Ask An Actuary

"I believe the demand for actuaries is rising while the supply of actuaries is decreasing. With the strong economy today, interested candidates should aggressively pursue actuarial careers"

Every other month a different actuary will be asked to describe the path that led him/her to an actuarial career. This month's actuary is Jeffrey White, a consulting actuary with Deloitte & Touche LLP.

Q: When did you first decide to become an actuary?

A: I actually come from a family of actuaries. My father is an FSA, Dan White, and my uncle is an FCAS, David White. My aunt, Mary White, also has an actuarial career in personal automobile ratemaking. As a result, early in my life I was aware of the actuarial career and its benefits. While in college, the careers that intrigued me most were sports broadcasting and actuarial science. I had several internships in the broadcasting industry, including a summer internship with NBC Sports in New York. After these internships (during my senior year in college), I became more interested in actuarial science and less interested in broadcasting. Actuarial science has a well defined system for advancement, both through proven work experience and exam progress. Also, entry level actuarial positions have very good starting salaries. I concluded that these two pluses were more attractive than the potential glamour of a career in entertainment.

Q: Who or what influenced your decision?

A: My first influence was my family. My three family members with actuarial careers liked their jobs. I was able to ask them questions and get a better understanding of the career. I also took a career course in college. One of the careers that came back from my multiple tests was "actuary." I took this as a sign and decided to become an actuary.

Q: What is your educational background? Where did you attend college and what was your major?

A: I received a Bachelor of Science Degree in Mathematics from Santa Clara University in the San Francisco Bay Area's Silicon Valley. I also have a minor in communication. Other than the examination process, this is my only formal higher education.

Q: What classes did you take in college that helped prepare you for the career? What class was most helpful? What classes outside of math and statistics (such as communications) were helpful?

A: I took calculus, probability and statistics, and numerical analysis. These classes corresponded to exams 1, 2, and 3c. I also took macro and micro economics and a personal finance class. These classes provided a good background for part 5. The communication courses that I took for my minor enabled me to be a better writer and public speaker. I also valued my ethics course, which has helped me try to "do the right thing" both personally and professionally.

Q: What was your first job in the profession? How did you get the job? Did you start as an intern or in an actuarial training program? What type of work did you perform in you first actuarial job?

A: Prior to my first job, I had an internship between my sophomore and junior years with William M. Mercer, Inc. in San Francisco. My first full-time job was as an actuarial trainee with The St Paul Companies in St Paul, Minnesota. My uncle, David White, is an actuary for The St Paul, and helped to send my resume to the right person. After a phone interview with human resources, I had a full day interview at The St Paul. I was then offered the job. I started as an actuarial trainee in their Financial Services department. My responsibilities were to prepare quarterly reserve analyses, prepare rate filings for fidelity and directors and officers coverage, and complete training modules to learn the different aspects of actuarial science (reserving, ratemaking, reinsurance, etc.).

Q: When did you take your first exam? How long did it take for you to get through the exam process?

A: I took my first exam as a sophomore in college. I was in the midst of taking an advanced calculus course. I didn't start taking exams seriously until I graduated from college in June 1992. After the May 1992 sitting, I had parts 1, 2, and 3c. I completed my final exam, part 8, at the May 1997 sitting.

Q: What was your career path from your first job to your current position?

A: I began as an actuarial trainee and later an actuarial assistant with The St Paul. I worked for The St Paul for 2 and 1/2 years before taking a consultant position with William M. Mercer, Inc. in Irvine, California in January 1995. I was with Mercer until March 1997. In July 1997, I began my current position as a Senior Consultant with Deloitte & Touche LLP in Los Angeles. My different positions have taken me from an insurance company to a consulting company to a consulting/accounting firm, which have given me a wide variety of experiences.

Q: What type of work do you do on a day-to-day basis in your current position?

A: The main task I perform is supporting the Deloitte & Touche LLP auditors in the audit process. Whenever our auditors review a company with a material insurance liability, they look to the property and casualty actuaries in the firm to determine the reasonableness of the company's stated insurance liabilities. We review liabilities for both insurance companies and for entities which have retained insurance risk. Our job is to determine whether the stated reserves in the Company's financial statements are reasonable, and to provide insights into the performance of the client's insurance programs.

Q: How long have you been in the profession?

A: I have been in the actuarial profession since June 1992.

Q: What advice would you give to someone first starting out?

A: I would recommend that the interested person decide what type of an actuary he/she wanted to be by speaking to health, pension, and life actuaries in addition to property and casualty actuaries. I would also recommend that the interested person consider what he/she prefers to do on a day-to-day basis. For example, consulting actuaries have more regular interaction with more people. I would recommend the interested person consider where he/she wanted to live long-term. Good jobs for the different actuarial fields are more prevalent in different parts of the country. The last recommendation I would make is to have the interested person complete an internship.

Q: It appears as though you passed exams very quickly. Do you have any study tips? Do you have a photographic memory? --Pam Kaplan

A: Unfortunately, I do not have a photographic memory. I have heard of exam takers who can remember exactly what they have read after one pass through the exam material, but this didn't work for me.

I have several study tips which helped me complete the exams:

1. Put in the time. One full exam (all of Part 4, for example) typically requires a 300-400 hour committment. If a student puts in the required amount of study time, he/she enhances his/her ability to pass.
2. Know the material. While it is important to complete old exam questions, it is as important (if not more important) to have a thorough understanding of the exam material.
3. Study groups can be helpful. I found study groups helped when taking exams. When you have questions, a study partner can help find the right answer. Also, study groups help keep you on schedule, as it is easy to fall behind when working through the exam material.

Q: What made you choose the Casualty system over the SOA system? --Colin Thompson

A: I graduated from college in June 1992, and the job market was much different than it is today. It was difficult for new graduates to get actuarial jobs since many companies had cut back on the number of new actuarial hires. As a result, I applied to both SOA and CAS jobs. As it happened, the first job I offer I received was with a property and casualty company. Since it was a good job with a quality company, I took it.

While the above describes how I made my decision, I wouldn't recommend that approach to new graduates today. I believe both the SOA and CAS careers have benefits. The key is to decide what fields interest you, where you want to live, and what your ultimate career goals are. I would recommend conducting informational interviews with both SOA and CAS actuaries who work for both insurance companies and consulting companies. I would be happy to assist anyone interested in informational interviews.

Q: What, exactly is the difference between a FCAS and an FSA in terms of career direction? I am new to this and didn't know there was a distinction. Can someone join both? Please elaborate. Thanks in advance.

A: An FCAS is a Fellow in the Casualty Actuarial Society. An FSA is a Fellow in the Society of Actuaries. The Casualty Actuarial Society (CAS) is the actuarial organization in the United States which provides actuarial services related to property and casualty insurance. The Society of Actuaries (SOA) is the actuarial organization in the United States which provides actuarial services related to life insurance, health insurance, and pensions.

It is possible to be a Fellow in both the CAS and the SOA. Each society has its own series of exams to obtain fellowship. While the exam structure in both societies are changing, the two societies currently share approximately the first 2 1/2 exams. In the CAS, an additional 7 1/2 exams are needed to obtain fellowship. In the SOA, there are an additional number of credits which need to be completed to obtain fellowship.

As far as career direction is concerned, if you are interested in property and casualty topics, you should consider joining the CAS. Property and casualty insurance includes workers compensation, general liability, automobile, homeowners, etc. If you are interested in life, health, or pension, you should consider joining the SOA. There are currently many more SOA actuaries than CAS actuaries, but I believe the current job demand is higher for CAS actuaries than SOA actuaries. I would again recommend conducting informational interviews with actuaries in each field to gain an assessment of the strengths and weaknesses of each area.

Q: In your opinion, how does the law and actuarial science interrelate? Can you foresee someone with a legal background, who is also interested in pursuing actuarial science, be of benefit to a prospective employer?If so,which of the two( soa or cas) sets of exams will you advise that person to pursue? -- A.M. Felix, BSc., LLB.

A: I believe the law and actuarial science interrelate in many situations. One benefit of a legal background is understanding how the laws affect insurance coverage. For example, the law in several states allows some public entities to have their liabilities capped at a certain maximum amount. Another example is workers compensation, where the available benefits to injured workers are based upon the laws of that particular state. As a result, a legal background might help an actuary when estimating the ultimate cost of insurance claims.

As far as which track is better for people with a legal background (SOA vs CAS), I am not sure that one is better than the other. While I have less experience in health and pension, I know that each of these fields employs lawyers (who are not actuaries) to review benefit plans. I suspect that lawyers could assist with property and casualty issues as well. However, a career in which you function as both an actuary and a lawyer may not exist in either society. I would recommend contacting a consulting firm and an insurance company for their thoughts if you are interested in pursuing a dual career.