Actuarial Exams: An Introduction to Part II and Its Role in the Path to Fellowship, Exams of Business Strategy

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Part II Actuarial Exams

An Introduction

Context: Path to Fellowship

Part I

Part II

Part III

Professionalism Course

FIAA

How does Part II fit into path to

Fellowship?

• Part II is not a hard Part 1 exam.
• It is the easiest Part III exam.
• Introduces common elements of Part III:
  • essay-style exams;
  • unfamiliar context – application of bookwork & often not repetition of bookwork;
  • problem solving method - “control cycle”;
  • consideration of other views.

Control Cycle Framework

(ETC 4110 & ETC 4120)

Specify Problem

Develop Solution Monitor

Professionalism

External Environment

Quantitative v Qualitative

• Go from A to B
• List assumptions/ axioms
  • Develop theory
  • Deep insight into a model
  • Provide an answer in framework
• Change assumption
  • New, more complicated model
  • Still solvable ( at this level) - Stakeholders disagree on assumptions - Can’t agree on where A is - Many paths to B - Multiple answers to B - Answer is often a list of further questions - An actuary’s job is to recognise differences and report on viable options (in appropriate context).

‘Part I’ (^) Part II – akin to Arts

Example of 4th/5th^ year Assignment

• Will open up an 8 page pdf covering 2nd

assignment for ETC 4460/5460 Financial

Econometrics. Assignment is 20% of total

• Note:
  • data provided;
  • models provided;
  • multiple parts to each question;
  • significant amount of guidance on how to solve the questions;
  • very deep knowledge of particular advanced models.

Observations on example ACC

assignment

• Limited information.
• Write a report – to whom?
• Consider audience.
• Large question – no sub-parts.
• Open question.
• No right answer.
• Some basic research required (google).
• Not looking for depth – wide thoughts to

generate many points.

Core skills to practice as an Actuary:

Actuarial Capability Framework

• Contribution to Business Strategy.
• Leadership.
• Holistic problem solving.
• Valuing uncertain cash flows.
• Risk management.
• Professional governance.
• Product development, management and pricing.
• Investment advice and governance.

Suggested Study Pattern

• 2 hour lecture.
• 1 hour tutorial (exam style practice in class).

• 3 - 5 hours pre-reading:

– attend class having read relevant

chapter(s).

• 3 hours homework.
• 1.5 hours revision of last week’s homework.
• 1.5 hours wider material reading.

Exemption Recommendation

• Exam results.
• Assignment marks.
• Participation in the class.
• Homework attempts.
• In-class tests.

CA1 Pass Rates and Exposure

0

200

400

600

800

1000

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40%

45%

50%

55%

Apr-12 Oct-12 Apr-13 Oct-13 Apr-

Number of Candidates

Pass Rates

Total Candidates Pass Rates

Actuaries Institute view on Part III

• Greater responsibility for learning.
• Less structure to study.
• Imbalance of life roles (in full-time employment).
• Increased individual pressure.
• Less contact with others.
• Complex judgment.
• Mastery learning approach – requires deep

learning.