Modern Actuarial Statistics I and II: New Exams for an Evolving Profession
“Well, there they go again…”
Any actuaries who have lived through a change in exam structure have probably said, heard, or at least sympathized with this sentiment. I suspect that students and faculty interested in actuarial science may be having similar thoughts right now. I recall struggling to comprehend the impact of exam changes during my own march (perhaps it could be more accurately described as a meander) toward Fellowship, followed later by helping employees and students sort out and interpret subsequent exam transitions.
But there is an important positive aspect of occasional exam changes: to the extent that they represent subject matter adjustments in response to the evolving skill set necessary for future actuaries, such changes reflect a nimble admissions structure keeping pace with a dynamic and growing profession.
In early January, the CAS announced two new exams, which I believe can best be understood in this positive context. Indeed, the recipe for this most recent exam change was robust anticipation of future needs – with a pinch of “necessity” thrown in.
Let’s explore the Whys, Wherefores, and the Reasons Thereof…
Why the Change?
The “necessity” occurred a year or so ago, when the SOA notified the CAS that it was planning to
discontinue Exam C (which most candidates use to get credit for our Exam 4 requirement via waiver) after spring 2018. The CAS decided to use this development as an opportunity to review and update not just the Exam 4/C subject matter being lost, but also the largely related topics on CAS Exam S. In fact, while addressing Exams 4/C and S was the immediate and highest priority, we actually undertook a review of the CAS’s entire exam syllabus. Literally hundreds of people provided input to this effort to determine what skills and knowledge an “Actuary of the Future” should have. One of the main takeaways from this effort was a strong consensus that we need to test more statistics and predictive analytics material in our exams.
What are the Changes?
The result was the creation of two new CAS exams: Modern Actuarial Statistics I & II (MAS-I & MAS-II). These new exams will replace two existing exam requirements Exams S and 4/C, respectively) beginning in 2018. They have been designed to address the emerging subject matter needs of future actuaries, and to increase the general relevance of our basic education system with respect to statistical and analytics skills.
Basically, MAS-I modifies and updates our current Exam S – it’s similar to Exam S, but with more emphasis on applied modeling and generalized linear models. It will first be offered in the spring of 2018, and there’s a simple Exam S-equivalent transition rule. The draft syllabus and learning objectives for MAS-I are available on the CAS website.
New Exam MAS-II covers some of the material in Exam C – primarily credibility theory – but also covers new statistics and analytics materials such as Linear Mixed Models, Bayesian Analysis & Markov Chain Monte Carlo, and Statistical Learning, all of which have become valuable and critical for casualty actuaries. This exam will first be offered in the fall of 2018, and the transition rule simply dovetails with the last scheduled offering of Exam C in the spring of 2018. The draft syllabus for MAS-II is available on the CAS website. Note that, although MAS-I is not a formal prerequisite for MAS-II, the latter exam will assume familiarity with the material on MAS-I.
Each of these exams will be a four-hour test, so there will be basically no increase in exam hours required for CAS credentials. They will have a multiple-choice format, and will initially be given as paper-and-pencil exams (although, in line with one of our strategic goals, we will consider evolving to a computer-based framework as these exams mature.) Both exams will be offered in both spring and fall, in the normal CAS timeframe, and will have sample questions available before the first offerings.
How Have Overall CAS Credentialing Requirements Changed?
The CAS Associateship designation will still require two VEEs, two online courses, a professionalism course, and seven exams. The difference is:
• Current ACAS Exam Requirements:
o Four preliminary exams: 1/P, 2/FM, 3F/MFE, and 4/C.
o Three associateship exams: S, 5, and 6.
• New ACAS Exam Requirements (2018):
o Three preliminary exams: 1/P, 2/FM, and 3F/IFM (modified MFE exam).
o Four associateship exams: MAS-I, MAS-II, 5, and 6.
See infographic depicting these changes. Fellowship requirements beyond the ACAS designation are unchanged.
How Should Students and Faculty Be Thinking About These Changes?
The impact of our basic education structure on actuarial students and faculty is hugely important to us at the CAS. Based on my experience from over a decade as director of the actuarial science program at the University of Illinois, I suggest that students and faculty consider and keep in mind the following:
1) The CAS has a duty to the actuarial profession, as well as our constituents and stakeholders, to help ensure that future actuaries are prepared to address the challenges of a rapidly changing world. These new exams demonstrate our commitment to providing education that’s uniquely relevant to property-casualty actuaries, so that we can continue to meet the emerging needs of future actuaries and their employers.
2) The new exam structure will benefit students because of its relevance. As mentioned above, the fact that Exam C was discontinued provided us an opportunity to create a replacement exam (and to enhance and upgrade another exam) that focuses on the modern statistics and analytics that actuaries are now using, and will certainly use more over time. This will increase the relevance of the CAS exam syllabus with respect to emerging statistical and analytics skills, with minimal changes to the overall exam structure.
3) These new exams replace existing exams, resulting in virtually no net increase in exam hours required for CAS credentials.
4) Finally, I think it’s very important to emphasize that students will not be disadvantaged by these changes. The vast majority of students do not take more than three exams in school (only about one in ten of them do), and for those top students that do take more than three, they will by then likely have already had internships and perhaps a full-time job opportunity in a specific practice area. Also, there is really no drawback to taking an “off-track” exam. No one will be disadvantaged in the recruitment process by taking an exam that ends up not “counting” toward a credential, and certainly any exposure to good mathematical or actuarial material is always a good thing. The CAS will continue to accept SOA Exams P, FM, and IFM (modified MFE exam) for our preliminary exam requirements. So while there will be one fewer SOA exam credit available via waiver, the vast majority of candidates will already be employed and on their (hopefully CAS!) exam track at the point that candidates would be sitting for their fourth exam.
In my view, these exam changes are good for everyone: our casualty actuarial profession, our CAS members, students (our future practitioners), and faculty. We are all participants in an exciting and evolving field, and we hope you will agree that the quality and relevance of our unique property-casualty actuarial education system will be enhanced by these changes!
We’d welcome your comments or feedback on this blog post, or questions you might have about these exam changes.
In February we were happy to announce that CAS would be taking part in 
Over the course of 2016 our CAS Student Central social media presence expanded and we wanted to use it to reach you directly and answer questions you might have, so we hosted our first 
In the fall, to help give you a broader look at the actuarial profession, we focused the CAS Student Central webinar on 
Compensation – What are they offering financially? The base salaries offered by both companies may be similar, but you must also consider a few other factors. Look at bonus potential (are you even eligible?), student program bonuses and raises for passing exams and receiving credentials, and company benefits. What might seem like a similar pair of salaries may seem very different when you dive into the details.
Career Path – Is there room at your potential employer for growth? Will you be part of a rotational program or will you be slotted into a role for the foreseeable future? Consider the size of the company and how actuaries move along their career path. If the company is small you might not have the opportunity to move up. If the company is large, you may be doing a very narrowly defined job that will not give you the skills to move forward.
Companionship – Did you like the people you met on your interview? You will be spending a very large portion of your waking hours with your coworkers. If you don’t like them, or there just aren’t many of them, you might find yourself miserable or just plain lonely.
Culture– Does the company culture fit your personality? If you are the laid back type, you might not be happy at a company that has a high speed, constantly changing landscape. Conversely, if you are a high-energy type-A personality, you might not enjoy working for a more conservative, slow paced organization. This is a good topic for questioning during the interview stage, so you can truly understand the company you are working for and how you would fit in terms of temperament.
The CAS has made it easier than ever to run an actuarial case competition for university students! With the help of practicing actuaries and some serious volunteer time, the CAS has developed two case competitions, complete with toolkits that offer you guidance and templates to run your own case competition.
Based on average survey ranking, the most risky Halloween monster is Dracula / Vampires. While no one selected Dracula as the most risky, almost all respondents ranked him (it?) second! Concerns about Dracula, from a risk management perspective, centered primarily around severity: if it bites you, that’s pretty much all she wrote, and you join the can’t-get-enough-of-that-O-positive club. Interestingly, the fact that Dracula is only active at night was used by respondents on both sides of the frequency issue, as an indication that the risk might be both lower and higher: active “only at night” versus “every night.” One person suggested that, from the standpoint of exposures, there’s only one Dracula – but don’t the bitten then also become vampires? Also, it was pointed out that the original Bram Stoker version could shapeshift, and was master of those he “recruited,” and thus had the potential to be a particularly grueling risk. These last few comments demonstrate the importance of correctly ascertaining and defining the essential characteristics of your risk, in order to properly quantify and assess the underlying exposure, as well as the frequency and severity potential.
Here I must embarrassedly provide a caveat. When I first sent this survey to my colleagues, I had included only the first seven monsters – I had somehow forgotten zombies! Several recipients of the survey pointed out this dreadful lacuna (which I contend was caused by the insidiousness of zombies themselves, and their effect on my brain!), but by then it was too late to add zombies to the survey. Nevertheless, a few respondents themselves chose to add zombies to their rankings and, although the sample size is much smaller than for the other classes, zombies did achieve the second-highest risk ranking, very close behind Dracula / Vampires.
This one surprised me a bit – clearly, I’m no horror expert. I thought that, for this dude, exposure would be low because he’s only a problem on nights with a full moon. But others felt that frequency per unit of exposure (on those infrequent nights, he has an insatiable appetite) and severity (if you happen to be in the same room with this guy, you’re probably dead) would be significant, even if the exposure itself is only about once per month.
Coming in fourth on our list of greatest risk-hits are witches and wizards. A problem with them is quantifying the exposure level: you never quite know who is and isn’t a witch (who would have suspected Selena Gomez?!). And, like most of the high-risk-ranking monsters, the potential severity is enormous – one thought, or nose-wiggle, or finger-snap could take out the whole town. On the good side, with respect to frequency of damage, unless they’re provoked, they’re generally not harmful. So “just leave them alone” would be sound risk management advice!
There was some disagreement among respondents regarding The Mummy, and so here’s another example of the need to precisely identify, characterize, and define your risks. Some felt he should be low on the list (perhaps you can simply outrun him). Others were concerned that he’s the one on the list that truly seems to want to kill everyone, and that he himself can be hard to kill, requiring magic or an ancient Egyptian curse. (So I guess we can’t just nuke him?)
Now this is a really interesting one, and it has a very important lesson for actuaries and risk analysts. The responses and rankings on The Grim Reaper had by far the highest standard deviation of any of the eight monster types – i.e., there was more disagreement in the rankings. In fact, roughly the same number of people ranked TGR most risky, as ranked it least risky. I think what has happened here is a common issue: causality versus correlation. Let’s face it: if TGR shows up, you’re pretty much toast. But is TGR the cause of death, or just the messenger (and thus the link between TGR is one of correlation, rather than cause)? My interpretation (and again, we need to define and characterize our risks accurately!) is that death is caused by other factors, and TGR just shows up at the appropriate time. In that sense, TGR would not be risky per se – but would be a rather reliable indicator that death is imminent.
Ghosts were generally low-rated, on the basis that they may be unable to do physical damage (although see Ghostbusters – “I think he can hear you, Ray”), and they tend to stick to their own stomping grounds. But there’s certainly potential for emotional distress and mental damage. Plus, again, how do we know the extent of the exposure?
Not the brightest bulb on the tree, he can be both outrun and out-thought. (But what’s up with that haircut??)
Last month, 
Health or medical insurance. This is a “first-party” insurance coverage, in which the policyholder’s own insurer responds with coverage for injury to the insured, regardless of whether or not a “third party” is liable. In our Pokémon hypothetical, medical expenses associated with your broken ankle, the car driver’s broken wrist, and the pedestrian’s dog bite would likely each be covered by that person’s own medical insurance.
Auto insurance. Damage to the passing car, as well as any liability ascribed to the driver and/or owner of the passing car, would potentially be covered by an auto insurance policy.
covers the liability of the policyholder in two ways: coverage above the policy limits associated with the policyholder’s HO and auto policies, and “drop-down” or “gap” coverage for other types of liability not covered by HO and auto policies.
This may be obvious to many, but your first barrier to entering the actuarial field will be completing at least one actuarial exam. Just about every full-time actuarial opportunity is going to require a minimum of one exam passed, and you will be even more marketable with 2-3 under your belt.
Regardless of being a current student, new college graduate, or career changer, actuarial internship experience will be a valuable addition to your background. I recognize that most internships are offered to current college students. However, on several occasions, I have worked with career changers who have been able to secure internships, even 10+ years out of college. While many internship descriptions may list “must be a current college student,” this is not always the case; it is still worth putting in an internship application, if you have the time, as you never know when a company may have flexibility. Keep in mind that most actuarial internships will also require at least one actuarial exam passed.
Just about every actuarial job description that you review is going to include a combination of programming/computer skills. While Excel tends to be the number one utilized computer skill in the actuarial field, basic Excel skills are not really going to cut it anymore, if you want to be competitive. In addition to Excel, there tends to be quite a bit of demand for the following skills: Access, Visual Basic/VBA, SQL, SAS, C++, and R.
It is quite common for job seekers to write a cover letter template, switch out the company name and position title, and click “submit.” This is a missed opportunity to explain your specific interest in the company and role, and hiring teams may see this as a lack of effort and interest. Do some research, and explain why this company and position make sense for you, long term.
One of the most common reasons that candidates do not move forward after an initial phone interview is that they did not appear to be knowledgeable about the company and position they are interviewing for. Make sure to thoroughly review the company’s website days before your interview, and print out a copy of the job description to have handy for your interviews. Take the time to draw parallels between your background (academics, work experience, technical skills, etc.), and the role you are applying to. It may also be helpful to write out a list that answers “Why am I interested in this specific company and role?” and also “Why am I a good fit?” Make sure to know the lines of business that the company works with.
Adam Noreen is an Actuarial Recruiter at DW Simpson. He has been assisting entry-level candidates and career changers for approximately three years, in securing their first actuarial and analytics positions. Contact Adam at