FIA – 1 Year
Here, we show the latest estimates of hedge costs of popular FIA designs. The hedge costs were obtained using market data of Thursday, April 11, 2024. Given a particular index, tenor and strike, FIA hedge costs tend to be quite stable on a day-to-day basis, with volatility (call) skew being the top driver of variation in hedge (option) costs. All the hedge costs are estimated for 1 year tenor.
RILA – 1 Year
Hedge cost estimates for RILA tend to be slightly more noisy day-over-day (5-10 bps), since both call and put volatilty skew impact the overall hedge cost. Puts for indices other than S&P 500 Index can be illiquid at times, leading to higher dealer markups. For these hedge costs estimates, the tenor is fixed to 1 year.
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