The standard industry approach for hedging registered indexed-linked annuities (RILAs) is to buy back the set of options sold to the policyholder from the market. However, insurers may also dynamically hedge. In this paper, we discuss a dynamic hedging backtest that shows how for certain valuation dates, modeling dynamic hedging along the simulated scenarios can be a reasonable indicator of the resulting profit or loss. We discuss:

• Background information on RILAs
• The asset and implied volatility model 
• Detail on the dynamic hedging setup 
• A comparison of dynamic hedging results from the simulated scenarios and the historical data