Information Session on Second Major in Actuarial Science (SMAS)

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Information Session on Second Major in Actuarial
Science (SMAS)

• What is an actuary?
• The SMAS
• Society of Actuaries (SOA) Professional Exams
• Questions and answers
• Professor Tse Yiu Kuen, PhD FSA
• Practice Assoc Prof Kwong Koon Shing, PhD ASA

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What is an actuary?

• A financial services professional who manages or
  advises clients on risks of financial events
• Work place of an actuary
• Life insurance company
• General (non-life) insurance company
• Pension fund
• Reinsurance company
• Others Investment houses, banks, government, and
  consulting firms

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Job Ranking in US (Jobs Rated Almanac)

• 1st Edition (1988) 1
• 2nd Edition (1992) 2
• 3rd Edition (1995) 1
• 4th Edition (1999) 2
• 5th Edition (2000) 4
• 6th Edition (2002) - 2
• The ranking was based on six key criteria
  environment, income, employment outlook, physical
  demands, security, and stress.

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Typical career path of an actuary

• design and run financial models, generate data
  and information, assist actuary to formulate
  his/her advice.
• specialize in one area product development,
  financial projection, risk analysis
• while doing the above (in an insurance company)
  sit for exams (and pass them)
• qualify as an actuary (FSA, FIA, FIAA etc)
• related career risk management (e.g., Chartered
  Enterprise Risk Analyst)

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What does an actuary study?

• Mathematics
• Statistics
• Economics
• Finance
• Insurance
• Others Business, Law, Accounting
• What quality should an actuary possess?
• aptitude for Mathematics and Statistics
• enjoy problem solving and working with numbers
• well-read on business issues and social trends
• possess soft skills for communication

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How to become a professionally qualified actuary?

• Become an Associate and then a Fellow of one of
  the professional bodies of actuaries, through
  exams and other required qualification process
• Associate of the Society of Actuaries (ASA) an
  individual with an understanding of the basic
  mathematics underlying actuarial science and of
  the applications to technical actuarial problems.
• Fellow of the Society of Actuaries (FSA) has
  demonstrated in-depth knowledge in a specific
  area of actuarial practice.
• Professional bodies
• Society of Actuaries USA, about 19,000 members
  (42 Fellows and 35 Associates in Singapore)
• Casualty Actuarial Society USA
• Institute of Actuaries and Faculty of Actuaries
  UK
• Institute of Actuaries of Australia Australia
• Canadian Institute of Actuaries Canada

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Second Major in Actuarial Science (SMAS)

• The SMAS prepares students for skills and
  knowledge relevant for
• an actuary in the insurance industry
• a risk analyst in the finance and banking
  industry
• The SMAS is structured after the Education and
  Examination (EE) System of the Society of
  Actuaries (SOA).

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The Education and Examination System for
Associateship in the Society of Actuaries (SOA)

• Validation of Education Experience (VEE)
• Four exams collectively known as the Preliminary
  Education Component (PEC)
• Fundamentals of Actuarial Practice (FAP)
• 8 E-Learning Modules and two Assessments
• Associateship Professionalism Course
• The SMU SMAS program covers the first two
  components VEE and PEC.

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Validation of Education Experience (VEE)

• VEE consist of three components Economics,
  Corporate Finance and Applied Statistical
  Methods.
• VEE are acquired in university and not examined
  by SOA.
• SMU has obtained VEE approval (B- and above) from
  SOA.

VEE segment Courses taught at SMU
Economics Intermediate Microeconomics A or B (ECON 101A/B) Intermediate Macroeconomics A or B (ECON 102A/B)
Corporate Finance Finance (FNCE 101) Financial Instruments, Institution and Markets (FNCE 102)
Applied Statistical Methods Applied Econometrics (ECON 107) Intermediate Econometrics (ECON 207)
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Preliminary Education Component (PEC)

• SMAS prepares students for four SOA exams
  collectively known as PEC.
• Probability (P)
• Financial Mathematics (FM)
• Actuarial Models (M) MLC MFE
• Construction and Evaluation of Actuarial Models
  (C)
• The courses at SMU preparing the students for
  these exams are

SOA Exam Courses at SMU
P Probability Theory and Applications (STAT 201)
FM Financial Mathematics (STAT 203) Analysis of Derivatives Securities (FNCE 305)
M Life Contingencies (STAT 310) MLC Analysis of Derivatives Securities (FNCE 305) MFE
C Risk Theory and Loss Models (STAT 311)
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Compulsory Courses required under SMAS

• Introduction to Statistical Theory STAT151 (or
  Introductory Statistics STAT101, with A- or
  better)
• Intermediate Mathematics for Economics
• Probability Theory and Applications (PEC)
• Applied Econometrics (VEE)
• Intermediate Econometrics (VEE)
• Intermediate Microeconomics A or B (VEE)
• Intermediate Macroeconomics A or B (VEE)
• Finance (VEE)
• Financial Instruments, Institutions and Markets
  (VEE)
• Analysis of Derivatives Securities (PEC)
• Financial Mathematics (PEC)
• Life Contingencies (PEC)
  (Pre-requisites
  Probability Theory and Applications, Financial
  Mathematics)
• Risk Theory and Loss Models (PEC)
• (Pre-requisite Probability Theory and
  Applications)

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Recommended sequence in Statistics
A- or above
STAT311 (offered in Term II)
STAT201
STAT101
B or below
STAT310 (offered in Term I)
STAT203
STAT151
STAT101, STAT151, STAT201, STAT203 will be
offered in both terms
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Fellowship Components under the SOA
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Chartered Enterprise Risk Analyst (CERA) under
the SOA

• CERA is a new designation given by the SOA for
  professional in enterprise risk management (ERM)
  within broader financial services, insurance, and
  pension markets.
• The required examinations will include the
  following
• Exams P, FM, MFE, C
• VEE Economics only
• Advanced Finance/ERM Exam
• CERA Module (under FSA module - Operational Risk)
• Associateship Professionalism Course

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MAS Financial Scholarship Program

• An MAS program sponsored by the Financial Sector
  Development Fund
• Program includes Actuarial Science as one of
  three areas
• Sponsor students to do a Master degree in
  Actuarial Science overseas, such as City U
  London, U of Wisconsin, U of Waterloo.
• 70 funded by MAS, 30 funded by Financial
  Institution (FI) partner (i.e., insurance
  company, banks, etc)
• Student will be bonded for 2 years to FI partner
  after graduation
• SMU is a partnering university with MAS.

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Useful Websites

• http//www.soa.org/
• http//www.actuary.org/
• http//www.asppa.org/
• http//www.actuaries.ca/
• http//www.ccactuaries.org/
• http//www.actuarialfoundation.org/
• http//www.beanactuary.org/
• http//www.actuaries.asn.au/default.htm
• http//www.actuaries.org.uk/
• http//www.ceranalyst.org/

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The End

• Questions and Answers.