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Actuarial science includes a number of interrelating disciplines, in particular the mathematics of Probability and Statistics . The science has gone through revolutionary changes during the last 25 years due to the proliferation of computers. In the life insurance industry, traditional actuarial science focuses on the analysis of Mortality and the production of Life Table s, and the application of Compound Interest . In the pension industry, actuarial science deals with methods of prefunding for retirement and proper measurement of liabilities that won't come due for many years. This is especially true with respect to the Old Age Survivors and Disability Insurance program in the United States and C/QPP in Canada. In the property insurance field which protects against losses like those caused by hurricanes as well as automobile accidents, actuarial science tries to forecast losses to homes and cars. Many aspects of traditional actuarial science are not aligned with modern finance due to its reliance on assumptions as opposed to Arbitrage-free Risk-neutral pricing. The divergence is not related to the use of historical data and statistical projections, but is instead caused by the manner in which traditional actuarial methods apply market data with those numbers. For example, traditional actuarial methods suggest that changing the Asset Allocation mix of investments can change the value of a liability - a concept unique to actuarial science and one that is inconsistent with Financial Economics . More recently, actuarial science has come to embrace more sophisticated mathematical modelling of finance . Ideas from financial economics are thus becoming increasingly influential in actuarial thinking. Many universities have undergraduate and graduate degree programs in actuarial science. SEE ALSO
REFERENCES | ||
| Year | 2006 |
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| Url | http://wwweconomistcom/finance/displayStorycfmstory_id=5436947 |
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| Title | When the spinning stops: Can actuaries help to sort out the mess in corporate pensions |
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| Accessdate | 2006-04-10 |
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| Work | The Economist |
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