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Insuring against ageing populations

Sunday 28 March 2010 - by Chris Jackson


“While there is sufficient capacity in the market in the short term, there are potential pressures on supplies as increasing numbers of pension schemes look to de-risk. Currently, the barriers to new monies coming into this area include the complexity of the risks and the lack of standard terms. If the LLMA succeeds in addressing these issues, it will help attract new investors and ensure pricing remains competitive.”

AKG Actuaries and Consultants communications director Guy Vanner says longevity will be a growing asset class going forward.

He says: “You just have to look at the demographics to see that it is becoming a major part of the mix. It exists in some forms embryonically as an asset class. There are some companies who are looking at it at the moment but it is in its early days. It isn’t straightforward to make it work as an asset class.”

Vanner says he foresees the longevity market as forming a “thin slice” of banks’ assets in ten years’ time.


The LLMA is eager to promote the creation of a standardised product that the market can understand and trade.

The intention is that any intellectual property developed by the LLMA will be made available for use by all market participants.

Looking ahead the LLMA plans to set standards for the new trading market it wishes to promote. These are likely to include:

• Templates for standardised longevity products
• A longevity trading index
• Standardised Valuation model for longevity

The scope for the LLMA at present is to only look at the UK, but with longevity a core issue for many of the EU members’ governments, it seems feasible that the organisation may later expand its horizons to other countries.

Current members of the LLMA are: AXA, Deutsche Bank, J.P. Morgan, Legal & General, Pension Corporation, Prudential PLC, RBS and Swiss Re.


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