Ask an Actuary

"Ask an Actuary" features an actuary that is asked to describe the path that led him/her to an actuarial career. For this installment, our featured actuary is J. Paul Cochran, Vice President, Actuarial Services at Old Republic Insurance Company in Chicago, Illinois.

Q: When did you decide you wanted to be an actuary?

A: At age 40, I had decided to go back to school to get my credentials for teaching high school math. The professor teaching Prob Stat continually used problems from something called "actuarial exams". Since I was getting an "A" in the class, I confidently took Part 2 (and failed). Fortunately, I was not deterred by my overconfidence.

Q: What influenced this decision?

A: An enthusiastic professor who liked actuaries (!), a local "career" dinner for actuarial college students, an HR director who talked to me about an actuarial career (and followed through with a job offer), and my lifetime love of numbers and mathematics.

Q: Where did you go to college, and what is your educational background?

A: I graduated from Hanover College with a BA in Chemistry, which included all of the undergraduate math courses. I then decided to pursue a career in music performance, receiving a Master's Degree in piano performance and a doctorate in music composition. This was not exactly the non sequitur that it seems, since I had studied piano privately from the age of four.

Q: What did you do before you were an actuary?

A: I taught college courses in piano and music theory and served as Dean of a School of Music. To make ends meet I also was a church organist and jobbed in nightclubs, weddings, etc.

Q: What classes did you take in college that helped prepare you for the career? What class was most helpful?

A: Certainly the math and physics courses; plane and solid geometry helped. Business courses would have been extremely helpful, especially accounting, but those courses were not encouraged for science or math majors. The computer programming class I took was good, but consider the time period (1968!).

Q: What classes outside of math and statistics (such as communications) were helpful?

A: I had some very good high school English classes, and that has helped me tremendously in my written communications. I would say that pc programming, data management, and relational data bases would be extremely important areas for students today.

Q: Tell me about your first job in the profession. Where did you work? How did you get the job? What did you do?

A: My first job was as an analyst with CNA. I got the job by meeting the head of HR at a student actuarial dinner and asking for an interview. That simple. There happened to be an opening at that time in personal lines pricing, and I was offered the job. My duties consisted of preparing rate filings for personal lines auto. This included rate level indications and various rating plans including territorial rating.

Q: When did you take your first exam? How long did it take you to get through the process?

A: I took my first actuarial exam while taking a Prob Stat course and before being employed as an actuary. This was 20 years after my undergraduate math courses. Please don't imitate this - it was not easy to find my math books, let alone relearn the material!

It took me 7 years to Associateship, 8 more to Fellowship. I did not mind the length of time, since I was working in interesting jobs, moving into management positions, and continuing to pursue music on the weekends. However, I think most would want to "bite the bullet" and get the process over with.

Q: What advice would you give to people preparing to take the exams?

A: Take as many math courses as possible in high school and college. My biggest impediment was not so much understanding as speed of recall and speed in working problems. Each individual is different, but most need to study every day for three to four months. Finally, put "fail" out of your mind. Not passing is not a failure, it is an unpleasant delay in achieving your goal.

Q: What is a typical day like as an actuary?

A: On an analytical level, a typical day would consist of working on spreadsheets to complete a reserve analysis or pricing adequacy review. In a midsize company like mine, there is also opportunity to price a new product, which takes creativity, or respond to an insurance department inquiry, which requires communication skills and tact.

On a management level, a typical day might consist of approving reserve or pricing reviews, conferring with data management over discrepancies, discussing product strategies with operating units, or meeting with senior management of the company to discuss quarter results.

Q: How long have you been in the profession?

A: I have been doing actuarial work for 18 years.

Q: What advice would you give to someone starting out in the profession?

A: It may appear an obvious danger to get caught up in exams to the detriment of the job. But, perhaps surprisingly, I have seen more students get caught up in work to the detriment of exams. Try to keep a balance between the two. Exams are important for your professional credibility and career advancement. Knowledge of how your company operates, how insurance is underwritten, data management, financial statements, profitability projections - all of these make you a valuable employee.