Actuary Information

Actuaries

1) Determine the probability of future events

2) Determine the financial impacts of that event occurring and turn them into premiums to mitigate risk

3) PV

No other profession deals with all these at the same time.

Lets say you join a company at 25 and you work for them until you are 60. That company agrees to pay you until you are 90. 65 years of projections. These projections include what youre going to earn every year, likelihood of termination in any given year, likelihood of disability, passing away, when you are going to retire, what inflation will do to benefits. You have to find the present value of all that and then discount it back to today’s date to figure out what is that worth today.

Its an actuaries job to decide what risks their client or institution should take on or transfer.

Traditional Areas 90%: Employee benefit plans & Insurance companies.

Nontraditional Areas 10%: Stock options for CEO’s.. Actuaries must value the structure packages for CEO’s. (How long will they hold those stock, the volatility of the stocks), Predictive modeling(weather), currency hedging ( for multinational companies, when revenue gets transported back to US dollars) Actuaries can help companies hedge against that inflation risk, Personal Actuary (how long you might live, how much you will need to live on, pretty much a personal financial advisor.

--- Slim jims are only made in one place. Slim jims had insurance to hedge against the risk of their facility malfunctioning and if there were no slim jims on the shelf.

Use of Actuary for airlines to hedge fuel cost, maximize price per seat for seasonal.

http://www.math.washington.edu/acmssem/2009/04232009.pdf

FIRST EXAM

http://www.beanactuary.org/exams/preliminary/exams/syllabi/ExamPSamplequestions.pdf

http://www.beanactuary.org/exams/preliminary/exams/syllabi/ExamPSamplesolutions.pdf