B.S. Mathematics, Oklahoma State U. 1971
M.S. Mathematics, Oklahoma State U. 1972
Al Litchenburg, FSA, is Senior Vice President and Chief Actuary at American Fidelity Assurance Company in Oklahoma City. He is in charge of the Risk Management Division, which consists of actuaries, underwriters, compliance, and support personnel. Here is his description of the actuarial profession.
An actuary is a business executive, professionally trained in the science of mathematical probabilities, who specializes in the evaluation of risk. An actuary is the mathematician behind the premium rates charged by insurance companies.
Actuaries design insurance products, price them, plan their production, and control their quality. The actuary's product is protection against risk. He or she must evaluate risks, taking into account rates of death, fire, accident, sickness, or the like, and also the trends in and the effect of investment earnings and operating expenses.
The mathematics of this pricing is called actuarial science. To become an actuary, one must study special types of mathematics which blend probability, statistics, compound interest, and risk theory. Also, it is important for the actuary to have a thorough understanding of other aspects of the insurance business--investment, accounting, taxation, and law.
An actuary brings together many factors when pricing an insurance product: company experience; industry-wide experience; the effects of new laws and regulations; the economy; competition; and the effects on longevity of advances in medical science.
Actuaries are the financial gatekeepers for their companies. If they do their job, the company will have enough reserves to make all of its claim payments down the road, have enough surplus to keep from going broke in the case of unexpected catastrophes, and meet the return on investment goals of its owners.
In addition to working for insurance companies, you can find actuaries in independent consulting firms, rating bureaus, large corporations, state insurance departments, and other governmental agencies, as well as in teaching at certain universities offering actuarial courses.