Capital

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...

Demand for longevity risk has been returning to the UK pension market. High levels of volatility during the financial crisis deterred many players in the pension buyout market. The return to normalcy in the capital markets may, in fact, be contributing to under-pricing of longevity risk among those who are providing solutions to UK pension plan sponsors who seek to offload longevity-related liabilities. A worthwhile article in the Financial Times discusses the range of options that are...

Variable annuity net asset values have recovered to pre-financial crisis levels. Buoyant capital markets over the past several months have resulted in the first increase in variable annuity net asset values in fifteen months. Gross variable annuity sales in the third quarter of 2009 were $31 billion. Qualified sales were $20.8 billion while non-qualified sales were $10.2 billion. Net sales of variable annuities in the third quarter were only $2.8 billion, which begs the question of why there...