What is Actuarial Science
On choosing the Actuarial track
Overview of actuarial exams and related courses
Campus course selection
General plan of study
Further information, including Web links
Actuarial Science is the subject at the interface of mathematics and business relating to the valuation of risks and Insurance. Actuaries find employment in the Insurance industry, as professionals and consultants employed to certify the financial soundness of pension and insurance plans, and in government agencies such as the Social Security Administration, Pension Benefit Guaranty Corporation, and Department of Housing and Urban Development.
The training of Actuaries heavily involves mathematical undergraduate coursework, as well as a solid grounding in business and economics. Actuarial certification, by the Society of Actuaries or the Casualty Actuarial Society, is accomplished through a battery of ETS-type examinations with a prescribed syllabus, which for the first several examinations are primarily mathematical and statistical.
There now exists an undergraduate minor program in Actuarial Mathematics, available only to non-math majors, documenting that students have taken a package of courses covering parts of the actuarial examination syllabi, and have prepared themselves to take several of the actuarial exams.
The general advice to students is that without at least a strong B in the calculus courses Math 140-141-240-241, Actuarial Science is probably not as desirable a career as advertised because so much of the potential for advancement depends upon competitive examinations which are initially VERY quantitative. However, if you have strong interests in business and other practical applications of mathematics, you should at least consider continuing with the same collection of: calculus, Probability/Statistics, computing, numerical analysis and Operations Research courses, with a view toward majoring in a field such as Operations Research or Statistics. [Operations Research (OR) has to do with optimal-allocation problems in business, scheduling and inventory management, etc.; Statistics has to do with the analysis and description of data to explain relationships and forecast trends.] At College Park, both OR and Statistics can be pursued within the BMGT College; and Statistics can be chosen as a concentration within the Mathematics major. For any quantitative major, you are well-advised to take the full calculus sequence and then some probability and statistics.
The Mathematics Department does not currently offer an Actuarial degree program, but does offer the Actuarial Mathematics course Stat 470, as well as many courses which heavily overlap the actuarial examination syllabi. In some cases, the courses exactly mirror the syllabi for specific exams.
- Course P covers calculus through multivariable calculus (Math 140-141 and Math 241) plus one semester of linear algebra (Math 240) plus multivariable-calculus-level probability (Stat 410). The probability part of the syllabus no longer coincides exactly with our Stat offerings: the probability topics definitely include joint distributions, moment generating functions, conditional expectations, but not quite as much material as in Stat 410, and statistics topics are not tested directly on the first exam any more. The probability material in the union of Stat 400 and Stat 401 might be barely enough for the Course 1 exam.
- Course FM covers Economics and Finance topics mostly, but there is also mathematical problem-solving material on Theory of Interest which is covered in part in Stat 470 (Actuarial Mathematics).
- Course MLC, on Actuarial Models, contains material on probability models and stochastic processes related to life tables and insurance, including the calculation of insurance premiums from life-table data. The probability material here is definitely at the level of Stat 410, and in the current set-up there is NO purely statistical material (like parameter estimation, hypothesis testing and confidence intervals) on this exam. The relevant undergraduate course offered at College Park is Stat470 (Actuarial Mathematics). The latter course overlaps about 50% with the material of the Course MLC exam.
- VEE requirement - For information on this requirement, please visit http://www.soa.org/education/exam-req/edu-vee.aspx .
Courses P and FM would be taken by any aspiring actuary, whether interested in Life Insurance and Pension or in Casualty/Property Insurance. The later exams are different when administered by the Society of Actuaries (Life/Pension) than when given by the Casualty Actuarial Society. These later exams, in either Society, involve a good deal of statistics, including topics in estimation, hypothesis and goodness-of-fit testing, computational and Bayesian methods, and survival analysis. Undergraduates should take either Stat 401 or Stat 420 to prepare for this later material. Other useful undergraduate courses would include Numerical Analysis, Econometrics, and Operations Research, as well as business topics in Investments, Finance, and Accounting.
Beyond the headings above, there are some relevant graduate courses, but you would be unlikely to take any of them unless you were also pursuing a graduate degree program.
If you are already graduated from college (with at least a B average), the way to take any of these courses at the University is to register as either a Special Student or an Advanced Special Student. In either case, you need to contact the Admissions Office and pay a one-time fee to obtain Special Student Status. The difference between Special Student and Advanced Special Student is that only the latter take courses which count for Graduate Credit (and accordingly, pay the higher tuition fees for graduate courses). The courses which you would take toward actuarial exams are undergraduate courses, but many would count — here or elsewhere — toward related graduate degree programs. So if you were contemplating using the courses toward some future graduate degree program, you should consider taking the courses under Advanced Special Student status.
If you are a freshman or sophomore, then the main courses you can plan on taking in the relatively near future which have a bearing on an Actuarial career — but which also can serve you well in several different majors — are the following:
- Math 140-141, 240-241: the regular calculus and linear algebra sequence is the most important component of a pre-actuarial course of study, and these courses coincide with the syllabus for the first actuarial examination.
- Operations Research, Finance & Accounting courses in BMGT: if you want to be an actuary, one of the logical plans is to become a Math Major with outside supporting area in BMGT.
- Introductory Economics courses (micro and/or macro economics) are also very useful for pre-actuarial study.
- A computer-programming course (JAVA or C). Although actuaries in insurance companies are often too senior to do much programming themselves, they will typically know and use some higher-level languages or packages (SAS, MATLAB, Mathematica, etc.) involving database operations, statistical analysis and mathematical manipulations.
- A Probability and Statistics sequence to prepare for the second actuarial exam: the syllabus coincides with Stat 410-420, but once you are finished with Math 141 you might consider taking Stat 400 as an earlier one-term introduction to Probability/Statistics.
- The Actuarial Mathematics course Stat 470. This course covers material related to at least two of the Actuarial Examinations, namely Courses FM ("Theory of Interest" topics) and MLC ("Actuarial Models"). However, it is not designed to prepare the student for any particular examination.
There are in fact more courses to take, which would help you in pre-actuarial studies, than you could possibly have time for. The essential courses are: Calculus (through Math 241) and Probability & Statistics (through at least Stat 410 and 401). The calculus sequence prepares you for the first exam, which you SHOULD then take as soon as you can make several months of study-time in which you would do MANY problems of the sort you can find in the sample actuarial exams or in actuarial practice manuals. The purpose of the additional practice is to augment your speed at working the actuaries' peculiar (and sometimes tricky) brand of multiple-choice problem. You SHOULD plan to take the first exam as a Junior (perhaps in November of your Junior year). Ideally, you would try to take the Probability/Statistics exam (Course P) by spring of your junior year. The combination of: the two exams, a BMGT or Math (or double) major, and a summer-internship experience, will position you in the best possible way for an actuarial career.
Which specific courses should I take if I want to become an actuary?
To further your actuarial studies, you should complete calculus I, calculus II, calculus III and linear algebra. You should also have some basic business courses (e.g. accounting or finance) or economics courses (micro- or macro-economics). You should also have some basic programming skills (e.g. JAVA and C). Additional math courses you can consider include: STAT400, STAT401, STAT410, MATH424, STAT430 and STAT470.
Which courses here at UMD will prepare me for the actuarial exams?
The specifics of the courses versus exams are as follows:
Exam P: MATH140, MATH141, MATH241, MATH240, STAT400, STAT401, STAT410 (note: STAT410 is not absolutely essential, but is helpful as there are always a few problems, like 4 out of 50, that cover multi-variable topics in probability, mainly change-of-variable formulae and conditional expectations).
Exam FM: Theory of Interest is covered in ECON and Finance courses. Also STAT470.
ECON or Applied Stat: these exams are mostly covered under a program called Validation by Education Experience (VEE), where you would take the ECON micro and macro courses to get some exam credits. Similarly, you would take STAT430 (linear regression) for partial exam credits.
How easy is it to get an actuarial internship?
Whether you have a shot at internships depends largely on your past coursework and GPA and whether you have passed any exam. If you have taken a solid set of courses with a good GPA, and you have passed the first exam, then you will have a better chance to secure an internship.
Where can I find the syllabi for the actuarial exams?
The syllabi are available at www.casact.org and www.soa.org.
Write for the Associateship Course Examination Catalog to either of :
Society of Actuaries, 475 N. Martingale Rd., Suite 800,
Schaumburg, Illinois 60694
Casualty Actuarial Society, 1100 North Glebe Road,
Suite 600, Arlington, VA 22201 (703) 276-3100