Author: Greg Winterton

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

The life risk investment market ultimately comes down to two sides of the same coin: longevity risk and mortality risk. Holding both risks in a portfolio simultaneously are something of a natural hedge, like an equity hedge fund manager maintaining both long and short positions in public equity markets or a credit hedge fund taking long and short positions across the yield curve. There aren’t many similarities between public equities, government bonds and life risk. However, managers of life risk strategies take similar approaches to portfolio construction as equity and credit hedge fund managers do – namely, additional layers of…

Life Settlements industry publication The Life Settlements Report, part of The Deal, publishes data each year on the size of the secondary market in life settlements, where individual policies are purchased by investors from the original owner through intermediaries. Much of the data comes from freedom of information requests to state insurers, and only a small percentage is contributed directly by providers. Unfortunately, little to no data exists about the industry’s tertiary market, where life settlements are traded both individually and in blocks between investors; investment managers are not under any obligation to disclose their activity in this market. But…

The United Kingdom has the most active pension risk transfer market but despite it being more than a decade old, growth has been slow. We recently looked at a development in the U.K.’s pensions industry which could expand the market, so this month we wanted to see whether our readers felt that growth was indeed likely to accelerate. The results aren’t definitive. Whilst 58.8% think there will be an increase, 35.3% think activity will stay roughly the same. There could be many reasons for this, but two impediments to growth are a lack of talent and experience (from a number’s…

Insurance companies are generally considered to be laggards in terms of their adoption of technologies, and life insurance companies especially so. But change is happening, and Life risk News spoke to Tom Scales, Senior Analyst at research and data provider Celent, to learn more about what he is seeing in terms of the digital transformation of life carriers. LRN: Tom, ‘digital transformation’ is one of those buzzwords that consulting firms love to throw around, but they tend to do so quite flippantly. Tell us what this means precisely for a life insurance company. TS: I suppose that is up to…

On the surface, Registered Investment Advisors (RIAs) in the United States are a natural home for life insurance advice. They advise their clients on pretty much everything else – tax planning, estate planning and investing, to name but a few – so, life insurance makes a lot of sense here. Right? Sadly, not so much. RIAs often steer clear of life insurance advice; part of the reason is because they might not be licensed to sell life insurance in the first place. And part of the reason why they might not be licensed to sell life insurance is because their…

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%…