ACTEX Publications PREPARING YOUR STUDENTS FOR ACTUARIAL CAREERS A GUIDE FOR PROFESSORS. Look inside for the following information:

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1 PREPARING YOUR STUDENTS FOR ACTUARIAL CAREERS A GUIDE FOR PROFESSORS Look inside for the following information: About the actuarial profession Becoming an actuary Starting your own actuarial science program ACTEX Publications retail@actexmadriver.com T H E E X P E R T S I N A C T U A R I A L E D U C AT I O N

2 If you have an actuarial science program If you offer a few actuarial exam preparation courses If you have students who want to pursue an actuarial career and need your advice ACTEX Publications can help TABLE OF CONTENTS What is an Actuary? The Self-Study Program Guide Starting Your Own Actuarial Program ACTEX Study Materials and Resources About ACTEX Skill-Development Books A Message from ACTEX s President 2 Introduction ACTEX Publications

3 WHAT IS AN ACTUARY? Like many people, your students may only have a vague idea of what an actuary does on the job. This section will help. WHAT IS AN ACTUARY? An actuary is a business professional who applies mathematics, finance, and statistics to analyze and predict the financial impact of uncertain events. Actuaries manage risk in order to help insurance companies, government agencies, consulting firms, and other entities protect themselves from loss, optimize earnings, and to plan for the future. Actuaries have a variety of job responsibilities including analysis, research, strategy development, and written and verbal communication. The actuarial profession is specialized, with fewer than 30,000 credentialed actuaries in the United States (compared to 1.8 million accountants). Actuaries enjoy high wages in a profession that is estimated to grow 27% by Bureau of Labor Statistics, U.S. Department of Labor, Occupational Outlook Handbook, Edition, Actuaries. retail@actexmadriver.com THE ACTUARIAL CREDENTIALING PROCESS To become a professional actuary, a student must pass a series of online courses and rigorous examinations, most of which are taken while employed in an actuarial capacity in industry or government. The first five actuarial examinations are considered to be preliminary because they give the student a foundational knowledge in probability, interest theory, financial instruments, financial models, and life contingencies. After passing the preliminary tests, students take specific exams and courses that pertain to the industry in which they work. Once a student passes all the requirements, he or she may apply for the professional designation of an Associate or Fellow with the credentialing body in their industry. TO GET CREDENTIALED IN THE UNITED STATES Life insurance, annuity, healthcare, advanced pension and general insurance actuaries are credentialed by the Society of Actuaries [SOA]; property and casualty actuaries receive their designations from the Casualty Actuarial Society [CAS]. IN CANADA Actuaries are credentialed by the Canadian Institute of Actuaries, which coordinates their standards with the SOA and CAS. What is an Actuary? 3

4 BECOMING AN self-study ACTUARY 1 2 Undergraduates Interested In Actuarial Studies Have Many Options Available To Them. If your school does not currently have a formal actuarial science program, you can encourage your students by guiding them through these steps to help prepare them for exams with a Self-Study Program. You can mentor students with an interest in actuarial careers with this step-by-step guide that explains the process from preliminary courses, to actuarial accreditation. Take undergraduate courses in general business, communication, and mathematical concepts to gain prerequisite knowledge. Students need to have knowledge in a range of subjects in order to have the necessary foundation for the actuarial exam material. Encourage your students to take classes in the following areas: Linear Algebra Introductory Accounting Calculus Mathematical Statistics Business Law Writing Take required undergraduate courses. Students are required to pass college-level courses in these topics: Applied Statistical Methods (Regression and Time Series) Corporate Finance (Intermediate Level) Microeconomics and Macroeconomics Advise your students to take the coursework above as an undergraduate. These courses are not prerequisites for the actuarial exams and may be taken while students are working on passing exams. If these courses are unavailable, or a student s schedule will not permit these classes, there are online courses approved by the SOA that also meet these requirements. program Self-Study ACTEX Publications

5 3 Begin taking actuarial exams. There are five so-called preliminary actuarial exams. Four of the first exams are administered jointly by the SOA and the CAS, and are identical. Since the first three tests are identical, students have the flexibility of taking a few exams without having to immediately choose between the life/annuity and the property/casualty career paths. 5 THE PRELIMINARY EXAMS ARE LISTED BELOW IN RECOMENDED ORDER: Get an internship in an actuarial department. Internships are an excellent way for students to practice interviewing and to gain valuable experience working in a government, professional insurance, or consulting business environment. Enter the workforce and keep taking exams. Once students near graduation (or are new graduates), and have passed one or two exams, they are ready to seek full-time employment. After students have been hired by an insurance company, consulting firm, or government entity, they will be given opportunities to study and pass exams, and take online courses on the job as they further their careers. SOA Society of Actuaries CAS Casualty Actuarial Society Exam P Probability Same Exam, Jointly Administered Exam 1 Probability Exam FM Financial Mathematics Same Exam, Jointly Administered Exam 2 Financial Mathematics Exam MFE Models for Financial Economics Same Exam, Jointly Administered Exam 3F Models for Financial Economics Exam MLC Models for Life Contingencies Specific to life, annuities, health and pensions industries Specific to property and casualty industries Exam 3L Models for Life Contingencies & Statistics Exam C Construction and Evaluation of Actuarial Models Same Exam, Jointly Administered Exam Construction and Evaluation of Actuarial Models retail@actexmadriver.com Self-Study 5

6 thinking about STARTING YOUR OWN ACTUARIAL SCIENCE PROGRAM Actuarial exams Undergraduates who pass the first two exams have an advantage in the job market you can help. In the absence of a formal actuarial program, you can help your students by offering comprehensive courses in probability and interest theory while considering the possibility of a full program. require students to have in-depth specialized knowledge that typical undergraduate courses may not offer. It is not unusual for a math major to pass 1 Adopt the suggested course reading for existing courses. Each exam has an approved topic syllabus and a list of textbooks recommended by the SOA and CAS that cover the required topics in sufficient depth. ACTEX has specialty texts on this list for most topics, written by our world-class actuarial educators. Make sure to include practice problems from old exams in your course curriculum. Students will need proficiency with the kind of questions that are on the exam. You can get additional practice problems from ACTEX for each exam. a probability course without having seen topics, such as moment generating functions, that appear on the exam. Matthew J. Hassett, PhD, Professor Emeritus, Arizona State University and retired actuary 2 Set expectations for your students. Taking a course in the tested topic is only the beginning. Having sufficient proficiency to pass demanding actuarial exams will take self-study too lots of self study. Your students should plan to study between 300 and 00 hours for each exam. Offer to tutor your students on difficult topics. Passing exams requires a rhythm of condensing, outlining, reviewing, and practicing the hundreds of new concepts required for each exam. Reassure your students that it is normal for students to fail an exam or two at first a notion which can be a shock to bright students accustomed to earning high grades. 6 Starting Your Program ACTEX Publications

7 3 Consider taking actuarial exams yourself. Tackling at least the first two exams will give you first-hand experience that you can translate into insights for your students. Reach out to the actuarial community. Actuaries value education and most companies would be pleased to communicate with you as you design your program. If you live near an area with active actuarial employment, you and your students can participate in actuarial clubs, internships, and other opportunities. 5 6 Build an Official Actuarial Science Degree Program Begin building a defined actuarial program using resources available from the SOA and ACTEX. Create the courses from the SOA or CAS Syllabus of Examinations. Attain the Centers for Actuarial Excellence designation. If your college or university chooses to become active in actuarial education, your school may become eligible for the SOA s Centers for Actuarial Excellence designation. This designation is awarded to colleges and universities worldwide with extensive resources devoted to actuarial education and research. Accredited schools are eligible for research grants up to $100,000 per year. The accreditation process has stringent requirements on curriculum, graduate count, faculty composition, industry connection, and research. Designated schools must also pass a site visit from the SOA. CAE For more information on the Centers for Actuarial Excellence accreditation, please see the SOA website at or cae@soa.org retail@actexmadriver.com Starting Your Program 7

8 A FULL COMPLEMENT OF RISK MANAGEMENT EDUCATIONAL MATERIALS TEXTBOOKS You and your students will appreciate having a course textbook that focuses on the key topics of importance for each exam. 1 STUDY MANUALS Hassett stewart Study guides are the foundation of good study practices for actuarial students. ACTEX and problem sets with complete solutions. About the Text 2 Visit us online at where you can: About the Authors Matthew J. Hassett is professor emeritus of mathematics at Arizona State University where he taught from 1966 to He worked in industry as a health actuary from 1999 to 2005, and then returned to Arizona State to continue working with actuarial students. He has published papers in mathematical logic, mathematics education, finance and actuarial science. Dr. Hassett has co-authored an introductory statistics textbook and the ACTEX study guide for Exam M of the Society of Actuaries. He has consulting experience in mathematical analysis of mortgage-backed securities and their derivatives. Dr. Hassett is an Associate of the Society of Actuaries. Order free textbook examination & desk copies for professor use Donald G. Stewart is professor emeritus of mathematics Click on our professors tab for all your education needs! G 5 W About the text Introduction to Credibility Theory presents the reader with a wide variety of credibility models, and, Z traces the historical development of the subject. In the first ten chapters emphasis is on in so doing, basic statistical concepts. Each of the last five chapters describes a practical application of concepts discussed earlier. The text contains end-of-chapter exercises and an extensive bibliography. There has been a significant expansion of information in the Fourth Edition of this important work, including three entirely new chapters. The first new chapter is inspired by the concepts discussed in The Cult of Statistical Significance text. The second is an application of the Bühlmann credibility model to group health insurance. The third is an application of Bayesian methods to data obtained during a clinical study of young children with cystic fibrosis. The goal of this study was to estimate the frequency, severity, and ultimately the cost of individual hospital visits. The Fourth Edition also contains a new section on the beginnings of Bayesian statistical inference and an update on recent applications of credibility. Textbooks Marjorie A. Rosenberg, PhD, FSA Professor and Department Chair of Actuarial Science, Risk Management and Insurance, with a Joint Appointment in Biostatistics and Medical Informatics University of Wisconsin-Madison X I have taught from the book, Introduction to Credibility Theory, by Thomas Herzog for years. Both the students and I like the way the various topics of credibility are presented in this book. It is done in a clear and concise manner without getting bogged down with too much notation. I find that after teachinggfrom thiswbook, my students have a firm understanding of the concepts of credibility and are better prepared to attempt the credibility questions on SOA Exam C/. Z Steve J. Kopp, M.Sc., FSA, FCIA Department of Statistical and Actuarial Sciences University of Western Ontario Bayesian methods have long been a key part of the actuarial repertoire, and are now rapidly gaining traction in a variety of domains in the natural and social sciences. Actuaries are fortunate to have Tom Herzog s practical and rigorous primer on this important subject. James C. Guszcza, PhD, MAAA, FCAS Consulting Actuary and Predictive Modeler ACTEX Publications Winsted, CT T homas N. h erzog 8 The th edition of Herzog s Introduction to Credibility Theory improves upon its already well-received and instructive material by introducing new ways of advancing the field. The text is easy to read and easy to understand with documented examples to guide the reader. X Y G Z Introduction to Credibility Theory th Edition th Edition -- Jay Vadiveloo, Ph.D., FSA, MAAA, CFA Math Department, University of Connecticut on using Models for Quantifying Risk (3) About the Author Thomas N. Herzog, PhD, ASA, is Distinguished Scholar in Insurance Regulation with the National Association of Insurance Commissioners. Dr. Herzog recently retired from the U.S. Department of Housing and Urban Development where he served many years as the Chief Actuary of the Federal Housing Administration. He has a Sc.B. in Applied Mathematics from Brown University and a Ph.D. in Mathematics, with a major in Statistics, from the University of Maryland. Dr. Herzog is a coauthor of the following books: Models for Quantifying Risk; Applications of Monte Carlo Methods to Finance and Insurance; and Data Quality and Record Linkage Techniques. Dr. Herzog is the winner of the 1990 AERF Practitioner s Award for a paper on Home Equity Conversion Mortgages, written with Theresa R. DiVenti. Dr. Herzog is also a Fellow of the American Statistical Association. ac T ex a C a d e m i CACTEX s e rpublications ies Winsted, CT I selected Models for Quantifying Risk as the text for my class. Given that the syllabus had changed quite dramatically from prior years, I was looking for a text that would cover all the material in the new syllabus in a way that was rigorous, easy to understand, and would prepare students for the May 2012 MLC Exam. To me, the text with the accompanying solutions manual does precisely that. Introduction to Credibility Theory at Arizona State University, following a career of 3 years. His original research interests were in topology. Since 199, Dr. Stewart has worked with actuarial students at ASU. He also participated in the creation of the ASU televised course in Survival Models. Dr. Stewart has extensive experience inproviding analysis for expert witnesses. Dr. Stewart has co-authored the ACTEX study manual for Exam M of the Society of Actuaries. nd Edition View sample textbook chapters Explore the full line of ACTEX Study Materials Request bulk catalogs to hand out to your students 2 Y This textbook differs from most intermediate probabilitytexts in that it focuses the theory directly on applications in the general field of financial risk management, including insurance, economics, and finance. It will be appropriate for a first course in probability. Probability for Risk Management study manuals feature comprehensive reviews of all syllabus material, worked examples, Thomas N. herzog, Phd, asa 3 X Y G W Z ACTEX Publications AC

9 TEX ACAd E mic S E ries Probability for Risk Management 2 nd Edition m ATTh E w J. h ASSETT, ASA, Ph. d. d ona ld G. STEw A r T, P h. d. I wanted to thank Dr. Hassett and everybody at ACTEX who helped me pass this exam. Dr. Hassett s textbook prepared me very well for the exam. -- S. Baskaran, Exam P Student, on using Probability for Risk Management (1) Probability for Risk Management Focused on applications of probability in the general field of Risk Management, including insurance, economics, and finance. Probability and Statistics with Applications Provides the content to serve as the primary text for a standard, two semester advanced undergraduate course in probability and statistics. Models for Quantify Risk Ideal for use in a two or three semester university course in basic actuarial science, it covers all life contingency exam topics in a single reference. Mathematics of Investment and Credit The leading textbook in interest theory, this publication is the required or recommended textbook in financial mathematics in many university courses. Introduction to Credibility theory Risk Models and Their Estimation Used together, these textbooks address all topics in the Exam C/ syllabus. retail@actexmadriver.com Syllabus Coverage 9

10 CONDENSE OUTLINE REVIEW PRACTICE 10 Exam Preparation Resources Classes are the best way for students to learn, but for your self-study students, there are many educational products About ACTEX Publications and opportunities available. Textbooks The most comprehensive tools for study, ACTEX textbooks give students a thorough understanding of a topic and allow for greater understanding when accompanied with the options listed below. Study Manuals Students will want to use a study manual as part of their exam preparation, particularly for the difficult material. ACTEX Study Manuals contain comprehensive reviews of all syllabus material. They also include many examples and problems sets with complete solutions to further illustrate topics. Online Courses If students are struggling with the material, ACTEX offers online courses taught by experts in the field. Practice Exams / Review Questions ACTEX offers lots of exam style questions for student practice, which is so vital to exam success. Flashcards Great for memorizing key formulas. SUCCESS Study Materials 0 YEARS STRONG We opened our doors in 1972 with a simple goal: to help new risk management professionals navigate the actuarial examination process by offering quality educational and study support. Since that time, colleges, universities, corporations, and over 50,000 self-study students have relied on ACTEX for professional development resources. Today, we offer materials for exam takers and seasoned professionals alike. All of our products are created by experts in the fields of risk management and education. ACTEX Publications

11 SKILL DEVELOPMENT BOOKS Check out two of our most popular books MAKING THE GRADE, TH EDITION The Aspiring Actuary s Guidebook to Consistent Exam Success and Advancement in the Workplace. Provides tips on significantly improving exam scores. Available in paperback and digital versions. Given that you can spend over 300 hours studying for just one actuarial examination, it is well worth an investment of two to three hours to read this fine summary of how to study for and write actuarial exams. - Robert L. Brown, Professor Emeritus, University of Waterloo; and President Society of Actuaries This is the only book on the market that directly addresses how to successfully navigate the entire actuarial exam system. - Robin Cunningham, Co-Founder Arch Solutions, Co-Author Models for Quantifying Risk THE INFLUENTIAL ACTUARY How Actuaries and Other Technically Oriented Professionals Set Themselves Apart. Available in paperback and digital versions. Most working actuaries use written and communication skills almost as much as they use analytic ones. This book offers specific tools and strategies for actuaries and other technical professionals on how to be more influential in the way they communicate, influence, and relate to others. This text is listed as an optional reference in the Society of Actuaries Decision Making and Communication Module. retail@actexmadriver.com Skill Development 11

12 Ohio National Financial Services Inc. Actuarial Resources Corporation Pennsylvania State University Aetna Inc. Allstate Insurance Company Prudential Retirement American Family Insurance Robert Morris University SAFECO Aon Hewitt Arizona State University AXA Equitable Chinese University of Hong Kong a message From the President St. John s University of ACTEX Publications Simon Fraser University Temple University Dear Teaching Professional, CIGNA Corporation Conrad Siegel Drake University, Iowa Gabriel Roeder Smith & Co. Genworth Financial Georgia State University The Hartford Illinois State University Laval University School of Actuarial Science, Quebec Legal & General America Liberty Life Assurance Co Of Boston The Co-Operators On behalf of everyone here at ACTEX, I would like to extend my thanks to you for guiding the next generation of mathematicians, engineers, and business people into the workforce. As educators ourselves, we recognize the importance of the work you do and strive to be your trusted partner for quality risk management educational materials. Towers Watson Transamerica Trustmark Companies University of Connecticut University of Hong Kong University of Illinois at Urbana-Champaign University of Iowa University of Manitoba We welcome your feedback. Please contact me or my staff with your comments, questions, or requests. University of Nebraska-Lincoln Thank you for allowing us to serve you. University of St. Thomas University of Michigan Manulife Financial University of Toronto MassMutual Mercer University of Western Ontario Gail A. Hall, FSA, MAAA University of Wisconsin-Madison Milliman Inc. ACTEX PRODUCTS ARE USED IN UNIVERSITIES AND CORPORATIONS AROUND THE WORLD! ACTEX Publications