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The Actuary The magazine of the Institute & Faculty of Actuaries
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Careers: Set to outperform?

There was gloomy news from the Chartered Institute of Personnel and Development at the end of 2008 — a further 600 000 jobs will be lost in the UK in 2009. One thing we can say for certain is that not all of those will be actuaries, but maybe our small membership and specialised skills leave us well placed to weather the storm. This article gives a few personal views on how the year might pan out.

We can’t escape redundancies altogether. Some of our actuarial colleagues at banks have already lost their jobs and there may be more to follow. The banks won’t be looking to take on many additional staff in the short term, and some insurers and consultancies currently have recruitment freezes in place. This may leave a surplus of actuaries looking for jobs in the first half of 2009. However, individuals tend to be wary about changing jobs in periods of uncertainty, so the supply of candidates may also drop off, perhaps offsetting the fall in demand. The first quarter is traditionally a busy period for recruitment, but this predicted fall in both supply and demand make this less likely to be the case in 2009.

Further consolidation in the insurance and financial services sectors during the coming year could lead to more actuarial job losses. However, consolidation efficiencies are largely generated in other functions, or at senior management level, so the actuarial job losses aren’t likely to be that widespread. Insurers recognise the important role played by actuaries in various aspects of their business and will want to hold onto that expertise where possible. Given the long-term nature of insurance businesses, many actuaries ought to be relatively recession-proof. Working in a highly capitalised industry helps, but even an insolvent insurer would need to be run off over a number of years. Unlike other industries, the doors don’t shut immediately.

Despite the recent turmoil, demand for actuaries appears to be robust. Regulatory change is helping create jobs, as insurers need additional resources to prepare for Solvency II and IFRS Phase II. These are regulatory-change driven roles within insurance companies but, even without these changes, the events of 2008 suggest that there may be scope for more scrutiny and monitoring from the Financial Services Authority (FSA). This is likely to generate jobs at the FSA and create demand for extra actuaries to move into regulation.

Greater demand
Pension funds continue to need actuarial advice for ongoing valuations, but there might be even greater demand from merger and acquisition activity in various industries. As insolvency threatens more companies, there is greater potential for advice around pension scheme wind-up or benefit changes to help prevent employers ending up at that point. There may also be additional work around investment consulting and hedging strategies to try to limit future losses. Some of the Big Four companies actively strengthened their pensions practices in 2008 and may continue to do so into 2009 if demand continues.

The events of 2008 have highlighted the need for adequate risk management. The profession’s credentials in this area leave it ideally placed to strengthen the risk management functions at insurers and other financial institutions in this period of renewed focus. In his presidential address, Nigel Masters commented that employers in wider fields are starting to recognise the value of actuarial skills, so maybe 2009 will be our opportunity to broaden our horizons. This could be true not only in terms of employers but in the geographical sense as well. Nigel Masters also commented on the globalisation of professional services, including actuarial services, in his presidential address. Outsourcing of actuarial roles has already begun at insurers and consultancies. If this trend continues, there will be more opportunities for actuaries to spend time working outside of the UK next year.

Although this period of uncertainty leaves potential for a slow start to the year and the possibility of further casualties, it also presents opportunities for the profession as a whole to flourish. What’s more, when we get to the graduate recruitment season, there could be a supply of high calibre numerate graduates, who might previously have searched for jobs in banks or other sectors, now looking towards the Actuarial Profession. In my view, it seems likely that the actuarial job market will outperform others in 2009.

Phillip Sturgess is a commercial actuary at Lucida and a member of the Actuarial Profession’s careers committee
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