The Life & Longevity Markets Association has launched a series of technical publications that aim to bring the creation of a longevity market a step closer.
For the first time there is now a publicly available market-standard approach to the pricing of longevity exposures and the definition of longevity risk transfer instruments.
This standardisation will facilitate the development of a liquid traded market in longevity risk transfer.
The LLMA standards aim to encourage greater consistency and the adoption of best practice across the market, thereby providing greater comfort to first-time counterparties and reducing the time spent on due diligence for longevity transactions.
The publications consist of a general Longevity Pricing Framework, together with a series of six documents describing two specific longevity hedging instruments that include technical descriptions, pricing spreadsheets and termsheets. They have been produced by the LLMA with input from specialists from each of the member firms.
Guy Coughlan, chair of the LLMA technical committee and managing director at J.P. Morgan, says: “The LLMA is pleased to make these new publications available to the market to promote further standardisation and foster the development of liquidity. Our Technical Workstream has worked hard over several months to create these documents with substantial input from our members, who represent leading active participants in the longevity market.”
