The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.

EIB, PartnerRe, and BNP Paribas create first longevity hedge

Pension funds welcome a new bond indexed to life expectancy which should cut the cost of matching a growing risk.

Deal: European Investment Bank's longevity bond

Size: £540 million

Structurer/manager: BNP Paribas

Date announced: November 8 2004 Asked what he thought about old age, Maurice Chevalier replied that he preferred it to the alternative. So do the rest of us. The EU expects the number of people aged 80 and over in its 15 pre-accession members to increase by nearly 50% in the next 15 years.

This raises the issue of how annuity providers can tackle longevity risk - the risk that people will live longer than expected. Life insurers are increasingly aware of longevity risk. “Someone who is 65 today will have a shorter life expectancy than someone who is 65 in 10 years' time and that's taken into account in pricing,” says Franck Pinette, head of life at global multi-line reinsurer PartnerRe.

If longevity trends are not accurately forecast, or are volatile, reserves and losses will have been wrongly estimated.

Similar problem

Pension funds face a similar problem. Annuities are paid for life. If funds are making payments to beneficiaries until those beneficiaries die, the longer people live the more money their fund has to pay them.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.


Unlimited access to and

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually


Unlimited access to and, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors


Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree