Ask an Actuary

" The nature of actuarial work is constantly evolving and changing, which makes it an exciting field in which to be working. "

Every installment a different actuary will be asked to describe the path that led him/her to an actuarial career. Our featured actuary is David Ruhm of The Hartford.

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

A: In 1989, I saw a flyer posted on the Math Dept. bulletin board at my university. It was entitled, "What Is An Actuary?". It got me thinking, and after discussing the profession with a few people and doing some interviewing, I decided it was a good career for me to pursue.

Q: Who or what influenced your decision?

A: Several aspects of the profession were very appealing. Actuarial work involves quantitative analysis and other business skills, so if you like math this profession gives you an opportunity to apply it every day in a real-world context. Compensation is usually very good after you pass 4 or 5 exams, and can increase to fairly high levels as you develop your career beyond that level. Advancement in the beginning years is based to a great extent on passing exams, which means that your speed of advancement is largely within your own control, if you are good at studying and passing exams. Finally, I found that the actuarial profession is well respected, both within the insurance industry and by the public in general. All of these factors made becoming an actuary look like a good opportunity, which I can now say it has turned out to be.

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

A: I received a B.A. in mathematics from The University of California at San Diego in 1988. This is fairly typical for an actuary, though there are quite a number of actuaries that have degrees in fields other than math. Some actuaries have advanced degrees (Masters' degrees or PhD's).

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: The math classes that were most helpful were elementary calculus, probability, and statistics. Also, the lower-division economics classes were very helpful, and I would recommend them to anyone interested in becoming an actuary.

All the writing classes and speech classes I ever took (including high school classes) have been useful, because a large part of an actuary's job involves discussing analyses and conclusions with other people, some of whom are not familiar with actuarial methods and terminology.

I did not take any business classes, but I know other actuaries who benefited from doing so, and I would recommend taking them if they are available.

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: I began my career at CIGNA (now ACE) in Philadelphia, in the Research division of the Actuarial Dept. The way I got the job was, I went to the library and got the phone books for cities I liked, and started calling insurance companies to find out who was hiring actuaries. CIGNA was expanding its actuarial department at that time, so I interviewed and was hired. That position involved measuring the company's profitability by line of business, as well as doing various research projects that came up, many of which involved some type of modeling.

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

A: My first exams were November, 1989. I finished the casualty actuarial exams with the May, 1999 sitting, for a total of 10 years "travel time". This includes one year during which I took a sabbatical and did not study at all, so the real travel time was 9 years. I understand that this length of time is about average these days for completion.

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

A: After spending two years in research, I held a number of positions all of which involved reserving (estimating how much the company will have to pay out in the future for insurance policies that have already been issued). Reserving is probably the most commonly practiced actuarial function, and doing it for several years provided a nice foundation of valuable experience. About two years ago, I started getting involved in pricing some finance-oriented products. I am still doing that, and I also participate in the development of new products at my company.

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

A: My company writes deals where we take over (or "buy out") insurance liabilities. At the time of the deal, the amount that we will have to pay is not precisely known, nor is the timing of the payments. I evaluate these deals, calculating the price that we should charge in order to expect a reasonable return on capital.

In addition, I'm involved in researching and developing new products and markets.

Part of my time is spent working on capital allocation and measuring return on capital. Return measurement has grown to be a significant research area for property/casualty actuaries over the past several years. I expect that p/c actuaries will get more involved in implementing surplus models and return measurement models throughout the next decade, particularly as dynamic financial analysis gains general acceptance and converges with surplus/return measurement.

Q: How long have you been in the profession?

A: I started in July, 1989 which was about 11 years ago. Having taken one year off, I have been in the profession for about 10 years.

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

A: When I was starting out, a friend of my father who is an actuary advised me to start with an insurance company that has a strong exam program, get some experience and use the program to finish the exams as soon as possible. He suggested that I wait until finishing the exams to look around for good career opportunities. It was excellent advice, and I would give the same advice to someone starting out today. Focus on finishing the exams as soon as possible, because in most cases they determine how fast an actuary advances.

Also, even if you have always been great at taking tests, don't make the mistake of underestimating the amount of work you'll have to put in to pass the actuarial exams (which I did). The volume of the material you have to learn or memorize, the specificity and difficulty of the exam questions, and the high level of competition make it unlike anything I've ever encountered. If you are just starting out, expect it to be very challenging (and not in a pleasant way!) right up to the last exam.

Q: Any additional comments?

A: The nature of actuarial work is constantly evolving and changing, which makes it an exciting field in which to be working. Recent developments include dynamic financial analysis, hurricane/catastrophe modeling, and pricing of finance-insurance products. Also, I have had the pleasure of meeting a wide variety of interesting, sophisticated people in this profession, and have made some great friends.