SRP Americas 2022 Personality of the Year – Mike Heraty

Mike Heraty joined Credit Suisse in October 2017 from Bank of America Merrill Lynch (Baml) where he was head of institutional equity derivatives sales and structuring for North America in New York.

He joined Baml in 2006 as head of cross asset solutions for pensions, endowments and foundations. At Baml, he managed a sales team servicing pensions, endowments, foundations, insurance companies, family offices, and asset managers, and was responsible for the distribution and structuring of equity linked notes and Baml's Investable Indices platform (risk premia, smart beta, and liquid alternatives), as well as vanilla and exotic derivatives, swaps, and exchange traded funds (ETF).

I have been involved with indexed annuities ever since I started in sales - Mike Heraty, Credit Suisse

Prior to joining Baml, Heraty spent a year at BNP Paribas as a director and equity derivatives marketer within the French bank's equity derivatives group.

At Credit Suisse, Heraty has implemented the Swiss bank’s plan to increase resources and investment in its hedging capabilities to become a critical player at the product development stage with insurance companies, as well as with the marketing and distribution aspects of indexed annuities.

Under his leadership, Credit Suisse brought to market one of the most successful indexes in the US annuities market – the Credit Suisse RavenPack AI Index – which has delivered an annualised performance of 6.7% since its launch in 2017.

Credit Suisse has traded more than US$1 billion in notional in derivatives linked to the Credit Suisse RavenPack AI Index, as of 31 December 2021.

What is your professional background?

Mike Heraty: I started my career as a rates / FX derivatives trader over 20 years ago. I then moved into the equity derivatives space with roles spanning trading and structuring. Most recently, I have had responsibility for North American equity derivative sales for Credit Suisse. 

I feel like this broad experience has allowed me and our team to offer quality service to all of our clients including pensions, insurance companies, asset managers, banks, broker dealers, and RIAs. 

How did you become involved in the structured products/indexed annuities market?

Mike Heraty: I have been involved with indexed annuities ever since I started in sales. It was somewhat of a sleepy market of S&P call spreads and cliquets. But after the financial crisis, there was a wave of innovation around annuities especially around custom indices. 

My involvement with structured products is more recent and it is amazing to see how the two areas have started to converge in terms of distribution, payoffs, and custom indices. There are even synergies on the conference circuit and SRP was one of the first to tap into that. 

What is the most important event you have witnessed in the structured products/ indexed annuities space?

Mike Heraty: The global financial crisis of 2008.  After that event, insurance companies pivoted away from variable annuities and focused more on indexed annuities.  And that product shift coincided with an increased interest in the type of defined outcomes / payoffs that can be delivered through an annuity and/or a structured product.     

How do you differentiate your offering in such a competitive market?

Mike Heraty: We do this in two ways.  Firstly, our team has a solutions mind set in how we work with our clients.  We listen to what they are trying to accomplish and then we work hard to deliver that to them. Secondly, I would like to think that we are more flexible than our competition. Every client is different, so we try to bend towards their needs instead of asking them to bend to ours. 

What is your outlook for the indexed annuity market?

Mike Heraty: The ageing population is a megatrend so I think the demand for indexed annuities will continue to grow.   Interest rates are also much higher than they were a couple years ago and that is a positive for life insurance companies because they are getting more investment yield in their general account.  And those benefits typically get passed on to annuity policy holders in the form of more attractive terms and features.   

What in your opinion are the changes needed to make the annuities/insurance market more successful?

Mike Heraty: Annuities represent one of many products for Americans to manage their retirement needs.  So I think that analytical tools that can show how annuities fit into a broader investment portfolio can be beneficial.  There are some existing tools out there that show how annuities can improve a retiree’s efficient frontier. Greater access and enhancements to those tools could lead to more success. 

The SRP Americas Conference will take place in Chicago on 15 September. Click here for more information.