Variable annuity (VA) guarantees are generally perceived by market participants as extremely risky products with significant market exposure. While companies have had tremendous success in managing this risk primarily via hedging, market participants have not fully appreciated such risk management techniques. This article attempts to illustrate that hedging VA guarantees can smooth company earnings.
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Variable annuity hedging: Effect on the value of a company
This article attempts to illustrate that hedging variable annuity guarantees can smooth company earnings.