Actuarial Science at the University of Michigan-Dearborn
I. Introduction.
The University of Michigan-Dearborn offers a number of courses and resources that assist
students interested in careers in the actuarial arena, especially in working toward the
associateship status in the Society of Actuaries (SOA) or the Casualty Actuarial Society (CAS).
The most popular majors for future actuaries are economics, finance, and mathematics
although any major is possible.
As undergraduates, it is highly advisable for prospective actuaries to handle the SOA’s and
CAS’s Validation of Educational Experience (VEE) requirement. See below on how to do that at
UM-D.
It is also highly advisable for prospective actuaries to take and pass the first two actuarial exams
before or soon after graduation. Although there is no course requirement associated with
taking actuarial exams, there are UM-D courses that help prepare students for these exams.
See below. Students should know that a significant amount of self-study is usually required to
pass an actuarial examination, even when a course or courses have been taken.
Students interested in actuarial science should become familiar with the SOA website,
www.soa.org, as well as www.beanactuary.org. The SOA site
http://www.soa.org/library/newsletters/the-future-actuary/2007/summer/how-toprepare.aspx contains advice about preparing for exams and also lists three online bookstores
that sell materials to assist in preparing for exams. Before buying materials, check out the
sample exams on the SOA website. See below for URLs.
Interested Students are advised to discuss your plans with a faculty member. The names of the
UM-Dearborn Actuarial Science Project Team are at the end of this document.
II. Becoming an Associate of the Society of Actuaries (ASA).
Becoming an ASA is a major step in an actuarial career and requires satisfying the VEE
requirement and passing certain exams. The relevant SOA page is printed below and can be
accessed at the URL http://www.soa.org/education/exam-req/edu-asa-req.aspx from which the
hotlinks can be accessed. This site, which is updated as SOA requirements change, contains
essential information that anyone interested in the field should become familiar with. While
visiting this website, click on “FSA Requirements” for information on becoming a Fellow of the
Society of Actuaries (FSA), the step beyond Associateship. Becoming a FSA is considered a very
significant accomplishment and should be the goal of an actuarial professional. In this
document we focus on the first steps in attaining the associateship level, particularly the VEE
and the first two exams.
III. The Validation of Educational Experience (VEE) Requirement.
The VEE requirement must be satisfied in three areas: Economics, Corporate Finance, and
Applied Statistical Methods. The requirement can potentially be satisfied by taking college
courses, through passing standardized exams (as offered by ACTEX), or with relevant
experience. See the SOA website http://www.soa.org/education/exam-req/edu-vee.aspx for
more information. UM-D faculty have applied for and received SOA recognition of certain UMD courses that satisfy the VEE requirement. The SOA has sent UM-Dearborn the following that
indicates exactly what to take at our campus to satisfy this requirement.
The SOA maintains a website of college courses that are approved for the VEE requirement for
the associateship. See http://www.soa.org/files/pdf/edu-vee-dir-approved-courses.pdf.
The above table indicates that the sequence FIN 401 & FIN 402 can be used to satisfy
the Corporate Finance VEE and that the sequence EC 201 & 201 or the sequence EC 301 & 302
can be used to satisfy the Economics VEE requirement. For the Applied Statistical Methods
VEE, EC 415 does not quite cover the full requirement with time series being what is missing.
The recently redesigned STAT 430 (or its graduate school version, STAT 530) satisfies the
Applied Statistical Methods VEE beginning with the Fall 2011 offering.
IV. Preparation for Actuarial Exams.
We first consider the first exams, 1/P Probability and 2/FM Financial Mathematics, and then
briefly discuss Exam 3F/MFE Actuarial Models, Financial Economics Segment. The SOA or CAS
do not require that specific courses be taken before taking exams and they do not require
exams to be taken in a particular order. See the exam website at
http://www.beanactuary.org/exams/ and the associateship website
http://www.soa.org/education/exam-req/edu-asa-req.aspx as gateways to much information
about the exams. These three exams are all considered Preliminary Exams and there are two
other preliminary exams, see http://www.beanactuary.org/exams/.
Exam 1/P is a three hour exam with thirty questions. Visit the website at the URL
http://www.beanactuary.org/exams/exam1p.cfm for details about Exam 1/P including an
outline of topics with suggested textbooks. The last item in the list, “Past Exam Questions and
Solutions,” contains sample exam questions with solutions. The exam topics and the exam are
consistent with material studied in a standard one semester course in elementary probability
and mathematical statistics plus a bit extra. The UM-Dearborn course MATH 325,
Mathematical Statistics I, matches up very well with the listed topics and exam problems
although there are some extra topics covered on the exam. MATH 325 uses one of the
suggested textbooks, Mathematical Statistics with Applications (Seventh Edition), 2008, by
Wackerly, D., Mendenhall III, W., Scheaffer, R . MATH 325 has Calculus II (MATH 114 or 116) as
a prerequisite and the exam questions assume calculus knowledge at the Calculus II level
although it is possible a determined student could build on Calculus I knowledge to acquire the
skills for this exam. A student wishing to enroll in MATH 325 with only a Calculus I background
should seek the permission of the instructor. Whether or not a student takes MATH 325,
substantial self study is a must as it is for any actuarial exam.
Exam 2/FM is also a three hour exam with thirty questions. Go the website at the URL
http://www.beanactuary.org/exams/exam2fm.cfm for details about Exam 2/FM including an
outline of topics with suggested textbooks. The last item in the list, “Past Exam Questions and
Solutions,” contains sample exam questions with solutions. In 2007 the FM exam was revised
to include some financial economics topics. There is no single UM-Dearborn course that covers
the lengthy list of topics. FIN 401, 407 & 447 (or FIN 531, 651 & 652) cover most of the
Financial Mathematics topics. FIN 401 has ACC 298, DS 300 (or STAT 325 or ECON 415 or
IMSE 317), and ECON 201 & 202 as prerequisites.
Exam 3F/MFE is a two and a half hour exam. Exam 3F/MFE is part of Exam M which is
split into this part and Exam MLC, Actuarial Models, Life Contingencies Segment, a three hour
exam. (The Casualty Actuary Society (CAS) does this second part somewhat differently.) These
two parts of Exam M are taken separately. Go to the website at the URL
http://www.beanactuary.org/exams/examam.cfm for details about Exam 3F/MFE. FIN 447 (or
FIN 652) covers a small subset, i.e., B1-B5, of the Financial Economics topics thus requiring
additional self study for proper preparation.
UM-Dearborn Actuarial Science Project Team
Prof of Mathematics and Statistics John Gillespie, Team Leader
Prof of Economics Patricia Smith
Prof of Finance Hei-Wai Lee
Lecturer in Mathematics Michael Meade
Mr. Christopher Place, FSA, Towers Watson Co.
Mr. Francis Bernardi, FSA, MAAA, AAA Life Ins. Co.
Ms. Barbara Kriigel, Associate Director, Mardigian Library