A group of banks and insurance companies recently formed a London-based trade group called the Life and Longevity Markets Association (LLMA).
The LLMA aims to develop a liquid market for longevity risk that taps into broader capital markets rather than just the balance sheets of certain insurers and reinsurers.
A core focus will be on longevity swaps and making the longevity swap transaction process more efficient.
Longevity swaps serve as a risk transfer alternative to pension buyouts.
The market for longevity risk is vast--it is estimated to be in the range of $3 trillion in Great Britain alone.
Similar to catastrophe or "cat" bonds, capital markets will likely be required to provide sufficient capacity and liquidity for longevity risk.
Source: The Economist
- Log in to post comments
