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More than just modelling: An FCIA’s dynamic journey through the banking sector

By Yi Luo, FCIA

My career has taken quite a few unexpected turns. As a kid growing up in China, I had always wanted to become a scientist, and if you had told me that I would one day become an actuary, I would have been completely confused – I don’t think I even knew what actuaries were at the time! However, several twists and turns led me to the world of actuarial science – and in the banking sector to boot – where I eventually found my calling.

As an immigrant struggling to make ends meet in Canada, I decided to go back to school, leveraging my engineering background and finance experience in China to get a degree in actuarial science.

After completing an undergraduate degree in actuarial science and economics, a Master of Financial Economics and some actuarial exams in Canada, I joined Manulife Financial in 2007 as a senior analyst, working for the Global Asset and Liability Management department.

During my tenure with Manulife, I developed my analytical skills by enhancing valuation models, analyzing reserves and managing the company’s interest risk. I also acquired strong modelling skills, covering interest rates, credit spreads, Monte Carlo simulation and econometric models. These skills would all prove crucial to my future roles.

“As I progressed on my career path, I found that hard skills aren’t the only assets an actuary needs. The scope of my responsibilities eventually expanded to leading teams, training staff and making strategy recommendations; having leadership and communication skills became a requirement.”

In 2016, a friend’s referral brought me to Canada Guaranty, a mortgage default insurance company. Mortgage default insurance companies essentially compensate mortgage lenders like banks and mortgage finance companies for losses caused by a mortgage default when mortgage borrowers can’t make their scheduled payments. This transition provided the perfect opportunity to challenge myself, step out of my comfort zone and learn new modelling techniques.

Almost immediately after taking on this position, the Office of the Superintendent of Financial Institutions (OSFI) revised the capital requirements for mortgage insurance, which impacted pricing, capital management and dividend recommendations for mortgage insurers in Canada.

This proved fruitful for me, as I gained extensive industry knowledge through the implementation of the revised capital framework. I also got to observe how a complete financial system works and how insurance companies, banks, mortgage finance companies, regulators, rating agencies and other financial institutions interact with one another.

Additionally, it wasn’t as though I were a fish out of water, struggling to learn from the ground up.

“I was uniquely positioned to take on this new role, being equipped with the actuarial principles that I acquired from my previous role, strong analytical and modelling skills, additional knowledge that I learned about the residential housing market as well as the regulatory rules of the industry and consumer credit risk modelling.”

By using these skills that I had gained throughout my career, I was able to build an actuarial team at Canada Guaranty and in May 2021, I was promoted to Appointed Actuary. 

Working in a smaller company like Canada Guaranty also had the benefits of bringing flexibility and exposure to various actuarial functions. Collaborating closely with departments such as underwriting, loss management and IT, I gained insights into reserving, pricing, capital management and risk management.  

Career development is unpredictable, and my advice to fellow actuaries is to seize opportunities wherever they arise. Every experience, no matter how seemingly small, contributes to growth. Whether at a large banking institution or a smaller company like Canada Guaranty, actuarial science offers diverse paths for success. Embrace the learning process, develop new skills and be ready to seize opportunities – the journey is yours to enjoy.

In the dynamic world of banking, actuaries play a pivotal role in managing financial risks. The sector not only demands technical prowess but also leadership, adaptability and effective communication. Aspiring actuaries, take note: the banking sector offers a multitude of exciting paths to explore and flourish in. Embrace the challenges, stay informed and be prepared to unlock the vast potential that a career in actuarial science in the banking sector holds.

This article reflects the opinion of the author and does not represent an official statement of the CIA.

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