Author: Greg Winterton

Life Risk News’ Editor’s Letter for the July 2022 issue

Pension risk transfer (PRT) – the process whereby a defined benefit pension fund transfers its longevity risk to an insurance company – has been around for more than a decade and the United Kingdom is the most active market. But despite its longevity – pun intended – growth has been anaemic, at least until recently. According to consulting firm Hymans Robertson, the value of deals in the U.K. across the three variants of LRT – buy-ins, buy-outs and longevity swaps – only exceeded £20bn once, in 2014, when £26bn of longevity swaps pushed the overall total value to almost £40bn.…

According to the American Council of Life Insurers’ Life Insurance Factbook 2021, around 5% of all in-force life insurance policies in the United States lapsed last year. Given that the total amount of life coverage in force at the end of 2020 was approximately $20.4trn, you don’t need to be a maths whizz to work out that amounts to around $1trn worth of cover that pretty much vanished, save those that received a nominal surrender value from the carrier. A recent survey of its members by U.S.-based trade association the Life Insurance Settlement Association suggests that its members paid out…

The market for the transfer of life-based risk to the capital markets remains an embryonic one despite some of the sectors in the industry being decades old. For Life Risk News’ most recent poll, we asked our readers whether the greatest barrier to increasing the number of these deals is one of demand – i.e., there isn’t enough money interested in these types of deals – or one of supply, where there aren’t enough deals to absorb the capital that desires a piece of the action. Life Risk News’ readers overwhelmingly think that it’s a deal flow problem, with 91.67%…

Life settlement investors don’t buy a life insurance policy without the data and analytical support of a life expectancy analytics firm. Life Risk News spoke to Chris Conway, Chief Development Officer at ISC Services, to learn more about how firms like his are adapting and changing to better model longevity risk for their clients. LRN: Chris, let’s start with the obvious. Modelling life expectancy is a bit like economists making forecasts – it’s almost impossible to predict. So, what certainties – if any – can life expectancy analysts offer to life settlement investors? CC: The most important thing to understand…

The insurtech market juggernaut keeps on going. In the past five years, total global venture capital investment into the sector has increased from $1.9bn in 2017 to $11.7bn in 2021, according to data and analytics firm Preqin. The growth of the sector is encouraging for both investors and consumers, as these technologies could lead to something of a revolution in product development, competition, and price in what is widely acknowledged to be a slow-moving industry. Most of the investment dollars from the VCs are going to insurtechs related to property and casualty (P&C) insurance, however. And, according to Tom Scales,…

Life Risk News’ Editor’s Letter for the June 2022 issue

Financial security in retirement for many is a precarious concept. According to Annuity.org, the average American woman retires with just $57,000 in savings. It’s double that for men at $118,000. But, given the average American retires at almost 67 years of age and lives to be almost 77 years old, that nets out to $5,700 per year for women and $11,800 per year for men. That’s not a lot. Clearly, America, like many (all?) western countries, faces a critical societal challenge for its citizens in in their autumn years because they will likely need to secure additional and alternative funding…

Everyone has wanted to know about the likely future impact of the pandemic because of worries about their own health as well as societal and economic health. But there’s one group of people particularly interested:  holders of mortality risk, such as life insurance companies and life contingent structured settlement investors. They wanted to know whether the Covid-19 pandemic would be so severe that mortality rates would spike high enough to bankrupt their operations. It didn’t turn out that way, fortunately. And Matthew Edwards, Proposition/Innovation Lead, UKI Life at consulting firm Willis Towers Watson, says that even though the past two…

Longevity risk – the risk of insured individuals living longer than expected – is a thematic one in the life risk industry, having far-flung ramifications for insurance companies and capital markets participation in life risk. This month, Chris Anderson, Senior Manager, EMEIA Insurance – Risk and Actuarial Services in EY’s Edinburgh office discusses the impact of longevity from an actuarial sciences perspective. LRN: Chris, let’s start at the beginning. What is the main topic or theme in longevity risk from an actuarial perspective right now? CA: One of the topics that keeps coming up is whether and how to adjust…