Download Life Risk News Volume 2, Issue 9, September 2023

The pension risk transfer market in the US is now a $50bn+ market, but unlike the UK, it’s one where private equity and private debt funds are playing increasing roles. That’s not gone unnoticed by some groups, so Aaron Woolner spoke to Charles Decker, a Researcher at UNITE HERE, and Joe Engelhard, Senior Counsel, US Policy & Regulation at the Alternative Investment Management Association to understand both the reservations that some have about this development, and the rebuttal, in Spotlight Falls on US Life Insurer’s Private Debt Investments, the cover story this month.

Higher interest rates have had an impact on all alternative investment strategies in the past twelve months and will continue to do so as they remain elevated when compared to the post-GFC decade. Perhaps no impact, however, is greater than that of the German secondary life insurance policy market which, due to its structure, is now largely defunct. Greg Winterton spoke to Anna Bailey, a Board member at trade group BVZL, for her views on the likelihood of the market returning in The US Now The Last Remaining Traded Life Policy Market.

The US Securities and Exchange Commission established a Life Settlement Task Force in 2009 to examine then-emerging issues in the life settlement market and advise whether market practices and regulatory oversight could be improved. Fourteen years later, the task force is yet to deliver its recommendations to Congress. Jeffrey Davis spoke to JoAnn M. Strasser, Partner and Chair, Investment Management at Thompson Hine LLP and Ron S. Geffner, Founding Partner at Sadis & Goldberg LLP, for their thoughts as to why in Re-Visiting the SEC Life Settlements Task Force More Than a Decade Later.

Life insurance companies have a reputation for being something akin to an oil tanker – big, and slow. But their approach to incorporating generative AI (GenAI) into various functions of their businesses can hardly be claimed to be thus. A snap poll conducted by technology consulting firm, Celent, in July this year revealed that 10% of life insurers in the United States were already using GenAI in production. Greg Winterton spoke to Keith Raymond, Principal Analyst, Insurance at Celent to learn more about this trend in Generative AI Set to Transform Life Insurance Industry.

Many investors in the life settlements asset class do not fully grasp the complexities underlying the asset before making the decision to invest in it; life settlements are more complicated to acquire and manage than other comparable discounted cash flow assets. Maurizio Pellegrini, Life ILS Manager at Azimut Investments, explains three areas that investors should pay close attention to before deploying capital in the space in The Critical Nature of Life Insurance Policy Due Diligence in the Life Settlement Asset Class, our first commentary article this month.

The UK’s Continuous Mortality Investigation (CMI) carries out research into mortality and morbidity experience and produces practical tools that are widely used by actuaries. It published its most recent set of projections in July, showing lower life expectancies. So, for August’s poll, ‘How Significant Will the Impact of the Latest CMI Data on UK Life Expectancy Be on Life Risk Markets? ’, was asked.

The US Centers for Disease and Control (CDC) tracks all causes of death and has published provisional summary for 2022 deaths, including Covid-19 related deaths. However, the life insurance subset is generally a higher economic demographic subset with longer than average life expectancies, and John Lynch, Director of Actuarial & Underwriting Services, Longevity Holdings, takes a closer look at where Covid-19 and life settlements meet in Covid-19 Excess Mortality Analysis, our second commentary piece this month.

The involvement of the capital markets in terms of its capability to absorb longevity risk has been talked about for years, but action has been largely absent. Greg Winterton caught up with David Blake, Professor of Finance & Director of the Pensions Institute, Bayes Business School, to get his thoughts on the current state of the longevity financing conundrum in this month’s Q&A.

Participants in the UK equity release market – insurance companies, advisers and consultants – generally agree that the industry has something of an awareness challenge. But the current macroeconomic environment is changing that, and Greg Winterton spoke to Rudy Khaitan, Managing Partner at Senior Capital, Ben Grainger, Partner at EY, and Steve Kyle, Secretary General of European Pensions and Property Asset Release Group, to get their views on the outlook for growth in the market in Equity Release Fundamentals Underpin Growth Opportunity.