Dying for a market

15 Dec 2005 By Edward Hadas

People are living longer and it’s causing a financial headache. CSFB is the latest firm to seek a way of laying off this risk. But it’s not easy partly because there aren’t many investors willing to bet on people living shorter lives.

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The Credit Suisse Longevity Index (CSLI) measures the expected average lifetime for a general population. The calculation is based on current rates of death at different ages. The index will be calculated annually, based on the most recent mortality data. In the US, where the first indices have been calculated, the information is three years old.

CSLI is calculated for the different population groups, divided by age and gender. The composite index, for the entire population, shows a life expectancy of 80.4 years, up 1.3 months from the 2004 value. In 1983 the pro forma index value was 78 years. A flu pandemic as fatal as the one in 1918 would reduce life expectancy by five years.

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