SA2 Exam Technique

[LangeSohne]

Hi
I want to know your opinions on something:

In CA1 and the ST exams, I had heard that a good technique would be to write down 2 points per mark.
Does anybody know whether this is the correct rule of thumb to use for Sas as well, or are they looking for something else?

 

[Mark Willder]

In CA1 and the ST exams, I had heard that a good technique would be to write down 2 points per mark.

Does anybody know whether this is the correct rule of thumb to use for Sas as well, or are they looking for something else?

Yes, this is still a good rule of thumb for SA2. If you look at the marking schedules for the assignments you'll see that most of the ideas score half a mark. However, some points take more explanation and can be worth more than half a mark.

Be careful though to give enough depth in your answers. To do this you may have to break an idea into several smaller points. The depth of your answer is much more important in SA2 than ST2 or CA1.

Best wishes

Mark

 

[scarlets]

People have broken ideas down into more detail, more depth, then be told by they went into too much depth on that when just 2-3 bullet points would do. So the examiners ask a vague question "Describe how...", give loads of marks available then blame people for what they elaborate on. All looks very discretionary to me. Head I win, tails you lose situation.

Other times it gets advised that the SA and CA1 is about more ideas and less about depth and detail, as the ST's are about depth and detail, which seems to conflict with the advice above.

So you get 300 people sitting an exam with vague questions and a 100 get close to mind reading the examiner about what they want depth on. It's like a very dull bingo game.

 

[bystander]

You just have to analyse a qn as best you can. I think the trick is often to read it more than once. Eg with how are they looking for the entire process or focussing on a specific bit.

Watch out for the word briefly too (often seen in conjunction with describe).

But you are right it can be tricky.

 

[scarlets]

Seems there's marks going for making things up without basing remarks on any evidence or information. I personally consider that an incompetent professional trait.

For an example look at April 2012 Q1 (iii) which shows a decrement profit. 19 marks for this one. Let's see what they're really 'testing' here.

If you speculate (without evidence) it's because actual deaths are different from expected deaths, they want you to invent reasons why that might be the case, even though there's no serious context/information given in the question for making such remarks.

Or maybe, the change in surplus is actually very small in relative terms but again this cannot be established from the question.

But as the decrements are lumped together with withdrawls etc. then you don't actually know which way actual vs expected deaths has gone, or indeed if they differ.

So are actuaries supposed to base views and speculation on available evidence or not? As this question rewards people for inventing data/context and speculate/bs on that basis. People can then qualify as actuaries after demonstrating this 'skill'?

What would be so wrong in saying 'there is insufficient information, evidence and context given in this question to conduct a credible discussion about these matters'.

In the real world if someone wanted to know why the numbers were like that you'd dig deeper, get more info and have a real-world context to judge it by. An unprofessional buffoon wouldn't bother and just bs without consulting more information.

Also, lack of proper context puts a lot more discretion in the hands of examiners' interpretation and less on a marking schedule as the question itself provides no evidence for you to base your speculations on. So people go off in tangents of their own creation.

This means it's very easy for them to dismiss the direction you've taken on the question.

What a farce.

 

[scarlets]

On the one hand they say it's good to use information given in the question. When it's not given in the question they reward you handsomely for inventing it.

 

[Mark Willder]

April 2012 Q1 part (iii) certainly does require some creative thinking and I agree that we'd want to dig into the data and get more information before reaching a conclusion.

However, its always good to have an idea of what to look for before you start an analysis and this is what the question is testing. This is an important skill for a senior actuary. After all, the senior actuary won't be doing these calculations herself, but will be delegating this to her team. She'll then want to challenge the conclusions presented to her, eg have you considered this reason or this alternative?

From personal experience doing analysis of surplus when I was a trainee, it always amazed me that the valuation actuary knew precisely what results I was going to show him before I did the calculations. If my results were not as expected, I was sent away to re-do them - I always found that I'd missed something.

Best wishes

Mark

 

[bystander]

You are right but you need to expand on your thought. What do you need to prove the number is right.

If it landed on your desk there isn't enough to go on so what would you like.... Decrements...how can they arise...so we are thinking offs.... so how do things go off.... death/surrender/maturity....now link that logic to the scenario....annuities/pensions.

How does a surplus arise? Change in basis/revised data/change in calc method/calculation error in start or end (yes actuaries are human)....

And yes I also agree with Mark that senior actuaries do have an uncanny knack of looking at data and know the answer before anyone starts!

 

[scarlets]

And yes I also agree with Mark that senior actuaries do have an uncanny knack of looking at data and know the answer before anyone starts!

That's because e.g. they attend meetings with people from the business on a regular basis, or are privy to interim results, so they would have an idea if there's been a lot more withdrawls or deaths than usual. (Sorry to burst that bubble- I know they want to give the impression they're really clever and all that.)

In this exam question no such information is given so you have to invent a context which lazily was not provided, and in my view very unfair on candidates.

Mark's explanations don't stand up. I suspect it was quite some time ago, certainly not in April 2012, that he was faced with a system with data constraints like that.

The question doesn't say 'small' company, or mention it has data issues etc. so you'd have to invent this context.

I've just spoken to Admin & Business Analyst professionals and they've confirmed that deaths and withdrawal admin processes are different and would be clearly recorded as such on systems, even dealt with by different teams. IT systems all comfortably hold the status of terminated policies and I've never heard of this not being available to actuaries. This has been going on for years and years.

So the exam question was ridiculous. This is supposed to be an exam that tests practical knowledge. No one records these things just as 'decrements' in reality. Sounds like the paper was written by people who are many years out of touch with business reality.

All the core reading in all exams split such analysis by deaths and withdrawals.

Therefore, anyone who made up bs like 'maybe the data is not available' shouldn't really get credit, whilst anyone who thought this was a trick question as the incredulous situation posed is not realistic should get credit but I suspect did not. HOW UNFAIR !

 

[scarlets]

You are right but you need to expand on your thought. What do you need to prove the number is right.

If it landed on your desk there isn't enough to go on so what would you like.... Decrements...how can they arise...so we are thinking offs.... so how do things go off.... death/surrender/maturity....now link that logic to the scenario....annuities/pensions.

You request the data. It's not cluedo.

 

[cjno1]

That's because e.g. they attend meetings with people from the business on a regular basis, or are privy to interim results, so they would have an idea if there's been a lot more withdrawls or deaths than usual. (Sorry to burst that bubble- I know they want to give the impression they're really clever and all that.)

It's not just that, they genuinely are very clever. You don't really get to become a senior actuary somewhere by luck. When you spend years and years looking at data and running results, you build up experience of what looks sensible and what doesn't.

When I started work in a life office, I would spend a long time running models, then hand it to my boss and he would glance at the numbers and say "no, that doesn't look right. I would expect it to be closer to £Xm". And inevitably, he would be right. And he had no exposure to hidden secrets or interim results, he just had lots of years experience running the same sort of investigations I had just done, so he knew when things looked wrong.

So the exam question was ridiculous. This is supposed to be an exam that tests practical knowledge. No one records these things just as 'decrements' in reality. Sounds like the paper was written by people who are many years out of touch with business reality.

You need to remember something when tackling SA2: It's not (just) about the knowledge in the course. It's about applying that knowledge to situations which are strange or new. It doesn't actually matter whether the situation could ever happen, because the idea is not to test how well you know decrement investigations. It's to see how well you are able to generate ideas and come up with solutions.

The profession is trying to recruit great thinkers, problem solvers, people who can generate ideas and use their initiative. It's not possible to learn the bookwork backwards and pass on that alone.

You request the data. It's not cluedo.

Believe me, Cluedo can sometimes be a LOT easier than trying to request data in a life office. I'm not sure where you work, but in my professional life, there isn't one big perfect computer system where we hold seamless data on every customer, expense, transaction, etc. It's fragmented, some data is missing, wrong, unavailable, difficult to find or split across several systems.

Sometimes you have to work with only 80% of the data you need, or 60%, or worse. Large life offices have grown up over many generations of computer packages, paper filing systems, database software, etc, and there are always issues. Alright, the example of decrements might be a bit extreme, but there will always be times in your careers where you can't get the information you want and you have to work out what to do instead.

 

[scarlets]

When you spend years and years looking at data and running results, you build up experience of what looks sensible and what doesn't.

Which proves my point - they have a context, reference points, prior business knowledge etc. In this question, no context is provided you have to invent one and bs on the back of that.

You need to remember something when tackling SA2: It's not (just) about the knowledge in the course. It's about applying that knowledge to situations which are strange or new. It doesn't actually matter whether the situation could ever happen, because the idea is not to test how well you know decrement investigations. It's to see how well you are able to generate ideas and come up with solutions.

No it does matter if they claim practical knowledge is tested and you use that practical knowledge to question the feasibility of what they've posed in the question.

The profession is trying to recruit great thinkers, problem solvers, people who can generate ideas and use their initiative.

Not really, those sort of people would ask awkward questions or make criticisms which are clearly very unwelcome. A great thinker for some does mean someone who can bs without foundation, spin it, it seems credit is given in this exam for such behaviour.

I'm not sure where you work, but in my professional life, there isn't one big perfect computer system where we hold seamless data on every customer, expense, transaction, etc. It's fragmented, some data is missing, wrong, unavailable, difficult to find or split across several systems.

OK, so are you saying there are established UK Insurance companies who don't specify whether a contract is terminated by death or withdrawal? Really?

 

[cjno1]

Which proves my point - they have a context, reference points, prior business knowledge etc. In this question, no context is provided you have to invent one and bs on the back of that.

Please don't take my comments out of context. I wasn't talking about the decrement question at all, I was replying to the fact that you seemed to be implying that senior actuaries aren't smart, they just "want to give the impression they're really clever and all that".

OK, so are you saying there are established UK Insurance companies who don't specify whether a contract is terminated by death or withdrawal? Really?

Of course I'm not. If you'd read my comment properly you would see that I said 2 things:

1) The example in the decrement question is extreme (i.e. not likely in real life)

BUT

2) It doesn't actually matter, because they're not really testing what you know about decrements or data, they're testing your ability to "think outside the box". Most of the marks in this question come from things which aren't in the notes, so it's not testing core reading, it's testing application.

I sat the April paper and I passed, so clearly whatever philosophy I took into that exam room was the right one. Either that or I got lucky!

If you spend your time in the exam thinking "well that would never happen in real life, what a stupid question, I'm going to make that clear to the examiners", then you're going to fail. It's the people who think "well, that clearly would never happen, but what would I do if it did?" who will pass.

Not really, those sort of people would ask awkward questions or make criticisms which are clearly very unwelcome.

Awkward questions and constructive criticism are, much of the time, exactly what actuaries add to a project. So personally, I think they are very welcome in most cases.

 

[scarlets]

2) It doesn't actually matter, because they're not really testing what you know about decrements or data, they're testing your ability to "think outside the box". Most of the marks in this question come from things which aren't in the notes, so it's not testing core reading, it's testing application.

No that's not the objective of the exam, off their website it says :

This specialist applications subject will provide newly-qualified actuaries with the ability to apply knowledge of the UK life insurance environment and the principles of the actuarial practice of life insurance to a UK life insurance company.

People with knowledge of the UK Life Insurance Environment will recognise that the decrement question/situation was bogus and anyone answering it seriously with bs should be marked down.

If you spend your time in the exam thinking "well that would never happen in real life, what a stupid question, I'm going to make that clear to the examiners", then you're going to fail. It's the people who think "well, that clearly would never happen, but what would I do if it did?" who will pass.

As I said, you request the data. It is collected. You don't start making up bs. I can't think why UK Life Insurance companies would want actuaries to sit around guessing rather than just get the data and base their views on cold facts.

 

[scarlets]

When I started work in a life office, I would spend a long time running models, then hand it to my boss and he would glance at the numbers and say "no, that doesn't look right. I would expect it to be closer to £Xm". And inevitably, he would be right. And he had no exposure to hidden secrets or interim results, he just had lots of years experience running the same sort of investigations I had just done, so he knew when things looked wrong.

Hold your horses, I don't think a genius has been discovered, more like last year's number was around £Xm...