A Career As An Actuary

1. A Career As An Actuary An Overview of the Initial Stages of an Actuarial Career

2. Presentation Outline • What is actuarial science and what do actuaries do: actuarial science, working areas, skill set of actuaries. • Early career as an actuary: studies and corporate exams. • Pro’s and con’s of being an actuary. • List of web sites.

3. What Is Actuarial Science? • In very broad terms, actuarial science is concerned with the valuation of uncertain financial transactions. • Examples of domains where such transactions occur: • Insurance and reinsurance industry; • Pension and employee benefit plans; • Valuation of lost earnings in court cases; • Cost of social programs such as CPP, OHIP, etc.; • Financial product pricing and financial risk management.

4. What Do Actuaries Do? • Because their job is the valuation of uncertain cash flows, actuaries • build models to forecast the occurrence of future cash flow-generating events, such as mortality tables, interest rate models, loss amount distributions, accident frequency distributions, etc.; • compute the probability of occurrence of these events and evaluate the expected present value of future cash flows.

5. Basic Skill Set Of Actuaries • Actuaries need to know • how to compute probabilities, expected values, variances, etc.; • how to compute the present value of an uncertain sequence of cash flows; • how to model financial risk and uncertainty in specific situations; • how to model the effect of changes in the economy on the future cash flows; • how to use a computer to perform complex calculations.

6. Actuarial Education: Step 1 • Actuaries must acquire basic knowledge in economics, finance and computer science, and advanced knowledge in mathematics, probability, statistics and the modeling and simulation of actuarial risks. • At the University of Toronto, this is typically done in one of two ways: • A specialist degree in actuarial science (first 4 SOA exams) • 2. A major degree in actuarial science (first SOA exam + parts of SOA exams 2-4)

7. Actuarial Education: Step 2 • In order to be recognized as an actuary by the Canadian law, one must be a Fellow of the Canadian Institute of Actuaries (CIA). Requirements: • Fellow of the SOA or of the CAS; • CIA’s practice education course and 12 hours of PD; • 3 years of full time practical actuarial work; • 18 months of Canadian practical actuarial work. • Must pass all exams of SOA or CAS!

8. University Degree Vs Exams • Society of Actuaries (life & group insurance, pension, finance): • Associate (A.S.A.): Exams 1-6 • Fellow (F.S.A.): Exams 1-8 • Casualty Actuarial Society (casualty insurance, reinsurance): • Associate (A.C.A.S.): Exams 1-7 • Fellow (F.C.A.S.): Exams 1-10 • Exams 1-4 are the same for both SOA and CAS. • In theory, a hard working student should pass Exams 1-4 while completing his/her specialist degree.

9. Pro’s and Con’s of a Career As an Actuary • Pro’s: • Consistently rated one of the top jobs in North America; • Financially rewarding; • Good jobs available immediately after bachelor’s degree; • Wide range of jobs and applications; • Demand has been exceeding supply for a while, so good job prospects; • Not stressful after exams are over.

10. Pro’s and Con’s of a Career As an Actuary • Con’s: • Professional exams hurt your social/family life for 3-7 years after your degree; • Professional exams cause important stress; • Courses and exams typically very difficult because a lot must be learnt in little time; • Often only small amount of all that was learnt in courses and exams applied in practice; • Growing competition from statisticians, mathematicians, financial engineers.