Actuaries' Survival Guide, Second Edition: How to Succeed in One of the Most Desirable Professions

296 Pages·2012·3.27 MB·english

by  Fred Szabo

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Actuaries’ Survival Guide
Second Edition
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Actuaries’
Survival
Guide
How to Succeed in One
of the Most Desirable
Professions
Second Edition
Fred E. Szabo, PhD
DepartmentofMathematicsandStatistics
ConcordiaUniversity
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Predictionisverydifficult,especiallyaboutthefuture.
NielsBohr,PhysicistandNobelLaureate
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ACKNOWLEDGMENTS
ThissecondeditionoftheActuaries’SurvivalGuideisthebrainchildofPatricia
Osborn,anAcquisitionsEditoratElsevierAcademicPress.Assheexaminedthe
continuingsuccessoftheguideoverclosetotenyearsandinviewofthechanges
that have taken place in the actuarial profession during that time, the thought
occurred to her that it might be appropriate to update some of the material in
thisguide.
Initiallyitseemedrelativelystraightforwardtoupdatetheguidewiththehelp
of several enthusiastic reviewers: Claire Bilodeau, Associate Professor, Direc-
tor,UndergraduateProgram,E´coled’actuariat,Universite´Laval;ProfessorDavid
Hudak, Director, Actuarial Science Program, Robert Morris University; Paul
H. Johnson, Jr., Assistant Professor, Department of Mathematics, University of
IllinoisatUrbana-Champaign;andTobyWhite,AssistantProfessorofActuarial
ScienceandFinance,DrakeUniversity.Whiletheywillrecognizemanyoftheir
suggestions implemented in this book, the final version of this guide is entirely
myownresponsibility.
WhatmadetheupdatingofthisguidedifficultasIbeganworkingonitisthe
factthatthefirsteditionisbasedonasurveyofactuarialstudentsandprofession-
als that depends critically on the actuarial examination structure that existed at
thetimewhenIconductedthesurvey.Sincethen,theactuarialexaminationshave
beenrestructuredandoftenrenamed.Ontheotherhand,themathematicsofactu-
arialsciencehaschangedverylittleandthetypeofexaminationquestionsusedto
illustratethemathematicsinthefirsteditionofthisbookareasrelevanttodayas
theywereinthepast.Ithereforedecidedtokeepintactthereferencestospecific
actuarial courses that predate today’s organization of the material by SOA, the
xi
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xii ACKNOWLEDGMENTS
SocietyofActuaries,andbyCAS,theCasualtyActuarialSociety.Varioustables
includedinthetextserveasroadmapstothenewstructure.Whathasremainedrel-
ativelyconstantisthechallengeofbecominganaccreditedactuarybysucceeding
intheactuarialexaminations.However,theprocesshasbecomemoretransparent
andperhapseasierbecauseofthewealthofinformationandsuggestionsinprint
andonline.Ontheotherhand,theamountofmaterialavailabletodaytoaspiring
actuaries is simply overwhelming. Fortunately, social media such as Facebook
and LinkedIn are helping to personalize and humanize the process. For this rea-
son,AppendicesAandBarebuiltaroundinformationeasilyavailablenotonlyon
companywebsites,butalsoonFacebook,LinkedIn,and,inthecaseofconsulting
firms,evenTwitter.
Asyourtrytocometogripswiththechallengeofcomparingthevariousactu-
arial career options and the available pathways to succeed, try to keep in mind
that no matter which route you choose, the actuarial world is built around four
types of knowledge: core knowledge common to all options, specialized knowl-
edgedependingonthefield,professionalknowledge,andexperientialknowledge.
Ifyoulovemathandthinkthatyoumightenjoymixingitwithbusiness,law,and
accounting,forexample,youshouldseriouslyconsiderbecominganactuary.The
personal stories on which this guide is based will illustrate how some of your
predecessorsmanagedtogetthere.
I would like to thank the following actuaries, actuarial students, mathemati-
cians, economists, consultants, and career experts for having participated in the
original design and completion of the actuarial survey on which the hands-on
materialinthebookisbased:
JonathanBilbul,Marie-Andre´eBoucher,DavidCampbell,SteveCohen,Fran-
c¸oisDauphin,KarineDesruisseaux,PierreDionne,NormanDreger,JeanDrouin,
JulieDuche`sne,LouisDurocher,Ame´lieGirard,PhilippeGosselin,KarineJulien,
David Laskey, Dany Lemay, Erik Levy, Jean-Gre´goire Morand, Paul Morrison,
LambertMorvan,DylanMoser,Ce´lineNgTong,MarcParisien,KarleneParker,
Caroline Piche´, E´tienne Plante-Dube´, Elisabeth Prince, Graham Rogers, Martin
Rondeau, Siobhain Sisk, Mariane Takahashi, Ve´ronique Tanguay, and Ghislaine
Yelle. The information that they have supplied in the survey or by direct com-
munication,andthatsuppliedbyothers,isreproducedinthisbookinanonymous
and sometimes paraphrased form because the survey was designed to guarantee
theconfidentialityoftheanswers.Thesurveywascompletedontheunderstanding
thattheopinionsexpressedarepersonalandshouldnotbeconstruedasrepresent-
ingtheviewsofthecompanieswheremanyoftherespondentsareemployed.
I would also like to acknowledge the contributions of the reviewers of the
first edition of this book. They include Dale Borowiak (University of Akron),
BruceEdwards(UniversityofFlorida),LouisFriedler(ArcadiaUniversity),Jose´
Garrido (Concordia University), Brian Hearsey (Lebanon Valley College), Jon
Kane(UniversityofWestWashington),StuartKlugman(DrakeUniversity),Jean
Lemaire (University of Pennsylvania), Murray Lieb (New Jersey Institute of
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ACKNOWLEDGMENTS xiii
Technology), Vania Mascioni (Western Washington University), Charles Moore
(Kansas State University), Kent Morrison (California Polytechnic State Univer-
sity),WalterPeigorsch(UniversityofSouthCarolina),GaborSzekeley(Bowling
Green State University), Charles Vinsonhaler (University of Hawaii), and Bost-
wick Wyman (Ohio State University), as well several anonymous referees who
providedguidancewiththedesignoftheproject.Iwouldliketothankallofthem
fortheirconstructivecomments.Theywillrecognizetracesoftheirideasthrough-
outthetext.
TheSocietyofActuarieshasgrantedmepermissiontobuildChapter2around
samplequestionsandanswersfromitsexaminations,theCasualtyActuarialSoci-
etyhasgrantedmepermissiontoincludetheresultsoftheirsurveyonCASpro-
fessional skills, and the International Actuarial Association has permitted me to
include its list of competency areas of actuaries. I hereby express my sincere
thankstothem.
Others have provided direct information in other forms and I am grateful to
them. They include Michelle Aspery (Institute of Actuaries of Australia), Mal-
colm Campbell (COO Skandia Offshore Business), Maria da Luz Fialho (Por-
tugueseInstituteofActuaries),PeterDiethelm(AssociationSuissedesActuaries),
WimEls(ActuarialSocietyofSouthAfrica),YvesGue´rard(InternationalActu-
arialAssociation),CarolineHenderson-Brown(TheActuarialProfession),Betty-
JoeHill(Royal&SunAlliance),CurtisE.Huntington(UniversityofMichigan),
LiyaquatKhan(ActuarialSocietyofIndia),PatKum(ActuarialSocietyofHong
Kong),Dr.EduardoMelinsky(UniversityofBuenosAires),Dr.MarioPerelman
(Argentinian Institute of Actuaries), Dr. Jukka Rantala (University of Helsinki),
Loredana Rocchi (Italian Institute of Actuaries), Deborah R. Rose (Institute
and Faculty of Actuaries), Dr. Rafael Moreno Ruiz (Universidad de Ma´laga),
Nicole Se´guin (International Actuarial Association), Martha Sikaras (Society of
Actuaries), Elizabeth Smith (Casualty Actuarial Society), Stuart Szabo (Global
Corporate Finance, Deutsche Bank), Klaus Wegenkittl (Union Versicherungs-
Aktiengesellschaft),KarinWohlgemuth(ZurichFinancialServices),YewKhuen
Yoon(ActuarialSocietyofMalaysia),MasaakiYoshimura(InstituteofActuaries
ofJapan),andAleshiaZionce(SocietyofActuaries).
IwouldalsoliketoexpressmysincereappreciationandgratitudetoDr.Har-
aldProppe,mycolleague,andtoEricHortop,myformerstudent,forhavingspent
manyhoursreadingthemanuscriptandsuggestingcorrectionsandimprovements.
Erichasbeenparticularlyhelpfulwiththeupdatingofsomeofthefactualinfor-
mation on which this second edition of the guide is based. As the manuscript
reached completion, I received an unexpected offer of help from Jean-Gre´goire
Morand, senior actuarial consultant at Normandin Beaudry, to help me proof-
read the manuscript before submitting it to Elsevier for publication. I jumped
at the opportunity to have Greg take an unbiased look at my work. The quality
ofthisguideowesmuchtohiskeeneyeandthoughtfulsuggestions.Thankyou,
Greg.
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xiv ACKNOWLEDGMENTS
AspecialthanksisreservedforKathrynMorrissey(ElsevierAcademicPress),
myEditorialProjectManager,whoguidedmejoyfullyandeffectivelythroughthe
productionofthesecondeditionofthisbook.
The anonymous survey was produced and evaluated with the creative help
and guidance of Maggie Lattuca, formerly of the Concordia University Instruc-
tionalandInformationTechnologyServicesDepartmentandnowtheManagerof
Educational Technologies at McGill University, Montreal, using Respondus and
WebCT.
Both editions of this book were written in LATEX using Scientific WorkPlace,
amathematician’sdreamcometrue.Thewritingofthissecondeditionwasmade
even more enjoyable because of many recent enhancements to Scientific Work-
Place and the fact the latest version also runs on Macintosh computers. I would
like to thank Barry MacKichan and his team for continuing to produce and
improvethisuniquescientificwritingtool.
FredE.Szabo
23October2011
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INTRODUCTION
Youarereadingthisbookbecauseyouarethinkingaboutthefuture.Whatwould
youliketodowithyourlife?Whatcareerwouldallowyoutofulfillyourdreams
ofsuccess?Ifyoulikemathematics,yourchoiceshavejustbecomesimpler.Con-
siderbecominganactuary.
Almosttenyearsago,IwrotethefirsteditionoftheActuaries’SurvivalGuide
toexplainwhatactuariesare,whattheydo,andwheretheydoit.Thepublishers,
ElsevierAcademicPress,encouragedmetoprepareasecondeditionofthislittle
book for two reasons: the book has been remarkably well received by its read-
ersandtherequiredchangescouldbemadewithoutdestroyingthecoherentand
conversationalflowofthenarrativethatwassoeffectiveinthefirstedition.
Positivecommentsonthefirsteditionofthisbookbyitsreadershavekeptme
goingasIsetouttorevisetheguide:
• “Anyonelinkedtothisprofessionmusthavethisbook.”(Michael)
• “Iamaresearchmathematicianwhohasoftenwonderedwhatmylifewould
be like today, had I chosen to become an actuary. Now I know. Dr. Szabo’s
insiderprofilesofworkingactuariesareentertaining,informative,andcom-
prehensive.Ihaveenjoyedtheaccountsoftheday-to-dayactivitiesofactu-
ariesattheirvariouslevelsofseniority,andhavefounditintriguingtolearn
how some of the underlying mathematical ideas and techniques can be dis-
cussed in a book of this type without assuming advanced prior knowledge.
I highly recommend this guide to anyone interested in an actuarial career.”
(Chantel)
• “I have been searching with my students for a good book explaining [the]
challengesoftheactuaries’jobandthewaytodoit.Icouldnotfindanything
xv
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xvi INTRODUCTION
thatwouldguidemystudentsandhelptheminmakinganinformeddecision.
Finally,IgottheActuaries’SurvivalGuidebyFredSzabo....Thecontentof
thebookisorganizedinaverylogicalway.Itisascomplete...aspossible.
Welearn[about]theactuarialjob,whatskillsweneedforit,typesofaccred-
itation,whateducationwemustgothrough,[and]howtostartandcontinue
anactuarialprofessionalcareer....InconclusionIwouldliketosaythisisa
wonderfulbookwritteninaprofessionalwayforthepeoplewhowishtobe
professionalsinoneofthemostdifficultprofessions.”(Mirek)
SeveralthingshavechangedsinceIwrotethefirsteditionofthisbook:
• Distinct syllabi. The examination structures of the Society of Actuaries and
the Casualty Actuarial Society of America have been modified. They now
havemorefocusedpathstosuccess.
• Online examinations. The revised examination processes now include
computer-basedonlineexaminationsknownasCBTs.
• Social networking. Actuarial companies have come and gone, and the net-
work of actuaries, both for job searches and advances in employment, have
changedasaresultoftheexplosionofsocialnetworking.
• Newmarkets.Themarketplacehaschanged.Steadyprogresstowardsaglobal
knowledge-based economy has opened up new needs for actuaries and new
employmentopportunities.
• Global expansion. The need for actuarial services has grown: changes in
health insurance in the United States, for example, require new actuarial
models.
• Internet growth. As in many other fields, the Internet has changed the way
actuariesstudyandinteractandthewayactuarialworkisdone.
In spite of these changes, the principles, skills, and techniques on which the
actuarial profession is based and depends have remained stable. Although the
actuarialaccreditationprocesseswererevisedin2003andtheSOAandCASsyl-
labiwererealigned,themethodsforsucceedingintheassociatedexaminations,as
describedinthefirsteditionofthisguide,haveessentiallyremainedunchanged.
Theresponsestothesurveyandthereferencestopre-2003coursesarevalidand
helpful. To distinguish these courses from those offered today we add the tags
[2002]or[2003]tocoursesthatwereofferedonorbeforethetimethesurveywas
conducted.
Sincethecoursesandexaminationsrequiredtobecomeanaccreditedactuary
are subject to ongoing changes, references to courses and examinations in this
bookaremeantasillustrationsonly.Youshouldalwayscheckwiththesocieties’