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yuxdhk
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Joined: July 3rd, 2015, 7:49 am

Portfolio Manager at Asset Management arm of an insurance company

May 28th, 2019, 8:58 am

Hi, I am asked to interview for a Portfolio Manager / Product Solution (fixed income focused) role for an asset management arm of a large insurance company. My past experiences has been at sell side I-Banks and Hedge funds. What are the main difference in managing the risk (and generate return) for an insurance company vs other financial institutions? I could not much relevant reading on the internet, hope someone here could help me with explaining and some reference reading. Thanks. 
 
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bearish
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Re: Portfolio Manager at Asset Management arm of an insurance company

May 29th, 2019, 11:52 am

First, just because the asset manager is owned by a company also in the insurance business does not necessarily imply that you will be focused on investing in behalf of the insurance company. As a couple of random example, PIMCO and PGIM both have several hundred billions of dollars under management from entirely unaffiliated sources. That being said, life insurance companies tend to be buy and hold (sometimes buy and hope) investors, paying a lot of attention to book yield and as little attention as they can get away with to mark-to-market gains and (especially) losses. They tend to have very long dated liabilities and often struggle to find matching assets they like. They are often credit ratings sensitive and typically subject to seemingly arbitrary regulations, so occasionally appearing to represent “dumb money”. I didn’t say “dumb people”...
 
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yuxdhk
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Re: Portfolio Manager at Asset Management arm of an insurance company

May 30th, 2019, 1:42 am

Thank you, this is very helpful. Does it mean the insurance company tends to invest in fixed income products? Does do they use equity investment to do to manage their risks (in each tenor buckets)?
 
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bearish
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Re: Portfolio Manager at Asset Management arm of an insurance company

May 31st, 2019, 12:06 am

I think P&C companies may be a bit more active in equities, but life companies tend to be 90%+ in fixed income (including private loans, real estate lending, etc.). 
 
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yuxdhk
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Re: Portfolio Manager at Asset Management arm of an insurance company

May 31st, 2019, 3:32 am

I have reading about immunization which is the technique insurance company (I guess this more for life insurance) to much off its financial liabilities. But I guess for more contingent based insurance, then the conventional investment targets such as target return by minimising the risk/target the risk by maximising the return also apply?