A quest for a factor model to quantify longevity risk in Kenya
Nyabanga, Franklin Mose
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With the advent of advanced medical procedures to manage terminal illnesses and even rectify conditions that would have otherwise been fatal, improved food technology and sanitary conditions allover the world, human mortality has greatly improved over the past few decades. This has been most evident in the developed countries. For this reason, Pension funds , Life Insurance companies and other financial institutions, whose liabilities are contingent on the lives of their customers, have had to endure the harsh reality of longevity risk. This has necessitated experts such as actuaries to come up with ways in which to model and forecast mortality trends in order to have a better picture of just how long people are likely to live into the future , so as to price the various financial products adequately and hold enough reserves. However, so little of this has been done in the developing countries. This research attempts to find a suitable Factor model to fit into the Kenyan mortality data.