How is Generali Investments addressing longevity risk in insurance portfolios?
In Short
The world is entering what is being called the "Age of Ageing," marked by a surge in life expectancy and a rapidly expanding elderly population. By 2050, the number of people aged 65 and over will double to 1.6 billion, with 1 in 6 over 65 and nearly 450 million over 801.At the same time, fertility rates are declining below replacement levels across much of the world, leading to a shrinking working-age population.
This presents urgent challenges for financial systems, healthcare infrastructures, and retirement planning, particularly around the management of longevity risk – which is the possibility that individuals will outlive their financial resources. Asset managers and insurers are therefore under growing pressure to adapt and respond.
At Generali Investments we recognize the profound implications of increasing life expectancy. We seek to tackle these challenges through a holistic and innovative approach that integrates diverse investment capabilities with tailored protection strategies, ensuring that clients benefit from both enhanced returns and effective risk mitigation.
Our strategy integrates private asset investments into life-cycle funds, democratizes access to private markets for retail clients, develops thematic funds targeting the longevity economy, and offers tailored annuities and pension solutions. We further strengthen our approach with advanced risk mitigation tools, including longevity swaps and dynamic asset allocation. Together, these initiatives aim to deliver sustainable income, enhance portfolio resilience, and capitalize on the opportunities presented by a longer-living world.
Longevity risk – why it matters
Increasing life expectancy creates both societal opportunities and economic vulnerabilities. Longer life does not necessarily equate to extended periods of good health. The World Health Organization notes a nearly ten-year gap between average life expectancy and healthy life expectancy globally, a gap that is widening.
An ageing population strains healthcare systems, with elderly individuals costing significantly more than younger age groups. Meanwhile, the shift from defined benefit (DB) to defined contribution (DC) pension systems has transferred retirement security responsibilities to individuals, requiring better financial strategies for accumulation, decumulation, and longevity protection.
Retirees also tend to underspend, preserving assets for fear of outliving them. Data from Japan, Italy, and the United States show that substantial wealth is often retained well into retirement. Thus, financial products must address not only longevity itself, but also behavioural dynamics associated with retirement spending.
Generali Investments’ holistic approach to longevity risk
Given the complexity of longevity risk, and leveraging the specialist asset management affiliates within the Generali Investments platform, we have built a diversified framework that combines robust investment capabilities with insurance-based solutions. Our focus is on providing sustainable income, portfolio resilience, and exposure to demographic growth opportunities. We detail the key strands of our approach below.
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1Source: The World Health Organization, October 2024 link
Important Information
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Generali Investments includes Generali Asset Management S.p.A. Società di gestione del risparmio, Infranity, Sycomore Asset Management, Aperture Investors LLC (including Aperture Investors UK Ltd), Plenisfer Investments S.p.A. Società di gestione del risparmio, Lumyna Investments Limited, Sosteneo S.p.A. Società di gestione del risparmio, Generali Real Estate S.p.A. Società di gestione del risparmio, Conning* and among its subsidiaries Global Evolution Asset Management A/S - including Global Evolution USA, LLC and Global Evolution Fund Management Singapore Pte. Ltd - Octagon Credit Investors, LLC, Pearlmark Real Estate, LLC as well as Generali Investments CEE. *Includes Conning, Inc., Conning Asset Management Limited, Conning Asia Pacific Limited, Conning Investment Products, Inc., Goodwin Capital Advisers, Inc. (collectively, “Conning”).
