University of Missouri Department of Mathematics	Undergraduate Studies
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Actuarial Science

Due to recent changes in the Society of Actuaries (SOC) requirements the Department of Mathematics introduces a revised program, Emphasis in Actuarial Science and Mathematical Finance. Its aim is to introduce students to mathematical methods and tools used in investment and insurance industries and to help them to prepare for the first three actuarial exams.

Those who have started while the old program Emphasis in Mathematical Finance and Insurance was in place may continue according to its requirements.

Emphasis in Actuarial Science and Mathematical Finance at the Department of Mathematics

What is Actuarial Science?
What is an Actuary?
Starting Actuarial Salaries
Actuarial Society Exams
Links

What is Actuarial Science?

Actuarial science applies mathematical and statistical methods to finance and insurance, particularly to the assessment of risk. Actuarial science includes a number of interrelating disciplines, in particular the mathematics of probability and statistics. In the life insurance industry, traditional actuarial science focuses on the analysis of mortality and the production of life tables, and the application of compound interest. More recently, actuarial science has come to embrace more sophisticated mathematical modeling of finance. Ideas from financial economics are also becoming increasingly influential in actuarial thinking.

What is an actuary?

Actuaries are professionals who analyze the financial impact of risk, particularly looking ahead far into the future. Actuaries use skills in mathematics, economics, finance and statistics to study uncertain future events, especially those of concern to insurance companies, employee benefits such as medical insurance and pension plans, and social welfare programs such as social security and Medicare. Recently the scope of the actuarial field has widened to include investment advice, and even asset management. Many belong to one or more professional bodies, which include:

• the Casualty Actuarial Society in the US;
• the Society of Actuaries in the US;
• the American Academy of Actuaries in the US;
• the Institute of Actuaries in England and Wales, and Faculty of Actuaries in Scotland;
• the Institute of Actuaries of Australia in Australia;
• the Canadian Institute of Actuaries;
• the Deutsche Aktuarvereinigung e.V. in Germany;
• the Actuarieel Genootschap in The Netherlands;
• the Royal Association of Belgian Actuaries in Belgium;
• the Danish Actuarial Society;
• the Society of Actuaries in Ireland in Ireland;
• the Hungarian Actuarial Society in Hungary;
• the International Actuarial Association;
• the International Association of Consulting Actuaries;
• the Groupe Consultatif of the European Union.

Starting Actuarial Salaries

Here you can see the starting actuarial salaries for the graduates who passed one, two or three exams. This information is taken from the actuarial grads network.

Actuarial Society Exams

One becomes an actuary by passing professional exams administered by the Society of Actuaries (SOA), and developing practical skills working at an insurance company.

Below are the principles Underlying the Education and Examination by the Society of Actuaries (SOA) as they are formulated by the SOA.

Principles Underlying the Education and Examination (E&E) System

The SOA administers a series of courses leading to Associateship and Fellowship. The principles underlying the SOA E&E system are the following:

1. To provide the actuary with an understanding of fundamental mathematical concepts and how they are applied, with recognition of the dynamic nature of these fundamental concepts in that the actuary must remain up-to-date with developments in mathematics and statistics;
2. To provide the actuary with an accurate picture of the sociodemographic, political, legal, and economic environments within which financial arrangements operate, along with an understanding of the changing nature and potential future directions of these environments;
3. To expose the actuary to a broad range of techniques that the actuary can recognize and identify as to their application and as to their inherent limitations, with appropriate new techniques introduced into this range as they are developed;
4. To expose the actuary to a broad range of relevant actuarial practice, including current and potential application of mathematical concepts and techniques to the various and specialized areas of actuarial practice, and to develop the actuary's sense of inquisitiveness so as to encourage exploration into areas where traditional methods and practice do not appear to work effectively.

Preliminary Actuarial Exams

Here is a quote from the official announcement by the SOA.

Effective January 1, 2005 the following requirements for Associateship will be applicable.

All candidates must complete Exams P, FM, M and C, collectively known as the preliminary education component. (Preliminary Actuarial Exams now consist of Probability (P), Financial Mathematics (FM), Actuarial Models (M) and Construction and Evaluation of Actuarial Models (C).)

All candidates shall satisfy Validation by Educational Experience (VEE) for three subjects: economics, corporate finance and applied statistics.

The Emphasis in Actuarial Science and Mathematical Finance program will prepare you for the first two actuarial exams (P and FM) and provide a solid background for preparation for the third exam (M).

You can see a sample of problems similar to those appearing on exam P here

Emphasis in Actuarial Science and Mathematical Finance Degree Requirements

• Mathematics 1500 (Analytic Geometry & Calculus I)
• Mathematics 1700 (Calculus II)
• Mathematics 2300 (Calculus III)
• Mathematics 3000 (Introduction to Advanced Mathematics)
• Mathematics 4100 (Differential Equations)
• Mathematics 4700 (Advanced Calculus of One Real Variable I)
• Mathematics 4140 (Matrix Theory)
• Mathematics 4315/Statistics 4710 (Introduction to Mathematical Statistics)
• Mathematics 4320/Statistics 4750 (Introduction to Probability Theory)
• Mathematics 4355 (Investment Science I)
• Mathematics 4370 (Actuarial Modeling I)
• Mathematics 4371 (Actuarial Modeling II)
• Mathematics 4520 (Statistical Inference I)

One of the following two courses:

• Computer Science 1040 (Introduction to Problem Solving and Programming)
• Computer Science 1050 (Algorithm Design and Programming I)

Additional requirements

• Statistics 4870 (Time Series Analysis)
• Statistics 4510 (Applied Statistical Models I)
• Economics 1014 (Principles of Microeconomics)
• Economics 1015 (Principles of Macroeconomics)

A minimum of 5 credits from the following courses:

• Physics 2750 (University Physics I)
• Physics 2760 (University Physics II)
• Chemistry 1310 (General Chemistry I)
• Chemistry 1320 (General Chemistry II with Laboratory)
• Chemistry 1330 (General Chemistry III with Laboratory)
• Biological Sciences 1500 (Introduction to Biological Systems with Laboratory)

Basic skills requirement

Basic skills and general education requirements must be met in accordance with University and College of Arts and Science rules governing degree programs.

• English 1000 (Exposition & Argumentation)
• Foreign language or foreign language alternative [12 hours of 2000 level courses from one area outside of mathematics]

Foundation and graduation requirements of the College of Arts and Science

Arts and Science General Education Requirements

It is also recommended that the following courses are chosen as electives

• Finance 3000 (Corporate Finance)
• Finance 4020 (Investments)
• Mathematics 4590 (Investment Science II)

Important Course Information

Actuarial Modeling I and Actuarial Modeling II are two courses in a seminar format specifically designed for preparation to the P, FM and M exams those students who has completed the preliminary theoretical courses. They are aimed at the analyzing and solving the problems which one encounter at the actuarial exams P, FM and M.

Investment Science II is particularly recommended for students who want to pursue graduate studies in Mathematical Finance/Actuarial Science.

Statistics 4870 and 4510 can be counted towards VEE (validated by educational experience) in Statistics, Economics 1014, 1015 can be counted towards VEE in Economics, while Finance 3000, 4020 can be counted towards VEE in corporate finance.

Links

Actuarial Societies and Organizations

• SOA
• CAS
• The Actuarial Foundation
• Actuary.com
• Be an actuary
• Graduate programs in Actuarial Science
• The Actuarial Grads Network

Actuarial Firms

• Hewitt Associates
• Price WaterHouse Coopers
• Tillinghast-Towers Perrin
• Buck Consultants (Mellon)
• Watson Wyatt Worldwide
• Trustmark Insurance
• William M. Mercer

Actuarial Recruiters

• D.W. Simpson
• Nationwide Actuary Search
• The Emerald Group
• H&H Associates