James CheesemanXafinity

Career talk:

Cardiff University School of Mathematics

1st December 2014

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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?

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

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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.

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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) Maths

2) Actuarial Science

3) Economics

4) Physics

5) MORSE

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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?

– 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

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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

Assessments

Work-based skills (WBS) – 1 or 3 years

Examination subjects9 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

Who’s in the IACN? – 500+ members – Over 30 different countries – Many different topics

– Job offers– Interview technique – Accountant or Actuary? – Practice areas

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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-hughes-mcim

-chartered-marketer/1a/bb1/459/

– Facebook - www.facebook.com/Actuarial

– Our brochures

Comments

Questions

OR…

– Speak to your Careers Adviser

– Contact a Careers Ambassador - www.actuaries.org.uk/becoming-actuary/pages/career-ambassadors

Pensions

How does a pension scheme work?

How full does the bath tub need to be?

Contributions (from employers

and members) Investment

returns

Benefitspaid out

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How do we decide on the level of assets needed?

How long will members live?

How high will inflation be?

How large will pensions be?

What returns will assets earn?

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How should we invest assets?

Low risk

High risk

Low return High return

EQUITIES

BONDS

CASH

Low risk or high return?Or somewhere between?

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Case study 1 – individual member calculations

DivorceTransfers

Lump SumsRetirement

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0

100

200

300

400

Assets Liabilities

£mill

ions

0

100

200

300

400

Assets Liabilities

£mill

ions

Case study 2 – actuarial valuations

© 2012 The Actuarial Profession www.actuaries.org.uk

• Required every 3 years

• Compare scheme’s assets and liabilities

• Advice on assumptions

• Negotiations with employer

• Design funding plan

• Models

Surplus?Deficit?

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 Scheme

Insurance Company

CASH

RISK

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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?

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Risk

What’s the highest risk activity?

– Cycling– Running– Swimming – Sky Diving

What’s the highest risk activity?

• Cycling 2nd 1-in-92,000• Running 3rd 1-in-97,000• Swimming 1st 1-in-57,000• Sky Diving 4th 1-in-101,000

Odds of death per participation in event.

What are you more likely to die from?

– Homicide– Food poisoning – An asteroid impact

What are you more likely to die from?

– Homicide 1-in-75,000– Food poisoning 1-in-500,000– An asteroid impact 1-in-500,000

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Perceptions of Risk are Influenced by

− 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.

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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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The past is not always a good guide to the future…

* Consider US hurricane fatalities U

S H

urric

ane

Fata

lities

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1943

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And then… U

S H

urric

ane

Fata

lities

1940

1943

1946

1949

1952

1955

1958

1961

1964

1967

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1973

1976

1979

1982

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General Insurance

What’s going on in the GI market?

– Technology– European regulation– Capital efficiency

– Global economic troubles

– Catastrophes

– Latent claims

– Sex discrimination

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Audience Participation

– How much has David Beckham insured his feet and legs for?

– How much has Mariah Carey insured her legs for?

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Audience Participation

– How much has David Beckham insured his feet and legs for?

~ £44m

– How much has Mariah Carey insured her legs for?

~ £630m

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How might a general insurance actuary be involved?

Assess the risk and determine the price

Estimate the probability of an insurance claim

Monitor actual claims against those expected

Determine the reserves that should be set aside to pay claims

Determine how to invest the premium received

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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

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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

– Two main types of products: protection and investments– Risks for the insurer which actuaries need to consider: mortality, anti-selection,

withdrawals, expenses, investment, profitability

£ - BENEFIT

Paid on death or survival

£ - PREMIUMPaid now

Actuaries in Life Insurance

– Actuaries in life insurance take a lead role in several function areas

– In addition actuaries also contribute to the following areas

Sales

Valuation

Investment

Marketing Risk

Legal Operations

Management Pricing

Product Dev

Opportunities in Life Insurance

– Life actuaries are employed by different types of companies

Consultancy Insurance Reinsurance Education

Thank you!