Like it or not, variable annuity (VA) liabilities are inextricably linked with the equity markets. Generally, up markets reduce the excess benefit liability and increase fee income, while down markets increase the excess benefit liability and reduce fee income. Given the volatility, most VA writers will hedge to meet their needs. In this session, the presenters will discuss the need for hedging, regulatory requirements and how companies ultimately determine their hedging strategies.
At the conclusion of the session, attendees will be able to:
• Explain the different methods for modeling the hedging for variable annuities
• Compare the different outcomes of different methods
• Evaluate the required operational strains for different approaches
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