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. 6 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 7 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 8 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? – – – – – – – 9 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 10 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 11 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 12 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: [email protected] – 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 13 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 − − − − − − − 28 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 29 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 30 1940 1942 1944 1946 1948 1950 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 US Hurricane Fatalities The past is not always a good guide to the future… * Consider US hurricane fatalities 700 600 31 500 400 300 200 100 0 1940 1942 1944 1946 1948 1950 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 US Hurricane Fatalities And then… 700 600 500 32 400 300 200 100 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!