1. A. Actuaries

Question 1

What are actuaries?

Answer 1

Acknowledged experts in the analysis and modelling of situations involving financial risk and contingent events

Question 2

With what are actuaries concerned?

Answer 2

Asset and liability management and associated risks (both sides of the balance sheet).
They are able to provide realistic solutions to complex problems with a long-term outlook on issues.

Question 3

Skills actuaries possess

Answer 3

• Highly practical
• Innovative
• Versatile
• Numerate
• Good communicators

Question 4

The first pension fund to be based on actuarial principles

Answer 4

The Scottish Ministers’ Widows Fund

- 1743

Question 5

James Dodson

Answer 5

Mathematician, and the father of modern life insurance.

Question 6

Areas where actuaries have added value and become established in: (5)

Answer 6

• Life insurace
• Pensions
• Investments
• Short-term (general) insurance
• Healthcare financing

Question 7

Actuaries in Life insurance

Answer 7

The design, pricing and valuation of life insurance product.

Question 8

Actuaries in Pensions

Answer 8

Advising on an appropriate set of benefits and the required funding method and rate.

Question 9

Actuaries in Investments

Answer 9

Advising on an appropriate investment strategy for an insurer, taking into account the nature and term of its liabilities.

Question 10

Actuaries in General insurance

Answer 10

Determining the appropriate amount of money to be held in reserves to meet future claims.

Question 11

Wider Actuarial Fields

Answer 11

• Demography
• Government initiatives
• Environmental impact evaluations
• Compensation calculations
• Corporate finance
• Personal financial planning

Question 12

Actuaries in Healthcare financing

Answer 12

Contribution and benefit setting for a medical scheme

Question 13

Actuaries in Demography

Answer 13

The modelling of the AIDS pandemic

Question 14

Actuaries in Government initiatives

Answer 14

Advising on national social security

Question 15

Actuaries on Environmental impact evalutions

Answer 15

Estimating the cost to society of a particular event or activity such as the mining of a dangerous substance such as asbestos

Question 16

Actuaries in compensation calculations

Answer 16

Determination of an individual’s loss of income following a disability caused by an industrial accident.

Question 17

Actuaries in corporate finance

Answer 17

The evaluation of alternative development projects and methods of financing them.

Question 18

Actuaries in personal financial planning

Answer 18

Advising an individual on appropriate death or retirement provisions.

Question 19

5 Values of the actuarial profession

Answer 19

• Expertise
• Integrity
• Professionalism
• Serving the public Interest
• Adding value

Question 20

Integrity

Answer 20

Actuaries aspire to the highest ethical standards. We recognise, raise and resolve conflicts of interest before acting and decline to act rather than compromise our advice.

Question 21

Professionalism

Answer 21

We accept the highest standards of competence set by our professional body. If we fail to meet professional standards we accept the disciplinary procedures of our professional body.
We put the interests of our client ahead of our own.

Question 22

Serving the public interest.

Answer 22

As a professions we do not hesitate to raise public interest issues and enable the public to make informed judgments.

Question 23

Adding Value

Answer 23

We use our training, experience and professional judgement to provide solutions to important problems.

Question 24

How the profession serves the public interest: (4)

Answer 24

• It provides skilled, trustworthy actuaries to meet both business and society’s needs.
• It meets requirements for current or future statutory prudential roles in the financial management of all major financial institutions such as Life and General Insurance Companies, Pension Funds and Banks.
• Its members are willing to accept roles which ensure financial protection for consumers.
• It provides authoritative and objective input to public debate.

Question 25

3 Key areas where further steps are continually needed to achieve the vision

Answer 25

• Serving the Public Interest
• Broadening the Profession
• Marketing the Profession

Question 26

3 Factors driving changes in actuarial education

Answer 26

• Globalisation of the actuarial career
• Changing world
• Mistrust

Question 27

The Profession will need to continually address the issue of increasing mistrust in the following ways: (4)

Answer 27

1. An early introduction to students about what it means to be a professional.
2. A more detailed consideration of professionalism issues when a student qualifies to become an actuary.
3. A system to ensure that newly qualified actuaries have acquired sufficient relevant work-based learning/skills.
4. A system of continued post-qualification education/development to ensure that skills and professional standards remain up-to-date.

Question 28

The 2 tradisional areas where actuaries have added value

Answer 28

• Life insurance

- Retirement funding

Question 29

Under life insurance, actuaries have had a central role in: (5)

Answer 29

• Valuation of assets and long-term liabilities to ensure solvency of life insurers
• Design and pricing of life insurance products
• Investment advice
• Risk identification and management
• Developing mortality (and morbidity) experience tables

Question 30

Actuaries have added value to the Retirement Funding area in the following ways: (4)

Answer 30

1. Valuation of pension fund liabilities and the assets backing them to ensure the retirement fund is sound (statutory responsibility)
2. The sound financial management of retirement funds.
3. Design and pricing of retirement funds.
4. Investment advice