The following article is about graduate Actuarial jobs. Actuaries provide commercial, financial and prudential advice on the management of assets and liabilities, especially where long term management and planning are critical factors. Actuaries traditionally work in finance, investment and risk management, general insurance, life insurance, pensions and social security.
What do Actuaries do?
Actuaries apply financial and statistical techniques to solve real business problems. These business problems typically involve analysing future financial events, especially when the amount of a future payment, or the timing of when it is paid, is uncertain. A lot of actuaries' work might be thought of as 'risk management', assessing how likely an event may be and the costs associated with it.
Actuaries apply financial and statistical theories to solve business problems. Although there is a wide variety in the work of different actuaries, there is a common theme. For most actuaries the role involves making financial sense of the future. This involves:
- analysing the past;
- modelling the future;
- assessing the risk forward;
- and communicating what the results mean in financial terms.
Actuaries are most publicly associated with pension schemes and insurance.
Understanding how businesses operate, the possible impacts of legislation and how financial economics may affect future values are all essential actuarial skills. However, what really stands actuaries apart is their core mathematical, economic and statistical understanding applied to real financial problems.
Where do Actuaries Work?
Actuaries work for actuarial firms, actuarial consultancies, accountancy firms and insurance companies, as well as other types of company. Actuarial firms provide actuarial-only services and actuarial consultancies provide actuarial advice, whilst insurance companies and accountancy firms use actuaries to calculate risk and help work out financial investments.
Generally actuaries start working for either a traditional life (insurance, assurance, pensions offices) or a consultancy company. The main difference between these two options is that joining a life office you will be working for one internal client, the company, whilst at a consultancy it is likely that you will be working for more than one external client at a time.
Actuarial consultancies are probably the biggest employers of actuarial graduates in the UK. Many actuarial consultancies offer advice to employers and trustees who run occupational pension schemes. The advice to clients will cover a wide range of topics from setting up of a new scheme to assessing the level of contribution to be paid by the members and valuing the fund if the company is to be taken over.
Additionally, consultancies will offer a whole range of services to their clients, such as acquisitions, mergers, corporate recovery and financing capital projects. Because of their knowledge of the finance industry and their technical skills, actuaries work alongside other business professionals in consultancy firms.
In life assurance actuaries are involved at all stages of product development and the pricing, risk assessment and marketing of the products. In addition, actuaries fill key roles in financial management and the investment of policyholders' money: developing strategies that ensure customers get a good return
General insurance is a fast growing area of employment for actuaries, both within insurance companies and at Lloyd's of London, where they also have certain statutory duties. Actuarial and statistical techniques are used extensively in the analysis of often susbstantial amounts of data. Increasingly, actuaries are being asked to provide formal opinions on the technical provisions for general insurance companies.
Some other types of graduate employers of actuaries are listed below.
Actuarial consultancies are the biggest employers of actuaries in the UK. Many offer advice to employers and trustees who run occupational pension schemes. The 1995 Pensions Act made it a statutory requirement for the trustees of a pension scheme to appoint an actuary. The advice to clients covers a wide range of topics from setting up a new scheme to assessing the level of contribution to be paid by the members and valuing the fund if the company is to be taken over. Additionally, consultancies will offer a range of services to their clients, such as enterprise risk management, mergers and acquisitions advice, corporate recovery and financing capital projects.
Government Actuary's Department
The Government Actuary’s Department (GAD) provides advice to the Government via Royal Commissions, as well as giving advice to other government departments and a wide range of public sector bodies, including local authorities and the NHS. An important part of this work concerns the occupational pensions for about four million people via the operation of the National Insurance Fund.
Life Insurance Companies
Life insurance companies provide life insurance, pensions and other financial services. Actuaries are involved at all stages in the product development and in the pricing, risk assessment and marketing of the products. In addition, actuaries fill key roles in financial management and the investment of policyholders' money by developing strategies that ensure customers get a good return.
It is currently a legislative requirement that each UK life insurance office appoints one or more actuaries to perform the actuarial function, advising the firm's directors on the firm's ability to pay claims and how to ensure that the life assurance and pensions benefits from the many millions of pounds invested by policyholders are secure.
Firms that have with-profits business must also appoint one or more with-profits actuaries to advise the firm’s directors on the use of discretion in the management of with-profits funds and in particular the addition of bonuses to policies, having regard to the fair treatment of with-profits policyholders.
Enterprise Risk Management
Enterprise Risk Management (ERM) is the process, effected by an entity’s board of directors, management and other personnel, applied in strategy setting and across the enterprise, designed to identify potential events that may affect the entity, and manage risk to be within its risk appetite, to provide reasonable assurance regarding the achievement of entity objectives. Actuaries working in this area are supported by the Enterprise Risk Management Practice Executive Committee.
Finance and investment
The Finance and Investment Practice Executive Committee gives broad support to actuaries working in the finance and investment area. Prior to March 2008, finance and investment and risk management were dealt with by the Finance, Investment and Risk Management Board.
Although it is still true that only a relatively small part of the actuarial profession works in general insurance, there has been significant growth in recent years. Furthermore, although any material involvement only began about 30 years ago, actuarial contributions to general insurance go back to the first edition of Journal of the Institute of Actuaries in 1851. Actuaries working in this area are supported by the General Insurance Practice Executive Committee.
Health and Care
Today actuaries are making an impact in many aspects of healthcare, and are supported by the profession via the Health and Care Practice Executive Committee. In both the private sector and public sector actuaries' work will expand as the government seeks ways of restructuring the welfare state to meet the demands of a changing population.
Actuaries have traditionally worked in life assurance, and their role and responsibilities have evolved as life assurance itself has developed external relations. The Life Assurance Practice Executive Committee supports those members working in both insurers and consultancies who are concerned with long-term (life assurance) business.
Advising on company pensions is a time-honoured role for an actuary in a rapidly developing area. Pensions actuaries now advise trustees, companies and scheme members on arrangements including defined benefit, risk-sharing and defined contribution schemes. They work with specialists such as pensions lawyers and administrators to help keep schemes running well and meeting the needs of employers and pension plan members. Actuaries working in this field are supported by the Pensions Practice Executive Committee.
The Social Policy Board ceased to exist on 1 March 2008, when the profession's revised structure took effect. During its lifetime it provided input to Government and others on the development of social policy, wherever actuaries have a contribution to make. There are a number of member interest groups which are continuing the work undertaken by the Social Policy Board and its committees.
What is the difference between working for a consultancy and an insurance company?
Although there are many opportunities available to actuaries, generally actuarial trainees start working for either an insurance company office or a consultancy firm. Having decided on a career as an actuary, you ought to contrast and compare the opportunities offered by the life, non-life and pensions companies, as well as the consultancy firms. These opportunities offer different lifestyles and challenges. Working in an insurance company environment means that there is usually only one client; your employer. Variety of work is available but tends to come more slowly – often you’ll be asked to work in one area for a period of about one year before moving on to the next challenge, taking the experience you have gained with you. The day-to-day work within consultancy firms tends to be more varied, as in any year you are likely to work for a number of different clients (and partners) solving different types of problems. This can become particularly challenging if you have a number of projects running in parallel and you need to ensure that you meet and manage each of your clients’ expectations and deadlines. Some consultancy projects can involve working at the client’s premises, which may not be in the same town as your own office. This can give you an excellent opportunity to work with other people and see the running of an organisation other than your own consultancy. However, you would need to consider the impact of being away from home. You may also find yourself working on just part of a project rather than seeing it all the way through from start to finish.
What qualifications do I need to become an actuary?
In practice the majority of employers are looking for graduates with at least a 2.1 and excellent A levels or equivalent. The minimum entrance requirements for admittance as a student of The Actuarial Profession are maths A level at grade C, along with a second A level or equivalent in any subject at grade C, English GCSE at grade C and two other GCSEs in any subject at grade C (or equivalent).
For holders of a second class Honours degree or above in any subject, the maths A level requirement is reduced to a grade C. For holders of a third class Honours or above in a mathematical or actuarial science degree, the maths A level requirement is dropped.
Which degree subject should I study?
Graduates from any degree discipline can work as actuaries, provided they meet the minimum entrance requirements for an employer. However, most employers recruit highly numerate graduates, with degrees in disciplines such as mathematics, statistics, actuarial science, economics, business, engineering, physics and chemistry.
How many years does it take to qualify as an actuary?
In order to become a Fellow of the Faculty or Institute (FFA, FIA), students must pass examinations, demonstrate satisfactory completion of modules and acquire a satisfactory level of work based skills. Average qualification time is currently three to six years.
An actuary’s early training has a split focus on passing the professional exams and building practical experience. Once qualified many actuaries go on to be practising specialists in one of the traditional fields, with many actuaries becoming senior managers in insurance companies or firms of actuarial consultants.
However, there are many different career paths available for actuaries. Some actuaries specialise in technical research, whilst others may focus more on commercial activities.
Although qualifying as an actuary is a demanding process, the rewards are considerable. An actuarial career offers a challenging, well respected and well paid future. Graduate entry salaries are offered between £25,000 to £35,000 and senior actuaries can earn £100,000 plus.