1. Internship Presentation Edgar Pal University of Chicago Actuarial Initiative

2. Background • Graduating third-year • Economics and Public Policy major • UChicago Careers in Business • Passed exams P/1 and FM/2 • Summer 2012: Actuarial Intern at Allstate Financial

3. Life Actuaries at Allstate

4. Actuarial Valuations and Analysis • Purpose • Calculate, analyze, and report the value of the company’s annuity and life insurance contracts • Reserves • Amount of money set aside to pay for future benefits • Held as a liability on balance sheet • Insurance companies need this to ensure they can fulfill promises to policyholders

5. Types of insurance products • Traditional life • Interest sensitive life • Deferred annuities • Payout annuities • Structured settlements

6. Update of mortality rates • Mortality study conducted in 2010 recommended a change to higher mortality assumptions • Increased mortality rate assumption in annuity valuation software • Reserves decreased

7. Monte Carlo projection • Shrinking block of business in New York • 51 participating policyholders • Dividends distributed to living policyholders each year • As the block shrinks, more important to distribute “fairly”, based on: • Face amount of each policy • Expected death toll in each year

8. Process • Monte Carlo method • Use simulations to estimate expected values and variance • 10,000 iterations on all simulations • Determined when most of population would be dead • Made recommendation on how long it should take for dividends to be released

9. Other projects • Actuarial picnic • Mayhem commercial

10. Main takeaway points • You should have flexibility in your technical skills. • You must learn to communicate your methodology and results in a variety of contexts. • PowerPoint presentations • Informal meetings • Show off your creativity. • Always think about the broader problem you’re solving.