AXA Global Life Selects RMS as Partner to Analyze Risk for Unprecedented Excess Mortality Bond
The bond, which closed this month, transfers €285 million of the risk of an upward shock in mortality in
RMS guided AXA Global Life through complex data gathering, hedge effectiveness and cost benefit analysis to develop the insurance program and its tuning of the payout mechanism and measurement of hedge effectiveness continues to enable sponsors to issue deals knowing that hedges are quantifiably effective and can be monitored over the risk period of the transaction. The bond transfers excess mortality risk from AXA Global Life to the capital markets to protect against losses from catastrophic excess mortality to a life insurance portfolio. The Benu index enables investors to take on this risk in isolation without taking on the complex financial risks associated with life insurance portfolios. A large event could trigger the index in a single year, thus reducing the time to settle excess mortality transactions post-event and simplifying capital calculations.
“We are delighted to have assisted AXA Global Life with this successful placement, and to bring another unique structure to market,” said
“The Benu transaction shows once again that RMS’s continued innovation of new models covering new perils promotes further innovation within the insurance industry, making the world more resilient against catastrophic events,” said Smith.
RMS has provided analytics to support the issuance of excess mortality bonds since 2009.
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RMS models and software help financial institutions and public agencies evaluate and manage catastrophe risks throughout the world, promoting resilient societies and a sustainable global economy.
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