The following is an excerpt from Mary Hennessy’s Address to new members, delivered on May 14 at the 2018 CAS Spring Meeting in Boston.
While the FCAS designation and your actuarial skills really are the best “union card” in the world — providing instant credibility in the insurance world — you can’t stop there.
The same talents that drove you (or that will drive you) to successfully completing your FCAS are absolutely essential to helping insurance companies thrive and reinvent themselves in today’s rapidly evolving landscape.
To become more than an actuary, you need to gain the broadest possible understanding of the insurance business that you can.
Make it a priority to team up with underwriters or claims people, marketing or finance people — hopefully all of the above — to learn what they do.
The most successful actuaries I know are people who made sure that they found a way to learn all parts of the insurance business — not just from exams, but from practitioners and in many cases by joining other departments like underwriting, finance, IT and claims.
If you buy in, let me make another bold suggestion: In for a penny, in for a pound, as they say — follow through on your course of action, no matter what it entails. If you become a broad student of the business, understand how companies work and how to meet consumer needs. Become that super actuary I am describing. I believe we are also describing a future CEO. Brian Brown asked me to talk to you today because he truly believes that not enough of the talented people in the CAS recognize how far they can go. He asked me to share a bit of my story … to prove the point that even someone who might have been the unlikeliest choice can leverage the actuarial skills and credentials to go a long way.
The most successful actuaries I know . . . made sure that they found a way to learn all parts of the insurance business . . . .
An Unlikely Beginning
I fell into actuarial student status after being laid off as a high school math teacher. Thankfully, those were the days when in lieu of passing Part 1, you could take the advanced math section of the GRE. A score over 630 got you credit for Part 1. I squeaked by with a 640. I am certain I could never have passed Part 1; I hated calculus. Most of the actuaries I met seemed to be geeks, but I persevered because I was the breadwinner.
I did my early training in a big primary insurance company with an established actuarial student program. I learned personal lines ratemaking and reserving. It was clear that the geeks really were better at a lot of the work than I was. My aspiration quickly became to transfer out of the actuarial department and go run a branch office somewhere. In those days, no company had enough actuarial talent to support their needs, so my company felt they couldn’t redeploy me to branch operations. Also in those days, virtually no P&C insurance company in the U.S. was led by a female CEO.
So I moved to what was then a boutique consulting practice that specialized in insurance strategy and operations and, importantly, that was led by people who weren’t actuaries.
Learning on the Job
I learned over the next eight to 10 years and over hundreds of projects how insurance really worked — what distinguished the best companies (those with excellent operations, strong technical claims and underwriting processes and training, strong and consistent financial results) from the worst (those who suffered from poor underwriting, bad data, under-reserving, fraud, you name it).
I learned how to do underwriting audits and evaluate claims handling and claims files. I read hundreds of SEC filings and reinsurance contracts. I dealt with insurance auditors and regulators as well as financial reporting. And, of course, I still did or reviewed loss reserves and price adequacy, product design and marketing.
For personal reasons, I left that great job and, as luck would have it, joined one of the most successful reinsurance companies in America.
We believed strongly in the value of using a multidisciplined team approach across the enterprise. It was evident that this approach was wildly successful in winning business and consulting with clients as well as building actuarial capabilities to grow great business leaders. Those practices and processes firmly established our company as the leading M&A consulting group in the U.S. We typically deployed a group of 25+ underwriters, claims people, actuaries, finance professionals and IT experts to diligence a target company — by 1995 our teams had evaluated companies comprising over half of the total U.S. P&C premiums.
I made it a point during that period to push many of my actuarial colleagues into business unit underwriting or other roles and, as far as I know, none of them ever came back to pure actuarial work.
The next move was my breakout move: joining an insurance holding company with both insurance and reinsurance operations, not as chief actuary, but as chief underwriting officer and shortly thereafter as president.
It was a turnaround, with legacy issues and public company shareholders that had been disappointed for years. That combination ultimately made a rehab too difficult: Our shareholders had lost patience. So my M&A skills came to great use in helping sell the company to a larger and better-funded organization.
Following that, I tried the turnaround thing again, two more times. The first time was as CEO of a Bermuda reinsurer that began with a pretty “big bang” — a $2 billion reserve increase within my first 30 days on the job. Luckily we started with $4 billion in capital, so it wasn’t fatal, but it still made for some testy board meetings and shareholder discussions.
The second time, was working at a specialty personal lines carrier. Reserves were good that time, but operations were bloated. So two months into that job, I had to lay off 20 percent of the workforce or shut the place down. Talk about character-building! In no way could the exams themselves could prepare me for that, but the grit and determination involved in taking those 10 exams definitely served me well.
I’m sure that I made mistakes in all these roles, but I am also confident that from day one of studying for my actuarial exams to attain my FCAS that I was training for those roles. Because of my actuarial training and knowledge, I was better positioned to evaluate operations, make tough decisions and define the paths companies needed to be successful, and then recruit and motivate teams of people who could help make it happen.
Today, eight of the people who were my senior leaders are themselves CEOs; three of those eight are actuaries. I am prouder of that more than any of my achievements.
So what’s next? If it was possible for an actuary who hated calculus to nevertheless use all the wonderful foundation of our exam process to leverage the FCAS training into numerous CEO roles, it is definitely possible for this group of smarter, more savvy people. I urge you to build the broadest possible career plan.
Mary Hennessy, FCAS, is a consultant and resides in Moorestown, New Jersey.