## What do they actually do?

An actuary is a professional who deals with the measurement and management of risk and uncertainty.

The mathematics and finance needed to scientifically measure – and mitigate – risks have their origins in the 17th century studies of probability and annuities. Actuaries use advanced skills developed primarily in mathematics, particularly calculus-based probability and mathematical statistics, and for this reason actuaries are essential to the Re/Insurance industries in London and Bermuda.

Actuaries assemble and analyse data to estimate the probability and likely cost of the occurrence of an event such as death, sickness, injury, disability, or loss of property.

They also address financial questions, including those involving the level of pension contributions required to produce a certain retirement income and the way in which a company should invest resources to maximise its return on investments in the light of potential risk. Accordingly, actuaries help design and price insurance policies, pension plans, and other financial strategies in a manner that will help ensure that the plans are maintained on a sound financial basis.

Most traditional actuarial disciplines fall into two main categories: life and non-life.

• Life actuaries, which include health and pension actuaries, primarily deal with mortality risk, morbidity risk and investment risk. Products prominent in their work include life insurance, annuities, pensions, and other forms of short- and long-term insurance (for examples health, disability, care)
• Non-life actuaries, also known as property and casualty or general insurance actuaries, deal with both physical and legal risks that affect people or their property. Products prominent in their work include auto insurance, homeowners’ insurance, workers’ compensation, product liability insurance, marine insurance and terrorism insurance

On both the life and non-life/casualty sides, as defined above, the classical function of actuaries is to calculate premiums and reserves for insurance policies covering various risks:

• On the life side, the analysis often involves quantifying how much a potential sum of money or a financial liability will be worth at different points in the future
• On the non-life side, this analysis often involves quantifying the probability (frequency) of a loss event and the size (severity) of that loss event. The amount of time that occurs before the loss event is important, as the insurer will not have to pay anything until after the event has occurred

Stochastic models are often used to determine frequency and severity distributions and the parameters of these distributions. Forecasting interest yields and currency movements also plays a role in determining future costs, especially on the life side.

Note that actuaries do not always attempt to predict aggregate future events: their work may relate to determining the cost of financial liabilities that have already occurred, known as retrospective reinsurance, or the development/ re-pricing of new products.

Additionally, actuaries are involved in investment advice and asset management, and they can be business managers and CFOs. A modern area in which insurance and investments cross over is ILS [read about Insurance Linked Securities here] and this clearly requires both actuarial and finance skills.

If you are an actuary and interested in working in the Bermuda/Caribbean region, visit our jobs portal to see the latest vacancies. Our site also includes a downloadable All You Need to Know guide which will tell you all you need to know about living and working offshore.