Part I
Investing in Demographics

The life markets are one of the most interesting and innovative markets in existence today. They consist of the secondary market for life insurance (life settlements), reverse mortgages, and longevity and mortality risk. Part I explains each of these markets in the context of global macro investing, as opposed to a more technical structural finance perspective. However, some basic quantitative concepts are necessary to fully understand the asset class. When examining these assets, it is important to understand the economic backdrop and the need for such markets. In this regard, the life markets can be broken into two distinct buckets: reverse equity transactions and longevity-mortality risk. Demographics is the common theme of both of these market segments as large numbers of baby boomers and seniors head toward retirement, creating a number of tangential economic problems.