You die, I win! Deutsche Bank bets on Americans’ life expectancy

Is Bill Gates inspiring the German Bank?


Daly Kos Feb 8 2012

Deutsche Bank outraged many when it took $11 billion in bailout funds from US taxpayers and bought money-losing casinos in Las Vegas. But the big German bank loves to gamble – especially with other people’s money. In particular, the bank likes to gamble on how long older Americans will stay alive. Deutsche Bank has been in the death business since 2009, when its first two Kompass Life funds purchased life insurance policies of American seniors, racking up profits when policy holders died. Then, at least, one could argue they were performing a service by providing liquidity to people who wanted to cash out of their life insurance.

But now the bankers of Deutsche Bank have come up with a new way to gamble on Americans’ death.

With its new Kompass Life III fund, Deutsche Bank has come up with something truly innovative: “certificates” based on medical data which allow the investor to guess when the “Reference Individual” (old Americans between the ages of 70 and 90) will die. Here is a quick translation from a description of the fund in the Frankfurter Allgemeine Zeitung:

The difference to the other products in the secondary market is that in this case Deutsche Bank doesn’t purchase life insurance policies, but rather creates certificates in which the investors in “db Kompass Life 3” invest. According to the prospectus, the certificates are based on a portfolio of 500 Americans between the ages of 70 and 90. Their health information is analyzed by two external medical experts before being included in the portfolio.)

Deutsche Bank pockets a handsome “placement fee” for putting investors in the fund.Why would one invest in such a vehicle? A simple explanation:The quicker the “reference individuals” die, the greater the return to the investor. If, God forbid, they outlive the estimates of the medical experts then Deutsche Bank wins big. Guess who stands to make the big money here?

The ombudsman for the Association of German Banks has condemned “db Kompass Life 3”:

“Das Produkt ist mit der Unantastbarkeit der menschlichen Würde nicht zu vereinbaren.”  “The product violates (Ariticle one of German Basic Law): Human dignity shall be inviolable.”

What does human dignity have to do with profits?

Source: DailyKos


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