This textbook presents a variety of stochastic models for the actuary to use in undertaking the analysis of risk. It is designed to be appropriate for use in a two or three semester university course in basic actuarial science. It was also written with the SOA Exam MLC and CAS Exam 3L in mind. It covers all of the life contingencies exam topics in a single reference. This text includes some introductory loss models material which can serve as initial preparation for SOA Exam C and CAS Exam 4. Models are evaluated in a generic form with life contingencies included as one of many applications of the science. Students will find this book to be a valuable reference due to its easy-to-understand explanations and end-of-chapter exercises. It also introduces students to the practical use of the science via the Appendices.

Models for Quantifying Risk

Business & Money

Thomas N. Herzog, Ph.D., ASA

Richard L. London, FSA

Robin J. Cunningham, Ph.D., FSA

Insurance

Actex Pubns Inc

Several chapters of this text have been adopted as syllabus references for the SOA Group and Health specialty Design and Pricing Fellowship exam. Credibility modeling is a proven approach for analyzing unique product designs. This text presents a wide variety of credibility models in an easy-to-read style, and in so doing, traces the historical development of the subject. The Bayesian approach to credibility is emphasized. The text concentrates on basic statistical concepts, leaving more sophisticated theoretical concepts for a more advanced treatment elsewhere. It contains worked examples, a large number of end-of-chapter exercises and an extensive bibliography. Practical applications of credibility theory are presented in the Appendices. Some university professors utilize this text together with Risk Models and Their Estimation to prepare for Exam C/4. In the rapidly evolving healthcare environment, data credibility is more important than ever. The Fourth Edition of this text includes three case studies relating to healthcare issues.

Introduction to Credibility Theory, Fourth Edition (ACTEX Academic Series)

ACTEX Publications

In 2012, the Society of Actuaries modified the learning objectives for Exam MLC. Significant changes have been made to Models for Quantifying Risk as a result. The fourth edition expanded the content in four areas. Now with the fifth edition, a fifth expansion has occurred. 1 Multi-State Models New Learning Objectives place additional emphasis on the notion of representing various actuarial models as multi-state models, using the mathematics of discrete-time and/or continuous-time Markov Chains. These topics have been rewritten and expanded. Additionally, several sections have been inserted to illustrate material represented in a multi-state model context. 2 Additional Insurance Coverage Another new Learning Objective calls for a brief presentation of other insurance coverages, showing how the concepts developed for traditional coverages can be applied to additional ones. The expanded coverage on this topic is focused on disability income insurance and defined benefit pension plans. 3 Interest Rate Risk An entire section has been added to address this topic, which includes an introduction to interest-sensitive products. 4 Expanded coverage of reserves Another new Learning Objective calls for an understanding of the concept of reserves as financial accounting liabilities, including the idea of addressing this notion via modified premium reserves. To adequately cover these key topics we have separated the chapter on reserves in earlier editions into two expanded chapters. 5 Analyzing contingent contracts A final new topic is the important concept of analyzing contingent contracts for profit or loss. This change is the primary focus of the fifth edition. This topic is covered in new sections inserted into chapters 10, 11, and 14.

Models for Quantifying Risk, 5th Edition

Robin J. Cunningham, Ph.D.

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Books by Thomas N. Herzog, Ph.D., ASA