Can Someone Explain What Re/Insurance Groups Do?
I see job postings and people on LinkedIn that work for reinsurance groups and have no idea what they do. Firms like BX, Brookfield, Apollo, etc. all have some sort of "re/insurance" groups. Do they provide insurance, buy insurance firms, or what? And what is the work like and returns you might seek to achieve in these investments? And what is the difference between reinsurance and insurance solutions in simple terms? Thanks!
Reinsurance is when firms work to insure insurance companies from catastrophes that would put them under. An interesting read on the topic from the WSJ: https://archive.ph/3rHY8
As mentioned by the previous poster, reinsurance is essentially insurance for insurance companies. There are various types of reinsurance but it works broadly the same way: earnings protection, volatility management, capital efficiency (cost is cheaper in certain circumstances than debt or equity). Property catastrophe reinsurance tends to be what ppl talk about when you mention “reinsurance” although there’s plenty of bilateral reinsurance trades for life and annuity blocks as well.
In terms of PEs and asset manager involvement in insurance, it’s quite broad so each firm has different approaches. Some like BX Insurance Solutions (to my knowledge) focus on consulting insurance companies on the management of the asset side of the business (remember insurance is all about matching assets and liabilities, particularly for life or annuity business). Others like Apollo (through Athene) or KKR (through Global Atlantic) literally either purchase insurers outright or have an exclusive arrangement to manage the assets generated from the sale of life or annuity policies. PE firms have come to love the sticky float that insurance provides and allows them to earn management fees as well.
There has been some PE involvement in other facets of insurance such as pure catastrophe reinsurance, insurance brokerages or MGAs but these tend to be more traditional PE investments. The bigger trend right now is what Apollo has achieved with Athene.
TLDR: each firm approaches insurance very differently.
Based answer my man.
Reading this, these places sound like they would be fun to work at. I have a math degree so I'm sure I could pass their quantitative tests but are these places insistent that you have actuary certifications? I'll kill myself before I subject myself to 4+ years of tests when I already have a job that pays higher than the average actuary, but if I could get in by just passing some hard as fuck in-house tests then I may start looking into what the pipeline is into these firms.
My personal take and experience in the space is that no you don’t have to be an actuary to work on the PE side of things. I think it would definitely be a big asset to be a qualified actuary as you’ll know the core insurance concepts quite well but it’s also something you can pick up doing insurance banking or other insurance adjacent roles.
In any case, a lot of these teams also have dedicated quants/numbers ppl or have teams to fill that function at the end company (eg. Athene) so they’ll still need people on the investment side.
Thanks for the very helpful responses and link!
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