What strategy might an insurance company employ to ensure that it will be able to meet the obligations of annuity holders?

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Cash flow matching is a common strategy used by insurance companies to ensure they can meet their obligations to annuity holders. This strategy involves investing in fixed-income securities, such as bonds, that mature at the same time as the insurance company's annuity payouts, ensuring a steady stream of income to cover those payouts. By doing so, the insurance company can minimize the risk of not having enough funds to pay claims and maintain the financial security of annuity holders. Index tracking, yield pickup swaps, and substitution swaps are not direct strategies for ensuring sufficient funds to pay annuity holders.

What Strategy Might an Insurance Company Employ to Ensure That