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HOW ACTUARIES SEE THE WORLD Joint Math Meeting, January 5, 2012 Emily Kessler, FSA, EA, MAAA, FCA Society of Actuarie

HOW ACTUARIES SEE THE WORLD Joint Math Meeting, January 5, 2012 Emily Kessler, FSA, EA, MAAA, FCA Society of Actuaries . WHAT IS AN ACTUARY?. PART SUPER-HERO. PART FORTUNE-TELLER. PART TRUSTED ADVISOR. ACTUARIES ARE EXPERTS IN:

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HOW ACTUARIES SEE THE WORLD Joint Math Meeting, January 5, 2012 Emily Kessler, FSA, EA, MAAA, FCA Society of Actuarie

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  1. HOW ACTUARIES SEE THE WORLD Joint Math Meeting, January 5, 2012 Emily Kessler, FSA, EA, MAAA, FCA Society of Actuaries

  2. WHAT IS AN ACTUARY?

  3. PART SUPER-HERO. PART FORTUNE-TELLER. PART TRUSTED ADVISOR. • ACTUARIES ARE EXPERTS IN: • Evaluating the likelihood of future events—using numbers, not crystal balls. • Designing creative ways to reduce the likelihood of undesirable events. • Decreasing the impact of undesirable events that do occur.

  4. WHAT DO ACTUARIES DO? • WE MANAGE RISK • Actuaries use a combination of strong analytical skills, business knowledge, and understanding of human behavior to manage today's complex risks facing our society.

  5. WHAT DOES RISK HAVE TO DO WITH IT?

  6. The future is uncertain and full of risk. • WHAT IS RISK? • Risk is the chance that an undesirable event will occur, but risk is also opportunity. That's where we come in.

  7. YOUR TURN! It’s your turn to be the actuary. Try your hand at forecasting the future with these sample problems.

  8. AUTO PRICING 101 • BACKGROUND: • 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. QUESTION: WHAT IS THE MINIMUM PREMIUM THAT ABC SHOULD CHARGE AN 18-YEAR OLD FOR A 1-YEAR CAR INSURANCE POLICY?

  9. AUTO PRICING 101 AUTO PRICING 101 • SOLUTION: • At a minimum, the total premiums collected must equal the total cost of the accidents. • Estimated cost of the accidents: 300 × $500 = $150,000 • Minimum premium for each driver: $150,000 ÷ 1,000 = $150 CHALLENGE: SHOULD ABC CHARGE MORE THAN THIS PREMIUM? IF SO, WHY?

  10. AUTO PRICING 101 AUTO PRICING 101 • BACKGROUND: • Assume 400 of the drivers are males and 600 are females. • Assume 200 out of 300 of accidents will involve males, and the remaining 100 accidents will involve females. QUESTION: WHAT PREMIUM SHOULD BE CHARGED FOR THE MALES AND THE FEMALES? SHOULD IT BE THE SAME?

  11. AUTO PRICING 101 • SOLUTION: • Total males’ premium: 200 accidents × $500 per accident = $100,000 • Each male’s premium: $100,000 ÷ 400 males = $250 • Total females’ premium: 100 accidents × $500 per accident = $50,000 • Each female’s premium: $50,000 ÷ 600 females = $83.33 THE MALE’S PREMIUM SHOULD BE THREE TIMES THE FEMALE’S PREMIUMS!

  12. WHY DID YOU BECOME AN ACTUARY? WHAT’S GREAT ABOUT THE PROFESSION? LIFE AS ANACTUARY… WHAT IT’S LIKE … WHERE DO ACTUARIES WORK?

  13. Not just insurance. • Although insurance companies can’t function without actuaries, that’s not the only place you’ll find us. • Consulting • The Government • Private corporations • Colleges and universities • Banks and investment firms • Public accounting firms • Labor unions • Rating bureaus • Fraternal organizations • Energy/Utilities • Transportation

  14. WHAT’S GREAT ABOUT THE PROFESSION? • TOP-RANKED JOB • No matter the source, actuary is consistently rated as one of the best jobs. US News and World Report, the Jobs Rated Almanac, CNN Money, and others all agree. • GREAT SALARY • Actuaries are well compensated. Experienced fellows have the potential to earn from $150,000 to $250,000 (USD) annually, and many actuaries earn more than that. • Actuaries earn while they learn. An entry level actuary with 1-2 exams passed will bring in a starting salary of $45-$65,000 (USD) depending on region.

  15. WHAT’S GREAT ABOUT THE PROFESSION? • JOB SECURITY: • Actuaries enjoy certainty in uncertain times. We're always in demand as the world confronts risk. • LIFE IN BALANCE: • More than a fulfilling career, being an actuary allows you to maintain a low-stress, highly sought-after work/life balance. • MAKE AN IMPACT: • Actuaries manage today's complex risks facing our society.

  16. WHERE WILL I LIVE? WHAT IS AN ACTUARY

  17. Why did you become an actuary? • How I found out about the profession • Why I became an actuary • What I like best about being an actuary

  18. LET’S COVER SOME BASICS…

  19. How do I get started? • If you want to be an actuary, start preparing now! • Follow a college preparatory curriculum of high school classes. • Take math classes every year. • Take advantage of Advanced Placement (AP) and advanced courses such as statistics and calculus. • Enroll in computer science courses to develop your computer skills. • Explore colleges and universities that offer actuarial science curriculum. • Look into scholarship opportunities.

  20. What about College? • Among the college majors you might choose: actuarial science, math, statistics, economics, business and finance. • Your equation for success should include the following courses: • finance • microeconomics and macroeconomics • calculus • linear algebra • calculus-based probability and statistics • actuarial science courses, as available • computer science courses • business courses, such as marketing • communication courses, such as speech, business writing and technical writing

  21. How do I stand out? • While you’re hitting the books, don’t forget to • Apply for scholarships. There are a number of scholarships open exclusively to actuarial students. • Look for internship opportunities. An internship will give you a head start on an actuarial career with relevant work experience. • Get involved with your actuarial or math club, if your school has one. • Talk to an actuary. • Start taking exams!

  22. BECOMING AN ACTUARY…

  23. Becoming an actuary • Actuaries earn credentials to be able to practice • Life/Health/Pension (Society of Actuaries) • Associate of the Society of Actuaries (ASA) • Fellow of the Society of Actuaries (FSA) • Chartered Enterprise Risk Analyst (CERA) • Property/Casualty (Casualty Actuarial Society) • Associate of the Casualty Actuarial Society (ACAS) • Fellow of the Casualty Actuarial Society (FCAS) • Coming soon: CERA

  24. Becoming an Associate (SOA)

  25. Becoming a CERA (SOA) *(effective July 2012)

  26. Becoming a Fellow (SOA)

  27. Becoming an associate (cas) Exam 1/P* Exam 5 Exam 2/FM* Exam 6 Exam 3F/MFE* Online Course 1 CAS Course on Professionalism Online Course 2 Exam 3L Exam 4/C* VEE* (Economics, Corporate Finance, Applied Statistics) *Shared with SOA

  28. Becoming a fellow (cas) Exam 7 ACAS + Exam 8 Exam 9

  29. FIND OUT MORE… beanactuary.org Like us on Facebook riskisopportunity.net Follow us:

  30. DIVERSITYPROGRAMS…

  31. To do this, we actively support: • Summer actuarial programs for high school students so students can get comfortable with the profession. • Reimbursements for qualified minority students who pass either of their first two exams. • Mentoring opportunities for those who want more guidance on what it takes to be a professional in today’s economy. • Scholarship opportunities are available from the Actuarial Foundation and other organizations.

  32. QUESTIONS?

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