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The Actuary The magazine of the Institute & Faculty of Actuaries
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First insurer longevity derivative trade

First insurer longevity derivative trade Lucida, a new insurance company formed to take on longevity risk and corporate pension schemes, has announced a deal with JPMorgan to hedge longevity risk through a derivative contract linked to the LifeMetrics longevity index.

The contract, the first of its kind involving an insurer, signals continued progress in the development of what many believe to be a significant new market. Jonathan Bloomer, executive chairman of Lucida, commented: “This innovative transaction demonstrates that Lucida is at the forefront of the emerging secondary market in longevity risk. “By selectively entering into longevity swap contracts we can maximise the value we offer our clients. We look forward to being part of this market as it develops.”

Guy Coughlan, managing director and head of Pension ALM Advisory at JPMorgan, said: “LifeMetrics is an innovative toolkit that JPMorgan has brought to the UK, US and Dutch markets. We believe that contracts based on LifeMetrics offer effective hedges against longevity risk and we are very pleased to have worked with Lucida on this deal.”