Actuarial exam

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Actuarial exams are a series of professional level examinations which must be passed in order to be admitted into an actuarial society, if the society has a "membership through examination" requirement.


Australia[edit]

In Australia, the examinations are offered by Institute of Actuaries of Australia to acquire its fellowships.[1] The primary levels of the examinations can also be taken via some of Australian universities, which will lead to the qualification of the associateship [2],.[3]



Canada[edit]

To qualify as an actuary in Canada, a candidate must become a Fellow of the Canadian Institute of Actuaries (CIA). To do so an individual must be either a Fellow of the Society of Actuaries (FSA) or a Fellow of the Casualty Actuarial Society (FCAS) and meet certain experience and continuing education requirements.

United Kingdom[edit]

In the United Kingdom, exams are offered by the Institute and Faculty of Actuaries. ActEd[4] (The Actuarial Education Company, a subsidiary of BPP Actuarial Education Ltd.) is contracted to provide actuarial tuition for students on behalf of Institute and Faculty Education Ltd (IFE), a subsidiary of the Institute and Faculty of Actuaries.

Students of the Institute and Faculty of Actuaries must sit 15 exams to qualify as a Fellow. In the UK, the term 'actuary' refers exclusively to Fellows of the I&FoA.

The exams [5] are split into four blocks - consisting of 9 'core - technical' exams, 3 'core-applied' exams, 2 'specialist-technical' exams and 1 'specialist-applied' exam. These are commonly referred to as 'CT', 'CA', 'ST' and 'SA' exams. All students must sit all 12 'Core' exams - and then select 2 of the 'ST' exams and 1 of the 'SA' exams.

Completion of exam ST9 (Enterprise Risk Management) will allow a qualified Fellow to also register as a Chartered Enterprise Risk Actuary.

The 'Core Technical' exams are:

Subject CT1 - Financial mathematics Subject CT2 - Finance and financial reporting Subject CT3 - Probability and mathematical statistics Subject CT4 - Models Subject CT5 - Contingencies Subject CT6 - Statistical methods Subject CT7 - Business economics Subject CT8 - Financial economics Subject CT9 - Business awareness (this is a two-day residential)

The 'Core Applied' exams are: Subject CA1 - Actuarial risk management Subject CA2 - Model documentation, analysis and reporting (this is a one day practical assessment) Subject CA3 - Communications (this is a one to two day practical assessment that can be taken online or in-person).

The 'Specialist Technical' exams are: Subject ST1 - Health and care Subject ST2 - Life insurance Subject ST4 - Pensions and other benefits Subject ST5 - Finance and investment A Subject ST6 - Finance and investment B Subject ST7 - General insurance: reserving and capital modelling Subject ST8 - General insurance: pricing Subject ST9 - Enterprise risk management

The 'Specialist Applied' exams are: Subject SA1 - Health and care Subject SA2 - Life insurance Subject SA3 - General insurance Subject SA4 - Pensions and other benefits Subject SA5 - Finance Subject SA6 - Investment

There is also an optional 'practice module' for each of the 6 'SA' exams. The practice module is a legal requirement for reserved roles in the UK finance sector.

All Fellows must also sit a 'Professionalism' course after qualifying. The course is not examined and covers the standard of behaviour expected from a Fellow of the Institute and Faculty of Actuaries.

Members of the US SOA or CAS may also register as Fellows at the UK Institute and Faculty of Actuaries.

United States[edit]

In the United States, the two largest professional organizations are the Society of Actuaries (SOA) and the Casualty Actuarial Society (CAS). CAS members are largely trained to work in the property and casualty insurance field. SOA members are trained to work in other branches of actuarial science. Both organizations have a common set of preliminary exams. CAS has a single set of advanced exams. SOA has five sets of advanced exams, one set for each of their five domains of competency.

Preliminary Exams[edit]

There are five preliminary exams, all of which are multiple choice.

They are administered on computers at Prometric testing centers or via pencil and paper. Candidates are allowed to use a calculator from an approved list.[6] Some tests provide instant feedback as to whether or not a candidate has passed that particular exam (see table below). All test scores (on a 0-10 scale with 6 or higher passing) are posted six to eight weeks after the test.

Through the end of 2013, four of the preliminary exams (all but MLC and 3L) are jointly sponsored by CAS and SOA. In late 2012, SOA announced its intention to end joint sponsorship beginning with tests administered in January 2014. CAS has not announced plans to develop alternative forms of the jointly sponsored exams; however, it will accept SOA exams for CAS credit.

CAS develops exam 3L, an alternative to SOA's exam MLC. Exam 3L covers many life contingencies that are covered by MLC plus statistical techniques not covered by MLC. CAS has announced plans to separate the life contingencies and statistical methods into separate exams. SOA does not recognize CAS's exam 3L.

Changes in Preliminary Exams[edit]

However, in 2013, both the SOA and CAS have decided to make certain changes about the exam policies, all of which are concerned with the Life Contingencies Exams: Life Contingencies Exam (called MLC) for the SOA, and Life Contingencies and Statistics Exam (called 3L) for the CAS.

The SOA has announced that starting in Spring 2014, Exam MLC will change from a solely multiple-choice based exam into one with both multiple choice questions and essay questions. The change is due to the fact that under the development of the syllabus and coverage of the exam, strict multiple-choice questions, SOA administration believes, are not sufficient or adequate to test whether the candidates are familiar and fluent in the material. Also, because of the addition of written-answer questions, the length of the exam has been extended from three hours to four hours. The breakdown will be approximately 4 to 6: 40% multiple choice questions, and 60% written questions. This breakdown, according to the announcement published by the SOA, also applies to the points distributed to these two parts, as well as the time one candidate should spend on each of them. During the new four-hour exam, candidates can freely allocate their time to the two different parts of the exam; there will not be any time limit except for the four-hour total length. The SOA has also stated that the multiple choice questions in the new test form will be easier and thus require less time allocation than the current multiple choice questions so that candidates will have sufficient time to write the written responses. The grade policy has been changed a little as well. The multiple choice part and the written answer will be graded separately. Only candidates who have answered a certain percentage of the multiple-choice questions correctly will have their written answers graded. The final results will be based on the total score the candidate gets.

The CAS also made changes to its Life Contingencies Exam. Effective from January 1, 2014, the CAS will split the Exam 3L into two separate exams: Exam 3LC and 3ST. The materials about survival model and life contingencies will be covered in 3LC, while statistics and stochastic processes parts will be the contents of 3ST. According to the CAS website, it will continue to allow the SOA Exam MLC to be an acceptable substitute for Exam 3LC, but all candidates must also take 3ST. Candidates who have passed either CAS Exam 3L or SOA Exam MLC before January 1, 2014, will be granted credits for both 3LC and 3ST.


SOA ExamCAS ExamExam TitleExam TopicsFormatTests per YearPass/Fail Estimate
P1ProbabilityBasic, univariate, and multivariate probabilityComputer6Yes
FM2Financial MathematicsBasic interest theory, annuities, bonds, loans, cash flows, portfolios, immunization, and financial derivatives, options, hedging, investment strategies, forwards, futures, and swapsComputer6Yes
MFE3FActuarial Models: Financial EconomicsInterest rate models, rational valuation of derivative securities, and risk management techniquesComputer3Yes
MLC3LActuarial Models: Life ContingenciesSurvival models, Markov chain models, life insurances and annuities, Traditional and Universal Life ModelsPaper and pencil2No
C4Construction and Evaluation of Actuarial ModelsSeverity models, frequency models, aggregate models, construction of empirical models, construction and selection of parametric models, estimating failure time and loss, determining the acceptability of a fitted model, credibility, simulationComputer3Yes

Validation by Educational Experience[edit]

Candidates for CAS and SOA membership must pass standardized tests in introductory economics, corporate finance and applied statistics. Applied statistics has two components: regression and time series. Instead of passing exams, candidates may earn credit by passing an approved college class with a B- or better grade or by completing an approved correspondence class.

CAS Advanced Exams[edit]

To earn associate membership (ACAS), a candidate must pass the preliminary exams, VEE, two online modules, exam five, exam six. For an associate to become a fellow (FCAS), exams seven through nine must be passed. The exams are administered on paper-and-pencil. Exam questions generally require an open answer; however, multiple-choice questions are allowed, too. Exam six comes in two versions: one for candidates in the United States and one for candidates in Canada. Traditionally, each exam is only offered once each year either during the early May or late October testing windows; however, beginning in 2013, exam 5 will be offered twice per year, and beginning in 2014, exam 6 will also be offered twice per year.

CAS ExamSubject MatterTest Window
Exam 5Basic Techniques for Ratemaking and Estimating Claim LiabilitiesEarly May, Late October
Exam 6Nation-Specific Examination: Regulation and Financial ReportingEarly May, Late October
Exam 7Estimation of Policy Liabilities, Insurance Company Valuation, and Enterprise Risk ManagementEarly May
Exam 8Advanced RatemakingLate October
Exam 9Financial Risk and Rate of ReturnEarly May

The two modules that must be completed to become an associate are...

ModuleSubject Matter
Module 1Risk Management and Insurance Operations
Module 2Insurance Accounting, Coverage Analysis, Insurance Law, and Insurance Regulation

The exam schedule above starts in 2011. Candidates who passed exams offered before 2011 will be granted credit according to the following schedule. To earn credit for new exam five, a candidate must pass old exam five and old exam six. Candidates who passed one of old exam five and old exam six must pass a sepecial exam covering the remaining material on new exam five.

Old ExamConversion credit
Old Exam 5Half of New Exam 5 on Basic Ratemaking plus Module 1 (Risk Management and Insurance Operations)
Old Exam 6Half of New Exam 5 on Basic Reserving plus New Exam 7
Old Exam 7New Exam 6 plus Module 2 (Insurance Accounting, Coverage Analysis, Insurance Law, and Insurance Regulation)
Old Exam 8New Exam 9
Old Exam 9New Exam 8

SOA Advanced Exams[edit]

After passing the preliminary exams, SOA candidates complete the Fundamentals of Actuarial Practice e-learning course. FAP contains eight learning modules and two assessments. This completes the requirements for associate membership (ASA).

Associates select one of five areas of competence in which they can further their training. Each area has two exams and three learning modules. After passing the required exams and modules, the associate is promoted to fellow (FSA). The exams for Individual Life and Annuities and Retirement Benefits have alternative forms that are specific to Canada and the United States.

TypeEnterprise Risk ManagementInvestmentIndividual Life and AnnuitiesRetirement BenefitsGroup and Health
Exam 1Advanced Finance and Enterprise Risk ManagementAdvanced Portfolio ManagementIndividual Life and Annuities Company/Sponsor PerspectiveRetirement Benefits Company/Sponsor PerspectiveGroup and Health Company/Sponsor Perspective
Exam 2Financial Economic Theory & EngineeringFinancial Economic Theory & EngineeringIndividual Life and Annuities Design and PricingRetirement Benefits Design and PricingGroup and Health Design and Pricing
Module 1Financial and Health EconomicsFinancial and Health EconomicsFinancial and Health EconomicsFinancial and Health EconomicsFinancial and Health Economics
Module 2Financial ReportingInvestment StrategyRegulation and TaxationSocial InsuranceHealth Foundations
Module 3Operational RiskOperational Risk or Financial ReportingOperational Risk or Financial ReportingOperational Risk or Investment StrategyPricing, Reserving, and Forecasting

Other Requirements[edit]

Candidates must pass modules on professionalism.

Chartered Enterprise Risk Analyst[edit]

This is a designation offered by SOA. Candidates must complete all of the preliminary exams except for exam MLC, the Advanced Finance exam and the Operational Risk module.

Enrolled Actuary[edit]

In the US the term "Enrolled Actuary" is applied to an individual who has taken certain exams sponsored by the Joint Board for the Enrollment of Actuaries relating to pension plans. Enrollment in the Joint Board is a requirement for SOA Retirement Fellows working in the US.

The American equivalent of the Canadian Institute of Actuaries is the American Academy of Actuaries (AAA).

Other Nations[edit]

Actuarial bodies in other countries offer their own series of exams (although, as previously noted, there are some countries where the term "actuary" is applied to individuals with a university degree in Actuarial Science).

Notes[edit]

See also[edit]

External links[edit]