Ask an Actuary

"While the actuarial field, like any other, is affected by the state of the economy, the bottom line is that people who pass exams always find jobs."

"Ask an Actuary" features an actuary that is asked to describe the path that led him/her to an actuarial career.  For this installment, our featured actuary is Anant Galande, a Senior Actuary at HIP Health Plans in New York City.

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

A: I decided to become an actuary the day I started as an intern for Northwestern Mutual Life (NML) in the summer of 1986. I was placed into the Actuarial Programming area. My boss asked me if I knew what an actuary did. When I said no, he gave me some pamphlets published by the Society of Actuaries and told me to read them. I knew as soon as I finished reading that the actuarial profession was for me.

Q: Who or what influenced your decision?

A: I had always wanted to be in a profession that used my math skills, given that math was my favorite subject in high school. However, upon entering college, I was aware of only two professions which directly used a Math degree: teacher and academic. I didn't find either of these professions appealing, so I decided to pick Engineering, a field that indirectly used my math skills. My performance in Physics quickly convinced me that I was ill suited to the profession. I enjoyed and had done well in the computer courses I had taken to that point, so I decided to switch to Computer Science.

At about the time I was wondering whether I would interact more with people or a screen, I received the NML internship. I realized that the Actuary has the rare opportunity to combine mathematical and technical ability with communication skills, which is what I was looking for in the first place.

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

A: I was born in England and spent seven years there; the next three were spent in Canada. I went to a Milwaukee public high school which gave me a wide exposure to mathematics, all the way up to graduate level. I majored in Mathematics with an Actuarial Emphasis at the University of Wisconsin-Madison.

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 went to a University which had an Actuarial Science program. Thus, most of the math classes I took were geared specifically for the exams. I can't stress enough how important these classes were to me for passing the exams. I think analytic literature courses are also very important. Math teaches you to problem solve with numbers; analytic literature courses teach you to problem solve with words. I have found that the good grammar and critical thinking skills these courses teach are very helpful in communicating with others. I also believe a public speaking course or activity (e.g. forensics or debate) develops the ability to be comfortable in front of others.

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 in the actuarial profession was as an intern at NML. I got the job through INROADS, a non-profit organization that recruits and develops minorities in the corporate arena. I coded various ad-hoc programs, including the development, testing and implementation of a claims processing function.

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

A: After graduating from college in 1988, I worked for CIGNA in Bloomfield, CT. I spent two years in the life insurance pricing area and another two years in the indemnity health pricing area. I moved to Keystone Health Plan East in Philadelphia in 1992, where I worked in the HMO pricing area.

In 1994, I moved to the actuarial consulting firm of Reden & Anders in Minneapolis, where I consulted with HMOs and insurance companies on managed care products and pricing mechanisms. I then moved in 1996 to the Chicago office of Watson Wyatt Worldwide, where I consulted with employers and HMOs on managed care products and pricing mechanisms.

In 1997, I moved to Swiss Re Life & Health (now Swiss Re) in New York City, where I attempted to increase the managed health care reinsurance portfolio. In 1998, I moved to HIP Health Plan of New York, also in New York City, where I still work.

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

A: I run the unit which is responsible for the actuarial financial reconciliations for all partners with whom my company has risk based arrangements. As a result, our unit determines the periodic cash flows associated with these arrangements. This involves working with the Provider Contracting unit to develop contract language and financial frameworks, as well as working with Actuarial and Finance to determine the claims and revenues associated with these arrangements. Most of my day is spent in meetings obtaining information, which I disseminate to the unit for use in developing, maintaining and reconciling risk arrangements.

Q: When did you take your first exam? Where are you currently in the exam process?

A: I took my first exam in November 1986. I became an ASA in 1992. I have not passed any more exams, and I stopped writing exams in 1995. I have decided to be a career ASA.

Q: What advice would you give to someone first starting out down the path of an actuarial career?

A: I believe that taking college courses geared towards the actuarial exams is extremely important. If you are starting your career after graduation, then attend after hours classes or seminars that are geared towards actuarial exams. Also, try to take practice exams in test like conditions. Lastly, when choosing a job, particularly if you have no or few exams, try and find a job that supports your exam taking efforts with time, materials and classes.

Additional Questions:

Q: Hello! Just wondering which areas of actuarial science are the "best" to enter right now -- that is, which areas have the greatest growth potential, etc. Conversely, are there certain areas that are poised to shrink in the years ahead? Thanks.

A: I think the following areas of Actuarial Science are still being defined, and as a result, offer the greatest growth potential in the near future:
Finance, Health Care, Casualty

Please note that the Health Care field would be negatively impacted if a nationalized health care program was ever to be adopted. In addition the Pension Consulting area has recently had a resurgence.

I think that the following areas of Actuarial Science are the most evolved and, while offering stability, may not provide the best growth potential:
Specialty Lines (e.g., Long Term Care, Disability), Life Valuation, Life Products.

Q: Is there an age limit to when someone can start in this business? I am 52, but competent in math, statistics, and probability, as I am an engineer. Thanks.

A: One of the many strengths of the Actuarial field is that age, gender, race or ethnicity are not barriers to entry. The Actuarial exams do require a large time investment, particularly outside of work. The ability to commit this time becomes more difficult as one gets older, especially if the commitment competes with family or outside interests.

Q: I have decided I would like to return to school for a math major and begin preparations to become an actuary. I will have to work while I am in school and would like to know if there are any specific jobs that would be good experience. I have an education degree/math minor, so I would imagine I could consider only entry-level positions in the more business-oriented fields.

A: I think that an internship would be your best bet. While I am not aware of a list of organizations that have intern programs, I do know that the beanactuary.org website does contain a list of companies that have actuarial training programs. I assume that many of these organizations have intern programs, too. You can contact companies in your area to see if they would be willing to take on interns during the school year. Please reference the "Finding A Job" link on the homepage for more information. Your school's Placement Office is probably a good source, too.

Q: I am in the preparation of applying to universities in the UK. I want to be an actuary, and my specialty is mathematics. It is quite difficult for me to make the decision on choosing a course of study. Which course do you think would be more helpful - a mathematics & statistics degree or a mathematics & economics degree?

A: The choice between a statistical and economic emphasis is difficult. My own experience has taught me that a statistical emphasis makes passing the lower level actuarial exams easier, while an economic emphasis makes passing the upper level actuarial exams easier. The ultimate path is really an individual decision.

Q: There is considerable variation in statistical/mathematical preparedness among entry-level actuaries, owing in part to their different degrees. What math/stats coursework do you expect is required for adequate future performance. In essence, how would you advise a non-math, non-stats major in choosing coursework? Thanks.

A: I believe that anybody who seeks to be an actuary must receive a obtain a strong calculus and probability background at college or university (i.e., the framework for the Course 1 actuarial exam). Take classes in these subjects geared towards math & science majors. If you can do this without becoming a math or statistics major, good for you. Otherwise I strongly recommend that you switch your major to math or statistics. These topics are extremely difficult to master through self-study in a working environment. I also recommend at least an exposure to the mathematics of finance (for the Course 2 exam).

Q: Mr. Galande, I always loved math! I received my B.S. in Applied Mathematics (3.2 degree GPA) and have always been an "A" student. Toward the end of my college career, I began to make more "C"s ( 70-80% )in the upper level math classes. Does this necessarily indicate I will have significant difficulty with the actuarial field? Thank you!

A: Grades are not necessarily the best indicator of your ability to master actuarial concepts. You certainly need to to have a very good understanding of calculus, probability and statistics. You will also need to understand financial mathematics, particularly theory of interest (this understanding can be developed after college). Advanced mathematical topics, particularly as they relate to classical mathematics are not generally part of the actuarial examination process.

Q: I am a Senior High School student in Nairobi, Kenya. I intend to study Actuarial Science in North America. According to you, which universities in USA and Canada have the best Actuarial Science Program? I am assuming U Of Waterloo, Canada is one of your choices.

A: There are many universities that have full actuarial science programs, as well as others that have courses geared towards the actuarial exams. Determining the "best" program is a subjective exercise that takes into consideration not only the quality of the program, but also geographic location, climate, affordability and other personal factors. Large actuarial science programs that immediately come to mind, in no particular order, include:

University of Waterloo - Waterloo, Ontario, Canada
College of Insurance - New York, New York
University of Wisconsin - Madison, Wisconsin
University of Nebraska - Lincoln, Nebraska
Drake University - Des Moines, Iowa
Georgia State University - Atlanta, Georgia

The beanactuary.org website gives a complete list of actuarial science programs. I have included the link below.
http://www.beanactuary.org/stillinschool/

Q: I recently read in an internet career site that the job prospects for entry level actuaries are very very small and jobs are going to be very hard to get (http://www.bls.gov/oco/ocos041.htm) Is this true?

A: The article you read stated that number of actuarial job openings, relative to the number of job openings in other careers, is small because the size of the profession is small. The article also stated that employment prospects are actually good because exam requirements limit the number of entrants.

While the actuarial field, like any other, is affected by the state of the economy, the bottom line is that people who pass exams always find jobs.

Q: Mr. Galande, I graduated from college back in December of 1998, however I have not been successful in writing exams, even though I have put in the time and dedication to pass them. I have been failing course 2 twice already, and I think it could be a painful process. My desire is to be an FSA but how can I accomplish that? Any suggestions. Thank you. By the way I am already 27 years of age and I am afraid I may not reach my goal because I keep failing the same exam.

A: Failing an exam multiple times is not necessarily a barrier to achieving Fellowship status. I became an ASA even though I failed four exams four times each. Given that 25%-40% of candidates pass a given exam, failing is usually part of any person's exam process.

As I previously mentioned, age is also not an inherent barrier to passing exams. However, as we grow older, personal responsibilities and interests tend to compete with the exam process.

I suggest that you first to understand whether your inability to pass the second exam is a function of performance or knowledge. By performance I mean not being able to finish the exam in time or nervousness. If you have a performance issue, look into relaxation techniques. I would strongly urge a good night's sleep the day before the exam. Make sure you concentrate first on questions you understand immediately, and come back to more difficult ones later.

If you have a knowledge issue, maybe attending an exam seminar would be valuable. If you are working in an actuarial environment, you may be able to get your company to cover the expense. Otherwise, the financial investment may well be worth the return.

Q: I am heading back to school to obtain my math major with the objective of becoming an actuary. While school will develop my academic abilities in relevant disciplines, I want to be sure I am developing the required knowledge in other areas as well. Could you recommend specific newspapers, magazines, websites, etc. which would inform me of developments in the "real world" that are important for an actuary to know? Thank you.

A: Knowledge of actuarial techniques is taught in school. Knowledge of the actuary's role in the insurance industry comes with work experience. Publications geared toward actuaries tend to focus on a particular area of practice (e.g., life, health, casualty). Most people in school have not yet chosen an area of practice, so I don't think these publications would provide valuable information to students. Publications that provide general business information, such as the Wall Street Journal or the Economist, will be useful. These publications will sometimes have articles that focus on insurance companies or the insurance industry itself.

Q: I am writing to you because I would like to talk to a real actuary about what the job is really like. I am very excited about learning more about this profession because it really seems like my dream career.

Also, could you please give me a description of what you do on a regular working day as part of your job? Do you usually attend meetings and spend time with people, or are you given a task and asked to finish it independently? Are you working on a project right now?

A: What you are seeking sounds like an informational interview, which is best conducted face-to-face. The Directory of Actuarial Memberships can help you identify actuaries in your area whom you could contact to set up such an interview. The website address is: http://dev.centrax.com/SOADir/search.htm The list of Actuarial Clubs would also be helpful. See http://www.BeAnActuary.org/forteachers/2clubs.htm

As far as classes in your last two years of high school, make sure you emphasize fundamentals. Take as many advanced math courses as possible (Advanced Placement level if possible) and do not neglect English classes (the ability to communicate is always important).

Q:I am currently a senior persuing BS in mathematics with a concentration in actuarial science and financial planning. I am preparing for Exam 1 and have been doing a lot of reading. My question is about the seminars that are offered in several parts of the US. Are these seminars worth going to and are they beneficial for passing the exams? Thank you for your time.

A: I have never attended one of these seminars, so I cannot speak from personal experience. However, my conversations with colleagues who attended these seminars leads me to believe that these seminars could be useful, particularly for the first couple of exams. These seminars assume that participants have familiarized themselves with the course material, so the information provided is very focused. I suspect the seminars may allow you to better apply the knowledge you have already gained.