Actuarial Science

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• Actuarial Science
• making financial sense of the future

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• 1 What is an actuary?

2 The new education strategy
3 The University route
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• 1 What is an actuary?

An actuary provides commercial and financial
advice on the long-term management of financial
assets and liabilities
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• An actuary is a specialist who has
• a proven record
• and good levels of knowledge
• and current skills
• in financial mathematics,
• statistics, and economics

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• Actuaries analyse the past
• model the future
• assess the risks involved
• communicate what the results mean
• Actuaries make financial sense of the future

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• The Actuarial Profession in the UK
• consist of two bodies
• Institute of Actuaries, London
• Faculty of Actuaries, Edinburgh

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• The profession has various roles
• it organises educational activities and advises
  government, it promotes research, and it has a
  statutory role as a regulator
• It is a worldwide profession

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www.actuaries.org.my
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• Key areas of actuarial practice
• Life assurance
• Pensions
• General insurance
• Finance and investment
• Health and care
• Social Policy

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• The profession is changing
• in recent years more actuaries have become
  involved in general (non-life) insurance (which
  can require extensive use of contemporary
  statistical modelling techniques), and in modern
  financial economics

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• The profession controls its own entry through
  its education strategy, which includes a major
  and rigorous series of examinations
• Students of the profession take these exams over
  several years

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• Success leads to
• Fellowship of the profession, a qualification
  which is internationally recognised and respected
  
• Responsible and well-paid positions
• Eventually very senior positions

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• Success leads to
• Fellowship of the profession, a qualification
  which is internationally recognised and respected
  
• Responsible and
• Eventually very senior positions

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• Success leads to
• Fellowship of the profession, a qualification
  which is internationally recognised and respected
  
• Responsible and well-paid positions
• Eventually very senior positions

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How big is the UK profession?
Fellows 7052 Students 7147
(at August 2004)

• About 400 new Fellows qualified in 2004

A growing profession over 1350 new students
joined in 2003
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• Femalemale ratio is increasing towards 5050
• Degrees of new students
• 1 Mathematics/Statistics (? 750)
• 2 Actuarial Maths/Science (? 450)
• then Economics, Physics
• 2003 data

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• From which UK universities?
• Warwick (94)
• Oxford (80)
• 3. Cambridge (71)
• 4. Dublin (64)
• 5. Heriot-Watt (60)
• City (52)
• LSE (50)
• entrants with undergraduate degrees only
  2003 data

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• Actuarial work is
• interesting and varied
• important to us all
• highly respected
• international
• well paid
• a bit dull?
• - not if you know my students

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• Quiz question 1

What are the current official FIFA rankings for
the Malaysia and Scotland football teams?
Malaysia
114
Scotland
87
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• 2 The new education strategy

New exam structure in 2005 now in place
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• Far-reaching changes -
• to reflect the broadening range of
• areas in which actuaries will work
• in the future
• to acknowledge the increasing
• globalisation of the profession
• to enhance business skills

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• Four examination stages
• ? Core Technical
• ? Core Applications
• ? Specialist Technical
• ? Specialist Applications
• choose 1 subject - country specific

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• Core Technical stage
• - designed to give students a solid grounding in
  the key actuarial techniques
• Financial Mathematics
• Finance and Financial Reporting
• Probability and Mathematical Statistics

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• Models
• Contingencies
• Statistical Methods
• Economics
• Financial Economics

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• Core Applications stage
• designed to teach students actuarial concepts
  across a range of subject areas, and how to apply
  them in both familiar and unfamiliar situations

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• Specialist technical and applications
• Health and Care
• Life insurance and general insurance
• Pensions and other benefits
• Finance and investment

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• Quiz question 2

What is the population of Scotland?
5.1 million
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• 3 The university route

Most entrants to the profession are graduates -
employers tend to favour students with numerate
degrees. Many students decide to take a degree
in actuarial science, either undergraduate or
postgraduate.
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• The profession is very well developed and mature
  in the UK so many students decide to study in
  the UK.
• Several UK departments and many academic staff
  have very close links with the professional bodies

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• Actuarial studies as part of a degree subject
  were introduced to the UK in the mid-1960s.
• The first Professor of Actuarial Science in the
  UK was appointed in 1971 at Heriot Watt
  University, Edinburgh

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This led to the creation of the first UK
department of actuarial science in 1972. From
small beginnings it has grown into a large and
very successful unit it currently has over 300
UG and 120 PG students
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• A principal benefit of taking an actuarial
  degree course is the availability of
• EXEMPTIONS
• from some of the professional exams
• (dependent on reaching an appropriate standard
  in the relevant University exams)

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• This is a very important and attractive
  arrangement for both students and the University
  departments
• - the students can jump up the qualifications
  ladder relatively quickly
• - the departments attract very bright and
  committed students

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• English universities BSc degrees last 3 years

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• Scottish universities BSc degrees have a
  foundation year and last 4 years - but
• DIRECT ENTRY TO THE SECOND YEAR
• of the actuarial course is available to
  well-qualified overseas applicants

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• Several UK Departments offer undergraduate or
  taught postgraduate courses in actuarial science

they include Heriot Watt (Edinburgh) City
(London), Kent, LSE Southampton, Swansea, Warwick
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• Many universities offer related MSc degrees in
  financial mathematics and various forms of risk
  analysis and management.

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• The main departments also engage in extensive
  research in actuarial science and financial
  economics

Heriot Watt was awarded a grade 5 in the latest
UK Universities Research Assessment Exercise
(on a scale of 1 (lowest) to 5 (highest))
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A new and important issue for the insurance
industry to consider centres on the potential use
of genetic information in the insurance context.
This is both an ethical issue for society and a
business issue for insurance providers.
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One major response has been the establishment of
GIRC Genetics and Insurance Research
Centre This unit was set up at Heriot Watt 4
years ago and is funded by the insurance
industry. It is attracting worldwide attention.
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• Early studies include the effect on long-term
  insurance liabilities of including/excluding
  people with genes regarded as giving
  susceptibility to particular forms of cancer and
  to Alzheimers disease.

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Success rates - the value of doing a good
actuarial degree course
(data from HWU, mid-90s)

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Success rates - the value of doing a good
actuarial degree course
(data from HWU, mid-90s) of trainee
actuaries without an actuarial degree (and so
with no exemptions) who eventually qualify is
around 40

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of trainee actuaries with an actuarial
degree and about half the possible exemptions who
eventually qualify is around 40
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• of trainee actuaries with an actuarial degree
  and all, or almost all, the possible exemptions
  who eventually qualify is around

80
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• Main information source
• UK actuarial professions website
• www.actuaries.org.uk

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heriot watt university