Insurance

Insurance companies invest money set aside to pay future claims to policyholders in stocks, bonds, real estate, and other assets. Thus insurance companies seek mostly individuals with knowledge in asset management. Several insurance companies hold large portfolios of bonds (also called fixed income securities). Knowledge of managing fixed income portfolios is a good skill for someone interested in a career in a large insurance company. Insurance companies also employ actuaries who are professionals with knowledge of statistical models to assess risk. The Department of Mathematics at the University of Illinois has a strong program in actuarial science.

A typical entry point is that of a fixed income analyst. These professionals focus on the analysis of corporate, government, and municipal fixed income securities. They specialize in specific industries (for example, telecommunications and automotive) or types of securities (for example, municipal securities) and provide recommendations for investments to senior portfolio managers.

Knowledge of investments (and particularly fixed income portfolios) is a strong attribute for successful placement. Very good writing and communication skills are also desired by employers. Pursue of the CFA charter (for example, taking the CFA I exam) is also a strong qualification for these positions.

Suggested Courses:

• Finance 431: Property-Liability Insurance

  Examines in detail the functions of property-liability insurers, including marketing, underwriting, claims, ratemaking and administration, and the major current issues facing this industry.

• Finance 432: Managing Financial Risk for Insurers

  Introduces basic concepts in financial economics used in the analysis and management of financial risks, with an emphasis on the applications by insurers and pension plans; topics include decision making under uncertainty, economic statistics, deterministic and stochastic interest rate models, derivative securities, valuation, binomial and option pricing models.

• Finance 433: Corporate Risk Management

  Case study course examining how corporations deal with pure risk.

• Finance 434: Employee Benefit Plans

  Studies the purpose, structure, and financial aspects of employee benefit plans, including pensions, health insurance, life insurance, and disability plans.

• Fin 580 ERM: Enterprise Risk Management

  Enterprise Risk Management (ERM) is the application of the basic risk management principles to all risks facing an organization; ERM integrates hazard, financial, strategic and operational risks under a single framework; ERM is becoming an important issue partly as the result of the Sarbanes-Oxley Act of 2002 that puts greater responsibility on the Board of Directors for managing all of an organization’s risks; this course will present the legal and regulatory environment that sets the state for ERM, cover the technical tools used in risk analysis, examine data integration processes and show how risk measures relate to strategic and tactical business decisions.