NEW YORK (AP) -- Goldman Sachs Group Inc. announced Friday the first of a new series of indices to help financial institutions with exposure to American mortality and longevity rates better understand their risk in these positions.

The initial index will independently track monthly a pool of 46,290 anonymous U.S. citizens over age 65, providing real-time publication of mortality information. The results will be periodically verified by a third party.

The New York-based financial firm said that, until now, holders of mortality risk -- such as insurance carriers and reinsurers -- and holders of longevity risk -- such as pension funds and annuity writers -- had no mechanism to manage their exposures in the capital markets.

Now, hedge funds, banks and asset managers with existing positions in the cash longevity market, or those with an interest in gaining synthetic exposure to this uncorrelated risk class, will be able to use the index to either hedge existing exposure or to initiate investments.

"This will result in more transparent pricing of longevity risk, should reduce transaction friction, and will likely lead to improved economics for market participants," said Alex Dubitsky, head of Goldman Sachs' Longevity Markets Group.

The index also could help manage risk in a burgeoning business market that, in effect, makes hedges on death itself. The business is referred to as "life settlements."

The way it works is a firm pays the holder of a life-insurance policy a lump sum for the policy now, takes over paying the premiums for as long as the insured person lives, then collects the benefits -- generally worth far more than the firm paid -- when the person dies. The firm keeps some of the policies in its own portfolio. It sells others to institutional investors.

In April, Goldman Sachs, Credit Suisse Group and Bear Stearns Cos. helped form the Institutional Life Markets Association to lobby against efforts to restrict the business. If successful, Wall Street firms could buy policies directly and squeeze out the middlemen. This year, Cantor Fitzgerald LP set up an Internet-based exchange for those who want to sell or buy policy rights.

Life settlements stir objections, and not only because they make some people squeamish. Some state regulators have called life-settlement terms unfavorable in some cases to policyholders. They have also charged that certain arrangements flout the spirit of laws designed to keep speculators from taking out policies on strangers.

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