Longevity bond
A security meant to transfer longevity risk to the capital markets. There have been several attempts, and no issuance has ever succeeded.
The longevity bond is a security meant to transfer longevity risk to capital-market investors, on the model of catastrophe bonds. Its history is one of failure. No issuance has ever succeeded, despite serious attempts such as the European Investment Bank's in 2004 and the World Bank's in 2010, both canceled for lack of interest on both sides. The maturities don't match: the risk plays out over decades, while the investor wants liquidity within years. There is no natural counterparty, since the market only runs one way. And basis risk is high between national tables and the longevity of each individual scheme. Securitization runs into a trend risk here, where it knows how to handle an event risk.
The European Investment Bank tried to issue a longevity bond in 2004 and canceled it for lack of both buyers and sellers. No investor wanted to bet on the survival of a generation.
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