Investment Analyst at Insurance Firm to Fund Manager
Hi all,
I secured a job after graduating and am currently working as an Investment Analyst at a large Insurance firm's investment management team on fixed income. I hope to eventually work at a large fund manager one day and move up the ranks.
Quick questions:
1. Is working as an Investment Analyst at an Insurance firm looked down upon when applying for large Fund Managers?
2. Should I pursue a CFA® or Masters in Applied Finance in the near future?
Thanks for any input
A lot of Insurance companies have in-house AM unit that serves as it's own buyside shop, in other words, it is no different than working at a large AM. Most of the Insurance company tend to focused on low risk fixed income products (AAA tranche ect), so you may or may not want to leap to a more speculative role at a hedge fund later. But going to a "larger company" isn't necessarily a step up in terms of job function.
So what Chloe said was right and wrong. For structured products, insurance companies will typically play in the AA and AAA tranches, which can be boring. But structured products aren’t all that insurance companies invest in.
For reference, I’m a corporate fixed income analyst at a life insurance company.
A life insurance company earns money by investing the insurance premiums at a higher interest rate than they pay out in claims and other expenses. If insurance companies only invested in super safe fixed income instruments, they wouldn’t be able to stay in business. In fact, if you were to be employed by an insurance company, I would argue that a life insurance company is the best of them to be employed at since the tail risk is long end. Meaning that the duration of your portfolio is going to be longer than say a property and casualty portfolio. The longer the duration of the bonds you hold, the more you care about the business that you’ve invested in and the greater the credit risk spread you’ll receive. I cover the energy sector and 90% of my time is focused on BBB- and BB companies, and the other 10% is really just checking the box for A companies when they report earnings to make sure they aren’t fucking up. Because of this, I follow the companies very closely and my skill set is fairly comparable with analysts in other buyside and sellside institutions. I’m currently looking to make the jump to a better paying / more prestigious shop and have gotten interviews with and am currently interviewing at Baml, Goldman, Citi, Jefferies, Janus, Fidelity. My only caveat is that you should look to make the jump early on in your career, within 4 years. However, all of these interviews were within my sector. So if you don’t like your current sector, could be hard to switch. Equity Research people are looking for your knowledge of the sector if you’re trying to make the switch from fixed income.
Totally agree with all of this. Life can go up in risk and enjoy a bit more of the high yield space that takes more of an "art" and a deeper knowledge of an industry to assess the credit risk correctly compared to looking into AA+ industrial companies.
To the OP: I would never say its looked down upon to be in insurance AM. Its a great starting point that lets you get your arms around analysis. I'm a CFA proponent since those three letters behind a name kind of portray a certain level of understanding. Just be ready to give up your life for a few months for the next two to three years.
Sorry to hijack the thread. I'm interning in the investment group of a large insurance company this summer (~$500b aum), and am looking at my options for FT. Would it be wise/possible to try to jump to IB for sake of more exit opps, or move to AM at a bank/larger shop? Or if i do get a return offer, do you think this is a good opportunity straight out of undergrad?
Would also like to have some insight as I'm in a similar situation. Currently working at a large life insurance firm on fixed income/credit research and was wanting to know whether insurance investment excellence is looked down upon when applying at a large asset manager.
@koalalove, if you enjoy investing I don't see why you'd want to do IB over doing insurance AM. As mentioned earlier in the thread, the only true difference between insurance AM and mutual funds/hedge funds is the tolerance of risk/required holding duration. If you want to do investing--insurance AM can be a great place to start and other shops will give you good looks. From personal experience, BB FI teams/IG mutual fund teams are the most receptive to that kind of background.
@wagsbillions, it's not looked down upon but you'll have to do more legwork if you want to do 'riskier' investments. Some insurance AMs dabble in equity/HY situations while others stick hard to IG investments. As SomePleb mentioned, in life insurance you seek to hold for 30 years and collect coupons. The industry diligence process is fairly developed to ensure you feel comfortable holding that long and looking for opportunities in the secondaries when the tides turn.
That's exactly the type of answer I was looking for, thanks heaps mate!
As a recent grad, is it normal to start out doing some "Middle-Office" reporting and spreadsheet work before moving onto the "Front-Office" tasks doing proper F.I./Credit research work? Is it unusual for a grad to work in Front Office roles straight out of university?
bump - wanted to revive this. Interested in career prospects when you start out as an Investment Analyst at an insurance company. What is career track/comp like as you move up. Also, has anyone made the jump to a hedge fund (credit/structured products) from this path.
Interested in this topic as well. I am curious what kind of exits are typically available. Would like to have a sector focus but not sure if most people leave to banks/PE/HF/credit and levfin or others? How is the experience at the insurance firm viewed?
I’ve had colleagues jump all over the place: distressed debt, quant hedge fund, prop trading, CRE, IB. It’s really endless. I think someone above put it well that you want to make the jump in year 3 or 4 or else you could be stigmatized with the IG/AAA tranche label. Additionally, if you go the insurance IM route, I suggest trying you’re hardest to get put on HY heavy sectors (or leveraged loans if that’s a focus) since it’ll build a better skill set to sell to more specialized credit funds (likely more modeling opportunities, more relative valuation, deeper analysis, complex capital structure considerations). I think it’s a good first step from undergrad since you get to build the credit analysis skills in a lower intensity environment since you have one client with a very specific mandate.
What are some Insurance AM, mutual funds, or smaller capital managers that recruit kids out of undergrad?
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