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Longevity CatalystsKhurram KhanRobert BuggDouglas Anderson

12 November 2013

Route-map• About us

• What is a longevity catalyst?

• Which problems are we looking to solve?

• Delayed recognition

• Potential indicators: OverviewPotential indicators: Overview

• Potential uses: Overview

• Examples of use

• Examples of Indicators

• Tobacco

• Stem cells

• Cancer diagnosis

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• Back testing: Breast cancer death rates

• Case study: Mortality improvements and cigarette smoking

• Aims for 2014

• Q & A

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About us

• Longevity Catalysts Working Party

• Set up in 2012

• What problem are we looking to solve?What problem are we looking to solve?

• We have a website! www.longevitycatalysts.com

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Longevity CatalystsWhat future events are we aware of today whose occurrence will be coupled

with a universal increase in expectations around mortality improvements?

Cardiovascular polypill Universal Influenza vaccine Bowel cancer screening

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Genetic ScreeningStem cell therapy for Parkinson’s

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What problems are we looking to solve?

• Uniqueness of the past

• Granularity

• Not making use of all available informationNot making use of all available information

• Greater appreciation of “dormant risks”

• Philosophy: imperfect but less so than status quo

• Delayed recognition

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Delayed Recognition

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Potential Indicators

Candidate Desirable properties

Population tobacco consumption

Early cancer diagnosis rates

1. Objective

2. Regular

3. Frequent

4. Reliable

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Population cholesterol levels

5. Strong mortality link

6. Historic precursor?

Potential Uses

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Example 1 – Economic Capital

• A stress and scenario testing framework linked to catalyst events could provide a more robust and less abstract way of calibrating, validating and communicating 1-in-200 year events

• A schedule of catalysts could help to answer the question:

“What could happen in the next year to significantly

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What could happen in the next year to significantly change our life expectancy estimates?”

Example 2 – Targeted Reinsurance / Retrocession

Premium

CedantReinsurer /

Investor

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Pay-out or series of pay-outs triggered by

occurrence of one of a list of longevity catalysts

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Example 3 – Longevity swap exclusions

Fixed cash flows

CedantReinsurer /

Investor

Additional payment triggered on occurrence of ‘excluded’

catalyst

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Actual “floating” cash flows

Example 4 – Longevity swap collateral call

Collateral account

Additional margin call into collateral account

CedantReinsurer / Investor

Fixed cash flows

on occurrence or non-occurrence of specified

catalyst(s)

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Actual “floating” cash flows

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Potential Uses

• Economic Capital / Solvency II

• Risk appetite

• Best estimate approach – what future events are youBest estimate approach what future events are you already (knowingly or otherwise) allowing for?

• Hedging

• Greater appreciation of

– Dormant risks

– Existing exposure

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Existing exposure

• Other

Monitoring of Key Indicators

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Example: Smoking prevalenceUK �������

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Source: Office for National Statistics and Cancer Research UK

Tobacco Use in the US, 1900-2005

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Example – Stem Cell TreatmentsCell types Stem cells

experimentalStem cells implantation

Skin Yes Yes

Cartilage Yes Yes

Arteries & veins Yes

Trachea Yes Yes

Eye (retinal cells) Yes Yes

Pancreas (insulin cells)

Yes Yes

Brain (dopamine cells)

Yes Yes

Red blood cells Yes Yes

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Red blood cells Yes Yes

Lung Yes

Heart Yes

Liver Yes

Small intestine Yes

Example – Cancer Mortality by Diagnosis Route

Source: Improving Outcomes, A Strategy for Cancer

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• In 2007, over 50,000 cancer patients in the UK were diagnosed on emergency presentation

• Earlier detection would clearly have a very significant impact on cancer rates

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Back testing past catalysts: Breast cancer screening and Tamoxifen

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Impact on past breast cancer death ratesThere is a clear signal in observed mortality data that shows large reductions in breast cancer mortality in 1990’s and 2000’s following the introduction of a national breast screening programme and the increased use of the drug Tamoxifen in the mid to late 1980’s

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This suggests a potential for similar improvements in the 2010’s and 2020’s for bowel cancer due to the recently launched bowel cancer screening programme.

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Case study: the unfolding smoking story

German Institute for Tobacco Hazards Muller suggests link Royal College of

Doll & Hill identify link between

study confirms Muller’s finding

1943

Health warnings on packaging

1971

TV advertising of cigarettes banned

1965

between smoking and cancer

1939

Physicians calls for tobacco controls

1962

smoking and lung disease

1950

60% of men smoke40% of women smoke

Bhutan becomes

Unal et al show 54% of

improvements i CHD

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Smoking ban in public places, including pubs

2006

Call for regulation of electronic cigarettes

2013

Class actions in US &increases in tobacco duties

1980s 1990s

first country to ban sale of tobacco

products

2010

20% of men smoke20% of women smoke

in CHDmortality relate

to smoking

2005

Why did it take so long?

• Groupthink• Categorical proof of link• Popularity amongst voters• Personal habits of decision makers

• Tough habit to break• Tax revenues• Lobbying• People don’t act rationally• Personal habits of decision-makers

20

30

40

50

60

70Percentage of adult men who smoke (by SEC)

• People don t act rationally

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0

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1972 1976 1980 1984 1988 1992 1996 2000 2004 2008

Professional Employers and managersIntermediate and junior non‐manual Skilled manualSemi‐skilled manual Unskilled manualNon‐manual Manual

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Questions Comments

Expressions of individual views by members of the Institute and Faculty of Actuaries and its staff are encouraged

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Faculty of Actuaries and its staff are encouraged.

The views expressed in this presentation are those of the presenters.