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Career Story: Actuarial Consultant

Actuarial Consultant

Job Title: Consulting Actuary

Type of Company: We provide actuarial support services to other insurance companies or audit firms. This means that we may help a company design and price a new product, help the company determine actuarial items for their financial statements, help an auditor review the actuarial liabilities on an insurance company financial statement, or help a company project their future cash flow.

Education: BBA, University of Michigan •• MA, Actuarial Science, University of Michigan

Previous Experience: I have worked as an actuary for my entire career. The first 28 years were as an employee of a life insurance company. The last 2 years have been with small consulting firms. I have worked on developing and pricing life insurance products, as well as the financial side of existing life insurance, annuity and health products.

Job Tasks: My basic job is to perform the necessary actuarial activities for whatever project or projects may be in progress for our company. Generally I may be working on more than one project at any given time, but in most cases, one project dominates my time. Projects can range from short-term (less than 2 weeks) to long term (6 months or more). Some of the projects can be recurring, although they generally take less time if they have previously been performed.

I will discuss one of my continuing assignment in more detail. This project began as support for an annual regulatory filing for an insurance company. Every year the insurance company files its annual statement with each state in which it does business, and the company must attach to that statement the opinion of a qualified actuary that the liabilities established on the statement are sufficient to cover all of the company's future cash flow requirements. To form this opinion, the actuary is required to develop a detailed projection which requires information on the myriad of different products that the company has sold in the past, but that still remain on the company's books. The actuary has to analyze information from the company and use his judgement in order to determine assumptions to be used.

After that part of the assignment was completed, I was then asked to help a sister company put a value on the business that was previously sold, but still on the books. This is a variant of the preceding task as it also requires a projection of the business, even though it is for a very different purpose.

Eventually, that project led to developing a new way of measuring the company's liabilities, and then it was time (a year later) to go back and do the first assignment again as part of the annual process.

Best and Worst Parts of the Job: The best parts of the job are that the work varies depending on the specific project and the company. There is very little that is truly repetitive, although we always try to apply what we learn to other situations and adapt our spreadsheets or tools that we use to new uses. Another interesting part is analyzing the raw data from the company to determine if everything makes sense.

Unfortunately, the data that we get is often not as clean or accurate as it should be. By using his experience and knowledge, looking at trends and data summaries, the actuary can often determine that something "doesn't look right", and then can investigate further.

One of the worst parts is dealing with people at the company when they really don't want to be bothered with problems that you find.

Job Tips:
1.) Develop a good understanding of accounting and financial statements. Many actuaries assume that the accountants will take care of that. Unfortunately, when the actuaries can't communicate with the accountants, problems ensue.

2.) Develop a good knowledge of basic computer processes, with a strong background in use of spreadsheets. That doesn't mean just knowing how to type in simple formulas. Most actuaries are comfortable with very complex spreadsheets with many pages, plus macros that may be used to replicate basic processes.

3.) You don't have to be an expert in statistical analysis or high level mathematics, but you better be very good in your algebra and calculus classes and be able to quickly see number series and spot where there is something out of line.

Additional Thoughts: The actuarial career is not for everyone. It is a very challenging career requiring keen mathematical insights and the ability to accept challenges. In the end, it is generally very rewarding with variable work and good pay.

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