The Birth of the Life Market

Pensions Institute Discussion Paper No. PI-0807

32 Pages Posted: 28 Apr 2009

See all articles by David P. Blake

David P. Blake

City University London - Cass Business School

Andrew J. G. Cairns

Heriot-Watt University - Department of Actuarial Science & Statistics

Kevin Dowd

Nottingham University Business School (NUBS)

Date Written: April, 28 2009

Abstract

The huge economic significance of longevity risk for corporations, governments and individuals is beginning to be recognized and quantified. The traditional insurance route for managing this risk is capacity constrained, leaving the capital markets to provide an effective solution. We consider what capital markets need to both start and evolve. We then look at the first generation of bond-based capital market solutions that have been tried so far and examine their success or failure. The lessons learned here have informed the design of the second generation of derivatives-based capital market solutions. Although there remain barriers to surmount, we are witnessing the birth of the life market, the market in longevity-related financial instruments.

Suggested Citation

Blake, David P. and Cairns, Andrew J. G. and Dowd, Kevin, The Birth of the Life Market (April, 28 2009). Pensions Institute Discussion Paper No. PI-0807. Available at SSRN: https://ssrn.com/abstract=1396196 or http://dx.doi.org/10.2139/ssrn.1396196

David P. Blake (Contact Author)

City University London - Cass Business School ( email )

London, EC2Y 8HB
Great Britain
+44 (0) 20-7040-5143 (Phone)
+44 (0) 20-7040-8881 (Fax)

Andrew J. G. Cairns

Heriot-Watt University - Department of Actuarial Science & Statistics ( email )

Edinburgh, Scotland EH14 4AS
United Kingdom

Kevin Dowd

Nottingham University Business School (NUBS) ( email )

Jubilee Campus
Wollaton Road
Nottingham, NG8 1BB
United Kingdom

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