Actuarial interview prep.

An actuary is the quantitative steward of an insurer: build the price to a target loss ratio, set the reserves for what's been incurred but not yet known, value the business, and feed the capital model.

What interviewers look for

  • Can the candidate set reserves end to end, pick a method (chain ladder / BF / Cape Cod / expected LR) appropriate to data maturity, calculate it, and state a range?
  • Do they price to a target loss ratio, loss cost (frequency x severity) + expenses + profit load, and walk a rate filing rather than quote a number?
  • Do they show judgment: choose BF over chain ladder when the latest period is thin, overlay expert judgment, and document the assumptions?
  • Can they explain uncertainty, best estimate, range, adverse development, to a non-actuary (management, regulator, auditor, board)?
  • Are they capital- and valuation-aware: US RBC / Solvency II SCR / ORSA for P&C; embedded value + VNB + MCEV for life, and the link from reserves and pricing to capital?
  • Are they exam-progressed credibly (CAS for P&C, SOA for life / health) and able to flex across pricing, reserving, valuation, and capital with the seat they want?

Behavioural questions to expect

  1. Walk me through your CV, and where are you on exams?

    What it tests: Story coherence + genuine fit for quantitative insurance work + credible exam progression. Actuarial teams want analytical rigor + judgment + the exam ladder progressing on a credible trajectory.

  2. Tell me about a difficult quantitative or judgmental call you've owned.

    What it tests: Method choice + judgment + the willingness to land a number and defend it under uncertainty. Tests whether the candidate picks the right tool to the data, states the assumptions, and communicates the result.

  3. Tell me about a weakness, a failure, or feedback you've received and worked on.

    What it tests: Self-awareness + analytical honesty. Cross-role canonical. Fake weaknesses downgrade immediately. Actuarial mistakes (under-reserving, mispricing) compound over years, so honesty about an assumption error and the process fix matters.

  4. Why actuarial, and why insurance?

    What it tests: Authentic fit for quantitative + judgment work over a long career: methodology + assumption discipline + the exam track. Tests whether the candidate is drawn to the long-tail, range-not-point problem and the regulated environment, vs data science or finance.

  5. Which actuarial seat would you want, pricing, reserving, valuation, or capital, and why?

    What it tests: Genuine fit + grasp of how the seats differ. Tests whether the candidate has a reasoned preference (pricing = forward, market-facing; reserving = backward, range-and-judgment; valuation = financial; capital = cross-cutting / regulatory) rather than a random one.

  6. Why this firm?

    What it tests: Whether the candidate has done the homework. Bar: firm-specific evidence from the lines, the actuarial team, the systems, and the exam support, not generic 'strong carrier'.

  7. How would you describe this firm's book and the actuarial function in your own words?

    What it tests: Whether the candidate has internalized HOW the carrier runs its actuarial work, its lines, its valuation basis, and its key actuarial debates, not just that it 'has actuaries'. Tests whether they read its results / disclosures.

  8. How does the actuarial function actually drive value at a carrier?

    What it tests: Whether the candidate understands that actuarial isn't a back-office function: pricing accuracy drives combined ratio, reserve accuracy drives reported earnings + capital, and the capital model drives strategy and dividend capacity.

Technical concepts to master

Reserving fundamentals

Case + IBNR + IBNER
Case reserves are set on known claims by claims handlers; IBNR covers losses incurred but not yet reported; IBNER covers further development on known claims.
Loss triangles + LDFs
Losses arrayed by accident year x development period; age-to-age factors (ATAFs) and cumulative loss development factors (LDFs) project emerged losses to ultimate.
Best estimate + range
The actuary's central reserve estimate (often the median or mean of method results), with a range reflecting reasonable assumption variation.
Reserve roll-forward + development
Quarter-on-quarter change in the reserve: paid losses + case change + IBNR change; compared to expected emergence per the prior LDFs.

Reserving methods + judgment

Chain ladder
Projects ultimate losses by multiplying emerged losses by selected LDFs derived from historical development patterns.
Bornhuetter-Ferguson
Ultimate = reported losses + expected losses x (1 - reporting %); blends emerged data with an a priori expected loss.
Cape Cod / Stanard-Buhlmann
Variant of BF where the a priori expected loss ratio is derived from the data (across years) rather than externally specified.
Stochastic methods
Mack, Bootstrap, and similar produce a distribution around the point estimate - used to inform reserve ranges + capital.

Pricing fundamentals + GLMs

Pure premium = frequency x severity
Expected loss per exposure decomposes into the rate at which claims occur (frequency) and how big they are on average (severity).
GLMs (Poisson + Gamma)
Generalized linear models - Poisson for claim frequency, Gamma for severity - fit on rating variables to produce a cell-level pure premium.
Premium build + target loss ratio
Technical premium = loss cost + expense load + profit / contingency load; the rate is adequate when the implied loss ratio hits target (~60-70% P&C, line-dependent).
Rate indication + filing
Indicated overall rate change = (loss + LAE + expenses) / target-LR-implied premium less 1; broken into class-plan cell changes for filing.

Capital + regulatory + valuation

US Risk-Based Capital (RBC)
NAIC framework for required capital, derived from charges on asset risk, credit, underwriting, and reserve risk; the trigger thresholds drive regulatory action.
Solvency II SCR + ORSA
European framework: SCR (Solvency Capital Requirement) is set to a 99.5% 1-year VaR; ORSA (Own Risk Solvency Assessment) is the carrier's forward-looking, scenario-tested view of its capital adequacy.
Embedded value + VNB (life)
Embedded value = net asset value + present value of future profits on in-force; VNB (value of new business) measures the EV contribution from the period's new sales.
Statutory vs GAAP vs IFRS 17
Statutory (regulatory, conservative); GAAP (US accounting); IFRS 17 (global insurance accounting, contract-level liability + CSM). Reserves + earnings flex with the basis.

Practical drills

  • Accident year cumulative paid losses ($m): AY1 at 12mo = 100, 24mo = 150, 36mo = 165, 48mo = 170. AY2 at 12mo = 110, 24mo = 165. AY3 at 12mo = 120. Assume the tail beyond 48mo is negligible. (a) Compute age-to-age factors. (b) Compute cumulative LDFs. (c) Project ultimate losses for AY2 and AY3. (d) Compute IBNR for AY2 and AY3 assuming case reserves of $20m for AY2 and $80m for AY3.
  • You're the pricing actuary for this firm on a personal-lines product. Walk me through how you'd build the rate indication and take it through a state filing. Be ready to be probed on GLM choice, on-level adjustments, and how you'd handle a regulator objection.
  • this firm has launched a new long-tailed commercial line. Year 1 earned premium is $50m; expected loss ratio (from pricing + industry) is 65%. Reported losses at 12 months are $5m; the industry chain ladder suggests a 12-month reporting pattern of ~25% (LDF_12 ~ 4.0). Recommend a year-1 ultimate and IBNR, and defend your method choice.

Smart-question anchors

  • Lines + seats - the lines the team supports, the pricing / reserving / valuation / capital seats, and what the role would specifically own
  • Valuation basis + systems - statutory / GAAP / IFRS 17 / SII; actuarial systems (Prophet / AXIS / ResQ / Igloo); analytics / ML maturity
  • Recent reserve / rate actions - any material development, rate filings, or capital actions and what they signal about the book
  • Capital + ORSA - the carrier's capital framework, ORSA cadence, and how the actuarial team feeds it
  • Exam support + progression - study support, exam time, mentor pairing, and how juniors progress from ASA / ACAS to FSA / FCAS

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