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Many young people in Zimbabwe seem to think that the only thing maths is used for, teaching aside, is actuarial science. I don't agree with this at all, but to satisfy all those who've been pestering me for infoon this highly - er - unique career, here's an article giving all they need to know. Readers from outside Southern Africa will find a lot of this quite regionalistic and may prefer to go to the bottom of the page for links to various actuarial sites.
I talked to Mike Rachman, an actuary working at Zimbabwe's largest insurance company, Old Mutual. He was born in Zimbabwe in the early 1960s and was sponsored by the company to do the actuarial science degree at the University of Cape Town. After completing that, he worked for four years in South Africa before transferring to the office in the UK, which had only recently been purchased. In late 1994, Old Mutual approached him to see if he'd like to work in the country of his birth for a while. He arrived in January 1996, joining three other actuaries already working at the Zimbabwean insurance giant.
An actuary is someone who works in the insurance industry working out insurance policies, designing pension schemes, planning investments and tackling various problems of general insurance. This is not to say that actuaries do all these things simultaneously --- they tend to specialise in one or two of the above areas.
Being an actuary isn't an easy job. It's often necessary to satisfy several parties simultaneously, and powerful optimisation techniques are required. And since everything is based on the probability of people kicking the bucket and stuff like that, statistics is absolutely essential. A good business sense is also needed, I'll get to that in the next section. To qualify as an actuary is a long and arduous process. Most people tend to study while working, and this is not the easiest thing in the world. A powerful determination to succeed is a prerequisite, as is a sound ability to think clearly and logically.
Being an actuary is no joke and often involves a lot of tightrope walking as one tries to balance the needs of all parties involved in each problem. So do actuaries have a million formulae firmly implanted in their brains that can be hurled upon any situation that happens to pass their way? No. The formulae are certainly there, but they use a lot of judgement, based on acquired experience. It's common for actuaries to disagree; and in many cases there is simply no one correct answer.
A common belief is that being good in maths is the only thing needed to become an actuary. Is this true? Mike felt that the importance of maths to the actuarial profession has been overemphasised, though other actuaries may not agree! For while a good head for maths is a necessity for actuaries, it is not enough. One also needs other things, like a good understanding of how businesses work. Consider that many actuaries are involved with pensions schemes. This means that they have to advise the financial directors of various other companies about how their schemes can work --- if the company pays too much for its employees' pensions, it may run into cash flow problems, but if it pays too little it may not be able to give its employees the pensions they deserve. One cannot just give advice without knowing something of the background in which it is given.
There is quite a difference in the way actuaries are educated in Britain and Southern Africa. In South Africa in particular, companies recruit bright school leavers and send them off to some varsity to do a degree in actuarial science (In Zimbabwe the Old Mutual sponsors about one student a year to a South African university but also offers on-the-job training). In Britain, graduates (especially maths and statistics) tend to be recruited. So having an actuarial science degree is highly valued in Southern Africa, but not in the UK. In fact, in the circles Mike moved in, actuaries looked down upon those with actuarial degrees! The advantage of the actuarial degree is that if you do well enough you will be exempted from some of the intermediate examinations, reducing the number of exams to be written and thus shortening the period to qualification. However, it may leave you with a less open mind.
Which universities offer undergraduate actuarial science degrees that are accredited by the Faculty and Institute? In the UK, there's Herriot-Watt in Edinburgh, City in London, Canterbury in Kent, University College in Swansea, Southampton and the London School of Economics. In South Africa, where there is an excess of institutions considering their population, there's Cape Town, Witswatersrand, Stellenbosch, Rand Afrikaans and Pretoria. There are other universities in other parts of the world, too.
Exams in Britain are set by two bodies --- the Institute of Actuaries (London) and the Faculty of Actuaries (Edinburgh). There are other bodies in other parts of the world, like the Society of Actuaries in the USA, I only have information on the British ones though.
There are two phases to the exams - Intermediate and Final. The former consists of subjects A to D, while the latter is subjects E to Q.
The Intermediate subjects are technical subjects that provide tools with which to attack real-life problems met later on. For instance, a major component of actuarial maths is life contingencies. This involves calculating the premiums that a x year old man/woma n with diabetes/cancer/heart problems/etc must pay in order to receive a payment of £y after z years and so on. Another important topic is mortality rates, which is the derivation of death rates for the population and particular sections of the population. This is not as simple as it sounds.
In the real world, what happens is that after a census, a standard table representing population mortality will be derived by actuaries. In developed countries similar investigations are also done in respect of specific portions of the population e.g. those taking out life insurance, or pensioners. But these cannot necessarily be used directly. It is almost always necessary to extract more specific information, e.g. what is the mortality rate for the group of people who are more likely to take out insurance with the actuary's own office (which may for example be targeting the high socio-economic group). This requires considerable skill and judgement and only an experienced actuary can do this.
Economics and Finance is an introduction to business terms and principles, eg accounting, corporate debt (how a company should take out a large loan so that it can be repaid in the easiest possible way, the financial consequences of the loan on the organisation, etc). Statistics consists of both pure and applied areas. Most accredited actuarial science degrees, eg the Cape Town one, train their students in these intermediate subject areas. So if you pass the corresponding course with more than 60\% at university, you will be exempted from the actual exams.
The exams are tough. The pass rate for the Intermediate stage exams is about 50-60% in the UK, while those who write the exams outside the UK tend to do worse, for various reasons - the exams are based on British working conditions; there are many actuaries in the UK, which means it's easier for students there to get help; and English is often only a second language for many overseas candidates. Most of those who write the exams are not at university. They may be straight out of A-level, or graduates, but tend to be working full-time at an insurance company while studying for the exams at night and on weekends. Rather like chartered accountancy. Each subject (except Q) has two papers. Most people write one subject every 6 to 12 months, though some brilliant people attempt 2 subjects simultaneously.The Final Exams E to H are the practical areas that actuaries deal with. Notice that, contrary to popular belief, not all actuaries work in insurance. A major application of actuarial science is in pensions, which is quite different from insurance, and many consultants work in this area. The pass rate for the final exams in the UK is only about 30% (that's for the 60% who passed through the first stage!) and the overseas pass rate is considerably lower.
Examination Q is the final qualifying exam. For paper one, candidates haveto totally master any one of the four subject areas E to H at an even higherlevel. They then walk into the exam, where difficult (and very compulsory)questions in their chosen specialisation await them. Paper 2 is acommunication paper with one compulsory question (the same for everybodyregardless of their specialist subject) involving writing a report to aclient expressing actuarial concepts in layman's terms. The question caninvolve anything covered in the previous exams E to H!
But what happens to people who fail the exams? Opportunities are still there, particularly for those who have passed at least a few exams. They are usually absorbed by their organization into responsible positions. Many move into marketing, computers, etc and there are many failed actuaries worldwide who have risen to the top of their organization! The problem might be for people who could have qualified in other professions, but go for actuarial science and fail, leaving them with no qualifications in either profession.
There are less than ten fully qualified actuaries in Zimbabwe --- 5 at Old Mutual, 1 at First Mutual, 2 at Watson Wyatt Worldwide Consulting and 1 at Pentact Consulting. Of these, only one is Zimbabwean citizen - Abednigo Sibanda at Watsons. The others are from SA, UK, India and Zambia. There are about 10 Zimbabweans (1 women among them) who have qualified as actuaries but most are working in SA. Old Mutual has some Zimbabwean students who are currently working towards passing the exams but it will be a long time --- at least 15 to 20 years --- before all actuaries working in Zimbabwe are Zimbabweans. So if you want to start on the long road to qualifying, do so!
What's a typical day in the life of an actuary? None --- every day is different. The only thing in common is hard work and long hours (due to the shortage of actuaries in Zimbabwe)! It's an office job, but being involved with pensions means that Mike often travels to his clients' workplaces to discuss pension schemes. Balancing the demands of the job and home is quite tricky but, being single, he hasn't faced that much of a problem in that respect yet! Taking a break is essential. He has never had any regrets though, and cannot see himself in any other job. He enjoys the variety each day brings, and looks forward to more young people joining the profession.
All these were working on 21 Feb 97. Inform us if you know any others, or if any of these sites decide to retire from public service...