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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

Mizzou Actuarial Club

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:


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), Models for Financial Economics (MFE), Models for Life Contingencies (MLC) 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

One of the following two courses:

Additional requirements

A minimum of 5 credits from the following courses:

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.

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

Important Course Information

Actuarial Modeling I and Actuarial Modeling II are two courses in a seminar format specifically designed for preparation for the FM and MLC exams. They are aimed at analyzing and solving the problems which one encounter on the actuarial exams FM and MLC.

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

Actuarial Firms

Actuarial Recruiters

Mathematics Department
202 Mathematical Sciences Bldg
University of Missouri
Columbia, MO 65211 USA
Phone (573) 882-6221
Fax: (573) 882-1869
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