Actuarial professional exams

Professional certification
and the UT program

Passing the exams of the Society of Actuaries (the SoA) or the Casualty Actuarial Society (the CAS) is absolutely essential to a successful actuarial career; students that have passed one or more exams have much better employment opportunities and salaries for both permanent jobs and summer internships. As actuaries often joke: exams aren't important unless you want to get a job.

Detailed official information on certification and exams is available from the SoA on its Website at www.soa.org/education/exam-req/ and from the CAS on its Website at www.casact.org/admissions/. This document that you are reading is an unofficial guide for UT-Austin actuarial students to the most relevant aspects of the exams.

Education is the basis for certification by the SoA or CAS. Some subjects are required as background, some are validated by educational experience, and some are validated by exams administered by the CAS or SoA.

Subjects required as background.
Background subjects needed for success as an actuary—but not formally validated— include calculus (M408K, L, & M (or 408C and M408D), linear algebra (M341 or 340L), accounting (ACC311-12 or 310F), business law (LEB320F or 323), and mathematical statistics (M358K or 378K)—and note that statistics is examined by the CAS as part of its Exam 3.

Subjects validated by educational experience (by "VEE").
Knowledge of these subjects is most commonly validated by making at least a B- in a college course accepted by the CAS and SoA, although other validation options exist. The subjects, and the most-commonly-used UT-Austin courses automatically accepted for validation by the CAS and SoA, are: micro- and macro-economics (ECO304K & L), business finance (FIN357), and practical data analysis using regression and time series (M349R or MSC371H);  you can find the list of all UT-Austin approved courses under the “U of Texas-Austin” listing at  www.soa.org/education/exam-req/edu-vee.aspx .

Subjects validated by CAS or SoA exams.
SoA Exams P, FM, MFE, and C  are administered jointly with the CAS---which denotes them by 1, 2, 3F, and 4---and count in both the CAS and SoA certification systems. For the CAS, the remaining Preliminary Exam is CAS Exam 3L. For the SoA, the remaining Prelimninary Exam is MLC . Since these Preliminary Exams are the most likely to be relevant to UT-Austin actuarial students, they are the only ones described further here.

Exams P/1, FM/2, MFE/3F, MLC, 3L, and C/4. Content of these Preliminary Exams is described briefly as follows (effective May 2007).
  • Joint Exam P/1 covers calculus-based probability, with many problems set as word problems involving risk.
  • Joint Exam FM/2 covers interest theory and introductory financial mathematics.
  • SoA Exam MLC covers “life contingent” actuarial models, including contingent-payment models and survival models; and special stochastic processes.
  • Joint Exam MFE/3F covers “financial economics”: the basic mathematical analysis of options and other financial derivatives.
  • CAS Exam 3L covers the same general topics as SoA Exam MLC , with different emphases, as well as mathematical statistics. Passing Exam MLC gives you credit from the CAS for Exam 3L.
  • Joint Exam C/4 covers ruin theory; risk measures; frequency- and severity-of-loss and compound models; simulation and its use in modeling; and construction and validation of actuarial models, including credibility theory and estimating and fitting survival models and frequency- and severity-of-loss models.
The Joint SoA/CAS Exam MFE/3F is given in Austin each May and November. Joint Exams P/1, FM/2, and C/4 are computer-based and are given in Austin more often—check with the SoA or CAS for details. Exams MLC and 3L that are specifically for the SoA or the CAS are also usually given in Spring and Fall in Austin. Detailed information on the exam system is available from the SoA and the CAS; phone 847/706-3500 or 703/276-3100, respectively

An ideal Exam schedule for undergraduate students that become interested in actuarial studies as freshmen follows; students that undertake actuarial studies later in their undergraduate careers may well have quite different schedules. The exams can be taken in any order.
  • Joint Exam P/1: near the middle or end of the Sophomore year, or later
  • Joint Exam FM/2: May of the Sophomore year, or later
  • Either SoA Exam MLC or CAS Exam 3L or Joint Exam MFE/3F or C/4: November of the Senior year, or later
Possible schedules for graduate students may vary enormously, depending on their exam status upon arrival.

Some UT courses that cover material for these exams are as follows:


What are the exams like?

The exams aren't easy. The exams are challenging. The exams are HARD! They are long, primarily multiple choice, and usually every question is worth one point; only correct answers count in your score (although the CAS has a "guessing adjustment" on its non-joint exams). Even very strong students find that they must practice, practice, practice on old exams in addition to learning the academic material in their regular classes. They have to learn to be accurate. They have to learn which problems to answer immediately, which to skip until later (if there is time), and on which ones to guess. A score of 65% correct is likely to pass, but it's not easy to get 65% correct. Plan to spend many hours taking complete old exams and sample exams, scoring them, then studying what you missed if you intend to succeed.