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Presentation on Actuarial Profession

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Presentation on Actuarial Profession Powered By Docstoc
					              Overview of the
      Actuarial Profession and Career
               Opportunities

                   St. John’s University
                    November 2, 2011

             Michael L. Frank, Aquarius Capital
AQUARIUS CAPITAL
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           Biography of Michael L. Frank
 Actuary: Life & Health Actuary (ASA, FCA, MAAA, MIAA)
 Experience: Insurance/Reinsurance/Employee Benefits
    Appointed Actuary: Insurance Companies, HMOs, & Reinsurers
    Consulted more than 500 municipalities and 80 private equity/hedge funds
    Managed $4 billion block of reinsurance
    Mergers & Acquisition Experience
 Actuarial Society of Greater NY, President (2011)
 SOA Section Councils: Actuary of the Future, Entrepreneurial, Reinsurance
 Various NAIC/AAA/CCA Committees & Task Forces (e.g., Healthcare Reform)
 SOA LEARN Program – Instructor for Reinsurance for Insurance Regulators
 Speak/Recruit at Industry Meetings, Publish Articles, Industry Committees
 Other Credentials & Designations
    Licensed life, accident and health broker (25+ states)
    Licensed reinsurance intermediary & managing general underwriter
    BS, University of Michigan, Mathematics & Statistics (1987)



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What portion of the GNP in this
 country is tied to the insurance
 industry? How about worldwide?




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                   Insurance Products
   Life Insurance
   Health Insurance (e.g., medical, dental, disability)
   Annuities
   Property (e.g., Personal Items – Home, Earthquakes)
   Casualty (e.g., Auto Liability, Professional Liability, Workers Comp)
   Variety of Specialty Coverages & Hybrids (e.g., Contingencies)
   Reinsurance/Retrocession
   Catastrophe Covers



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    Insurance is part of our day-to-day lives!
   Business Interruption
   Entertainment (TV, Movies, Sports)
   Travel Coverage
   Weather
   Terrorism
   Mail/Shipping
   Transportation – Auto, Motorcycle, Boat
   Home Owners/Renters Insurance
   Many others – traditional and non-traditional


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           A Strong Career Outlook

          Doing the Math to
          Find the Good Jobs               Actuary Ranked Best
                                               Job of 2009




        Best Jobs for New          One of the Best Careers in 2007
      College Graduates Now



Ten Jobs That Pay $80,000 a Year
  Ten Jobs For Math Whizzes
    AQUARIUS CAPITAL                    Ranked Top Four Careers in
6
                                           the Past Six Editions 6
             Definition of an Actuary
 An actuary is a business professional who deals with the
  financial impact of risk and uncertainty. Actuaries
  provide expert assessments of financial security
  systems, with a focus on their complexity, their
  mathematics, and their mechanisms

 Actuaries mathematically evaluate the likelihood of
  events and quantify the contingent outcomes in order
  to minimize losses, both emotional and financial,
  associated with uncertain undesirable events.

  Source: Wikipedia, 1/2011

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                  Types of Actuaries
   Life Insurance
   Health Insurance
   Pensions/Retirement
   Investments
   ERM
   Property Casualty



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         Emerging Issues & Concerns
Health                      Life                         Pensions/Retirement


Financial Crisis            Financial Crisis             Financial Crisis


High Cost of Healthcare     Mortality Improvement?       Unfunded Pensions & PBGC


High Uninsured              Premium Finance              OPEB Liabilities


Healthcare Reform (PPACA)   Secondary Insurance Market   Social Security Crisis


OPEB Liabilities            Enterprise Risk Management   Decline in Defined Benefit Plans


Medicare Crisis             Rating Agency Assessments    Medicare Crisis


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    Actuaries Involved in Public Issues
   National Budget Deficit – What about OPEB
   Employee Benefits – 20% to 25% of Salary
   OPEB Largest Number in Municipal Financials
   Medicare & Social Security Crisis
   Financial Market Crisis

What portion of the cost of this
car is needed to fund retiree
benefits?

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                  Actually, Actuaries…
 Analyze, measure, convert and
  manage risk into opportunity
 Use mathematical and statistical
  analytical skills, financial theory,
  business knowledge and an
  understanding of human
  behavior
 Develop and validate financial
  models to guide decision making
 Are creative problem solvers
  who see the “whole picture”



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          High Standards and Ethics
   Candidate Code of Conduct - Emphasizes importance of
    ethical behavior on the part of those pursuing an actuarial
    credential
   Historically, actuaries many times wear the “black hat”
    and delivery bad news, but not always (they also deliver
    solutions).
   It is a profession that takes the honor system very serious
    (Precepts and Actuarial Standards of Practice)

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Who Traditionally Employs Actuaries?
 Insurance Carriers (e.g., AXA, MetLife, NY Life, Prudential, etc.)
 Health Maintenance Organizations (HMOs)
       Aetna, Blue Cross, Cigna, Coventry, Humana, United, and many others
   Consulting Firms (e.g., Aon, Mercer, Milliman, Towers, etc.)
   Reinsurers (e.g., Gen Re, Munich, RGA, Scor Re, Swiss Re, etc.)
   Regulators – Insurance Departments, CMS, HHS
   Rating Agencies – AMBest, S&P, others
   Financial Institutions - Investment Bankers, Banks, Asset Managers
   Large Employers or Welfare Funds
   Other Organizations Serving the Insurance Industry

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                       Roles of Actuary
   Actuarial - Pricing, Reserving, Product Development
   Financial Reporting, Valuation & Analysis
   Underwriting
   Risk Management
   Investment Managers
   Claims Management
   Reinsurance/Retrocession Purchasing
   Broker/Intermediary Issues
   Product Development
   Audits (e.g., Forensic Audits)
   Expert Witness
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              Common Terminology
• Reserves
• Valuations
• Loss Ratios
• ROIs
• Risk
• Embedded Value
• Experience Rating & Credibility
• Underwriting
• Risk Management/Reinsurance
• Enterprise Risk Management (ERM)
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       Life Contingency Functions
  (Life, Annuity, & Pension Actuaries)
• Ax:n
• ax:n
• px
• qx
• Vx
• Commutation Functions: Cx, Dx, Mx, Nx, etc.
• Cash Values

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             Health Insurance Terms
 Medical Loss Ratio
 Completion Factors & Claims Triangles
 Healthcare Inflation (Trend)
 PPO/POS/HMO/EPO
 Capitation
 Days per 1,000; Visits per 1,000
 Per Member Per Month
 Provider Fee Schedules – DRGs, RBRVS
 Publicly Traded HMOs – Earnings per Share (EPS)
 PPACA (e.g., Accountable Care Organizations)

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     Sample Actuarial Assumptions
   Starting Claim Costs or Benefits
   Inflationary Assumptions (e.g., healthcare inflation/trend)
   Completion Factors
   Interest discount rate
   Retirement rates
   Turnover rates
   Disability rates
   Mortality rates
   Aging Assumptions (Age/Sex Factors)
   Asset return on investments (if funded)
   Salary increases
   Plan Participation %
   Actuarial cost methods (e.g., projected unit credit)
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            Actuaries in Consulting Firms
   Actuarial Valuations
       Development of Pricing Models & Underwriting Box
       Valuations – Reserves & Portfolio Valuations
       Financial Modeling/Forecasting
   Brokering & Consulting – Sourcing Policies
       Employee Benefits and Other Insurance Products
       Reinsurance
   Product Development Consulting
   Legal & Compliance Consulting
   Financing
   Fiduciary Services
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                      Emerging Trends
    Changes in accounting rules
         Increase in demand for financial reporting actuaries
    Enterprise risk management (ERM)
         Expanding traditional and non-insurance opportunities
         CERA credential; SOA funding
         Development of Insurance/Reinsurance Pricing Committees
    Globalization
         Opportunities for those understanding cultures, language, etc.
         Unifying approaches, actuarial organizations, credentialing, etc.
    Expanded underwriting/risk management roles
    Health care - PPACA
         Changes in regulation may drive new opportunities for actuaries

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         Actuarial Organizations (US)
   Society of Actuaries (www.soa.org)
   American Academy of Actuaries (www.actuary.org)
   Conference of Consulting Actuaries (www.ccactuaries.org)
   Casualty Actuarial Society (www.casact.org)
   Joint Board for Enrollment of Actuaries (www.irs.gov)
   Actuarial Society of Greater New York (www.goasny.org)
   Chartered Enterprise Risk Analyst (www.CERAnalyst.org)
   Other Actuarial Organizations & Clubs Worldwide

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            Resources for Students

 www.Soa.org


 www.Beanactuary.org


 www.Riskisopportunity.net


 www.Casact.org

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      The Society of Actuaries (SOA)
   Is the largest professional, actuarial organization in the world
    (www.soa.org)
   Serves over 21,000 members, 30,000 candidates and the public
   Works for actuaries to be the leading professionals in the
    measurement and management of risk
   Committed to:
      Education

      Research

      The Profession




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Three Society of Actuaries (SOA)
   Designations/Credentials

   Associate of the Society of Actuaries (ASA)

   Chartered Enterprise Risk Analyst (CERA)

   Fellow of the Society of Actuaries (FSA)




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                 SOA Examinations

   350 exam centers worldwide            Canada
                                           15%

   49,500 Exams administered                        Other
    in 2009                                        countries
                                                      23%

   More than 9,000 candidates   United
                                 States
    were new                      62%




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       Enterprise Risk Management
                  (ERM)
   There is a growing need for organizations to
    link their risks across their business units and
    adopt a more comprehensive framework

   ERM is the process of risk analysis and
    management across an entire organization

   Evolution & growth of senior management
    pricing committees


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        Actuarial Society of Greater New York
                       (ASNY)

   Largest actuarial club in the world
   Serves actuaries in the NY, NJ, CT plus other states
   Supports actuarial exams (e.g., venues & proctors)
   Provides continuing education seminars to actuaries
     15 to 20 continuing education events a year plus annual meeting
 Actuarial exam study classes (e.g., St. John’s University)



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                        ASNY (Continued)

   Offers networking opportunities for new & future actuaries
   ASNY has many volunteers plus new members joining
   ASNY has a LinkedIn Group
   Actuarial Career Day
     “Bridge from University to Work World”
 Website www.goasny.org




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                        ASNY Career Day
 Learn about profession from actuaries in different disciplines
    Life, health, pensions, P&C
    Learn about traditional, emerging and non-traditional opportunities
 Opportunity to interview with different employers (e.g., last year
  14 employers participated)
 400+ students attended in 2011 event
 Network with other actuaries and future actuaries
 Annually: Typically 2nd Sunday in January (tentatively 1/8/12)
 Traditionally hosted by Columbia University
 Website www.goasny.org
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ASNY Career Day – 2011 Participating Companies

APEX Publications             MetLife

Buck Consultants              MIB

Coventry Health Care          New York Life Insurance Co.

Fidelity Investments          New York State Insurance Dept.

General Reinsurance           Phoenix Life, Inc.

Guardian Life Insurance Co.   Prudential Financial

Humana                        Towers Watson
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         Advice for Actuarial Students
 Make learning a lifelong habit
 Develop disciplined study habits
 Acquire a well-rounded curriculum
 Sharpen your communication and business skills
 Take SOA/CAS actuarial exams while in school
 Obtain an actuarial internship or relevant employment
 Find mentors
 “Networking” is important (e.g., volunteering, industry events)

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                     Academic Studies
 Actuaries come from a range of
  disciplines including actuarial
  science, math, finance, statistics and
  engineering
 Students should complete courses in
  probability, calculus and business
  communications
 Other foundational coursework
  includes economics, applied
  statistics and corporate finance
 Growing need for developing
  business skills & communications

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                       Things to Knows
   Actuarial Exams
   Need a Resume
   Job Market
   Actuarial Recruiters
   Networking
   Volunteering
   “Never stop learning”

Note: There are resources to help in your employment search
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                        Top 10 reasons…
10. Looking for a career that’s dynamic and challenging
9. You don’t want to go to graduate school
8. Superior job security through economic cycles
7. You want a professional title other than MD, Esq., or CPA
6. Opportunities to develop skills transferrable across multiple industries
5. “Earn while you learn”
4. Control over your own career: advancement is merit-based
3. Ability to choose among outstanding job offers
2. Highly competitive salary and benefits

1.        You’re self-motivated and goal-oriented, with
          superior math & communication skills!
http://www.beanactuary.org/college/topten.cfm & ASNY 2011 Career Day

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 Open Discussion & Questions
          Michael L. Frank, ASA, MAAA, FCA, MIAA
                      President & Actuary
                        Aquarius Capital
                     Phone: (914) 933-0063
          E-Mail: michael.frank@aquariuscapital.com
              Website: www.aquariuscapital.com

           (Visit “Aquarius in the News” on Website)
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