Is Investments at Insurance Firms Looked Down Upon?
I just received a full time offer to join a large (yet slightly unknown) insurance firm's Investments team in NYC. the starting salary is on par with "high finance" in NYC and I'm not entirely sure what bonus compensation looks like, however I am a bit worried about if working for an insurance firm will have any negative consequences on my future?
I go to a non-target school in Washington so even receiving an offer to join the buyside in NYC straight out of college is big for me, and I know investments and AM is what I want to pursue, but i have been recommended by a few of my peers and alum to look at credit risk and other middle office roles in BBs rather than insurance firm if I want to break into a large AM a few years down the line. Not sure what to do any any comments are genuinely appreciated.
Congrats on the offer, have a couple of questions that will help me guide my response.
1. What is the asset size of the insurance company total portfolio and what is the asset size of the strategy you will be working on?
2. What asset class? Fixed income, equities, multi-asset, alternatives, etc.
3. What exactly will you be doing? Trading, research, portfolio management? Something else?
I am 99% sure that working in the front office at a large insurance company will lead to better opportunities at a large AM firm if that is what you decide to peruse but I want to get a better idea of what you will be doing before making a recommendation.
Thank you so much for getting back to me! The firm has around 75bn aum. I’d be working on the fixed income arm which is about 50bn of the portfolio. The work as an analyst revolves around performing research and diligence for the underwriting of potential credit opportunities, however I’m sure there is a large portion of the analyst role dedicated to portfolio monitoring.
Thank you again for getting back to me and please let me know if you’d like to know anything else :)
Take that job and don't look back, 50bn is a lot of money. Anybody telling you to work in MO or do credit risk at a BB has never spent a day working in the markets business. You are going get great experience, meet a ton of people (all the sell-side people who cover you, and other buy side people at conferences) and you should have no problem moving to a traditional AM firm when the time comes. While the portfolio management strategy of a large AM (many actually manage assets on behalf of insurance companies) and an insurance company are different, the job of the research analysts is pretty much the same. Are you going to be doing investment grade credit, high yield credit, or structured products?
Just for color, I work in FI in a large LifeCo and you should be ecstatic for that offer. Our Credit Analysts are usually hired as Associates out of IB. Its really a fantastic job. Great blend of responsibility, pay, networking and work life.
It may take you off the HF/Mega PE path but anyone telling you to take a MO job over this is fvcking nuts. Those guys would kill for a role like this after 2-3 years experience
how was the interview process?
Feel free to PM :)
First off, congrats. It feels good to have an offer in hand doing something that you want to do.
Second, this is a great role to be in. A lot of people may look down on it because this isn't a BB, but if it's a reputable firm and the training is good, you'll come out ahead of someone doing Credit Risk and MO at a BB. This is the type of role people salivate over but don't want to admit it because it's actually working on the investment decision and getting real experience doing it. If the training is good, you'll kill it when you leave. Also, if it's $75Bln Total AUM, it sounds like this may be a leaner team, which means more experience. Since you want to be in AM, this sounds like the perfect role. Enjoy it man!
Thank you so much!!!
I would echo what other people have said that working insurance asset manager is a great experience and much better than working at middle office / risk at a big banks. You will get actual investing experience which is very valuable right out of college. If you do insurance investing for a year or 2 and want to move to a shop that has total return, you can say I loved investing but wanted to pivot to a role that was more active then insurance AM. The network that you will make from being on the buyside is also invaluable - between sell side coverage, conferences and meeting buyside counterparts you will develop a great network.
wow I wasn't aware of how exposed insurance AM is to the rest of the industry, thank you!
I'll start by saying it's much better to work for the AM arm of an insurance firm than MO at a bank, if the goal is breaking into a large AM (which some insurance firms are anyway).
But I haven't worked at one. Luckily, one of the most helpful users on WSO does exactly that (on the equities side though).
Hope he'll join the conversation with his thoughts Secyh62
Working at an insurer is a great place to start. As others have mentioned, not only are you going to gain tangible real investment experience, but you’re also going to be able to start building up a network via brokers, conferences, industry/company contacts, and other events. I want to add the caveat that these comments are within the context of an insurer with a full service inhouse investment arm. Some insurers simply pick funds, and that experience would be roughly equivalent to middle office at a bank in terms of experience and resume enhancement in my view; however, if you are going to be engaging in security selection, it is one of the best places to start and get your foot in the door. With the company running 75B in aum, I am assuming that it will be more of a security selection role, in which case it beats the middle office seat by a mile. If your goal is to move to a larger fund, I don’t think you will have an issue after 3-5 years provided you already check some of the other boxes (CFA, decent UG).
Looking out a bit further in time, insurers will continue to be some of the largest institutional investors in the marketplace. Additionally, they are somewhat insulated from the other pressures that are plaguing the more traditional asset managers. Your capital base at an insurer is very stable and is essentially permanent, so you won’t get crushed by outflows or worry about fee compression longer-term. The most unique characteristic about the insurer’s capital base is the management of capital gains. When the industry goes through extreme loss events (hurricane Harvey comes to mind for me personally), sometimes management will look to the investment arm to paper losses over and take capital gains. This really is uncorrelated with broader market volatility usually, so it’s not as bad as the external pressures you will feel at a fund (you won’t be selling into weak markets because you’re being hit with redemptions like at a traditional fund), although sometimes it may result in selling a name you’d otherwise want to hold onto just because it has the most capital gains. So, in terms of broader career stability, being at an insurer is one of the better seats in that regard.
Upside is obviously more limited, and that is really the biggest negative relative to a more traditional asset manager, but the delta shouldn’t start to form until you become relatively more senior. I am personally probably fairly priced from an all-in total compensation perspective relative to my experience and background, but eventually a spread will start to form as I become more experienced. So overall, it is a great place to start out and spend a few years really learning the ins and outs of the business. Once you hit a certain number of years of experience, it becomes much easier to get looks from solid large funds. The last thing I will say is that there is also an intangible benefit from gaining experience where you will start to learn what your personal investment style is. Once you have that identity and personal philosophy, you can be more selective in the types of funds you target and you will have a lower probability of jumping to one that is the wrong fit. When I first started, I would throw my resume at anything, but now I know exactly what I want and the type of fund/strategy that I will work the best with. That’s a benefit that is hard to quantify, but it has enabled me to take a longer-term view of my career and make better (less short-term oriented) decisions.
wow, thank you for taking the time out of your day to type this out for me. I genuinely can't emphasize how much I appreciate it. I had no idea some of the niche pros that come along with working in AM for insurance, i was so focused on the cons.
One thing I will say, I go to an extreme non target, however I have worked internships (Bus Dev, PWM, Credit at mid-sized PE) since I was a freshman and have a strong gpa, i hope this will outweigh any issues pertaining to my UG with recruiting a few years in.
Thank you again!
Threads like this are why I go on wso
This is my first time ever posting on here! genuinely amazed and grateful for how kind and helpful people on here are.
Yes- some great posts on here. Not much to add on here but I'm pleasantly surprised to see the (accurate) positive responses. Great place to start (or build if it suits) a career in credit/public equity investing. Learn the fundamentals, learn the players, learn as many asset classes as you can. You may make a little less than your banking friends but avoiding the 100 hour weeks (no guarantee, but better odds) is well worth it and in my opinion the asset mgmt. work much more interesting.
Thank You!!! I believe the salary easily crosses six figures post bonus and that's money I never thought I would have ever made this fast post going to UG for free. Don't mind losing out on a bit haha.
Nothing really to add to an already excellent thread other than the advice to network like a madman (internally and externally) once you get there. LifeCo's have a plethora of experienced guys looking to groom the "next generation" of investors. Will be a great learning opportunity and your co-workers will go on to be hitters. The latter should be easy as has been mentioned several times here, sell-siders will be buttering you up as you're already on the principal side, makes for a nice dynamic especially at the junior level.
Anecdotal I know but a cousin started out as a credit analyst at a major lifeco, worked his way up, and ultimately became a well known PM at a name brand fund co and eventually a HF manager. Was on CNBC many times. He would credit much of his success to his early days as a credit analyst at that lifeco.
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