I'm wondering if anyone can provide color on what the typical day-to-day of working on either the insurance sector or the banks sector is like. From my anecdotal experience, people covering those sectors tend to have advanced maths backgrounds (i.e. majored in pure maths or physics) and I'd be particularly interested in hearing about whether the maths and stats work on those sectors is heavier than other coverage areas.
I study economics so I'm certainty not weak in those fields, but if the work involves constant heavy actuarial research I'm just worried I'll get smoked by someone who majored in pure stats or something. Also, any idea about how transferable banks and insurance skillsets are to other sectors? It's been mentioned to me that you become pretty specialized in that area (read: pigeon holed), which I understand isn't a problem if you enjoy it but still curious.
I don't know what people you've met, but literally none of the banks guys I've met have heavy math / stats backgrounds. In the case of insurance, one guy I knew majored in math and might've been an actuary. But even then, that was a one-off example whereas most of the people I've seen come from some tried and true path (e.g. fancy MBA), some FP&A role from a bank / insurer, and consultants.
As for transferability, it's definitely tough. The main issue isn't that you aren't able to do other things, but that prospective employers will have a biased view as to what you can do. Also, you won't be familiar at all with EBITDA, EV, SSS, TAM, etc. and a whole bunch of other acronyms which bored people in our field like to use to make themselves feel smart.
Happy to answer other, more specific questions if you have any.
Thanks for the reply, regarding maths backgrounds my sample size was tiny so not surprised that it's not that common.
Couple questions on the day-to-day work. Would the nature of the work in banks or insurance be markedly different from other sectors? What type of work would you do on a typical day? I know each sector has its own quirks, but for example insurance be dominated by reading actuarial-type reports instead of more bread and butter equity research work? And does banks revolve around insurance rates analysis? Sorry if these are stupid questions.
The day-to-day work will probably be different insomuch that you have to focus on things like housing starts and yield curves as opposed to calling suppliers and large customers (i.e. channel checking). While this can probably be said about almost any given sector with the primary difference being one of degree (i.e. banks don't sell widgets).
Also, banks don't revolve at all around insurance rate analysis (unless the bank happens to own an entity that actually underwrites insurance of any kind - rare, if not nonexistent in the US). It'd be focused much more on funding source / rates (e.g. deposits vs. ST wholesale funding) and product specific yields (investments, mortgages, CRE, etc.)
I cover health insurance on the sell-side, and majored in finance. Covering insurance companies does not involve any actuarial type research, its actually pretty typical financial analysis. Every industry does have its own quirks and metrics though, and insurance is no different. The learning curve is high because the industry is complex. If your coverage is broad enough, you will have exposure to different methods of valuation but that will depend on your analyst (most things do). Sounds like you're referring to insurance like GEICO/AFLAC as opposed to the companies that I cover so the similarities probably stop there. Actuaries come up with the proper rates that the companies charge to earn a profit off certain risk/population levels etc... we track the broad drivers of rate changes but nothing that an actual actuary would do.
Minor qualification, GEICO does P&C insurance whereas AFLAC is a life insurer (former is also owned by Berkshire Hathaway). But yah, even comparing P&C vs. Life is like two completely different industries with completely different nuances.
Yeah, i just meant different insurance than health, which is also pretty unique in its own right and has little correlation to covering banks
LOL. The average bank and insurance analyst I've met barely understands calculus. No, you do not need an advanced math background.
Now this is a good question and a problem I had to overcome since I started my career covering financials. Unfortunately, what you learn in financials is not that transferable. However, understanding banks and insurers is a pretty uncommon skill set which makes you more valuable in your own right.
I'm a generalist now and it took me ~2 years to start getting up to speed on more "traditional" companies such as consumer, utilities, and real estate. It's certainly doable, but you need a PM that is supportive during your learning curve.
I have covered both banks and insurance. No one I've worked with has had any kind of advanced math or physics degree. I think the senior analysts tend to have some level of industry experience (having previously been an insurance underwriter, a corp fin analyst at a bank, or even a regulator). This comes from the fact that these are incredibly nuanced industries and those who are best equipped to understand companies/the industry are often those with real experience with the product. The average person does not understand how loans are actually made or how insurance policies are actually written, but they probably have a good idea of how Nike manufactures and sells a pair of shoes.
That being said, Financials focused people are often seen as being smarter/nerdier. I'll take the "smarter" rep even if it's not actually true.
The guy sitting next to my desk is one of the top ranked banks/insurance analysts in Europe. He studied economics at a shitty university and has no advanced maths background whatsoever.
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