Introduction to

Actuarial Science
OUTLINE
I. What is Actuarial Science?
II. Why should you choose Actuarial Science?
III. How to become an Actuary?
IV. Actuarial Science in the Philippines
V. Actuarial Science in Action
VI. Application of Actuarial Science in Economics
What is Actuarial Science?
 What is Actuarial Science?
Wikipedia defines Actuarial Science as:

“Actuarial science is the discipline that applies

mathematical and statistical methods to assess risk in
insurance, finance and other industries and professions.”
 What is Actuarial Science?
Investopedia defines Actuarial Science as:

“A discipline that assesses financial risks in the insurance

and finance fields using mathematical and statistical
methods.”
 What is Actuarial Science?
In Principles Underlying Actuarial Science (SOA),
Allaben, et. al. defines Actuarial Science as:

“Actuarial science is primarily concerned with the study of

consequences of events that involve risk and uncertainty.
Actuarial practice identifies, analyzes and assists in the
management of the outcomes — including costs and benefits
— associated with events that involve risk and uncertainty.”
What is Actuarial Science?
INVOLVES RISK AND
UNCERTAINTY
 Who is an Actuary?
• Actuarial Science practitioners
• Actuaries Quantify Risk.
• Actuaries are highly sought-after
professionals who develop and
communicate solutions for complex
financial issues. (SOA)
• Actuaries measure and manage
risk. (SOA)
 Who is an Actuary?
• Use scientific actuarial principles so
that the financial aspects of
uncertainties can be exchanged for
the certainty of a premium payment.
(ASP)
• A combination of a business
executive, mathematician, financier,
sociologist and investment
manager. (ASP)
Why should you choose Actuarial Science?
1. Top Ranked Job

A. Top 10 Highest Paying Jobs for Fresh Graduates in

2017 (Jobstreet)
B. Top 25 Highest Paying Jobs in 2016 (Time Magazine)
C. Top 25 Highest Paying Jobs with Less Stress in 2016
(Business Insider)
Why should you choose Actuarial Science?
2. Salary (Earn while you Learn)
Median Salary of Actuarial Analyst in the Philippines
~ P30,000/month. (Payscale.com)

3. Balance of Work Life

4. Smart Work
Problem solving, critical thinking, real world problems,
and more.
Why should you choose Actuarial Science?
5. Expanding Industry
 How to become an Actuary?
1. Go to College

A. Undergraduate Degree
a. Actuarial Science
b. Statistics
c. Mathematics
d. Physics, Engineering, … ?

B. School
 How to become an Actuary?
2. Study Hard and Smart

• Invest in Mathematics and Statistics

• Take up subjects in Mathematics, Statistics,
Economics, Programming, or Business
Management.
 How to become an Actuary?
3. Take and Pass Actuarial Exams (As early as
possible)

A. Society of Actuaries (ASA & FSA)

a. 9+ Exams
b. VEEs
c. Seminars

Check: http://www.soa.org/
 How to become an Actuary?
3. Take and Pass Actuarial Exams (As early as
possible)

B. Casualty Actuarial Society (ASA & FSA)

a. 11 Exams
b. VEEs
c. Seminars

Check: http://www.casact.org/
 How to become an Actuary?
4. Gain Work Experience

A. Life Insurance Companies (SunLife, CocoLife,

Manulife)
B. Non-life Insurance Companies (Malayan Insurance,
UCPB Gen)
C. Banks and Other Financial Institutions (BDO, BPI)
D. Government (SSS, GSIS)
 Actuarial Science in the Philippines
• Not as diverse and numerous in U.S.

• Traditionally practiced in the Life Insurance Industry.

• Determine the chances of future risks, like birth, disability,

accidental injury, fire, damage to property, need for
medical care, or premature death, and calculate the cost
of financing these uncertain events by insurance or other
related means.
Actuarial Science in Action
Calculating Reserves
Actuarial Exams
Actuarial Software
Role of Actuarial Science in
Economics
Two Distinct Discipline
• Actuarial Science:

 Multi-disciplinary field which uses mathematics and statistics to

measure and evaluate risks and uncertainty.

• Economics:

 The science that deals with the production, distribution, and

consumption of commodities. Involves allocation of scarce resources.
Combining Finance and Economics
• Financial Economics:

 Financial economics is a branch of economics that analyzes the use

and distribution of resources in financial markets in which decisions are
made under uncertainty. (Investopedia)

 This is where Actuarial Science is of use.

Application of Actuarial Science in Financial
Economics
• Complex Financial Models where Actuarial Science is of use:

1. Derivatives
2. Options
3. Black-Scholes Options
4. Futures
5. Swaps
6. Stochastic Calculus in Finance

• An Actuarial Exam is made specifically for this matter.

Application of Actuarial Science in Financial
Economics
• Actuarial science quantifies the risk involved in the mentioned
financial models which would be utilized in Insurance and other
financial Industries.
Thank you!