Consider a Career as an Actuary

1
Consider a Careeras an Actuary

• presented by the
• Casualty Actuarial Society

2
Overview

• What is an Actuary?
• What skills are needed to be an Actuary?
• Where do Actuaries work?
• What do Actuaries do?
• What is the career outlook for Actuaries?
• How do I become an Actuary?
• Questions

3
What is an Actuary? An Actuary is a person who

• applies mathematical, analytical, and business
  skills to help solve a variety of financial and
  social problems.
• develops models to estimate the financial impact
  of future events.
• puts a price tag on future risks.

4
What Skills are Needed to be an Actuary?

• Specialized math knowledge
• Keen analytical, project management and problem
  solving skills
• Good business sense
• Solid communication skills (oral written)
• Strong computer skills

5
What Talents are Needed to be an Actuary?

• Motivation
• Creativity
• Independence
• Ability to work with others

6
Where do Actuaries Work?

• Insurance companies
• Consulting firms
• Government insurance departments
• Colleges and universities
• Banks and investment firms
• Large corporations
• Public accounting firms
• Anywhere else

7
Most Common Areas Where Actuaries Work

• Insurance Industry
• Property (home) and casualty (car)
• Life and annuities
• Employee Benefit Industry
• Pensions
• Health
• Social Security
• Financial Industry
• Banks, investing, risk management

8
Typical Casualty Actuarial
Projects

• Conducting studies of insurance rates.
• Estimating the amount of money to be set aside
  for insurance claims that have not been paid.
• Participating in various aspects of corporate
  planning.
• Calculating a fair price for a new insurance
  product.
• Forecasting the impact of catastrophes.
• Implementing and monitoring investment programs.

9
Fundamental Actuarial ProjectCar Insurance

• ABC Insurance Company insures 1,000 eighteen year
  old drivers.
• Assume 300 of the 1,000 have accidents within a
  year.
• Assume the average repair cost for each accident
  is 500.
• How much should ABC charge each of the eighteen
  year olds for a one year car insurance policy?

10
Actuarial ProjectCar Insurance

• Total premiums paid should equal the total
  estimated cost of the accidents.
• Total estimated cost of the accidents 300 x
  500 150,000
• Total premium paid total cost of accidents
• Total premium paid 150,000
• amount of premium for each driver
  150,000/1,000 150

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Actuarial ProjectCar Insurance

• Assume 400 of the drivers are males and 200 of
  the accidents involve males. The remaining 100
  accidents involve females.
• Should the females be charged the same premium as
  the males?
• What premium should be charged the males? the
  females?

12
Actuarial ProjectCar Insurance

• Total males premium 200 accidents x 500 per
  accident 100,000Each males premium
  100,000 / 400 males 250
• Total females premium 100 accidents x 500
  per accident 50,000Each females premium
  50,000 / 600 females 83.33

13
Other Considerations in the Car Insurance Project

• Other factors?
• Socially acceptable?
• Competition?
• Enough data?
• Simplified example.

14
Jobs Rated Almanac

• Actuaries have the top job in America, according
  to the 1995 Jobs Rated Almanac.Best Jobs
• 1. Actuary
• 2. Software Engineer3. Computer Systems
  Analyst4. Accountant
• 5. Paralegal Assistant

15
Jobs Rated Almanac Ranking is based on six
criteria

• Income
• Outlook
• Stress
• Environment
• Physical Demands
• Security

16
Salary Information

• Starting salaries of 37,400 (1998).
• Merit increases.
• Examination increases.
• Increases for professional designations.

17
Earning Potential

• No. of Exams Avg. Compensation1
  37,4004
  54,9007 77,000FCAS
  145,300
• Compensation may vary significantly
  according to years of experience, geographic
  region and responsibilities.

18
Career Outlook for Actuaries

• Employment growth for consulting actuaries.
• Development of new financial tools.
• Growing ability to model risks.
• Growth in the health services industry.

19
How to Become aCasualty Actuary

• Casualty actuaries achieve professional status by
  passing examinations administered by the CAS.
• Examinations are held twice yearly.
• Associate of the CAS (ACAS) - Completion of Exam
  Parts 1-7 and Course on Professionalism.
• Fellow of the CAS (FCAS) - Completion of all 9
  Exam Parts.

20
Casualty Actuarial Areas of Study

• Associate Level Exams
• Exam Topic
• 1 Mathematical Foundations of Actuarial
  Science
• 2 Interest Theory, Economics, and
  Finance
• 3 Actuarial Models
• 4 Actuarial Modeling
• 5 Property/Casualty Insurance Coverages
  and Ratemaking
• 6 Reserving, Reinsurance, Accounting
• 7 Annual Statement, Taxation, Regulation
• (Nation Specific)

21
Casualty Actuarial Areas of Study

• Fellowship Level Exams
• Exam Topic
• 8 Investment and Assets, Dynamic
  Financial Analysis, Valuation of Insurance
  Companies, Interest Rate Risk
• 9 Advanced Ratemaking, Rate of Return

22
Typical CAS Exam

• Four hours in length.
• Administered twice a year.
• Requires 350 to 500 hours of studying to pass.
• Only 30 to 40 of the takers pass.

23
Advice to Students Who Want to be Actuaries

• Develop disciplined study habits.
• Take a well-rounded curriculum.
• Sharpen your communication skills.
• Take actuarial exams while in school - the sooner
  you start, the sooner you will finish.

24
Questions and Comments
Visit the CAS on the Web - www.casact.org