What is an actuary?
l “A mathematician who uses statistics to calculate insurance premiums” rd l American Heritage New Dictionary of Cultural Literacy, 3 ed.
l “A person qualified to calculate commercial risks and probabilities involving uncertain future events, esp. in such contexts as life assurance” th l Collins English Dictionary, 10 ed.
l “A person who calculates insurance and annuity premiums, reserves, and dividends”
l Merriam-Webster online dictionary
l “Actuaries are the analytical backbone of our society’s financial security programs”
l www.beanactuary.org
towerswatson.com 1 © 2010 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. What is an actuary?
l Actuaries are professionals who quantify risk and find ways to manage it
l Insurance example: Setting premium rates for auto insurance
l Consulting example: Managing the cost of pension benefits to be paid 40 years from now
l Actuarial work is critical to the financial well-being of governments, corporations, and individuals
l Consistently rated as one of the top jobs in the United States, based on criteria such as:
l Employment outlook/job security
l Income level
l Stress/work environment
towerswatson.com 2 © 2010 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. Two credential-granting societies in the United States
l The Society of Actuaries
l The Society of Actuaries is an educational, research and professional organization dedicated to serving the public and Society members.
l www.soa.org
l Casualty Actuarial Society
l The Casualty Actuarial Society is a professional organization whose purpose is the advancement of the body of knowledge of actuarial science applied to property, casualty, and similar risk exposures.
l www.casact.org
towerswatson.com 3 © 2010 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. There’s really only one way to become an actuary…
l Pass actuarial exams offered by the SOA and CAS!
l Multiple-choice and written-answer
l Two levels of actuarial credentials:
l Associate (ASA or ACAS)
l Fellow (FSA or FCAS)
l Some other actuarial designations:
l Chartered Enterprise Risk Analyst (CERA) — ASA-level designation offered by SOA
l Enrolled Actuary (EA) — Designation for pension actuaries required to practice before IRS
l Member of American Academy of Actuaries (MAAA) — Often required to attest to certain government filings — Indicates formal adherence to actuarial Code of Professional Conduct towerswatson.com 4 © 2010 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. Society of Actuaries Education System ASA Requirements
l Pre-requisites not tested directly – 5 subjects
l Calculus, Linear Algebra, Introductory Accounting, Business Law, Mathematical Statistics
l Validated Education Experience (VEE) – 3 subjects
l Economics, Corporate Finance, Applied Statistics
l Preliminary Education (PE) exams (5 exams)
l Probability, Financial Math, Financial Economics, Life Contingencies, Actuarial Models
l Fundamentals of Actuarial Practice (FAP)
l 8 interactive modules with 2 assessment exercises
l Associate Professionalism Course (APC)
towerswatson.com 5 © 2010 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. Society of Actuaries Education System FSA Exams & Modules
Individual Tracks Finance/ERM Investment Retirement Group & Health Life & Annuities
Company Company Company Advanced Spring Advanced Sponsor Sponsor Sponsor Portfolio Exams Finance/ERM Perspective Perspective Perspective Management (CSP) (CSP) (CSP)
Fall Financial Economic Theory & Design/Pricing Design/Pricing Design/Pricing Exams Engineering (DP) (DP) (DP)
Financial and Health Economics
Operational Investment Regulation & Health Social Insurance Risk Strategy Taxation Foundations FSA ERM or Pricing, Modules Financial Enterprise Risk Management or Investment Reserving & Reporting Financial Reporting Strategy Forecasting
Enterprise Risk Enrolled Management Actuaries Exams
Capstone Decision Making and Communication (DMAC) Module Experience Fellowship Admissions Course towerswatson.com 6 © 2010 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. Skills needed to become an actuary
Mathematics Communications Calculus Written Statistics Oral Financial Math Explaining/Teaching Actuarial Math Actuarial Science Business “Soft Skills” Finance Integrity Economics Creativity / Problem solving Accounting Understanding of human behavior Business Law Self-motivation Love of learning
Just passing the exams will make you an actuary. Possessing many of the qualities above will make you a successful one.
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