Actuarial Career Presentation ISO

Typical Actuarial Projects■ Life Insurance: Designing and pricing life insurance products ◆ Impact of AIDS on mortality tables ■ Property & Casualty: Estimating the cost of personal aut

Brought to You By:

Brought to You By:

About an Actuarial Career

 My Background

 What is an Actuary?

 Where do Actuaries work?

 What do Actuaries do?

 Why become an Actuary?

 What is the career outlook?

 What skills and talents are needed?

 How can you become an Actuary?

◆ Not an insurance company

◆ Provide data and analytics to insurance industry

◆ www.iso.com

What is an Actuary?

An Actuary is a person who:

■ Analyzes, manages and measures the financial implications of

future risk.

■ Develops and validates financial models to guide decision making.

■ Typically an actuary uses data from the past to predict the future

◆ Driving a car by looking in the rear view mirror

■ Need to quantify how the future will be different from the past

◆ Impact of large increases in price of gas on auto insurance costs

Most Common Industries

Where Actuaries Work

◆Banks, investing, risk management

◆Mergers & Acquisitions

Typical Actuarial Projects

■ Life Insurance: Designing and pricing life

insurance products

◆ Impact of AIDS on mortality tables

■ Property & Casualty: Estimating the cost of personal auto or homeowners insurance in a particular area

◆ Global Warming Impact

■ Health Benefits: Setting HMO premium rates.

■ Retirement Systems: Pricing the cost of

increasing retirement benefits

Interesting Actuarial

Problems

■ Property/Casualty Actuary

◆ Automobile Insurance and Credit Scores

◆ Catastrophe Insurance Coverage – wildfires,

hurricanes, earthquakes, etc

✦ How to account for population shifts or rare events

◆ Does location matter?

◆ What do you think you are getting by buying IPOD insurance?

Why Become an Actuary?

■ Use your math expertise to solve real world

problems

■ High earning potential

■ No cost of graduate school – “learn while you earn”

◆ Typically given paid time off to study for exams

■ Advance by examinations – no “glass ceiling”

■ Skills are highly transferable to other industries

and job responsibilities

■ Newsworthy projects

■ High demand – less sensitive to economic cycles

■ Job security; need expected to grow

■ Overall, a highly ranked profession

Jobs Rated Almanac

■ Actuary was rated the #2 job in America,

according to the 2002 Jobs Rated

Jobs Rated Almanac (cont.)

■ Actuary has been rated as

one of the top five jobs in

each of the six editions

published since 1988.

■ Actuary has received the #1

job rating twice!

■ Ranking is based on 6 factors:

Income, Outlook, Stress,

Environment, Physical

Demands and Security

◆ E.g $2,500 per exam at ISO

designations

Source: D.W Simpson & Company, Inc., 2006 Salary Survey

Earning Potential

Note: Compensation may vary significantly according to years of experience, geographic region and responsibilities.

Source: D.W Simpson & Company, Inc., 2006 Salary Survey

Average Actuarial Salaries

Years of Experience

Career Outlook for

Actuaries

■ Employment growth for consulting

actuaries

■ Development of new financial tools

■ Growing ability to model risks

◆ Data Mining/GLM/Neural Nets

■ Growth in the health services industry

■ Growth in risk management

Disadvantages of the

Career

◆ Only about 40% pass ratio for each exam

◆ Huge time commitment, 200+ hours per exam

◆ Length of time to complete exams

✦ 7-9 years

✦ Some people never do )-:

specialization

projects before you get the “sexy” ones

What Skills are Needed

■ Solid communication skills (oral & written)

■ Good business sense

■ Ability to see and/or argue both sides of an issue

How to Become

an Actuary

■ Like a doctor or lawyer, an actuary achieves professional status by passing examinations to prove a certain level of knowledge

■ Actuarial examinations are administered by the Casualty Actuarial Society (CAS) and Society of Actuaries (SOA) Three of the first four exams are administered jointly

■ Examinations are held twice a year (1/P – four times/year)

■ Two professional designations exist for each organization:

◆ Associate (either ASA or ACAS)

◆ Fellow (either FSA or FCAS)

■ You can earn while you learn - employers support

actuarial trainees taking exams by providing exam study time on the job

■ Validation by Educational Experience (VEE)

◆ VEE credits are obtained through college courses (B-

or higher), standardized exams and approved

educational experiences for:

✦VEE- Applied Statistical Methods

✦VEE- Corporate Finance

✦VEE- Economics

http://www.soa.org/education/education-

redesign/edu-validation-by-educational-experience.aspx

✦B Univariate Probability Distributions:

binomial, negative binomial, geometric, uniform, hypergeometric,Poisson, exponential, Pareto, normal, chi- square, beta, lognormal, gamma, and Weibull

✦C Multivariate Probability Distributions

◆ Joint Exam 2/FM: Financial Mathematics

✦A Interest Theory

✦B Finance

CAS Exams

■ In addition to the preliminary education, each society has additional requirements to achieve professional designations

◆ CAS total of 9 Exams (1-7 for Associateship)

■ 3 – Statistics and Actuarial Models

◆ Soon to be two separate exams (one part joint with SOA)

■ 4 Construction & Evaluation of Actuarial Models (Joint with SOA)

■ 5 – Intro to Property & Casualty Ratemaking

■ 6 – Reserving, Accounting, Reinsurance

■ 7 – Regulation, Taxation, Annual Statement

■ 8 – Investments and Financial Analysis

■ 9 – Advanced Ratemaking, Rate of Return

Advice for Students Who Want to be Actuaries

approved for VEE credit

skills

start, the sooner you will finish

Advancing Diversity

■ Minority Students:

◆ African American, Latino, or Native American

■ Scholarships for Minority Students

◆ Individual awards of $500 - $3,000, annually

◆ Demonstrated performance and commitment

■ Exam Fee Reimbursement for Minority Students

◆ Reimbursed for successfully passing Exam P/1 and/or FM/2

■ Visit the website www.BeAnActuary.org

Minority Programs: Scholarship applications, exam fee reimbursement forms, internships, and more

Actuarial Jokes

■ Wanted to be an Accountant but…

■ How do you know that you are talking to an outgoing Actuary…

■ How many actuaries does it take to change a light bulb…

Questions and Answers

To learn more about the actuarial

profession, exams, and

internships, visit

BeAnActuary.org

Casualty Actuarial Society -

www.casact.org Society of Actuaries - www.soa.org