So You Want To Be An Actuary?

Alice Alsberghe, ASA, MAAA

UCSD – Actuarial Information Presentation & Recruiting Event

October 30, 2017

October 30, 2017

Overview

• What is an Actuary?

• What do Actuaries do?

• Where do Actuaries work?

• What is great about the actuarial profession?

• What skills and talents are needed?

• How can you become an Actuary?

• What is it like to work at Cheiron?Note: Portions of this presentation were taken from the Society of Actuaries and Casualty Society of Actuaries presentation “Be An Actuary”.

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October 30, 2017

What is an Actuary?

An actuary is a person who:

– Analyzes, manages and measures the financial implications of future risk

– Develops and validates financial models to guide decision making

– Keystone of Cheiron:Interactive financial modeling to simulate the financial future depending on assumed key riskvariables

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October 30, 2017

What do Actuaries do?

• Actuaries manage risk.– We use a combination of strong analytical

skills, business knowledge, and understanding of human behavior to manage today’s complex risks facing our society.

• What is risk?– Risk is the chance that an undesirable event

will occur.– But risk is opportunity. That’s where an

actuary comes in.

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October 30, 2017

Where do Actuaries work?

• Insurance Companies• Consulting Firms• Government Insurance Departments• Banks and Investment Firms• Large Corporations• Public Accounting Firms• Anywhere Risk Management is needed

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October 30, 2017

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Where do Actuaries work?

• Insurance IndustryProperty (home) and casualty (auto) Life and Health

• Employee Benefits Industry Retirement Benefits Health BenefitsSocial Security

• Financial Services Industry Banks, investing, risk management Mergers & Acquisitions

October 30, 2017

Where do Actuaries work?

Source: D.W. Simpson & Company, Inc., 2017 Salary Survey

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October 30, 2017

Where do Actuaries work?

Source: D.W. Simpson & Company, Inc., 2017 Salary Survey

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October 30, 2017

What is great about the profession?• Top-ranked job

– Work environment, employment outlook, job security, growth opportunity, salary

• High earning potential– Entry level actuary starting salary $45,000 - $65,000– Experienced fellows earn $150,000 - $250,000 +

• No cost of graduate school – “learn while you earn”• Skills are highly transferable to other industries and job

responsibilities• Potential for travel (as a consultant) or a non-travel 9-to-5 job

(as a non-consultant)• High demand – less sensitive to economic cycles• Allows for work/life balance• Make an impact – manage today’s complex risks facing our

society

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October 30, 2017

Earning Potential

Source: D.W. Simpson & Company, Inc., 2017 Salary Survey

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October 30, 2017

Earning Potential

Source: D.W. Simpson & Company, Inc., 2017 Salary Survey

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October 30, 2017

What skills and talents are needed?

• Knowledge of math and finance• Computer skills• Keen analytical, project management, and

problem solving skills• Attention to detail• Solid communication skills (oral & written)• Good business sense (know what is

important)• Motivation, creativity, independence• Ability to work with others

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October 30, 2017

How can you become an Actuary?• An actuary achieves professional status by passing

examinations to prove a certain level of knowledge

• Actuarial examinations are administered by the Casualty Actuarial Society (CAS) and Society of Actuaries (SOA)– Preliminary exams are administered jointly– Examinations are held multiple times a year depending on the

exam

• Two professional designations exist for each organization:– Associate (either ASA or ACAS)– Fellow (either FSA or FCAS)

• You can earn while you learn - employers support actuarial trainees taking exams by providing exam study time on the job

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October 30, 2017

Preliminary Education Structure

• Prerequisites– Calculus– Linear Algebra

• Validation by Educational Experience (VEE)– VEE credits are obtained through college courses,

standardized exams, approved educational experiences, and transitional exams for:

• VEE- Applied Statistics• VEE- Corporate Finance• VEE- Economics

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October 30, 2017

Preliminary Education Structure

• Preliminary Examinations– Exam 1/P: Probability– Exam 2/FM: Financial Mathematics– Exam 3F/MFE: Models for Financial Economics– Exam 3L/MLC: Life Contingencies– Exam 4/C: Construction and Evaluation of Actuarial

Models• In addition to the preliminary education, each

society has additional requirements to achieve professional designations

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October 30, 2017

How can you become an Actuary?

• Acquire a well-rounded curriculum, including classes approved for VEE credit

• Sharpen your communication skills (especially writing/grammar)

• Take advantage of opportunities to give presentations

• Sharpen your computer skills• Get good grades (3.0 GPA required at Cheiron)• Take actuarial exams while in school (at least 1

exam for internship at Cheiron and 2 exams for new hires)

• Find an actuarial internship

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October 30, 2017

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What is it like to work at Cheiron?

• Employee benefits consulting firm

• Employee-owned• All revenue derived from

actuarial consulting services• Two primary specialty areas,

retirement and health• Clients include public sector

entities, multiemployer plans, corporations and nonprofit organizations

October 30, 2017

What is it like to work at Cheiron?• Nine offices nationwide (plus 4 satellites)• 100+ Employees• Serve over 300 pension and health funds

throughout the country• Excellent reputation in our industry (plan

sponsors and competitors)• Significant growth on the West Coast

– Offices in San Diego (Solana Beach), Los Angeles, Oakland, and Portland (satellite in Seattle)

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October 30, 2017

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StartingAssets 1,000$

Net Cash Flow -5.0%Net Cash Flow Growth 0.0%

NET CASH LEVEL Volatile EOY ASSETS

Year FLOW RETURNS RETURNS level volatile1 (50.0)$ 8.0% -2.0% $1,028.0 $930.52 (50.0)$ 8.0% -6.0% $1,058.3 $826.23 (50.0)$ 8.0% -9.0% $1,091.0 $704.14 (50.0)$ 8.0% 8.5% $1,126.3 $711.95 (50.0)$ 8.0% 8.0% $1,164.5 $716.96 (50.0)$ 8.0% 9.0% $1,205.7 $729.27 (50.0)$ 8.0% 15.0% $1,250.2 $785.08 (50.0)$ 8.0% 18.0% $1,298.2 $872.09 (50.0)$ 8.0% 24.0% $1,350.1 $1,025.6

10 (50.0)$ 8.0% 20.0% $1,406.2 $1,175.9reported 10 yr return= 8.0% 8.0%

doller weighted return= 8.0%Asset Loss/(Gain) $230.3% of Level Assets 83.6%

Asset Growth

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

1 2 3 4 5 6 7 8 9 10

Level Returns Volatile Returns

N Year end 2017 Percentiles 5% 25% 50% 75% 95%

return 8.5% ER Contr Rate 0.0% 0.0% 11.6% 20.9% 31.3%risk 12.0% Funding Ratio 190% 138% 106% 84% 66%

Funding Ratio

0%

50%

100%

150%

State Contribution Rate

0%

5%

10%

15%

20%

25%

100% 90% 80% 70% 60% 50% 40% 30% 20% 10%

Individual Information Defined Contribution Percentages GrowthHire 33 401(a) - Money Purchased 0.0% Salary Increase 4.0%Now 43 401(k) - Profit Sharing 0.0% Merit Increase 2.0%Retirement 65 457 - Deferred Compensation 5.0% Cost of Living 3.0%Average Salary 401(a) - Fixed $ Match - MD employee $600

Expected Annual Return 7.8% 401(a) - Percentage 0.0%View Teachers(T)/Employees(E) EView Comparison at Age 75

43,000$

Net Employer CostTeachers

0.00% 0.50% 1.00% 1.50% 2.00% 2.50%

WV

VA

UT

PA

NJ

MO

MI

DE

DC

MD

Net Employer Cost Accrual Rate

Retirement Replacement RatioTEACHERS

0% 20% 40% 60% 80% 100% 120% 140% 160%

WV

VA

UT

PA

NJ

MO

MI

DE

DC

MD

Percentage of Final Salary

DB BenefitDB ColaDC BenefitDC ColaSocial SecuritySS Cola

Retirement Replacement RatioEMPLOYEES

0% 20% 40% 60% 80% 100% 120% 140%

WV

VA

UT

PA

NJ

MO

MI

DE

DC

MD

Percentage of Final Salary

DB BenefitDB ColaDC BenefitDC ColaSocial SecuritySS Cola

0%10%20%30%40%50%60%70%80%90%

100%

2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034

Prob

abilt

ies Safe

EndangeredSeriously End.Critical

($150)

($100)

($50)

$0

$50

$100

$150

$200

$250

$300

$350

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Mil

lion

s

Contributions Ben+Exp Inv Ret Net Cash Flow

Cheiron’s Advantage

October 30, 2017

Why Join Cheiron?

• Opportunity to work in both health and retirement practice areas before committing

• Early exposure to client meetings• Extensive responsibility and ownership of

work product early on in career• Work directly with senior consultants • Small enough for you to make a big impact• Less bureaucracy than other firms• Work/Life Balance

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October 30, 2017

Helpful Resources• Be An Actuary

– beanactuary.org• Society of Actuaries

– soa.org• Casualty Actuarial Society

– casact.org• Recruiting and Salary Surveys

– dwsimpson.com• To learn more about internships and

career opportunities at Cheiron– cheiron.us– opportunity@cheiron.us

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October 30, 2017

Questions

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October 30, 2017

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Cheiron

“Classic Values, Innovative Advice”Our Mission: To empower benefit plan sponsors to understand and better manage their benefit programs and their resulting financial risks through innovative technological applications and unsurpassed professional expertise.

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October 30, 2017

Cheiron (pronounced kī´· ron), the immortal centaur from Greek mythology, broke away from the pack and was educated by the gods.

Cheiron became a mentor to classical Greek heroes, then sacrificed his immortality and was awarded in eternity as the constellation Sagittarius.