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.
One of the emerging groups of players in this market is hedge funds--such as Centurion Fund Managers--that are interested in trading longevity risk.
What remains to be seen is how much capacity will come from asset managers and how these players will be viewed by the pension funds.
Source: Financial Times
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