Actuarial Science as a Math Career Presentation to Conard High
School October 21, 2011
Slide 2
- 2 - Document Tracker Do red cars cost more to insure? Myth
red cars are charged higher insurance premiums Fact paint color is
not used to price auto insurance Data-driven pricing factors are
used to price auto insurance Red cars are not correlated with
higher loss costs or aggressive driving styles More important is
what kind of car do you drive, and how you drive it Up to 100
variables are used when pricing auto insurance such as: Age,
Gender, Marital Status Zip code where the vehicle is parked Type,
make, and year of car Credit History Driving Record/Prior accident
history Good grades!
Slide 3
- 3 - Document Tracker Why become an actuary? Do you want a job
that Has consistently been rated one of the top five jobs in the
United States Offers high pay and lets you earn while you learn?
Has excellent job security? Gives you the opportunity to
participate in high-level business decision making? Lets you
balance work and private life?
Slide 4
- 4 - Document Tracker Why become an actuary?... Then you
should be an actuary!
Slide 5
- 5 - Document Tracker Actuaries provide expert advice and
relevant solutions to business problems that involve risk. They
usually work in: Insurance Companies Consulting Firms Banks and
Investment Firms Colleges and Universities Insurance Regulators
What is an actuary? Risk is the possibility that an undesirable
event will occur. Actuaries are experts in: Evaluating the
likelihood of future events Designing creative ways to reduce the
likelihood of undesirable events Decreasing the impact of
undesirable events that do occur
Slide 6
- 6 - Document Tracker What do actuaries do? Traditional Roles
Pricing of Insurance Product Development Financial Modeling Profit
Analysis Risk Management Actuaries solve business and societal
problems and help corporations and government agencies make
decisions. To do this they make financial forecasts and apply
analytical skills to key business and economic problems.
Nontraditional Roles Derivative Modeling Economic Hedging
Enterprise Risk Management Mergers and Acquisitions
Slide 7
- 7 - Document Tracker What career choices do actuaries have?
Determine the premium, or how much a company should charge, for a
new type of health insurance Design new features for a life
insurance policy Evaluate how much money must be invested today so
that employees retirement benefits are secured Calculate reserves
for hurricane damage Opportunities for actuaries also exist in:
Health Actuary Life ActuaryPension Actuary Property & Casualty
Actuary Banking Government Education Executive Roles Technology
Actuary
Slide 8
- 8 - Document Tracker What do I do every day? Julia Bishop
Travel to insurance companies across the Northeast US Validate
selected life and annuity policy reserves for multiple clients
Review actuarial assumptions (mortality, lapse rate, interest rate)
Actuarial Auditing Implement solutions for client consulting
projects by creating and validating spreadsheets, macros, or
actuarial projection software Document all meetings with the client
in order to build detailed solutions to match their specific needs
Create presentation materials and help facilitate workshops with
the client Actuarial Consulting Assist in recruiting at University
of Connecticut Help to transition and welcome new hires into the
Deloitte culture Pass actuarial exams and earn actuarial
designation Other Responsibilities Analyst for Deloittes Actuarial
& Risk Analytics Group Background Hometown: Carterville, IL
School: University of Illinois Degree: Actuarial Science How I
chose Actuarial Science as a career: My love of math, puzzles, and
people all come together. How I ended up in Connecticut: Paid
internship with a small life insurance company in Hartford the
summer after my junior year in college
Slide 9
- 9 - Document Tracker What do I do every day? Matt Wininger
Business consultant for capital management, financial reporting,
expense management Manage project teams of actuaries, accountants,
and business strategists Travel to client workplaces in
Connecticut, New York, and Florida Listen to clients request and
design an efficient solution Work within budget and time
constraints Be the go-to-person for the client; review and deliver
the final work product Business Consulting Perform auditing work
for payout annuities and reinsurance transactions Evaluate clients
financial statements with professional skepticism Review details of
client work against professional standards Add value to the client
by helping them identify and solve problems Auditing Manager for
Deloittes Actuarial & Risk Analytics Group Deliver 6-10
projects / year on average worth $150,000 Clients
Slide 10
- 10 - Document Tracker What makes a good actuary? Responsible
for explaining complex concepts about applied statistics,
insurance, accounting, and finance Work in large teams of people,
often have supervisory role Actuaries work with numbers statistics,
income streams, financial statements daily. Success on actuarial
exams require comfort with higher mathematics and statistics
Excellent CommunicatorFacility with Technology Figure out what is
important about a complex situation Develop an understanding of
what is the right thing to do, even in complex and ambiguous
situations Make recommendations and solve problems
Quantitatively-oriented Critical Thinker Microsoft Excel and Access
are used daily to produce reports and analyze data More complex
software such as Mathematica and SAS are sometimes used Must be
able to learn new software quickly
Slide 11
- 11 - Document Tracker What are Actuarial Exams? Actuaries
need to pass professional exams that test their knowledge and
skills similar to doctors and lawyers. Aspiring actuaries usually
start taking exams while they are in college, especially if they
are in actuarial science degree programs. After getting your
degree, most full time jobs offer exam support. Examples: paying
for study materials giving time during normal work hours to study
Employers also reward students through salary increases for passing
exams
Slide 12
- 12 - Document Tracker Actuarial Exam Topics Calculus-based
probability and statistics Theory of Interest Life contingencies
and stochastic models Financial economics, option pricing, and
forecasting models Loss models, credibility theory, and financial
forecasting Time series and regression analysis Corporate finance
Insurance product design
Slide 13
- 13 - Document Tracker What are the benefits? Many different
jobs/roles to choose from Rotations offer training and development
Competitive Compensation Starting base salaries $55k - $70k 5 Years
experience $80k - $115k Merit and exam increases Highly respected
profession Executive opportunities Job security Graduate degree not
required Earn while you learn!
Slide 14
- 14 - Document Tracker Arent you an Accountant? Accountants
Work with past events to explain financial results For an example,
an accountant would review number of policies sold, amount of
premium received and amount of claims paid in the past. Actuaries
Forecast economic future events and prepare for different outcomes.
An actuary forecasts the number of policies that may be sold in the
future and the expected amount of claims that those policies might
produce.
Slide 15
- 15 - Document Tracker Comparable Careers Analytical, but with
a sales focus 70-80 hr/week Client interaction Internally
competitive Generally not a rotational program Large, but variable,
initial compensation Investment Bankers Actuaries Purely analytical
no sales bias Work/life balance (45-55 hour weeks) Progress at your
own pace take breaks from exams if needed Support for professional
development Structured rotation and promotional process Document
Tracker
Slide 16
- 16 - Document Tracker Choosing a Career Hours Compensation
Work / Life balance Emotional reward Job Security Travel Desk Job /
Work outdoors / Work with people Lets compare an actuary and a
medical doctor Cost of Entry Cost of switching What is important
about a career and how can we analyze it? Working Conditions
Personal Interests Career Costs Subject Matter expertise (e.g.
finance, biology, etc) Hobbies Team environment vs. working alone
Geographical location
Slide 17
- 17 - Document Tracker Choosing a Career - Actuarial
Projections Suppose youre a high school senior and are interested
in becoming an actuary or a doctor. How can you think about this
decision? Lets analyze the objective elements of the decision: Cost
/ benefits of entry Time requirements
Slide 18
- 18 - Document Tracker Projection Assumptions Will review
actuary and doctor on the objective basis of compensation and
working hours Need to develop assumptions about time, cost of
education, projected income Actuary and general practitioner go to
a in-state university, minimal scholarships, no college loans As
full time students, classes 20 hrs / week + 40 hrs studying / week
for 8 months/year Finds summer internship that pays $20 / hour for
3 months/year Works 45 hours / week, increasing 5 hrs/week with
each promotion Exams take 300 hours / session, 10 sessions to pass
all post-graduate Salaries include exams, bonuses and merits,
estimated from DWSimspson.com Initially 2 weeks vacation; 1
additional week every five years ActuaryMD General Practitioner No
paid internships, you volunteer in hospitals instead Salary info
from MDSalaries.com Med school is 60-80 hours / week, 10
months/year. Medical residents work average 80 hours/week, 11
months / year GPs work 70 hours/week for 11 months/year General
Assumptions
Slide 19
- 19 - Document Tracker Analysis of Results Compensation
Comparison On average, actuaries have significantly higher salaries
than doctors during their first decade out of college, but
eventually doctors have higher salaries
Slide 20
- 20 - Document Tracker Analysis of Results Hours Comparison
Doctors consistently work longer hours than actuaries
Slide 21
- 21 - Document Tracker Analysis of Results Accumulated Value
Throughout our projection period, actuaries have a higher
accumulated value
Slide 22
- 22 - Document Tracker Conclusions from analysis Actuaries
work fewer hours, on average, than doctors Actuaries have a higher
accumulated value (defined as compensation less education expenses)
than doctors Training period is much more costly and time-consuming
for doctors than for actuaries. Actuaries tend to earn higher
incomes than doctors at the beginning, and doctors tend to earn
higher incomes than actuaries later on.
Slide 23
- 23 - Document Tracker Choosing a Career - Review and Limits
Assumption uncertainty Limited projection period Important decision
factors are not objectively measured Career satisfaction
Intangibles such as prestige Does not account for self or
externally imposed limits: Ability to borrow or earn Family care
decisions A career decision has important objective and subjective
elements; you must consider both and should compare your selected
career choice to alternatives in order to make a fully informed
decision.
Slide 24
- 24 - Document Tracker How do I become an Actuary? In High
School Associated classes Math/Calculus/Statistics
Economics/Investments Computer Science Apply to Colleges &
Universities with Actuarial Programs, and begin to pass exams while
in college Job Shadow & Network To learn more about the
actuarial profession: www.BeAnActuary.com www.soa.org
www.castact.org www.coachingactuaries.com Extracurricular
Activities Develop communication skills Leadership opportunities
& teamwork
Slide 25
- 25 - Document Tracker Copyright 2011 Deloitte Development
LLC. All rights reserved. Questions?
Slide 26
- 26 - Document Tracker Copyright 2006 Deloitte Development
LLC. All rights reserved. About Deloitte Deloitte refers to one or
more of Deloitte Touche Tohmatsu, a Swiss Verein, its member firms
and their respective subsidiaries and affiliates. Deloitte Touche
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devoted to excellence in providing professional services and
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