Ask an Actuary

"If you're good in math, enjoy solving puzzles, and want to continue learning, this is a great career for you."

Every other month a different casualty actuary will be asked to describe the path that led him/her to an actuarial career. This month's actuary is Jen Polson Johnson, Vice President at Towers Perrin Reinsurance.

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

A: I first decided to become an actuary senior year in college, the day I accepted my job offer. Although it would be nice to say I had always wanted to be an actuary and knew exactly what I was doing, the reality was that I was looking for a job which used math skills, and I really liked the people at the company I interviewed with. I am not above saying that perhaps I was just plain lucky to fall into this career.

Q: Who or what influenced your decision?

A: At most companies, advancing up the ranks is at least in part dependent upon your ability to pass exams, something objective, something under your control. I found this very appealing, as I was good in math and good at taking exams. However, it is just as important to be working for a firm where you like and respect the people you are working with and are comfortable with the work ethic there. I believe the biggest stigma facing actuaries is all of the jokes accusing us of nonexistent personalities. Getting past that stereotype was important to me in committing to the career. Otherwise I would have become an accountant (just kidding).

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

A: I attended Bucknell University, where I earned a Bachelor of Arts in Mathematics in 1986. While there, I also took a concentration in Operations Research and minored in Geography (gotta have some fun).

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: In a plug for a liberal arts education, all of my classes helped prepare me in that they helped me to think. As much as my calculus, statistics and operations research courses helped me learn information useful in my job and in passing exams, English helped me to write, Political Geography helped me to be more cognizant of cause and effect, Psychology helped me to listen to clients better and be a more effective negotiator. In particular, I would say that my Introductory Logic course (part of the Philosophy department) helped me to think clearly and frame arguments in a cohesive manner.

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: My first job was working for CIGNA Property & Casualty as a student within their actuarial training program. I had interviewed with CIGNA on campus my senior year, where they had sent a general recruiter, and later was invited back for a round of on-site interviews. CIGNA's training program was rotational in nature, and I began in the Special Risk Facilities area, pricing up the expected costs of policies for large Fortune 500 - type accounts. Although it's now hard to believe, not everyone back then had personal computers, so a lot of my work was spent using pencil and adding machine to perform calculations. What used to take 2 days is now done in about 10 minutes.

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 that first fall after graduation, and never looked back. In total, it took 11 sittings to complete all 10 exams. I comfort myself by saying that failing one exam has given me a proper dose of humility.

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

A: At CIGNA, I rotated from Special Risk into International Reserving and Commercial Pricing, all rotations lasting 2-3 years. When CIGNA reorganized and physically placed actuaries next to their underwriters and marketing people, I was dedicated to their Municipalities, Education and Care Providers segments. This was a great opportunity to learn about running a business from all sides. After 9 years with CIGNA, I joined Towers Perrin Reinsurance, where I work today. TP Re is a reinsurance intermediary, and I do analytical work in support of our brokers.

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

A: I would say that the majority of my time is spent in estimating the costs of large reinsurance contracts (insurance that insurance companies buy to further leverage their risk). No two contracts are alike, so the work stays pretty interesting. The work is primarily deadline-oriented and involves a fair degree of travel. I will often be asked to participate in a presentation to either pitch a new product to a prospective client, explain cost changes to current clients, or negotiate rates with reinsurance markets. This work will sometimes expand to estimating the impact of various reinsurance contracts on a company's financial statements and consulting on optimal strategies for doing business. Most of the people I come into contact with through work are not themselves actuaries, so being able to explain mathematical concepts to non-math people is extremely important (I find pictures help).

Q: How long have you been in the profession?

A: I have been in the profession for 12 years, and am still learning new things.

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

A: If you're good in math, enjoy solving puzzles, and want to continue learning, this is a great career for you. The biggest hurdle for most people is the exam process. It's a long road ahead, so you'd better be pretty committed. The good news is, you get rewards along the way. The bad news is, it can be very frustrating to watch other people advance when you're having trouble. A helpful perspective on the exams is to see them as more than just teaching you facts and formulas, but teaching you how to think. If successful, you also come away having honed skills such as time management, priority setting, and communications, all of which are valuable in all aspects of business. As long as you feel like you're progressing on some level, you're a winner.

Otherwise, don't limit yourself. Take any opportunities which come your way with respect to talking to senior executives, working outside your field, volunteering with the CAS . . . better still, make those opportunities happen.

Q: Is work experience helpful in landing a job as an actuary? If so what kind of jobs are helpful in landing a job as an actuary?

A: Yes! Work experience is always helpful. From the other side of the interview table, the employer will be concerned about the following: is this person intelligent / good at math? will they be good at day-to-day analytical work? do they know anything about the insurance industry? Any experience which helps relieve these worries will be a help.

The ideal job would of course be working in the actuarial department of a property casualty insurance company and/or consulting firm. Given these may be hard to come by, you've got options. You might try other insurance-related jobs, for example working in the claims department of an insurance company or working for an insurance agent. These will expose you to a lot of the language and terminology we use in our field, and reaffirm your committment to the industry. Another option is to get an analytical job in another industry. For example, I spent one summer working for M&M/Mars candies. I worked in sales setting up excel spreadsheets for sales projections and using project management software. It helped demonstrate that I was able to work with figures and computer software under minimal supervision, skills useful to a potential employer. I found this job through a temp agency, a good source if you don't have personal contacts. If nothing comes your way, you might want to consider volunteer work: being a math tutor, working on the budget for a non-profit, anything demonstrating useful skills. If all fails, something is better than nothing. As much as it might be fun to take the summer off, it's not likely to impress an employer.

Q: What made you specialize in property insurance rather than life?

A: Truthfully, I came to the property/casualty side by accident (it's where the job was), but I feel very fortunate in where I landed. I suppose actuaries on both sides will say that they're happy with their choice, and I will admit to only having worked on the P/C side, so it's possible I'm way off base. Even so, here is my potentially biased opinion on both.

First off, bear in mind that the SOA (life side) is a much bigger organization than the CAS (16,411 members vs. 2,901 as of Nov 1997) and has been around longer as well. I perceive the "other side" as a more traditional, well-established field who has already dealt with most of their industry's problems, and whose focus has evolved into being more financial and economic in nature than in our work. I think of it as a smoothly running machine that just needs tinkering on occasion. The risks are pretty well known (with the exception of AIDS and health care reform) and challenges are found more often in areas such as investment risk and stochastic modeling.

On the P/C side, there are a lot more unknowns to deal with; everything from state legislated auto reforms to asbestos and environmental risks to the probability of "The Big One" hitting in California, not to mention everyone's favorite El Nino . . . There's a lot we just don't know much about, and so we have to do a lot of creative guessing in our jobs. There isn't necessarily one right answer - I think of it as more art than science. To be fair, we are beginning to become involved in "life-type" areas such as asset/liability modeling, dynamic financial analysis and accident & health insurance, but our efforts are relatively new compared to the life side.

So, if you're choosing, think on what appeals to you most: intensive financial modeling, or more creative risk assessment. Different strokes . . .