In order to achieve professional actuarial status in either the United States or Canada, candidates must pass a series of exams administered by the Society of Actuaries (SOA) and/or Casualty Actuarial Society (CAS). SOA exams are named with letters and CAS exams with numbers. The first four of these exams are called the preliminary exams, with exams P/1, FM/2, and C/4 being jointly sponsored by both actuarial societies (only the 3rd exam, Exam M, differs). Students must also complete approved coursework in applied statistical methods, economics, and corporate finance — known as the Validation by Educational Experience (VEE) requirement.
Passing actuarial exams is essential for an actuarial career, as most employers prefer to hire candidates who have already passed one or two examinations. The exams may be taken in any order, but Valpo students should aim to pass Exams P and/or FM (along with the VEE) prior to graduation. Students can find general information about the exam requirements, including the registration deadlines, in the SOA course catalog, and students can register for the exams online via the SOA website.
Individual Actuarial Exams
Exam P/1 (Probability) is a three-hour multiple-choice examination covering calculus-based probability and statistics. Many of the problems on this exam are set as word problems involving risk. The exam is jointly administered by the SOA and CAS and is now offered five times during the year via computer-based testing. Students should be prepared to take this exam after completing MATH 341.
Exam FM/2 (Financial Mathematics) is a three-hour multiple-choice examination covering interest theory and introductory financial mathematics. The exam is also jointly administered by the SOA and CAS and is now offered four times during the year via computer-based testing. Students will see some of this material for this exam in FIN 304 and much more in ACRS 325 and FIN 425. The more of these courses taken, the better prepared students will be for the exam, but it would be reasonable to sign up for the prep course after or concurrent with ACRS 325.
Validation by Educational Experience (VEE) Requirements
In addition to professional actuarial exams, The Society of Actuaries and Casualty Actuarial Society also require that students complete approved coursework in applied statistical methods, economics, and corporate finance. These three areas were once part of the exam process, but the SOA and CAS felt that this material would be better learned outside of the exams. Valpo courses that have received VEE approval are listed below. A student must receive a grade of B- or better in the course to receive VEE credit. Additional information about the VEE process can be found on the SOA website.
VEE Approved Courses:
- Applied statistical methods – STAT 343 and either STAT 340/IDS 340 or ECON 325
- Economics – ECON 221 and 222
- Corporate finance – FIN 304 and 410
Studying for the Exams
The actuarial exams are challenging, and students should plan to spend additional study time on them beyond the college coursework. The general rule of thumb is to spend 100 total hours of class and study time preparing for each hour of exam time (for example, spend about 300 hours preparing for a three-hour exam).
For the preliminary exams, it is essential that students work through practice problems, and it is recommended that students purchase or borrow a study manual. Valparaiso University's actuarial science committee chair has one or two study manuals students may borrow, or students can purchase a study manual through an actuarial bookseller.
Students can find the syllabus for the exam in the online SOA course catalog. Within the syllabus are electronic links to any required study notes, plus a set of sample exam problems with solutions. Students should download these. There are also additional practice exam problems online.
Valparaiso University offers independent-study exam-prep courses for Exam P (ACRS 495-P — fall semesters) and for Exam FM (ACRS 495-F — spring semesters).
Study resources are available on the Actuarial Links page.