A long way to go
Longevity derivatives trading has been the subject of speculation for some time. Several new initiatives are now under way that are aimed at kick-starting a liquid market, but fundamental challenges remain. Mark Pengelly reports
Longevity derivatives have been the source of fevered market speculation for some time. The concept of trading longevity - or the risk that people might live longer than expected - is of particular excitement to some. The ability to lay off this risk seems like a silver bullet to pension funds and annuity providers in particular, which are smarting from exposure to steadily increasing life expectancies in the US and western Europe.
A report released in April 2007 by Pension Capital Strategies
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