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International Professional Meeting„Strengthening the profession“Warsaw, 4-5th September 2006

Education of Actuaries:Training and Education, offered bythe European Actuarial Academy

(EAA)

Dr. Martin Balleer

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to to introduceintroduce myselfmyself……

• Past president (1995-2003) German Actuarial Association (DAV)

• Honoury Fellow Institute of Actuaries and Swiss ActuarialAssociation (SAV)

• Past member resp. chairman of several committees in IAA and Groupe Consultatif

• Member of Advisory Board German Supervisory Authority(BaFin) since 1997

• Professional background: Board member of Gothaer Insurance Group 1975 – 2002

• EAA background: Initiator and founding member; chairman of the Advisory Board

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to face to face thethe trendtrend in in actuarialactuarial competencecompetence……..

Solvency rules are based on actuarial knowledge and technicsIFRS (claims reserves !) asks for actuarial technicsPremium calculation in life is based on actuarialtechnics; non-life insurance is following dramaticallyPortfolio projection will be based on stochastic actuarialmethods - incl. asset portfoliosActuarial report will be extended to an actuarial risk report in both life and non-life insurance, especially whenusing internal models in Solvency IIResponsible actuary will take over resposibilities even in non-life

Conclusion: Actuarial skills will get major importance!!!

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to to introduceintroduce thethe topicstopics……

Key Key statementstatement::An An efficientefficient insurance insurance industryindustry cannotcannotsurvivesurvive withoutwithout actuarialactuarial competencecompetence !!

Key Key challengechallenge::HowHow to to developdevelop an an strengthenstrengthen actuarialactuarial

infrastructureinfrastructure in Central and Eastern in Central and Eastern Europe?Europe?

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to to developdevelop an an actuarialactuarial infrastructureinfrastructure……

Actuarial

AssociationResponsible

Actuary

• Licensing of companies• Control of misuse, fulfilling

legal framework, solvency

• Membership

• Codes of conduct

• Actuarial guidance notes

•Professional representation(national, international)

•Education/advanced training•Actuarial guidance notes•Codes of conduct

•Legally definedresponsibilities to supervise long termsolvency of the company

Actuarial report Actuarial guidance notes

Supervisory

Authority

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to to developdevelop an an actuarialactuarial infrastructureinfrastructure……

Supervisory

Responsible Actuary Actuarial

Association

Auditor

Actuarial guidance notes

Codes of conduct

Actuarial report

accountantprinciples and rules

ChamberChamberof of auditorsauditors

Company Company levellevel InstitutionalInstitutional levellevel

actuarial guidancenotes

Comment: It´s of great importance in emerging markets to develop thefunction of a responsible actuary within the companies, if possible, in order to strenghten the companies´ actuarial competence.

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to analyse the situation …

• Different situations in the CEE/CIS-countries regardingactuarial infrastructure concerning– the role of the responsible actuaries and supervisory authorities– the status of actuarial education– the status of actuarial associations

• Except for some countries the actuarial education is noton the level of the international core syllabus (GroupeConsultatif/IAA)

• Smaller countries are not able to develop and to financea high levelled education system

• Depending on the status of the actuarial profession thereis a discussion between university based and practicedriven education

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to to introduceintroduce EAAEAA……

„It is the vision of EAA to develop a modern training and further education programme for actuaries. Special consideration will be given to the requirements in the “Central Eastern European” (CEE) countries and the CIS states....”(statues of EAA)

An initiative of the four central European actuarial associationAn initiative of the four central European actuarial associations:s:

ÖÖsterreichischesterreichische AktuarvereinigungAktuarvereinigung (A)(A)ActuarieelActuarieel GenootschapGenootschap (NL)(NL)Deutsche Deutsche AktuarvereinigungAktuarvereinigung (D) (D) SchweizerischeSchweizerische AktuarvereinigungAktuarvereinigung (CH)(CH)

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to manage EAAto manage EAA……

Founder- Associations A, CH, D, NLGUS/CEE-Countries.

Advisory Board Management Board

Office Education Advanced actuarial training

• Organisation• Marketing• Accounting• Coordination• Public relations

• Development andsupervision of theeducation system

• Development ofactuarial training(CPD)

Cologne (D) Woerden (NL) Vienna (A) Zurich (CH)

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to to integrateintegrate thethe CIS/CEE CIS/CEE –– countriescountries……

•• RepresentationRepresentation of of thethe East European East European actuarialactuarial associationsassociations in in thethe AdvisoryAdvisory BoardBoard

•• Flexible Flexible subsidiarysubsidiary principleprinciple regardingregarding educationeducation::–– TheThe national national actuaryactuary associationsassociations areare responsibleresponsible forfor thethe

actuarialactuarial educationeducation and and examinationexamination accordingaccording to to national national lawslaws und und practicespractices

–– EAA will EAA will supportsupport thethe national national associationsassociations byby providingprovidingsupportsupport to to developdevelop an an actuarialactuarial educationeducation systemsystem and to and to covercover topicstopics thatthat cannotcannot bebe offeredoffered byby thethe national national associationsassociations

–– EAA EAA offersoffers thethe fullfull rangerange of of actuarialactuarial educationeducation accordingaccordingthethe corecore syllabussyllabus of of thethe GroupeGroupe ConsultatifConsultatif; ; thethe modulesmodulescancan bebe integratedintegrated fullyfully oror partlypartly in in thethe national national educationeducationsystemsystem

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to to introduceintroduce thethe targetstargets of EAAof EAA……

• Promotion of the professional actuarial knowledge and actuarial expertise in Central and East European countries(CEE, GUS) by developing a modern system of actuarialeducation and advanced actuarial training based on thecore syllabus of the Groupe Consultatif

• Promotion of the actuarial education at universities and colleges via integration into the education and trainingsystem of the national actuarial associations and of EAA

• Promotion of further education even in the founder-associations of EAA

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to to offeroffer seminarsseminars and and actuarialactuarial educationeducation ……

ConcreteConcrete actionsactions::

•• OfferingOffering seminarsseminars of of advancedadvanced educationeducation on on actuarialactuarial topicstopicsprimarilyprimarily in in thethe CEECEE-- and and GUSGUS--countriescountries

•• DevelopingDeveloping an an educationeducation systemsystem forfor youngyoung actuariesactuaries byby achievingachievingthethe highesthighest standardstandard bringingbringing in in thethe experiencesexperiences of all of all associationsassociations thatthat participateparticipate in EAA in EAA

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to to offeroffer seminarsseminars on on actuarialactuarial topicstopics……

2002: Budapest2003: Warsaw2003: Salzburg2004: Prague2004: Ljubljana2005: Riga2005: Zagreb2006: Basle2006: Moscow2006: Bratislava2006: Tallinn2006: Cologne2006: Bucharest2007: Vilnius2007: Kiev2007: Vienna2007: Budapest

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to to offeroffer seminarsseminars on on actuarialactuarial topicstopics……

Budapest: Topical Actuarial IssuesWarsaw. Topical Actuarial IssuesSalzburg: Actuarial Aspects of Capital ManagementPrague: Actuarial workshop on occasion of 100 years of the

universities actuarial education in PragueLjubljana: Fair value for life insurance actuariesRiga: Risk ManagementBasle: Fair value for life insurance actuariesZagreb: International accounting standards and solvency IIMoscow: Key Actuarial TechnicsBratislava: Economic Capital for Insurance CompaniesTallin: Practical models in Solvency II frameworkCologne: Market Consistent Valuation of Life Insurance LiabilitiesBucharest: Pricing of ProductsVilnius: Solvency II related topicKiev: (in preparation)Vienna: Asset ManagementBudapest: (in preparation)

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to offer an actuarial education…

–– Curriculum for the postgraduate education of actuariesCurriculum for the postgraduate education of actuaries

–– Full alignment to the Full alignment to the GroupeGroupe ConsultatifConsultatif core syllabuscore syllabus

–– High degree of distance learning (electronic platform)High degree of distance learning (electronic platform)

–– English languageEnglish language

–– Based on a logical order of modulesBased on a logical order of modules

–– Intention to upgrade the education to master degreeIntention to upgrade the education to master degree

–– Education Modules already available, courses starting at the Education Modules already available, courses starting at the beginning of 2007beginning of 2007

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to offer an actuarial education…

General outline education for actuary• Three years course• 15 Modules• Each year four terms with 2-4 modules• Virtual classroom 2-3 hours per week per module• A module of 8-16 weeks means

– 16/24/32 hours virtual classroom– A seminar at the end of the course– Written exams after finishing Module

Individual selfstudy

Virtual class room, e-learning Plenary

training

Module

2 ½ hours

Test

8-16 weeks 2/2½ days

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EAA EAA EducationEducation SyllabusSyllabus SurveySurvey (1)(1)

Stage ModuleNumber

Module Time(Hours)

Credits

0 Preliminary

1 ActuarialFoundationand GeneralizedApplications

EAA-0EAA-1EAA-2EAA-3EAA-4EAA-5EAA-6EAA-7EAA-8EAA-9EAA-10

LanguageComputingEconomicsBusiness AdministrationMathematics of Finance IFinance and Financial MarketsMathematics of Finance IIPortfolio ManagementGeneral Insurance IGeneral Insurance IIGeneral Insurance III

32323216 24 3224321624

161616812161216812

MathematicsProbability and statisticsStochastic Processes

123

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EAA EAA EducationEducation SyllabusSyllabus SurveySurvey (2)(2)

Stage ModuleNumber

Module Time(Hours)

Credits

1 Actuarialfoundationand generalizedapplications

2 Countryspecific and specialist

Stochastic Foundation of Life Insurance, Pensions and Living BenefitsLife Insurance ILife Insurance IIPensionsLiving Benefits

EAA-11

EAA-12EAA-13EAA-14EAA-15

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Accounting and financial reportsStructures and Legislative Instruments of theEUCommunication SkillsFurther Regulatory, legislative, cultural and administrative framework of the country, Practical work experience

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24162416

12

12812 8

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EAA EAA EducationEducation SyllabusSyllabus

Module EAA-1 Computing

1. Entry level / Foreknowledge

2. Aim (s)

3. Content / Topics

4. Study credits

5. Teaching and Study Materials

6. Didactics • Theory by self study and Q&A in virtual classroom;• Practical excercises from the book as homework, Plenair discussion on solutions in virtual classroom.

7. Examination • Open questions related to the introduction, written exam• Exercises in Excel

• Basic knowledge of PC’s, Office, and Excel as calculator.• Some experience with PC’s, using them in a daily routine.• Strong developed visual practice.• Keeping track of the big numbers as well as detailed information.

• To provide a grounding in modern computing methods necessary for the work of an actuary;• Basic knowledge on computer and network environments;• Using statistical material in Excel.

• Organisation of data• IT- Supplies• Project Management --- Project work• Maintenance• Practical Exercises in Excel --- Modeling; projections

•16 hours + 16 hours exercises – 16 credits

• Sengupta; Financial Modeling Using Excel and VBA, Wiley, 2004• Ercegovac; Introduction to digital systems, Wiley; ISBN: 0471527998

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EAA EAA EducationEducation SyllabusSyllabus

Module EAA-2 Economics

1. Entry level / Foreknowledge

2. Aim (s)

3. Content / Topics

4. Study credits

5. Teaching and StudyMaterials

6. Didactics Virtual classroom, Discussion on topics, exercises

7. Examination Open questions, written exam, some exercises

No specific foreknowledge. At least primary school and a few years highschool. Level undergraduate.Some basic mathematical knowledge on functions and derivatives.

To provide a grounding in the fundamental concepts of economics as they affect the operation of insurance and other financial systems.

• Supply, demand and equilibrium price (in both free and controlled markets)• Elasticity of supply ad demand• Utility theory and consumer choice (including analysis of insurance problems)• Theory of the firm under differing market structures• General equilibrium theory• Public sector finance and taxation• Aggregate national income: measurement and analysis• The multiplier, accelerator and aggregate supply and demand• Government policies and their effects (direct and via the banking system)• Domestic macroeconomic factors and their management• International trade, exchange rates and the balance of payments.

32 hours – 16 credits

Case&Fair; Economic, H 1 – 4; Pearson/Prentice Hall, ISBN: 0-13-144172-8

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EAA EAA EducationEducation SyllabusSyllabus

Module EAA-8 General Insurance 1

1. Entry level / Foreknowledge

2. Aim (s)

3. Content / Topics

• Principal terms; Benefit types• The needs and roles of various parties• Utility theory and insurance• Individual risk model• Collective risk model• Ruin theory

4. Study credits 32 hours – 16 credits

5. Teaching and Study Materials

• Baranoff; Risk Management and insurance• A global framework for insurer solvency assessment, IAA (2004)• Ryan; Financial condition assessment, British actuarial journal• Vaughan; Fundamentals or risk and insurance•Kaas/Goevaerts/Dhaene/Denuit; Modern Actuarial Risk Theory, Kluwer Academic PublishersChapter 1 - 4

6. Didactics Virtual classroom, Discussion on topics, exercises

7. Examination

Level 0

To get acquainted with the general principles and practice of non-life and generalinsurance.To know the financial environment and the relation between assets and liabilitiesRecognize the different benefit types, calculate their risks and needed solvency

Written exam, exercises

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EAA EAA EducationEducation SyllabusSyllabus

Module EAA-11 Stochastic Foundation of Life Insurance, Pensions and Living Benefits

1. Entry level / Foreknowledge

2. Aim (s)

3. Content / Topics

4. Study credits

5. Teaching and StudyMaterials

6. Didactics Virtual classroom, Discussion on topics, exercises

7. Examination Written exam, exercises

Level 0

Give an introduction to stochastic models of life insurance, pensions and livingbenefits

■ Survival Models■ Multiple Decrements■ Multiple Life Insurance■ Estimatition of transition intensities

■ --- Biometrics (mortality tables, morbidity, selected tables etc.)

24 hours – 12 credits

Gerber, H.-U.: Life insurance mathematics, Springer 1997 (3rd ed.), Chapters 2, 7, 8, 11

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ee--learning based education learning based education

•• Using advantages of traditional teaching and Using advantages of traditional teaching and modern webtechnology (blended learning)modern webtechnology (blended learning)

•• easy technologyeasy technology•• available for nearly everbody (hardware/www)available for nearly everbody (hardware/www)•• use of existing books and materialsuse of existing books and materials•• privacy, high impact privacy, high impact •• place independent: reduction of travel time and place independent: reduction of travel time and

travel coststravel costs•• lessons are onlessons are on--line available (7 days / 24 hours)line available (7 days / 24 hours)

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Virtual classroom

TeacherAustria

StudentCroatia

StudentHungary

StudentAlbania

ee--learning based education learning based education

StudentSlowakia

StudentPoland

StudentSlovenia

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to to sumsum upup……

The challenge• to strengthen actuarial competence by implementing an

actuarial infrastructure– by defining the role of the actuarial association and supervisory

authority– by implementing a responsible actuary– by developing actuarial training and education

The role of EAA– to offer actuarial training by seminars on actuarial topics– to offer support to develop an actuarial infrastructure– to offer a comprehensive, modul based education system on

international standard

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WhereWhere to to gogo ??

Looking forward….

the future of actuaries !

Thank you for yourattention !

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NeedNeed moremore informationinformation??

Management Board Anno Bousema (The Netherlands)Peter Diethelm (Switzerland)Peter Prieler (Austria)Michael Steinmetz (Germany)

Advisory BoardDr. Martin Balleer (Germany), ChairmanMatija Senk (Slovenia), Vice-Chairman

ContactEAA – European Actuarial Academy GmbHHohenstaufenring 47 - 51D -50674 Köln, GermanyTel.: +49 / (0) 221 91 25 54 21contact@actuarial-academy.com

www.actuarial-academy.com