As the registered index-linked annuity (RILA) market continues to evolve, variable annuity (VA) writers should be poised to recognize the potential risk management synergies by adding RILAs to an existing VA block portfolio. In particular, there are offsetting sensitivities to equity returns for VA and RILA. Recent industry and regulatory trends warrant reconsideration of these synergies as part of managing a hedge program. In this white paper, we discuss:
- Some background on RILAs
- Benefits of hedging equity exposures from VA and RILA together
- Tradeoffs between hedging and capitalizing for RILA and VA risk