Actuarial exam
Encyclopedia
Actuarial exams are a series of professional level examinations which must be passed in order to be admitted into an actuarial
society, if the society has a "membership through examination" requirement. Many societies that belong to the International Actuarial Association
do not require examinations for membership.
(SOA) and the Casualty Actuarial Society
(CAS). CAS members are largely trained to work in the property and casualty insurance field. SOA members are trained to work in other branches of actuarial science. Both organizations have a common set of preliminary exams. CAS has a single set of advanced exams. SOA has five sets of advanced exams, one set for each of their five domains of competency.
testing centers or via pencil and paper. Candidates are allowed to use a calculator from an approved list. Some tests provide instant feedback on if the candidate passed their exam. All test scores (on a 0-10 scale with 6 or higher passing) are posted six to eight weeks after the test.
CAS develops an alternative form of SOA's exam MLC designated as 3L. CAS recognizes credit earned for all SOA exams. SOA does not recognize CAS's exam 3L.
, corporate finance
and applied statistics. Applied statistics has two components: regression
and time series
. Instead of passing exams, candidates may earn credit by passing an approved college class with a B- or better grade or by completing an approved correspondence class.
The two modules that must be completed to become an associate are...
The exam schedule above starts in 2011. Candidates who passed exams offered before 2011 will be granted credit according to the following schedule. To earn credit for new exam five, a candidate must pass old exam five and old exam six. Candidates who passed one of old exam five and old exam six must pass a sepecial exam covering the remaining material on new exam five.
Associates select one of five areas of competence in which they can further their training. Each area has two exams and three learning modules. After passing the required exams and modules, the associate is promoted to fellow (FSA). The exams for Individual Life and Annuities and Retirement Benefits have alternative forms that are specific to Canada and the United States.
relating to pension plans. Enrollment in the Joint Board is a requirement for SOA Retirement Fellows working in the US.
The American equivalent of the Canadian Institute of Actuaries is the American Academy of Actuaries (AAA).
(CIA). To do so an individual must be either a Fellow of the Society of Actuaries (FSA) or a Fellow of the Casualty Actuarial Society (FCAS) and meet certain experience and continuing education requirements.
.
In Australia
, the examinations are offered by Institute of Actuaries of Australia
to acquire its fellowships. The primary levels of the examinations can also be taken via some of Australian universities, which will lead to the qualification of the associateship ,.
Actuarial bodies in other countries offer their own series of exams (although, as previously noted, there are some countries where the term "actuary" is applied to individuals with a university degree in Actuarial Science).
Actuary
An actuary is a business professional who deals with the financial impact of risk and uncertainty. Actuaries provide expert assessments of financial security systems, with a focus on their complexity, their mathematics, and their mechanisms ....
society, if the society has a "membership through examination" requirement. Many societies that belong to the International Actuarial Association
International Actuarial Association
The International Actuarial Association is a worldwide association of local professional actuarial associations and their 64,000-odd fellows.-History:...
do not require examinations for membership.
United States
In the United States, the two largest professional organizations are the Society of ActuariesSociety of Actuaries
The Society of Actuaries is a professional organization for actuaries based in North America. It was founded in 1949 as the merger of two major actuarial organizations in the United States: the Actuarial Society of America and the American Institute of Actuaries...
(SOA) and the Casualty Actuarial Society
Casualty Actuarial Society
The Casualty Actuarial Society is a professional society of actuaries whose goal is "the advancement of the body of knowledge of actuarial science applied to property, casualty, and similar risk exposures." Its members are mainly involved in the property and casualty areas of the actuarial...
(CAS). CAS members are largely trained to work in the property and casualty insurance field. SOA members are trained to work in other branches of actuarial science. Both organizations have a common set of preliminary exams. CAS has a single set of advanced exams. SOA has five sets of advanced exams, one set for each of their five domains of competency.
Preliminary Exams
There are five preliminary exams. Exams are multiple choice. They are administered on computers at PrometricPrometric
Prometric is a U.S. company in the test administration industry. Prometric operates a test center network composed of over 10,000 sites in 160 countries...
testing centers or via pencil and paper. Candidates are allowed to use a calculator from an approved list. Some tests provide instant feedback on if the candidate passed their exam. All test scores (on a 0-10 scale with 6 or higher passing) are posted six to eight weeks after the test.
| SOA Exam | CAS Exam | Exam Title | Exam Topics | Format | Tests per Year | Pass/Fail Estimate |
|---|---|---|---|---|---|---|
| P | 1 | Probability | Basic, univariate, and multivariate probability | Computer | 6 | Yes |
| FM | 2 | Financial Mathematics | Basic interest theory, annuities, bonds, loans, cash flows, portfolios, immunization, and financial derivatives, options, hedging, investment strategies, forwards, futures, and swaps | Computer | 6 | Yes |
| MFE | 3F | Actuarial Models: Financial Economics | Interest rate models, rational valuation of derivative securities, and risk management techniques | Computer | 3 | No |
| MLC | 3L | Actuarial Models: Life Contingencies | Survival models, Markov chain models, life insurances and annuities, and Poisson processes | Paper and pencil | 2 | No |
| C | 4 | Construction and Evaluation of Actuarial Models | Severity models, frequency models, aggregate models, construction of empirical models, construction and selection of parametric models, estimating failure time and loss, determining the acceptability of a fitted model, credibility, simulation | Computer | 3 | Yes |
CAS develops an alternative form of SOA's exam MLC designated as 3L. CAS recognizes credit earned for all SOA exams. SOA does not recognize CAS's exam 3L.
Validation by Educational Experience
Candidates for CAS and SOA membership must pass standardized tests in introductory economicsEconomics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
, corporate finance
Corporate finance
Corporate finance is the area of finance dealing with monetary decisions that business enterprises make and the tools and analysis used to make these decisions. The primary goal of corporate finance is to maximize shareholder value while managing the firm's financial risks...
and applied statistics. Applied statistics has two components: regression
Regression analysis
In statistics, regression analysis includes many techniques for modeling and analyzing several variables, when the focus is on the relationship between a dependent variable and one or more independent variables...
and time series
Time series
In statistics, signal processing, econometrics and mathematical finance, a time series is a sequence of data points, measured typically at successive times spaced at uniform time intervals. Examples of time series are the daily closing value of the Dow Jones index or the annual flow volume of the...
. Instead of passing exams, candidates may earn credit by passing an approved college class with a B- or better grade or by completing an approved correspondence class.
CAS Advanced Exams
To earn associate membership (ACAS), a candidate must pass the preliminary exams, VEE, two online modules, exam five, exam six. For an associate to become a fellow (FCAS), exams seven through nine must be passed. The exams are administered on paper-and-pencil. Exam questions generally require an open answer; however, multiple-choice questions are allowed, too. Exam six comes in two versions: one for candidates in the United States and one for candidates in Canada. Each exam is only offered once each year either during the early May or late October testing windows.| CAS Exam | Subject Matter | Test Window |
|---|---|---|
| Exam 5 | Basic Techniques for Ratemaking and Estimating Claim Liabilities | Early May |
| Exam 6 | Nation-Specific Examination: Regulation and Financial Reporting | Late October |
| Exam 7 | Estimation of Policy Liabilities, Insurance Company Valuation, and Enterprise Risk Management | Early May |
| Exam 8 | Advanced Ratemaking | Late October |
| Exam 9 | Financial Risk and Rate of Return | Early May |
The two modules that must be completed to become an associate are...
| Module | Subject Matter |
|---|---|
| Module 1 | Risk Management and Insurance Operations |
| Module 2 | Insurance Accounting, Coverage Analysis, Insurance Law, and Insurance Regulation |
The exam schedule above starts in 2011. Candidates who passed exams offered before 2011 will be granted credit according to the following schedule. To earn credit for new exam five, a candidate must pass old exam five and old exam six. Candidates who passed one of old exam five and old exam six must pass a sepecial exam covering the remaining material on new exam five.
| Old Exam | Conversion credit |
|---|---|
| Old Exam 5 | Half of New Exam 5 on Basic Ratemaking plus Module 1 (Risk Management and Insurance Operations) |
| Old Exam 6 | Half of New Exam 5 on Basic Reserving plus New Exam 7 |
| Old Exam 7 | New Exam 6 plus Module 2 (Insurance Accounting, Coverage Analysis, Insurance Law, and Insurance Regulation) |
| Old Exam 8 | New Exam 9 |
| Old Exam 9 | New Exam 8 |
SOA Advanced Exams
After passing the preliminary exams, SOA candidates complete the Fundamentals of Actuarial Practice e-learning course. FAP contains eight learning modules and two assessments. This completes the requirements for associate membership (ASA).Associates select one of five areas of competence in which they can further their training. Each area has two exams and three learning modules. After passing the required exams and modules, the associate is promoted to fellow (FSA). The exams for Individual Life and Annuities and Retirement Benefits have alternative forms that are specific to Canada and the United States.
| Type | Enterprise Risk Management | Investment | Individual Life and Annuities | Retirement Benefits | Group and Health |
|---|---|---|---|---|---|
| Exam 1 | Advanced Finance and Enterprise Risk Management | Advanced Portfolio Management | Individual Life and Annuities Company/Sponsor Perspective | Retirement Benefits Company/Sponsor Perspective | Group and Health Company/Sponsor Perspective |
| Exam 2 | Financial Economic Theory & Engineering | Financial Economic Theory & Engineering | Individual Life and Annuities Design and Pricing | Retirement Benefits Design and Pricing | Group and Health Design and Pricing |
| Module 1 | Financial and Health Economics | Financial and Health Economics | Financial and Health Economics | Financial and Health Economics | Financial and Health Economics |
| Module 2 | Financial Reporting | Investment Strategy | Regulation and Taxation | Social Insurance | Health Foundations |
| Module 3 | Operational Risk | Operational Risk or Financial Reporting | Operational Risk or Financial Reporting | Operational Risk or Investment Strategy | Pricing, Reserving, and Forecasting |
Chartered Enterprise Risk Analyst
This is a designation offered by SOA. Candidates must complete all of the preliminary exams except for exam MLC, the Advanced Finance/ERM exam, the Operational Risk module, VEE Economics, and a professionalism course.Enrolled Actuary
In the US the term "Enrolled Actuary" is applied to an individual who has taken certain exams sponsored by the Joint Board for the Enrollment of ActuariesJoint Board for the Enrollment of Actuaries
The Joint Board for the Enrollment of Actuaries licenses actuaries to perform a variety of actuarial tasks required of pension plans in the United States by the Employee Retirement Income Security Act of 1974...
relating to pension plans. Enrollment in the Joint Board is a requirement for SOA Retirement Fellows working in the US.
The American equivalent of the Canadian Institute of Actuaries is the American Academy of Actuaries (AAA).
Canada
To qualify as an actuary in Canada, a candidate must become a Fellow of the Canadian Institute of ActuariesCanadian Institute of Actuaries
The Canadian Institute of Actuaries is the national organization of the actuarial profession in Canada. It was incorporated on March 18, 1965. The FCIA designation stands for Fellow of the Canadian Institute of Actuaries...
(CIA). To do so an individual must be either a Fellow of the Society of Actuaries (FSA) or a Fellow of the Casualty Actuarial Society (FCAS) and meet certain experience and continuing education requirements.
Other Nations
In the United Kingdom, exams are offered by the Institute and Faculty of ActuariesInstitute and Faculty of Actuaries
The Institute and Faculty of Actuaries is the professional body which represents the actuaries in the United Kingdom. It operates publicly under the name Actuarial Profession.-History:...
.
In Australia
Australia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...
, the examinations are offered by Institute of Actuaries of Australia
Institute of Actuaries of Australia
The Institute of Actuaries of Australia , commonly referred to as the Institute, is an organisation representing the actuarial profession in Australia. The Institute has origins which trace back to 1897.- History :...
to acquire its fellowships. The primary levels of the examinations can also be taken via some of Australian universities, which will lead to the qualification of the associateship ,.
Actuarial bodies in other countries offer their own series of exams (although, as previously noted, there are some countries where the term "actuary" is applied to individuals with a university degree in Actuarial Science).