They are financial architects. They are social mathematicians.

Actuaries use a unique combination of analytical and business skills to solve a growing variety of financial and social problems. They attempt to make financial sense of the future. An actuary applies mathematical models to problems of insurance and finance, improving the financial decision-making process by developing models to evaluate the current financial implications of uncertain future events. They rely on historical data, state laws and trends, among other sources, to develop reliable, theoretical projections.

The work done by actuaries is the backbone of the insurance and financial security industries. The work is math-intensive, so math aptitude is paramount along with knowledge of business issues and trends, social science, law, and economics. To become an actuary, one must pass a series of rigorous exams. There are eight required exams to pass to attain the status of FSA (Fellow of the Society of Actuaries). The Society of Actuaries recommends approximately 400 hours of study for each exam! However, the benefits would seem to be worth it.

The job "actuary" was rated the best job in America by the Jobs Rated Almanac in 2001 (this is one place ahead of last year, before the fall of the dot-coms). This reference book ranks professions on the basis of Environment, Income, Outlook, Physical demands, Security, and Stress. Generally, actuaries make a fairly large sum of money for fairly few hours of work. There is much room for growth, as when they pass each exam they will move up. There is little physically demanding about the job, except maybe your ass will hurt from sitting for so long. Actuaries do get to travel to meet with clients or attend meetings. There are many positions open for actuaries but relatively few actuaries to fill those positions.

If you were wondering where actuaries usually work, they often work for insurance companies. However, they do also work as actuarial consultants for consulting firms. The government also hires actuaries for insurance and Social Security and Medicare purposes. Colleges and universities, banks and investment firms, and public accounting firms also need actuaries.

So what is an actuary? I read somewhere that an actuary is a guy who, if he enters a revolving door behind you, comes out ahead of you.


Thanks to:
http://www.casact.org/pubs/actrev/feb00/whatever.htm
http://www.beanactuary.org/whatis/noonnews.pdf
http://www.beanactuary.org/newsroom/top_job.htm

An actuary counts dead bodies, the mortuary stacks 'em.

This is how I keep them separate in my mind. One of the main uses for actuarial skill is to determine insurance rates. Using statistics and models actuaries can determine a rate at which a company can insure a person with x, y, and z problems, while making money.

This, if you think about it, is actually a difficult thing to do - We're talking multivariable calculus mixed in with messy statistics here. The exams (spoken of above) can only be taken with a basic financial calculator (Approved by the society), and are timed, so you have to be very good at what you do in order to pass them. Most actuaries are hired from college with a math degree (masters), and their new employer pays for each exam, usually one per year, giving them large raises and bonuses for each exam completed, but also keeping them from going to another company, as the actuary has to pay back the company for exams taken in the past year if they leave. Exams are not considered cheap.

There are those who believe that the association of actuaries limits the number of actuaries available in the marketplace to make them more profitable. A friend of mine is working through the exams (has 3 or 4 done) and feels that it really isn't a difficult job if you are good at math, but the exams are much more complicated than what she has to do on a day to day basis.

An actuary is a highly specialized mathematician who uses finance theory, probability and statistics, and advanced calculus to determine the probable financial outcome of a company's action. In the simplest of terms, actuaries are mathematical fortune tellers who use the past to predict the future for companies looking to predict their future financial status.

Most actuaries work on either insurance or pension plans, though rarely both. Some work for leading health insurance companies, others work in house for major corporations. Some companies, who cannot afford to keep their own actuary on staff, prefer to use the services of a consulting firm. For hundreds of dollars an hour, smaller businesses can pay a consulting actuary (of either medical or pension specialty) to determine how much money they need to invest in employee benefits plans and to project future costs and/or profits.

To become an actuary, one must graduate from a 4-year college or university, typically with a degree in actuarial science or something similar. As this is a highly competitive and challenging field, many students drop the program in their first years at university. If you do graduate with the degree, you've only just begun.

Even before you graduate, you're expected to begin taking the dreaded actuarial exams. The Society of Actuaries, the largest professional actuarial society, offers a series of exams that increase in difficulty and range in topic. You work your way up from the lower numbered exams to the higher. During the timed exams, you are given a small series of very complex problems to solve using the formulas you've memorized, pencil, scratch paper, and a financial calculator (either designed or approved by the Society). There is no limit to the amount of exams you can take at once, but they are very gruelling so most people take no more than two at a time. The company you choose to work for will allow you to take time from work (typically one hour per day) to study for these exams. As you pass exams, your salary (and billing rate) increase.

But here's the tricky part: it's tough to pass exams, and I'll tell you why. The Society of Actuaries (and the Casualty Actuarial Society, and all the other societies) puts a cap on the number of people who can pass an exam in one sitting. In other words, if there are 1500 people taking Exam 1400, they might say that only 10% will pass. They then take the highest 150 grades and congratulations, those people pass the test. And the others? It doesn't matter how well they've done; they'll have to try again next time. It does not even matter if the top 10% only scored a 3 out of 10. It's not a belief as implied above; it's a fact. The SOA believes this to be a fair practice and makes it common knowledge both before the test and on your results letter.

Once you accumulate a certain amount of exam credits, you become an Associate. More exams, a Fellow. By this point you're earning a six-digit salary, you have your own office, and you're in charge of several other actuaries. Some people can acheive Fellowship in the Society before they're 30; for some, an entire lifetime of exams still isn't enough. Naturally, the field of actuarial science is filled with very bright, very math-driven people. They tend to be very career-oriented, analytical, and hardworking. No, seriously, they're good people; they're just really into their work.

A major reason why "Actuary" is voted so frequently #1 on job rating charts is because of the salary and job opportunities. Do not be fooled, however, into thinking this is an easy job. Being an actuary means having people's financial futures in your hand. One small mistake in a program you're running, one miscalculation and you could potentially distort weeks of work. When your client's corporation of ten thousand needs a pension projection done in three days, you make that happen. And then, there's always the typical actuarial disposition:

What's the difference between an accountant and an actuary?
Accountants have personality.

Small personal note: my mother became an actuary 10 years ago because she loved math and making money. She's now rethinking that position.

I work as an actuarial recruiter. Essentially this means I sit by the phone all day and convince mathematicians who deal with risk that they should quit their job and move to a different job, possibly in a different city, where, who knows? Their commute in miles to work may be changed by .5 miles, causing their car to age at an infintesimally but certainly quantifiably faster rate. Or, the mineral content of the water may be .00001% more likely to cause acne.

Ah, they are not all a bad lot. Perhaps not the most out-going of crowds -- Q: How do you recognize an out-going actuary? A: He looks at your shoes when he's talking to you.

I was talking to this young Asian girl this morning; she is a three exam student from a large city in China who is currently squirreled away in a rather small mid-western town. She said she is looking for a position in a larger city with a bit more culture and diversity; of course, she didn't use those words precisely...

"They look at me here like I have 2 heads or something -- I'm Chinese , I'm not an alien!"

So I asked her where she would rather see herself. She railed against the monotony of the small town and her duties in financial reporting and valuation. She said, wishfully, "Chicago, New York, Los Angeles." I asked her what she would rather be doing besides financial reporting and valuation, and a dreamy tone took over her high-pitched, accented voice. She spoke breathily as though she was a high-school girl in the 50s swooning over Elvis:

"Risk Management."

Ac"tu*a*ry (#), n.; pl. Actuaries (#). [L. actuarius copyist, clerk, fr. actus, p. p. of agere to do, act.]

1. Law

A registar or clerk; -- used originally in courts of civil law jurisdiction, but in Europe used for a clerk or registar generally.

2.

The computing official of an insurance company; one whose profession it is to calculate for insurance companies the risks and premiums for life, fire, and other insurances.

 

© Webster 1913.

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