Goldman Sachs Launches Tradeable Index for Longevity and Mortality Risks

This is a finance blog with a penchant for interesting financial market events so rather than focussing on the rather mundane elements of retail insurance brokerage/ financial planning industry, I thought I'll point you towards an article from Business wire. Goldman Sach launched an index in December 2007 which attempts to benchmark a representative population group's mortality and longevity risk.

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Link to the index: Qxx-index

From the index site:

QxX.LS index swaps are designed to allow market participants to hedge or gain exposure to longevity and mortality risks, providing reliable, real-time pricing information and execution

Yes, that's right, folks. You can now trade your way to wealth and riches by betting on when the market is wrong on assessing death rates in the population!

Longevity and mortality are the risks that realized lifespan differs from expected lifespan, creating an economic consequence, often a price change in an asset or liability.

Here's the useful bit in what kind of risks your typical insurance provider holds:

Holders of mortality risk -- typically institutions such as insurance carriers and reinsurers -- are economically exposed to a decrease in the lifespan of a pool of individuals

Holders of longevity risk -- pension funds, annuity writers, the social security trust fund or life settlement investors -- are exposed to the increase in the lifespan of a pool of individuals

Hang on, let me get my head around this:

Insurance companies face more risk if the population lifespan is FALLING. Therefore, it is in their interests to KEEP US HEALTHY AND ALIVE on this planet.

Pension funds and Social Security trust funds, (that includes Singapore's Central Provident Fund and Australia's Superannuation Funds) face GREATER RISK if the population's longevity is RISNG.

Does that mean its a good time to invest in general insurance companies like Warren Buffett did considering that we are all living longer?