James Cheeseman
Xafinity
Career talk:
Cardiff University School of
Mathematics
1st December 2014
A bit about me
–Actuarial Assistant @ Xafinity
– Pensions Consultancy
– A-levels: 4 A’s
– MORS at Cardiff Uni
– Student actuary for 15 months. Passed 3 exams.
–Why did I decide to become an actuary?
–What do I do in my role?
2
Suggestions for talk topics
– What do you do day-to-day
– Who are your clients, what do you do for them?
– What projects are you working on?
– What key issues are there in your practice area at the moment?
– What do I want to achieve in the future?
– What advice would you give a potential student?
– Any helpful hint on graduate entry – e.g. work experience/internship/recruitment
processes
Institute and Faculty of Actuaries (IFoA)
– Promotes the work of actuaries
– Oversees the education of actuaries belonging to the body at all stages
– Expands actuarial knowledge through research and thought leadership
– Enforces ethical and professional standards
– Identifies matters where the work of actuaries would be of benefit to the public
– If you want to qualify as an actuary you must become a member of an actuarial
professional body.
4
Who makes up our membership?
We have a global membership of over 25,500
members.
Our student membership is 13,097. It is broken
down below;
– 4% are under the age of 21
– 57% are under the age of 30
– 94% are under the age of 40!
– 55% are based outside of the UK
– 38% are female
– The top 5 degree subjects our Student
members have studied are below
1)
2)
3)
4)
5)
5
Maths
Actuarial Science
Economics
Physics
MORSE
Where do actuaries work?
Of the 25,500 members of the IFoA…
– 72% are based in the UK
– 28% are based outside of the UK
18% General insurance
33% Life insurance
7% Investment
27% Pensions
4% Emerging fields – Health and Care, Risk management*
5% Other
6% Retired
* This figure may look small but many members in this area may have Life of General
insurance as their primary practice area but work predominantly in risk.
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How do I become an actuary?
– Get your A Levels or Scottish Highers, including a good grade in Maths
– Complete your degree, ideally in a numerate subject from a university with a good
reputation
– Gain a 2:1 or higher – this is a minimum requirement from most employers
– An actuarial science degree or diploma offers opportunities for exemptions from
exams
– Get some work experience
– Find a trainee actuarial position with a company
– Join the IFoA as a student member – employers will help you with this; you do not
need to join us until you get a job
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What kind of work experience should I get?
– It doesn’t matter!
– 47% of employers say that “they would not take on a student if they don’t have
work experience”
– Actuarial placements are very competitive
– Client work is often confidential
– Too technical
– Costly for a firm in terms of money and time
– Look for a role in an office/financial sector/within the industry
– If this is not possible then any sort of work experience will do
– The “business skills” you will learn are transferable
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Graduate trainee schemes
– Use the Directory of Actuarial Employers to help you get started
– Research the practice area/region/type of company you want to work for
– Consultancy
– Insurance
– Lots of differences
– Graduate closing dates, usually early November although some all year round
– How will you be assessed?
– Assessment centres/phone interviews/cover letters/CVs
– What do you get from your employer?
–
–
–
–
–
–
–
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Study mentor
Salary
Study days (can vary)
Support
Social life
Exam success associated pay increase (usually!)
They will pay for you exams, study materials and any exam support
What can an actuary earn?
Chief actuary, senior partner
£209,292
Senior function head, practice director
£133,813
Function head, practice head
£122,472
Department manager, managing consultant
£96,331
Section manager, senior consultant
£86,422
Section leader, consultant
£70,945
Senior actuary, junior consultant
£63,238
Actuary
£50,007
Student actuary
£36,842
Source: XpertHR Salary survey of actuaries and actuarial students, 2014. For more information visit www.xperthr.co.uk
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Assessments
Work-based skills (WBS) – 1 or 3 years
Examination subjects
9 Core technical (CT)
3 Core applications (CA)
2 Specialist technical (ST)
1 Specialist applications (SA)
1 Practice module (to practise in the UK in a reserved role)
Including practical exams:
Business awareness (CT9)
Model documentation, analysis and reporting (CA2)
Communications (CA3)
Professionalism requirement – courses/online test
Ongoing CPD – when you qualify
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International Actuarial Careers Network - IACN
A global network for potential actuarial students
What are we offering you?
– Access to Career Ambassadors
– Networking and links with employers etc
– Information on local events
– Careers newsletter
What are the benefits to you?
– Align yourself with the IFoA and the wider industry
– Find out what’s happening in the industry
– Get your questions answered by employers
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Who’s in the IACN?
– 500+ members
– Over 30 different countries
– Many different topics
– Job offers
– Interview technique
– Accountant or Actuary?
– Practice areas
Where can I find out more?
– Visit: www.actuaries.org.uk/becoming-actuary
– E-mail: careers@actuaries.org.uk
– LinkedIn: uk.linkedin.com/pub/jenni-hughesmcim-chartered-marketer/1a/bb1/459/
Comments
– Facebook - www.facebook.com/Actuarial
– Our brochures
Questions
OR…
– Speak to your Careers Adviser
– Contact a Careers Ambassador - www.actuaries.org.uk/becomingactuary/pages/career-ambassadors
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Pensions
How does a pension scheme work?
How full does the bath tub need to be?
How do we decide on the level of assets needed?
How large will
pensions be?
How long will
members live?
How high will
inflation be?
What returns will
assets earn?
How should we invest assets?
High risk
EQUITIES
BONDS
CASH
Low risk
Low return
Low risk or high return?
Or somewhere between?
High return
Case study 1 – individual member calculations
Retirement
Transfers
Lump Sums
Divorce
Case study 2 – actuarial valuations
400
• Required every 3 years
• Compare scheme’s assets
and liabilities
• Negotiations with employer
• Design funding plan
• Models
£millions
• Advice on assumptions
300
Deficit?
Surplus?
Assets
Liabilities
200
100
0
© 2012 The Actuarial Profession
www.actuaries.org.uk
Case study 3 – buy-out project
– Pension liabilities are risky and long term
– Pension schemes pay insurance companies to take risk away from them
– Actuaries are involved in all stages of the process –from obtaining initial quotations
from insurers to selecting the final insurer and negotiating the terms of the risk transfer
Pension RISK
Scheme
CASH
Insurance
Company
Case study 4 – Merger and acquisition
– Company A takes over Company B
– Company A needs to understand the pension risks it is taking on – actuaries advise on
this
– Involves detective-like investigations and then negotiations
– Working in a team with client, legal advisers and corporate financiers
Would you want to buy a
company whose pension
scheme has a deficit larger
than the value of the
company?
Risk
What’s the highest risk activity?
– Cycling
– Running
– Swimming
– Sky Diving
What’s the highest risk activity?
•
•
•
•
Cycling
Running
Swimming
Sky Diving
Odds of death per participation in event.
2nd
3rd
1st
4th
1-in-92,000
1-in-97,000
1-in-57,000
1-in-101,000
What are you more likely to die from?
– Homicide
– Food poisoning
– An asteroid impact
What are you more likely to die from?
– Homicide
– Food poisoning
– An asteroid impact
1-in-75,000
1-in-500,000
1-in-500,000
Perceptions of Risk are Influenced by
−
−
−
−
−
−
−
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Perceived degree of control.
Awareness of the risk / media coverage.
Man-made vs. natural.
Catastrophic vs. chronic.
Familiar vs. new.
Trust in the source.
Negative Event Fixation.
Actuaries are typically involved in the monitoring and
assessment of risk which generates financial uncertainty
– Longevity risk
– Mortality risk
– Credit risk
– Catstrophe risk
– Market risk
– With the aim of creating value from pooling and managing risk
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Actuaries who work in risk
– Need to consider the ‘full picture’
– Don’t evaluate risk in a purely numerical or mathematical way
– Provide an independent view
– From an oversight function – actuaries provide a second line of defence
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1940
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2004
2006
2008
2010
US Hurricane Fatalities
The past is not always a good guide to the future…
* Consider US hurricane fatalities
700
600
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500
400
300
200
100
0
1940
1942
1944
1946
1948
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2006
2008
2010
US Hurricane Fatalities
And then…
700
600
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400
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100
0
General Insurance
What’s going on in the GI market?
– Global economic troubles
– Catastrophes
– Latent claims
– Sex discrimination
– Technology
– European regulation
– Capital efficiency
Audience Participation
– How much has David Beckham insured his feet and legs for?
– How much has Mariah Carey insured her legs for?
Audience Participation
– How much has David Beckham insured his feet and legs for?
~ £44m
– How much has Mariah Carey insured her legs for?
~ £630m
How might a general insurance actuary be involved?
Assess the risk and
determine the price
Estimate the probability of
an insurance claim
Determine how to invest the
premium received
Determine the reserves that
should be set aside to pay
claims
Monitor actual claims
against those expected
Life Insurance
Life Insurance: A brief introduction
– Origins around the late 16th century
– Two key branches to life insurance:
– Protection
– Investment
– Actuaries are at the heart of life insurance!
– Key actuarial areas within life insurance: product design, pricing, marketing,
management, investment and valuation
– Current hot topics: Solvency II, IFRS, RDR and others
Basic model of Life Insurance
– Life insurance is a contract between an “insured” and an insurer to pay an amount at
a future date on the occurrence of a life based event (usually death)
Cost = Amount x Probability of event x Discount factor
£ - PREMIUM
Paid now
£ - BENEFIT
Paid on death
or survival
– Two main types of products: protection and investments
– Risks for the insurer which actuaries need to consider: mortality, anti-selection,
withdrawals, expenses, investment, profitability
Actuaries in Life Insurance
– Actuaries in life insurance take a lead role in several function areas
Management
Pricing
Investment
Sales
Product Dev
Valuation
Marketing
Risk
– In addition actuaries also contribute to the following areas
Legal
Operations
Opportunities in Life Insurance
– Life actuaries are employed by different types of companies
Consultancy
Insurance
Reinsurance
Education
Thank you!
