview available in the link below provides a snapshot of some of his views.

Source: Machines Like Us