You Can Be an Actuary!

Presented By

Jarrett Cabell, FCAS

Kezia Charles, ASA, EA
Overview

 Introduction
 What does the future hold for you? (Prospects / Risks)
 What is an actuary?
– What do actuaries do?
– Where do actuaries work?
– What skills are needed to become an actuary?
 How do I become an actuary?
 What is the current and future career outlook for
actuaries?
 Conclusion (Advice, Helpful Links, Q&A)
Overview

 Introduction
 What does the future hold for you? (Prospects / Risks)
 What is an actuary?
– What do actuaries do?
– Where do actuaries work?
– What skills are needed to become an actuary?
 How do I become an actuary?
 What is the current and future career outlook for
actuaries?
 Conclusion (Advice, Helpful Links, Q&A)
Introduction

 Jarrett Cabell, FCAS

– Henderson County High School (KY)
– Washington University in St. Louis (Mathematics, ’06)
– Allstate (since July ‘09); Zurich North America (3 years)
– Work in Property & Casualty sector (“P&C”)

 Kezia Charles, ASA, EA

– St Joseph’s Convent (POS, Trinidad)
– MIT (Mathematics, ’04)
– Watson Wyatt/Towers Watson (2004 – Present)
– Work in Pension Consulting
Overview

 Introduction
 What does the future hold? (Prospects / Risks)
 What is an actuary?
– What do actuaries do?
– Where do actuaries work?
– What skills are needed to become an actuary?
 How do I become an actuary?
 What is the current and future career outlook for
actuaries?
 Conclusion (Advice, Helpful Links, Q&A)
What Does the Future Hold?

 Prospects (“Desirables”)
 Health & Wellness
 Successful Careers
 Homes & Neighborhoods
 Vacation
 Retirement in Jamaica
What Can Thwart Your Future?

 Risks (“Undesirables”)
 Illness (injuries, disability)
 Insecurity (job layoffs, financial burdens)
 Accidents
– Man-made (home, auto, work place)
– Acts of nature (earthquake, hurricane,
tornado)
 Crime (theft, arson, murder, terrorism)
 Death
Overview

 Introduction
 What does the future hold for you? (Prospects / Risks)
 What is an actuary?
– What do actuaries do?
– Where do actuaries work?
– What skills are needed to become an actuary?
 How do I become an actuary?
 What is the current and future career outlook for
actuaries?
 Conclusion (Advice, Helpful Links, Q&A)
 What is an actuary?

An actuary:
 Analyzes, manages, and measures the financial
implications of future risk

 Develops financial models to guide decision making

 Serves as the analytical backbone of our society’s

financial security programs (i.e., insurance, Social
Security, pensions)
What do actuaries do?
 Evaluate likelihood of future events
– Forecast potential impact of catastrophes
– Calculate expected lifetime of retiree receiving pension benefits

 Design creative ways to reduce the likelihood of undesirable

events
– Life insurance policy, annuity
– Promote safety (e.g., seat belts)

 Decrease the impact of undesirable events that do occur

– Death benefits
– Retirement benefits
– Indemnity benefits
What do actuaries do?

 Participate in corporate planning

– Mergers & Acquisitions
– Evaluate investment programs

 Help insurance companies:

– Calculate rates for new insurance products
– Forecast and interpret underwriting results
– Maintain databases uniquely suited for the analysis of pricing
issues
Where do actuaries work?
Actuaries are largely employed by insurance companies and
consulting firms, specializing in the following areas:

– Life, Annuities, and Mutual Funds

– Health
– Pensions
– Property & Casualty
Life, Annuities, and Mutual Funds
1) Life Insurance
Offers several term and permanent insurance products
to provide death benefit protection to its customers.
2) Annuities
Fixed and variable annuity products allow customers to make a
lump-sum payment or series of payments today in return for
periodic payments beginning immediately or in the future.
3) Mutual Funds
A mutual fund pools the assets of multiple investors and
purchases securities to achieve a common, pre-defined goal.
With its pooled assets, mutual funds provide advantages that
an individual investor would not be able to receive.
Source: http://www.thehartford.com
Health
1) Individual
Offers Medicare and other health products to individuals,
families, and sole proprietors.

2) Employers
Offers administration services, Health Benefit and Health
Insurance Plans incorporating managed medical, pharmacy
and dental care services and other valuable resources and
products based on employer size. An example:
 Small Group – 2 to 50 employees
 Middle Market – 51 to 3000 employees
 National Accounts – 3001+ employees

Source: http://www.aetna.com
Pensions
 Provide steady income, typically in the form of a guaranteed
annuity, to a retired or disabled employee under pre-
determined legal and/or contractual terms.
 Plans can be divided into two broad types:
1) Defined benefit plans - incorporate the employee's pay,
years of employment, age at retirement, and other factors
in calculating the benefit.
2) Defined contribution plans - such as a 401(k) plan or
403(b) plan, in which the employee elects to defer some
amount of his/her salary into the plan and bears the
investment risk.

Source: http://wikipedia.org
Property & Casualty
1) Business Insurance
Offers a broad array of property and casualty insurance and
insurance-related services to its clients, which range from small
“Main Street” businesses to Fortune 100 corporations.
2) Personal Insurance
Offers a broad array of property casualty insurance products to
individual customers such as Auto, Homeowners, etc…
3) Financial, Professional & International Insurance
Includes surety and financial liability coverages, as well as
property and casualty products that are primarily marketed on
an international basis.

Source: http://www.travelers.com
What Skills are Needed to
Become an Actuary?
 Keen analytical, project management, and problem-solving skills
 Good business acumen
 Excellent communication skills (oral and written)
 Solid computer skills (Microsoft Office)
 Strong work ethic (especially for the exam process!)
 Motivation
 Creativity
 Independence
 Ability to collaborate effectively with others
Overview

 Introduction
 What does the future hold for you? (Prospects / Risks)
 What is an actuary?
– What do actuaries do?
– Where do actuaries work?
– What skills are needed to become an actuary?
 How do I become an actuary?
 What is the current and future career outlook for
actuaries?
 Conclusion (Advice, Helpful Links, Q&A)
 How do I become an actuary?

 Professional designation is achieved by passing a series of

examinations
 Actuarial examinations are administered by the Casualty
Actuarial Society (CAS) and the Society of Actuaries (SOA)
 Examinations are held multiple times a year
 Two levels of membership in each organization:
– Associate (ACAS or ASA)
– Fellow (FCAS or FSA)
 You work AND take exams!
Actuarial Student Programs

To prepare you for success in completing the

series of professional exams, most companies
offer the following benefits:
 100 to 140 paid study hours per exam sitting

Reimbursement for exam registration fees, study materials, and a

preparatory exam seminar

 Time off on exam days and the day prior to each exam

Receive rewards for each exam you pass!

 What do the exams cover?

 Preliminary Exams
– Joint exams (for which both societies give credit)
 P/1: Probability
 FM/2: Financial Mathematics
 MFE/3F: Financial Economics
 C/4: Actuarial Models

– SOA’s MLC (Life Contingencies) vs.

CAS’s 3L (Life Contingencies & Statistics)
How to Prepare for Exams

 Set up a study schedule

 Go through the syllabus
– The syllabus for each exam is on the SOA/CAS
website
– Be sure that you have covered all the material
before the exam
 Get a study manual (e.g. ASM, Actex)
 Exam Seminars
How to Prepare for Exams

 Take practice exams

 Study groups
 Know your study style
– Do you study better in mornings or evenings?
– Can you study for long blocks of time or would
shorter blocks on more days work better?
 What do the exams cover?

 Upper-Level Exams: Vary by discipline:

– SOA: Retirement Benefits; Group & Health Design
& Pricing; Individual Life & Annuities; Investments
– CAS: Introduction to P&C Insurance/Pricing;
Reserving; Accounting/Annual Statement;
Advanced Financial Management; Advanced
Pricing
Exam Statistics

See next page

Exam Statistics
Overview

 Introduction
 What does the future hold for you? (Prospects / Risks)
 What is an actuary?
– What do actuaries do?
– Where do actuaries work?
– What skills are needed to become an actuary?
 How do I become an actuary?
 What is the current and future career outlook for
actuaries?
 Conclusion (Advice, Helpful Links, Q&A)
Salary Information

 Starting salaries of
$46,000-$65,000
(passed one exam, 0 - 0.5 years
experience)

 Merit-based increases (contingent upon

workplace performance)

 Exam passing increases

 Increases upon achievement of

professional designations

Source: D.W. Simpson & Company Website:

http://www.dwsimpson.com/salary.html
Salary Survey

Preface to the forthcoming salary survey slides:

 These figures serve as a general range and average of various
compensation levels

 These figures are base salaries only and do not figure in

bonuses or annual incentives

 Last Updated: October 2009

– http://www.dwsimpson.com/salary.html
 Life / Health Actuary

0-0.5 yrs 0.5- 2.5- 4.5- 6.5- 9.5- 14.5- 19.5+

(excl. sign-
2.5 yrs 4.5 yrs 6.5 yrs 9.5 yrs 14.5 yrs* 19.5 yrs* yrs*
on)
1 course 46-62 51-66 55-72
2 courses 49-67 55-72 60-77 64-82
3 courses
52-69 57-76 63-83 67-88
(MLC+MFE=1)
4 courses 54-71 61-83 67-89 72-96 75-103
5 courses
65-88 72-96 80-108 84-118
(or 4 + FAP I)
ASA 73-98 78-108 88-119 93-132 98-146 109-234 115-252+
7 courses 95-137
8 courses 105-147
FSA 95-148 101-158 110-174 127-220 144-324 149-341+
Life/Health/Pension combined-CEO/CFO/CIO/COO/Pres.-10th-90th%
TBD data points - from 2009 SEC Def 14A filings N/A
 Pension Actuary
0-0.5 yrs 0.5- 2.5- 4.5- 6.5- 9.5- 14.5- 19.5+

(excl. sign-
2.5 yrs 4.5 yrs 6.5 yrs 9.5 yrs 14.5 yrs* 19.5 yrs* yrs*
on)

1 course 47-62 51-64 55-70

2 courses 51-64 53-66 60-76 63-81
3 courses
53-70 58-72 63-85 66-91 72-95
(MLC+MFE=1)
4 courses 55-73 61-79 68-90 73-100 78-106
5 courses
67-88 71-94 76-104 80-112
(or 4 + FAP I)
ASA 68-91 74-99 81-111 85-117 103-155 123-237 140-258+
7 courses 89-129
8 courses 103-144

FSA 97-134 108-163 133-205 147-321 150-344+

Life/Health/Pension combined-CEO/CFO/CIO/COO/Pres.-10th-90th%
TBD data points - from 2009 SEC Def 14A filings N/A
 Property & Casualty Actuary

0-0.5 yrs 0.5- 2.5- 4.5- 6.5- 9.5- 14.5- 19.5+

(excl. sign-
2.5 yrs 4.5 yrs 6.5 yrs 9.5 yrs 14.5 yrs* 19.5 yrs* yrs*
on)

1 exam 48-65 51-66 55-72

2 exams 51-68 55-72 60-77 65-82

3 exams 53-70 57-77 66-84 69-89 73-100

4 exams 57-74 62-84 69-92 75-99 75-109 93-138

5 exams 65-89 73-104 80-112 83-126 97-149

6 exams 71-94 80-113 87-124 97-140 110-170

ACAS 81-110 84-124 92-137 105-160 119-185 135-266 152-305+

8 exams 91-133 104-155 111-174 134-224

FCAS 120-184 134-215 154-329 171-439 179-478+

CEO/CFO/COO/CIO/CRO/President - 10th-90th percentile

TBD data points - from 2009 SEC Def 14A filings N/A
 Career Outlook for Actuaries

 Expected growth of 21% from 2008-2018

 Specific Areas of Growth

– Management Consulting; Financial Management: > 21%
– Insurance Industry: < 21%

 Other Areas of Growth

– Enterprise Risk Management
– Health Services

Source: www.bls.gov
Overview

 Introduction
 What does the future hold for you? (Prospects / Risks)
 What is an actuary?
– What do actuaries do?
– What skills are needed to become an actuary?
 How do I become an actuary?
 What is the current and future career outlook for
actuaries?
 Conclusion (Advice, Helpful Links, Q&A)
 Advice to High School Students
Who Want to be Actuaries
 Follow a college preparatory curriculum
 Take math classes every year
 Take advantage of advanced courses, such as
calculus
 Enroll in computer science courses to develop your
computer skills
 Explore colleges and universities that offer Actuarial
Science curriculum
 Participate in math-based competitions such as
Mathletes
Advice to College Students
Who Want to be Actuaries
 Develop disciplined study habits
 Take a well-rounded curriculum
 There are people in the actuarial profession who majored in
Music, Biology, etc., who were able to attain their designations.
However, the majors that would better prepare you for this
profession are:
- Actuarial Science - Mathematics
- Economics - Statistics
- Finance
 Enhance your general business knowledge
 Sharpen your communication and presentation skills
 Take actuarial exams while you are in school – the sooner you
start, the sooner you will finish!!!
Which Skills Can I Sharpen
while in college . . . and How?
 Interpersonal Skills
– Speeches (e.g., Toastmasters)
– Involvement in college (or local) actuarial organizations
(e.g., IABA!)

 Writing Skills
– Don’t immediately shy away from writing-intensive
electives—they could help you in the long run!

 Technical Skills
– Microsoft Office (Excel, Word, Access, PowerPoint), VBA,
SQL, SAS, C++
Which Skills Can I Sharpen
while in college . . . and How?

 Current Events
– Wall Street Journal, New York Times, Insurance Journal,
etc. should be helpful here

 Additional Resources
– Career Counselor, Academic Advisor, Math Professor
– People you meet here at the Annual Meeting
– IABA Mentors and Mentor Resources
– Recruiters
Top 10 Reasons to Consider
Being an Actuary
10. You enjoy continually learning.
9. You want a professional title, but don’t want to be a doctor,
lawyer, or accountant.
8. You want a career that is dynamic and challenging.
7. You want a career that you can control because advancement
early in one’s career is largely exam-based.
6. You want a career with many opportunities that will provide
you with skills that are transferable across multiple industries.
5. You want a career with superior job security through economic
cycles.
4. You would like to “earn while you learn.”
3. You want to be able to choose among several job offers.
2. You are self-motivated, goal oriented, and have superior
math aptitude and communication skills.
1. You want a highly competitive salary and excellent benefits.
Helpful Links

 To learn more, visit

– www.blackactuaries.org
– www.beanactuary.org
– www.casact.org
– www.soa.org
Questions?

???
A Brief History of the IABA

 Founded in 1992 as the National Association of Black Actuaries

(NABA), the International Association of Black Actuaries (IABA)
was created in recognition that blacks represented less than
1% of the actuarial profession in areas where the population of
blacks is greater than 15%

 NABA was changed to IABA recognizing that two of its charter

members, Daisy McFarlane-Coke and W. St. Elmo Whyte, are
both from Jamaica
A Brief History of the IABA

 The issue of representation is critical because of its root

causes:
– 1) lack of awareness among black children about the profession,
– 2) lack of support through the exam process,
– 3) lack of advocacy during career development, and
– 4) lack of role models for self visualization

 IABA exists to address this issue and its root causes.

A Brief History of the IABA

 IABA seeks to address the issue of representation through:

– 1. High School Awareness Programs,
– 2. Collegiate Scholarships and Professional Development
Workshops,
– 3. Mentoring Programs
– 4. Professional Continuing Education Workshops (including the
Annual Meeting),
– 5. Professional Networking and Relationship Building,
– 6. Exam Success Recognition, and
– 7. Exam Study, Resource, and Emotional Support