What is your view on insurance's investment division?
I would like to get some career advice. There are so few threads talking about jobs in the insurance investment division here and on Reddit.
What is your view on the investment division of an insurance company? To me, it looks like a career pigeonhole after working here for a few months, and I am pretty disappointed.
I work in the investment division of a Fortune 500 insurance company (note: not an investment asset management firm). My position focuses on portfolio planning and controlling under the investment team currently. I knew this role was not as technical as research analyst positions because insurance firms assign the majority of the portfolio to other third-party asset managers (AMs). However, I wish to transfer internally to more technical teams, such as the Tactical Asset Allocation (TAA) team, which is supposedly the most technical team related to the markets.
But I didn't expect that the entire insurance firm has no in-house analysts globally to generate any views or insights independently. From what I have heard, the views of the investment team (even the aforementioned TAA team) are highly influenced by the third-party AMs assigned to manage the portfolio. They then make a few adjustments to the asset class ratio in the portfolio, and that's it. There is no independent view or market analysis at all.
I wonder if I am just unlucky to have joined a poorly managed insurance firm, or if this is generally the norm for all investment divisions in the insurance sector. Has anyone successfully transitioned out of these roles? I find it hard to imagine escaping this niche sector with few transferable skills, apart from pursuing an MBA degree.
Based on the most helpful WSO content, here are some insights and advice regarding a career in the investment division of an insurance company:
Insights on Insurance Investment Divisions:
Tangible Investment Experience:
Capital Management:
Career Stability:
Networking Opportunities:
Role Comparison:
Career Advice:
Internal Transfer:
Skill Development:
Networking:
Further Education:
Exploring Other Roles:
Conclusion:
While working in the investment division of an insurance company may seem limiting, it offers valuable experience and networking opportunities. By focusing on skill development, networking, and possibly further education, you can position yourself for a successful transition to other roles or sectors.
For more detailed discussions and personal experiences, you can refer to the following threads on WSO: - https://www.wallstreetoasis.com/forum/private-equity/worse-than-ib?cust…</a">Is Investments at Insurance Firms Looked Down Upon? - https://www.wallstreetoasis.com/forum/private-equity/worse-than-ib?cust…</a">Where do the IBD Rejects go?
These threads provide insights from professionals who have navigated similar career paths.
Sources: Is Investments at Insurance Firms Looked Down Upon?, Any career regrets after moving from PE to public markets?, Career Mistake - Left IB too Soon, Not sure what to do at this point, Worse than IB?
It depends on the insurance firm. There are LifeCos with in-house investment teams that manage their own balance sheet and invest in mostly high-grade fixed income with premiums. Those seats don't come often, a lot of people in those seats especially seniors are there to live a cushy 8-5 job.
Hi. Would you mind naming a few LifeCos with such practices. I know firms like Manulife has a big in-house investment teams, but they mostly recruit analysts from outside the insurance industry (e.g. credit research at ibanks)
Is your job doing research on other funds and managers? I think the likely exit from there is a role in a CIO office or other investment consultant roles. Normally, I'd assume investment team in insurance company will have worked on credit and actuary type research which opens doors to fixed income funds. That said, there is some value in what you do as TAAs typically have the component of selecting funds/managers for the asset classes they have allocation in. You're missing the economic outlook/projection part for the asset class allocation decision which you will have to work on on your own and up sell when opportunity comes about. Best of luck.
Research primarily focuses on funds, but it occupies only 5% of my working time.The rest of my time is dedicated to portfolio reporting on various key performance indicators and risk metrics. There is limited credit and actuarial research conducted since our investment strategy is relatively straightforward. We seldom trade bonds frequently; instead, we typically hold them until maturity. If there is pressure on profit and loss, we may consider selling some bonds to realize a profit. I am not sure if this approach is unique to my firm.We are not required to perform economic outlooks or projections because our insurance firm's asset management arm or the group head office assists us in that regard.
I have a good chance to be transferred to the TAA team, which is probably more technical than what I do. But after all, they are not really originating trading ideas as LO/HF do. So that's why I write this post because it seems like there are not transferrable technical skills to get out of the insurance industry. I am planning to look for a M7/T15 MBA degree afterward. But it seems unlikely to get any LO/HF right after mba given my irrelevant skill set.
That's not uncommon, as insurers are sensitive to losses and it's not unusual to run non-total return strategies, where you are far more focused on the yield and basics such as 'will this default prior to maturity'.
It does sound like you have an affiliated asset manager - are there opportunities to transition there?
In essence, you have what is a very small internal team that manages some portion of assets, probably short-intermediate term IG fixed income type assets, and then anything else, surplus funds and/or others, will be farmed out to other managers across a wide mix of asset classes. I'd guess that your team uses other fixed income managers, and piggybacks or leverages their ideas, commentary, or even analysts as needed - almost as if they are an extension of your staff - anything outside of that is in effect manager due diligence and/or asset allocation to varying degrees. Just making sure I have the right understanding.
If you were to get a role in the TAA type team, you have some exits - consultants, other insurers with similar setups, OCIO firms, and other asset owners -you aren't doing the 'direct' investing, so to speak, but you should have some options there. It's going to be pretty tough, if you don't have a direct investing role, to jump to a research or investment position on a fixed income strategy.
What I would say is that your position should give you a pretty strong understanding of how insurers manage their assets, how they think about investments, etc. That's valuable in the market, whether it's at the AM's dedicated to insurance, or those that are trying to break into that space. Again - it's probably not perfect, as you've described, but you could be able to parlay that into something potentially.
A lot of good info above so will try to add new thoughts:
Insurers ran the gamut from what you describe (mostly external) to having pretty much all capabilities in house ex some really esoteric stuff and similarly from trading/being measured like an asset manager to pure insurance portfolio management; you are unlucky to land in one without much internally
What do you want to do long term- make money/advance fast or work on what is interesting to you? It's not binary but the path of least resistance is what has been mentioned above i.e. try to join TAA, move up and then look the Insurance groups at Asset Managers/Consultants (have seen folks go from associates to MD's very fast via this route bc if smart/dedicated there is not too much competition
If not then you can go the "direct investing route" but it really depends what your skillset is/how bad you want it- 1.) if you wanted to get an equity/fundamental research job post MBA and you were head down no reason you can't get it but it will be painful (gotta crush GMAT/make good app/unpaid research internships around it etc etc so should ask why you want to do it; 2.) just start trying to get into random small shops- if you show you can do the modeling not sure why you wouldn't be able to accomplish this; 3.) if you have exceptional quantitative skills this could open up some other options (could spin the TAA etc) but if you are talking about MBA i'm guessing this isn't you.
Big picture you have a job that is very solid compared to most college grads...and I get why you seem disappointed it is not an "elite" job but by definition those are very hard to get so you kinda have to decide if you are willing to do whatever it takes to get them or not? There is not a "do these 6 steps" PDF that will magically access those jobs
If you're set on a role where you're doing research on individual stocks or bonds, then you need to start planning to move right away. Even the insurance companies with teams doing their own security selection won't be well regarded by most HF's.
But your current job sounds strange - why do you only spend 5% of your time on manager research? Normally a role like that would be mostly manager research? Or are you in a MO reporting function?
The TAA jobs can be interesting - but it's a very niche skill set and isn't very relevant to security selection. The equivalent sell-side roles would be market strategists (for reference), where you're looking at the market outlook for different asset classes and deciding how best to position the portfolio.
Hi. Not sure why there is no notification on my post. Sorry for the very belated reply.
I also did more research on the task of my CIO office colleagues this month. I would say yes its mostly a MO reporting function. Because Insurance itself is bureaucractic in nature and needs to do a lot of reporitng, including the CIO office. ut I am not too sure how "FO" I am. After all, it seems like our team (CIO office) have very little discretion on what specific things to invest. At best, we can set the limit of different asset class allocation, explore what funds we can invest in, and forecast different local office's return based on capital market assumptions next year (which we can set the budget, and the actual vs budget results are directly tied to our bonus. 2-4 months in the past 5 years).
If by 'specific things to invest' you mean specific securities, that wouldn't be unusual for an allocator to not do that (like most insurance companies). Most allocators would reflect the types of investments they want to make through a more top-down approach, and then find a manager who can set up a mandate to make the specific investments. For example, if your thesis is that the healthcare market is about to perform well, you hire a specialist healthcare manager.
Are you spending so little time on manager research because they don't make manager changes often? Or because someone else is doing the research?
And generally MO reporting at an allocator is a bad place to be if your looking to move into an investing role (even an allocator style investing role).
I would agree with the first sentence. If you are not doing individual stocks, IG/HY Corps, or directly analyzing SPG get out. I think 10 years ago you probably were 100% right but I think it has changed. I worked at a large LifeCo ($50B+ AUM, 100% in house) out of MBA doing IG & HY Corps and started looking for a new job in mid-2023 so was curious what types of platforms would be interested and was totally astonished by the number of decent Hedge Funds. I ended up going to a large asset manager but not sure if they look down on insurance AM all that much anymore. If anything, PE had the most interest and then a few of the really solid credit focused multi-strat HF's.... honestly I was surprised as going into it I thought there would be zero appetite from HF. Not sure if my experience was more of a one off or given performance of the insurance industry, growing interest out of PE, etc. HF's generally just have more of an appetite now for investment + insurance knowledge
that is great to hear! May I ask what is your pre-MBA experience? I think of doing MBA and work at insurance AM after graduation as well.
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