Combining Floor and Buffer
Cost Synergies with bundling RILA Floor and RILA Buffer Summary In this article, we suggest how insurers can save on hedging costs for RILA by taking advantage of the naturally synergistic relationship between RILA Buffer and RILA Floor product...
Using Strike Averaging to reduce hedging costs
Learn how to get extra savings in hedging costs for point-to-point cap payoffs using strike-averaging. This result applies only to FIAs that have point-to-point “capped” payoffs. In this analysis, we show that buying one point-to-point hedge (call spread) at the...
How to build a smart beta index
This article is targeted towards actuaries and risk managers working at insurance companies. This article must not be construed as investment advice or product recommendation. The recipe for building smart beta index is quite straightforward. Here it is: Step 1:...
Annuity Market: Better Days Ahead
Introduction Higher rates are unarguably the best thing to happen to the annuity market. Many of us don’t realize that the much larger size of the annuity market in the US, compared to the UK or Europe, is very much...
Inflation Protected Annuities
Summary In this analysis, we attempt to create an inflation-protected annuity by adding an increasing annuity to a level annuity. Increasing annuity’s annual benefit increases as {k, 2k, 3k, …} and so on. Final annual benefit amounts are {b+k, b+2k,...
Fixed Indexed Annuity : Insurers rely on asset ret...
Summary Our base case scenario is that of high nominal rate (5 YR Corporate AA yield 4%), average asset income (5.75%) and single digit equity returns (7-9%). Our analysis suggests excellent Fixed Annuity and Fixed Indexed Annuity returns for both...