The world’s life reinsurers have already traded large amounts of lifespan uncertainty risk through “longevity swaps,’ and the size of the longevity swaps market is likely to continue to grow.
A team at S&P Global led by Sebastian Dany talks about the rise of longevity swaps in a new review of the world’s life reinsurance market.
The team estimates reinsurers have used longevity swaps to manage annuity obligations and other lifespan-related obligations with a present value of about $60 billion.
(Related: Pension De-Risking Now Has IMF’s Attention)
“We expect to see increasing longevity risk appetite” at life reinsurers, the analysts say.
Much of the appetite could come from the United Kingdom, with additional demand coming from markets such as the United States and the Netherlands.