Longevity: a new asset class
By David Blake
A little over a decade ago, a new asset classemerged, one linked to longe vity risk, i.e., unanticipatedchanges in life expectancy. The Life Market has two seg-ments: a macro-segment with assets linked to groups of lives,such as members of a pension plan or a book of annuitants;and a micro-segment with assets linked to individual lives,such as life settlements. For the market to become global,certain market requirements need to be satisfied, such asunderstanding the causal factors underlying longevity andthe development of market indices and mortality forecastingmodels. The government has a role in contributing to thedevelopment of the mar ket, as do pricing models. Byaddressing these issues, as well as understanding the needs ofinvestors better, the asset class can become global, byattracting new groups of investors seeking returns that areuncorrelated with existing financial instruments.
Source: Springer
