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Becoming an Actuary, and Associated Applications in Probability and Finance

Becoming an Actuary, and Associated Applications in Probability and Finance. ACMS Talk February 2, 2006 By Toby White. Recent Press. Jack Nicholson portrays actuary in current film ‘About Schmidt’ 2002 Job Almanac Rates Actuary #2 Career Overall behind Biologist

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Becoming an Actuary, and Associated Applications in Probability and Finance

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  1. Becoming an Actuary, and Associated Applications in Probability and Finance ACMS Talk February 2, 2006 By Toby White

  2. Recent Press • Jack Nicholson portrays actuary in current film ‘About Schmidt’ • 2002 Job Almanac Rates Actuary #2 Career Overall behind Biologist • Actuary has been rated #1 more often than not over last several decades – why?

  3. Primary Attractions • Combines Math/Business Applications • Intellectual Challenge/Variety • Career Potential/Mobility • Salary/Benefits • Work Conditions/Environment

  4. Professional Designations • F.S.A. = Fellow in the Society of Actuaries (requires passing all 8 life/health exams) • A.S.A. = Associate in the Society of Acts. (requires passing the first 6 exams) • F.C.A.S./A.C.A.S. = Fellow/Associate in the Casualty Actuarial Society (about same as above, but property/casualty is focus)

  5. S.O.A. Exam System • The first 4 exams are mathematically - oriented, multiple choice exams (exam P-3 hrs., exam FM-2 hrs., exams M/C-4 hrs.) • 1/P: Probability (includes calculus) • 2/FM: Interest Theory/Mathematical Finance • 3/M: Risk Modelling / Life Contingencies • 4/C: Credibility, Loss Distributions, Survival Analysis, Construction of Models

  6. S.O.A. Exam System (part 2) • Courses 5,6, and 8 are primarily essay exams, testing knowledge of the insurance, banking, and financial services industries • Course 7 is an intensive project-oriented seminar, but has a pre-test to qualify • Professional Development and a Fellowship Admissions Course complete requirements

  7. Salary Structure • Starting Salaries around $45,000-$50,000 (and only requires undergraduate education) • Salary Increases by $5,000 per exam passed • New FSA Salary in $80,000-$100,000 range, depending on experience, company, and geographic living standard adjustments • Annual Bonuses can add 10-50% to base

  8. Main Actuarial Functions • Pricing / Setting Premiums • Product Creation / Development • Reserving / Solvency Provisions • Financial Reporting / Accounting • Consulting • Excecutive (C.E.O./C.F.O./V.P.,…)

  9. Specialty Tracks • Individual Life Insurance and Annuities • Group/Health Insurance and Managed Care • Pension/Retirement Funding • Finance • Investments • International

  10. Insurance v. Consulting • Insurance • Standard business hours (40 hrs/week) • More traditional corporate infrastructure • Work is of periodic nature, expertise developed • Consulting • Longer hours, but higher pay/bonuses • More travel; goal is to attain ‘principal/partner’ • Work is more variable, depends on client

  11. Geographic Opportunities • Jobs are heavily concentrated in financial centers, such as: • East coast (NYC, Boston, Hartford, Philly) • Midwest (Chicago, Minneapolis, Des Moines) • Consulting opportunities can be found in any of the 25-30 largest cities in the U.S. • Seattle insurance companies include Safeco (office in U-district) and Farmer’s Life

  12. Competing/Related Professions • C.F.A. = Certified Financial Analyst • C.F.P. = Certified Financial Planner • C.P.A. = Certified Public Accountant • M.B.A. = Master’s Business Administration • Trading (Wall Street / Chicago exchanges) • Academic (many schools have actuarial-training programs, and offer M.S. degrees)

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