Global Longevity Risk Exposure

According to Swiss Re the total worldwide longevity risk exposure is $20.7 trillion.

This $20.7 trillion figure is presumably a result of defined benefit pension assets that have not been hedged or insured.

This information comes from a Wall Street Journal article (click here to read) that discusses the recent longevity trend bond issued by Swiss Re.

As an aside, through the new longevity-linked cat bond, Swiss Re is attempting to lock-in what is presumably a natural hedge between its U.S. life insurance book (where it is long mortality risk) and its UK annuity book (where it is short mortality risk).

The underlying reference is males age 75-85 in the UK and males age 55-65 in the U.S.

Divergence of normal mortality patters for these 2 reference groups is the basis for the risk and trigger.



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