Ask an Actuary

"You need a broader base of skills than you think you do. The math knowledge quickly becomes "a given" and it is applying that special knowledge in the business world and being able to communicate it well that accelerates you further down a successful career path."

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 Scott Martin of Manufacturers P&C Ltd. in Barbados.

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

A: I was always aware of the profession as my dad is an Actuary, but I can't say I truly decided until early university. I had co-op work-terms during university as an actuarial student, but I was ready to change if I didn't like those first work-terms.

Q: Who or what influenced your decision?

A: My dad being an Actuary had distinct influence but, in general, I always enjoyed and was good at math and so I thought that was where I wanted to study. I liked to simplify math into three different categories: science math, pure math, and business math. I was never as fond of the physical/chemistry side of math, and I knew I wanted to apply my studies beyond the pure side of math, so the business side of math seemed to be the best choice. I also enjoyed computers, but wanted them to be used as a tool, not "be the job itself", so Actuarial Science seemed like a good overall choice. In retrospect, it worked for me, but that was certainly an oversimplification of the rest of the math world.

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

A: I actually have a Bachelor of Mathematics from the University of Waterloo with a Major in Actuarial Science.

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: Well, I certainly took several courses fairly directly covering the material on the first levels of actuarial exams. I also took several statistical courses, especially in the higher years, that weren't directly actuarial at all. The statistical courses are very useful, especially on the property and casualty side, but you clearly need more than that.

I took several computer science courses and promise they are useful even if you think its too much programming or "old systems". If today's students are not completely comfortable with working on the computer, they will have noticeable difficulty in this profession.

I took several business courses, some marketing, and many economics courses and highly recommend all of them. I get asked questions now that seem to be "common sense" to me and I think part of that is due to a good sense of the whole insurance/business process which is far more than just the numbers.

We had to provide significant work-term reports for school which were great writing practice and I highly recommend taking that sort of thing seriously, but I did not really chose any communications type courses. However, they would be a tremendous benefit. If you can't explain your results, the "perfect" answer is not much use.

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: During university, I had six different four month work terms specifically as an actuarial student. My first boss is largely responsible for me being on the property and casualty side. I don't think I really knew it was that different from life insurance my first day on the job, but my first work terms were with a P&C firm mostly in pricing support. One of my big projects was a net-impact report calculating the impact of a rate change by calculating exposures and premiums down to the individual cell level of a classification structure. To this day, many companies likely have to approximate that calculation.

My last several work terms were on the life insurance side, which I chose while I had the chance to see both sides, but I found the property and casualty side more interesting and preferred its undeveloped feel, so I consciously chose it upon graduation.

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 after the first year of university. I finished basically half the exams during university. I almost got a little too ahead of myself (too many exams, not enough real business experience), but I have slowed down too much after my ACAS and have not yet finished the final exams. I am 100% committed to doing so, however, and I am confident I will soon.

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

A: My first job after university was with the Insurance Corporation of British Columbia, in Vancouver. It is essentially a government supervised monopoly over automobile insurance in that province, but competition is allowed in the optional coverages. My biggest project early on was with their Stochastic Planning Model for Dynamic Financial Analysis, but for my last year there I was the actuarial department manager responsible for all ratemaking and reserving.

The path then took a big jump to the only Actuary in a small offshore reinsurance company in Barbados. We are a subsidiary of Manulife Financial, the largest life insurance company in Canada, but we are entirely property and casualty business reinsuring clients from all around the world. It has been great experience professionally, along with living on the island itself, and being here four years after coming out of university is a great example of some of the opportunities in the actuarial profession.

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

A: I have a broad range of responsibilities. I am entirely responsible for the reserving, I lay out the pricing guidelines and acceptable boundaries, and I assist in underwriting individual contracts to an extent that varies significantly with each contract. I do all financial forecasting and explanation of quarterly results. I co-ordinate the investments backing the contracts and the asset-liability management. I monitor all of our aggregate exposures. In a small company, you have to be ready to help with whatever needs to be done no matter if its in your "job description" or not.

Q: How long have you been in the profession?

A: I am seven years out of university, plus my experiences during university.

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

A: Its a wonderful profession and I highly recommend it. It is not for everybody though, but the struggle through the exams is worth the effort. You need a broader base of skills than you think you do. The math knowledge quickly becomes "a given" and it is applying that special knowledge in the business world and being able to communicate it well that accelerates you further down a successful career path.

Q: I am a mathematics graduate with a bachelor degree of science, I graduated from a university in Shang hai 8 years ago.Now my whole family is going to immigrate to Canada, and I am reconsidering about my career. I was quite good at maths in high school and in university, but I seldom use my maths knowledge after graduation. Now I have a strong desire to be an acturay, though I am not sure how difficult it will be and how long it will take to pass the first step exams and get a student status in SOA, do you have any suggestions for me? Thank you!

A: Your mathematical background will be a wonderful start, and you have obviously done some background reading to help you decide you want to become an Actuary. Your issue will be proving that desire to potential companies, who also have a good selection of actuarial students with specific actuarial background that they could choose, particularly in Canada.

I would target the bigger companies, as they are always looking for a broad base of students and you would be a great supplement to the others. Some of the life companies, in particular, might like your knowledge of the Far East as many are expanding that way. If you want to look for work right away, you might have to start as a general "analyst" in a company and work your way into the actuarial field during your employment, but that should not be a concern.

Writing the first few exams independently, even before you immigrate here, could help. The first few exams are much university math, but if you are still comfortable with that, they should go fairly quickly.

The other choice would be a short schooling program. The University of Waterloo, and likely others, have a one or two year program for people exactly like yourselves--graduates with other degrees, looking to switch into Actuarial Science. That might be beneficial if you have the time. Good luck!

Q: You went to University in Canada. How did you end up in Barbados? What opportunities for travel exist in the profession?

A: It was really just luck that brought me here. I was ready to move to a new job and wanted to be in reinsurance. The company was reorganizing and looking for someone as they were just setting up down in Barbados. The fact that the parent company is in Canada likely made me easier to find.

But overall there are many opportunites for travel in the profession. The financial/insurance business is more and more one global market, and besides switching companies you can now move around a lot of the world all within the same overall organization. In addition to the potential of being domiciled outside North America, you can also travel a lot from home base inside North America.

I can't suggest its too representative, but out of the fifteen or so friends I knew best in my graduating actuarial class, one is in England, one is in Hong Kong, one is in Australia, and then there is myself in Barbados.

Q: I am originally from Barbados and have thought of moving back home sometime in the future. I have four CAS exams (under the new system) and was wondering what future opportunities would be available in Barbados for actuaries either with your company or in general?

A: Barbados is currently a small actuarial market, but it does seem to be growing. There are two life insurance companies who need several actuaries, but on the property & casualty side, it seems to be just the few off-shore reinsurance organizations like ourselves.

The difficultly is we are small companies, who generally need only one or two qualified actuaries, and unfortunately don't really need any students. The practicality is that we would love to hire an "experienced" local person but of course have difficulty finding that person as we are not able to offer that person the experience. You should also want to learn under other actuaries while you are working through the exams. Somebodying returning to the island with at least some experience would be ideal and I think would interest many companies. Contact me directly and I can talk to you more about it.

The other potential that I know very little about is the local car/home insurance companies. It would be easier for someone from Barbados to find their way into that market, and they will be more receptive with some experience.

Q: I am interested in actuarial science. However, most of the information that I have obtained points that actuaries mainly deal in life insurance and superannuation. I would like to deal actively in the banking sector and stock exchange in the future, so I would be grateful if you could give me some information on whether an actuarist would be actively involved in the banking and stock exchange sector.

A: The answer is that actuarial science will definitely be active in the banking and investment world in the future. The question is exactly how far in the future that time is.

Fairly recently, actuaries really only looked at the liability side of the balance sheet. Today, the actuary looks at the whole balance sheet, including assets and investments. There are currently many asset-liability management jobs and investment orientated jobs within the insurance world--the life insurance world in particular--but it is growing in the property and casualty insurance business. All actuarial science is doing more in Dynamic Financial Analysis ("projecting the whole company") and we have improved our investment education within the actuarial exam system.

There is no question that we will have much involvement on the investment side within the insurance world--that is happening now--and there have been writings about what all is possible in moving directly into the banking/stock exchange world--some people have even suggested that at some point in the future, the actuary will put a risk "number" attached to a particular bond/stock to summarize its potential risks. The difficulty is two-fold: many "new" actuaries are very interested in this field, and we have been a little slow to prove to the banking world exactly who we are and what all we can do for them. If you are the type of individual who can prove your worth and show up with a good background of investment and financial knowledge with your actuarial b ackground, you can definitely find active actuarial involvement in the banking and stock exchange sector.

Q: I am a student in Computer System Engineering in a local university besides that I am also appearing in the exams of SOA. Do you think I can utilize my degree in Computer Systems in the actuarial profession?.Do any jobs exists in which I can serve as an actuary as well as a system engineer for a firm?

A: You can definitely utilize a degree in computer science within the actuarial world. You would likely want to target the larger insurance firms, with more of a database to work with.

When I worked at ICBC, we had a systems engineer and computer programmers directly in the actuarial department. If there was a person with those computer capabilities who truly understood the actuarial world, then life would be much easier for all.

However, you will have to decide how technical a job you want in the long-term. After finishing all your actuarial exams, you usually find yourself more towards a management position doing less direct computer work, having actuarial students do that for you. So, bringing actuarial knowledge will make you the ideal candidate for computer jobs similar to the above, and any computer knowledge is a distinct benefit to any actuarial position, but you will likely have to choose one way or the other in the end as 'actuary' and 'systems engineer' are truly two full-time jobs.

Q: Is work experience necessary in passing the exams for either CAS or SOA?

A: It is not at all necessary for the first several exams, and I highly recommend actively writing some in school.

I can't say that it is absolutely necessary for the higher (more written answer) exams, but it is certainly recommended, expected, and they will be a significant challenge without some years of work experience. The current CAS Part 8 exam, for example, also covers "current events" in material relevant to the exam. They now give you a few select papers, but not long ago they simply gave you subjects to review in a few business periodicals under the expectation that you would have read them at work, and then review them for the exam.

The CAS & SOA are the "education" organizations, but to be a fully qualified actuary you need to join either the CIA in Canada or usually the AAA in the U.S. (there are other choice in the states). These are the "professional" organizations and they do have work experience requirements.

Q: Does an FCAS earn more money than an FSA?.

A: That is a much harder question to answer than you might think. Salary depends on many things, such as qualifications, overall experience, location, type of company, size of company, and specialization. The business world seems to be moving towards lower base salaries and higher incentive pays which makes any generalization even more difficult. The current impression is that an FCAS will make more on average than an FSA,. However, that could be largely because the property and casualty world is a small piece of the entire actuarial world and there are proportionally fewer actuaries. There might be specialities within the FSA that support a higher than average pay. Also, there are currently more FSA's in upper management/president's on the life insurance side than on the casualty insurance side, so they usually support higher pay. In any case, I hope that is not the deciding factor in your career choice as you might not then have a very happy career.