Actuarial Studies brochure 2012

Undergraduate information

Actuarial Studies Actuarial modelling Actuarial statistics Financial mathematics Models for insurance and finance

Actuarial Studies

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Contents What is actuarial studies?

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Majoring in actuarial studies Specialist areas Double majors Sample course plan

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Focus on first year actuarial studies

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Bachelor of Commerce graduate pathways Honours Careers Professional accreditation Graduate study in actuarial studies

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“The Actuarial major is quite challenging, and it has taught me a lot of useful skills – from the highly analytical and mathematics based right through to the more managerial side. Actuarial is a combination of statistics, probability and finance, so you get to study a lot of interesting maths and learn a lot of statistical techniques, but you also get to ground this in finance and learn about the pricing of different instruments.

Studying commerce has given me a great opportunity to meet a very diverse group of people. The Faculty of Business and Economics work very hard to ensure that each student is able to make the most of their degree, meet as many like-minded people as they can, and even form industry links through networking events.�

James Morris James Morris is a current Bachelor of Commerce student majoring in Actuarial Studies, and was the 2011 President of the Actuarial Students Society.

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Bachelor of Commerce

What is actuarial studies?

The work of an actuary involves the assessment, evaluation and management of the financial risks faced by individuals, companies and governments as they plan for the future. These risks vary from an illness, disability or death to the effects of a cyclone, earthquake or major economic or social change. The actuary’s work is based upon a multi-disciplinary background of mathematics, statistics, demography, finance and economics.

As a result of this multi-disciplinary background and their strong analytical skills, actuaries serve as financial advisers to a wide range of commercial organisations including life, general and health insurance companies, superannuation funds, banks, other financial institutions and governments.

In most cases they are asked to tackle a wide range of problems, most of which involve some uncertainty about the future.

Five reasons to choose actuarial studies at Melbourne 1. Teaching excellence

3. Professional accreditation

The Centre is committed to the highest standards of teaching. You will be taught by experts in their fields.

The approach to teaching balances the theoretical and practical aspects (one does not go without the other).

We devote significant resources to teaching, for instance: all material online, qualified tutors and small tutorial groups.

The University of Melbourne is one of only five universities in Australia to be fully accredited by the Australian actuarial profession. As such, our students are on a fast track to a professional actuarial qualification.

2. Research excellence

The Centre is a leading international research group. Our teaching is research led so that our students are exposed to current developments in the field.

4. Strong industry links

Staff bring a wealth of industry experience to the program.

Additionally, leading practitioners contribute to the teaching of the program, exposing students to the latest developments in their fields.

5. Active Students’ Society

The Actuarial Students’ Society provides support to students and encouragement to enjoy university life outside of studies.

“Choosing the Bachelor of Commerce at the University of Melbourne was the best decision I could have made.

I enjoy every moment of my studies, have made many friendships among my classmates, and am confident the skills I’ve developed in my degree will be useful and relevant to my employment upon graduation.”

Shona Wills Shona completed the Bachelor of Commerce (Honours) in 2009. She majored in actuarial studies and commenced a graduate position with McKinsey & Company in 2010. Shona was a Melbourne National Scholar and went on to receive the Commerce Honours Scholarship as well as the Goldman Sachs JBWere Final Year Scholarship.

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Majoring in actuarial studies Students who complete a major in actuarial studies will have a firm grounding in the traditional actuarial skill set of probability and statistics, financial mathematics, and life insurance mathematics.

Specialist areas Financial mathematics

Life insurance mathematics

Actuarial statistics

Studies in financial mathematics cover the basics of the theory of interest, investment mathematics and stochastic models for asset returns. These skills are relevant to all actuaries and have wide applicability throughout the financial sector.

Studies in life insurance mathematics involve building probability models of human mortality and morbidity, and combining these with a financial model in order to price and reserve for life insurance policies. This is called the “valuation� of insurance policies, and is performed by all actuaries working in life insurance. It is also important in superannuation, in which case the valuation is often undertaken by firms of consulting actuaries.

The analysis of actuarial statistics is important in all areas of actuarial work, perhaps most so in the field of general insurance. General insurance refers to any type of insurance that is not insurance on a human life and includes common forms of insurance such as motor vehicle insurance. Actuaries calculate quantities such as premiums and the appropriate level of no claims discount for different types of general insurance. Actuaries working in general insurance are usually employed either by general insurance companies or by firms of consulting actuaries.

1st year

Introduction to Actuarial Studies Financial Mathematics I

2nd year

Financial Mathematics II Probability Statistics

3rd year

Financial Mathematics III Models for Insurance and Finance

1st year

Introduction to Actuarial Studies Financial Mathematics I

2nd year

Financial Mathematics II Probability Statistics

plus advanced study at honours level 3rd year

1st year

Introduction to Actuarial Studies Financial Mathematics I

2nd year

Financial Mathematics II Probability

Actuarial Modelling I

Statistics

Contingencies (double subject) 3rd year

Actuarial Modelling II Actuarial Statistics plus advanced study at honours level

Sandhya is currently in her final year of the Bachelor of Commerce majoring in actuarial studies. Sandhya was one of the two inaugural recipients of the Commerce Opportunity Bursary.

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Bachelor of Commerce

“The Melbourne BCom is the only degree available in Victoria that is fully accredited by the Actuaries Institute, and is ranked as having the best university actuarial studies program in Australia. I never had a single reason to even consider another university.

Pursuing actuarial studies has been a thoroughly challenging and invigorating experience. Some of the mathematics behind the models presented is incredible – it is exciting to know that I am learning the frameworks which real companies use to assess their investment opportunities.”

Ben Burger Ben completed the Bachelor of Commerce (Honours) in actuarial studies. He now works at Taylor Fry Consulting Actuaries in Melbourne.

Double majors

Students choosing the actuarial major with the intention of pursuing full professional accreditation cannot complete a double major in the Bachelor of Commerce.

Sample course plan

1st Year

2nd Year

3rd Year

Semester 1

Introductory Microeconomics

Accounting Reports and Analysis

Accelerated Mathematics 1

Commerce elective

Semester 2

Introductory Macroeconomics

Accounting Transactions and Analysis

Accelerated Mathematics 2

Introduction to Actuarial Studies

Semester 1

Organisational Behaviour

Probability

Financial Mathematics 1

Business Finance

Semester 2

Intermediate Macroeconomics

Statistics

Financial Mathematics 2

Breadth (non-maths)

Semester 1

Actuarial Modelling 1

Actuarial Modelling 2

Financial Mathematics 3

Breadth (non-maths)

Semester 2

Contingencies (double subject)

Actuarial Statistics

Models for Insurance and Finance

Compulsory subjects

Actuarial subjects

Accounting subjects

Finance subjects

Commerce elective subjects

Breadth

The above example shows how you can major in actuarial studies, meet honours entry and professional accreditation requirements.

Students pursuing accreditation in actuarial studies (defined as those students who successfully complete Actuarial Modelling I) are not required to complete at least 75 breadth points (six subjects). However they must take at least 75 points outside the core program including two mathematics subjects, probability and statistics.

Each subject is usually worth 12.5 points.

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“I enjoyed the challenges offered by the course. The core technical subjects for the actuarial major were very relevant and well structured. Breadth subjects allowed me to expand in areas that were not immediately within the scope of my major. I have made many good friendships that I am sure will be valuable to me for many years into the future.�

Viola Chan Viola completed her Bachelor of Commerce in 2011, after moving down from Brisbane in order to pursue her major of Actuarial Studies. She currently works as an actuarial graduate at Deloitte

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Bachelor of Commerce

The Basement Lecture Theatre in the Business and Economics building

Focus on first year actuarial studies Subject name: Introduction to Actuarial Studies Contact hours

3 hours per week, comprising 2 lectures and one tutorial Topics covered

The subject provides an introduction to four main areas of study: financial mathematics, demography (the study of populations), actuarial practice, and the valuation of contingent payments.

In financial mathematics, you will learn about compound interest and how to place a value on payments to be made in the future – for example, how much money do we require now to make a payment of $1 million five years from now?

In demography, you will learn about human populations and the key factors of fertility and mortality. Using mathematical models of human mortality, you can answer questions such as: what is the probability that an individual aged 25 will live to age 60?

In actuarial practice, you are given a broad overview of the main areas of actuarial practice and the problems faced by actuaries working in these areas. You will be exposed to real insurance and superannuation products and will be able to perform calculations.

For example, from information given on the UniSuper website (UniSuper is the superannuation fund for Australian university staff), you can work out the amount of superannuation benefits a person would receive on leaving the superannuation fund.

In contingent payments, you combine ideas from financial mathematics, demography and probability theory to place a value on a payment, or set of payments, to be made in the future.

For example, if a person retired from work at age 60 and wanted an income of $50,000 throughout their remaining lifetime, what sum of money should the person save before retirement to secure this income?

Skills developed

You will develop your mathematical modelling skills and learn the techniques required to price basic financial contracts.

You will also develop an awareness of the environment in which actuaries operate and of the problems they face.

Assessment

The subject is assessed by a midsemester test (10%), an end of semester exam (70%) and two assignments (10% each). The assignments are usually computer based and are designed to test skills that cannot be examined in a traditional examination.

Please check the Course and Subject Handbook to confirm subject details.

Teaching methods

The subject is taught by a mixture of lectures and tutorials. The lectures have a fairly formal structure, whilst tutorial classes are much more interactive, where you are expected to contribute to solving problems.

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Bachelor of Commerce graduate pathways Upon completing your Bachelor of Commerce with a major in actuarial studies, there are a number of graduate pathways to employment, further study and research.

Bachelor of Commerce Duration: 3 years full time Choose from the following major areas of study: Accounting, Actuarial studies, Business, Economics, Finance, Management, Marketing www.bcom.unimelb.edu.au

Honours Duration: 1 year full time Available in: accounting, finance, actuarial studies, economics, management or marketing or a combination of two areas.

An honours year enables you to extend your knowledge of your major or area of specialisation through higher level honours subjects and by undertaking an independent research thesis in a single area of study under the guidance of an academic supervisor.

Graduate research degrees1 Duration: 2-3 years full time The Graduate School of Business and Economics offers a range of Masters by Research and PhD programs. See www. gsbe.unimelb.edu.au for more information.

Graduate professional development degrees1

Graduate professional entry programs1

Duration: Generally 1.5-2 years full time

Duration: Generally 2-3 years full time

The Graduate School of Business and Economics offers a full suite of graduate business and economics programs with an emphasis on career entry programs for recent graduates and specialist education for professionals. Our expertise spans the fields of accounting, actuarial studies, economics, finance, human resource management, international business and marketing. See www.gsbe.unimelb.edu.au for more information.

Title: Master of, unless otherwise specified: Including: Engineering, Forest Ecosystem Science, Information Systems, Juris Doctor (Law), Science (Management Science), Teaching, Urban Horticulture, Urban Planning. See www. futurestudents.unimelb.edu. au for more information.

Employment Melbourne Commerce graduates enjoy careers both locally and abroad in areas such as accounting services, finance, insurance and superannuation services, banks, mining, manufacturing, utilities and transport services, business, management, advertising, market research and statistical services, legal services, retail and wholesale, and computing and telecommunications services.

See www.bcom.unimelb.edu.au/pathways/careers.html for more information.

1 Selection into these programs is based on performance in an undergraduate degree and additional selection criteria may also apply.

Note this information indicates many but not all the possible pathways to graduate study.

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Bachelor of Commerce

Honours

Careers

An honours year provides an advanced knowledge of actuarial studies and the opportunity to develop your research and communication skills through either a research essay or a set of research projects.

The fast-growing actuarial profession provides employment opportunities throughout Australia and the world.

There are currently over 1,500 qualified actuaries in Australia. More than 25% work in life insurance, where the actuarial profession has its foundations. Nearly 20% work in superannuation, with the remaining actuaries typically working in general insurance, investment management, asset consulting, financial planning and in government.

The honours year also fulfils all the requirements for Associateship of the Institute of Actuaries of Australia. In this fourth year of study you will take advanced coursework in the areas of risk theory and financial mathematics.

Importantly you will also develop your business and academic writing skills and your communication skills by producing some research into an area of actuarial science that has not been widely considered previously. Employers of actuarial graduates are becoming increasingly interested in students who can demonstrate an ability to learn, to adapt to changing situations and to work well within a team. These skills are all honed during the honours year.

To be eligible for entry to honours, students must satisfy the requirements of the BCom degree and obtain a grade of H2B (70%) in at least four level-3 actuarial studies subjects.

Demand for qualified actuaries is growing in health insurance, risk management and financial services. Actuaries also work in non-traditional areas, for example information technology and public infrastructure. In recent years actuaries have played a growing role in banking and finance. The analytical skills of actuaries are seen as invaluable in banking activities including security pricing, valuations linked to mergers and acquisitions, project finance and also the development of enterprise risk management programs.

Typically, a newly qualified actuary would earn around $95,000-$110,000 per annum, with at least an $11,000 increase per year for several years. More senior, experienced professionals would earn in the vicinity of $200,000 per annum.

Career examples for actuarial studies graduates

> Banking and finance > Capital and risk management > Financial planning (retail) > Financial reporting and performance management > General insurance > Health insurance > Investments/asset management > Life insurance: product pricing, design and distribution > Superannuation > Valuation of insurance liabilities and financial instruments Source: Actuaries Institute and Graduate Destinations Survey, University of Melbourne

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Professional accreditation The Centre for Actuarial Studies is fully accredited by the Actuaries Institute, which is the professional actuarial body in Australia. This accreditation means that students can obtain exemption from Parts I and II of the Institute’s professional exams, leading to the designation of actuary and Associate of the Actuaries Institute of Actuaries of Australia (AIAA) on completion of a professionalism course and experience requirements.

To qualify as a Fellow (FIAA), you must pass (or be exempt from) three parts of the professional accreditation as prescribed by the Institute. The first two parts can be undertaken as a part of the Bachelor of Commerce (Honours) degree at the University of Melbourne.

If you complete relevant subjects at the University of Melbourne, and perform sufficiently well, you will be recommended for exemption from the corresponding subjects offered by the Institute.

Should you receive exemption from all corresponding subjects you will be exempt from both Part I and Part II by the end of your honours degree. If you do not obtain the mark needed to achieve exemption you do not need to repeat the subject. As long as you achieve a pass mark or above the subject will still be credited towards your Bachelor of Commerce degree.

Part III of the professional accreditation is set by the Actuaries Institute. These examinations are held in May and October each year and are undertaken after you graduate, while you are working full time.

Graduate study in actuarial studies

The length of time taken to qualify varies from student to student. The FIAA qualification can be achieved in a minimum of five years, but the average time to gain full accreditation is between seven and eight years (including completion of the four year Bachelor of Commerce (Honours) degree.

This is a two year program designed to provide initial actuarial education for graduates with a first degree that includes a strong mathematical or statistical component, for example commerce, mathematics, physics or engineering).

The program enables students who perform at a sufficiently high level in university subjects to receive exemption from all of Part I of the professional actuarial examinations of the Actuaries Institute.

International recognition

Overseas actuarial bodies give recognition for the qualification of Fellow of the Institute of Actuaries of Australia, subject to some supplementary training. There is also partial recognition for exams passed (or obtained through exemptions) under the Institute.

Career entry programs

Master of Actuarial Science

Research higher degree programs

Master of Commerce in Actuarial Studies This is a one year research degree with no coursework component.

Candidates are assessed on the basis of their research thesis. The degree is primarily aimed at honours graduates from the disciplines of actuarial studies, financial mathematics, mathematics and statistics.

PhD in Actuarial Studies This is a three year research degree with no coursework component.

Candidates are assessed on the basis of their research thesis. The degree is primarily aimed at honours or masters graduates from the disciplines of actuarial studies, financial mathematics, mathematics and statistics.

“I really enjoy the study process here which is different from that in high school. The lectures and tutorials give me a comprehensive and intensive image of what we learn. Usually I have to spend some time doing research or discussing with teammates regarding certain issues after class.

Commerce itself is a society-related course which means that what we learn is very relevant to the world. Apart from the theories learned in the subjects, skills such as communication and teamwork are also improved during the three years of study.”

Qiaojun Luo Qiaojun is a current Bachelor of Commerce student majoring in Actuarial Studies. He is an international student from China and is a member of the CCMC Business Consulting Team.

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Bachelor of Commerce

Actuarial Studies

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Need more information?

Commerce Student Centre +61 3 8344 5317 Toll free: 1800 666 300 +61 3 9347 3986 13MELB@unimelb.edu.au www.bcom.unimelb.edu.au

University Information Course Search web site: http://coursesearch.unimelb.edu.au Call the University Information Centre: 1800 801 662

Information Centre Gate 3, Swanston St The University of Melbourne Victoria 3010, Australia + 61 3 8344 6543 + 61 3 9349 1291 13MELB@unimelb.edu.au

Actuarial Studies Undergraduate Information brochure Authorised by: Provost Published by: The Faculty of Business and Economics Copyright: The University of Melbourne, July 2012 CRICOS Provider code: 00116K Intellectual Property: For further information refer to www.unimelb.edu.au/Statutes Copyright: Copyright University of Melbourne 2012. Copyright in this publication is owned by the University and no part of it may be reproduced without the permission of the University.

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Bachelor of Commerce

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