Monday, February 1, 2010

New Institutional Longevity and Mortality Risk Group Formed

Institutional interest in longevity and mortality risk continues to grow, according to news that started off the week. A new organization, the Life and Longevity Markets Association (LLMA) has been formed and AXA, Paris, is a member, spokesman Emmanuel Touzeau confirmed.

The LLMA’s founder members are: AXA, Deutsche Bank, J.P. Morgan, Legal & General, Pension Corporation, Prudential, RBS and Swiss Re. The new organization's Web site states that "Longevity expectations continue to increase across the developed world. As they do, defined benefit pension funds, a primary holder of this risk, are having to recognise it in their actuarial valuations. This increases their liabilities and puts their finances under further pressure."

The site explains that "In order to offset this pressure and help secure member benefits, pension fund trustees have been able to pass longevity risk on to the insurance market through longevity swaps and bulk annuities. Whilst this capacity has managed the level of demand to-date, exposure to longevity risk by pension funds in the UK alone exceeds £2 trillion. Demand is therefore projected to increase significantly."

And, the LLMA site adds, "For certain institutional investors, longevity represents a potentially attractive investment opportunity primarily because it is not correlated to non-life, credit and market risks."

The new site is available at:

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