Centers of Actuarial Excellence CAE

Centers of Actuarial Excellence (CAE)

By Emily Kessler

I would like to like to open this article by thanking the E&R Section Council for the opportunity to bring you up to date on the Centers of Actuarial Excellence (CAE) initiative. I’d also like to thank every member of the academic community who responded to either or both of the surveys on the CAE initiative. We value your time and opinions, and thank each of you for sharing them with us. We have made several changes to the CAE program based on your input. This article will give you the final format of the program, and give you a sneak peek as to the timing of applications and announcements. If you read the document that was released with the January survey, you’ll notice the basic structure of the plan has not changed.

One caveat: final details of the final program are still being developed; while the principles outlined in this article will remain, some details may not be exactly as described when the final application materials are released.

The CAE designation will be awarded to schools using the following standards:

  • Meet each of four A‑level criteria: degree, curriculum, graduate count and faculty composition. Schools that are not able to meet any A‑level criteria as written may ask for a facts and circumstances determination.
  • Meet, as a whole, the four B‑level qualitative criteria: graduate quality, appropriate integration, connection to industry, and research/scholarship.
  • Pass a site visit. There will be a fee charged to schools that are selected for a site visit to help defray the cost of the visit.

Schools that are designated as CAE will retain the designation for five years. Schools designated CAE must file an annual report with the SOA.

The process for designating the CAE is unchanged. Schools will have the right to appeal (to a separate body) the denial of a site visit and the denial of the CAE status. Schools will also be consulted in the selection of the site visit team (schools will be given a list of six potential site visit team members and can remove one name from that list for any reason; the final team will be drawn from the remaining five). Schools will also be able to comment on the site visit report.

Our goal is to have all application materials available no later than June 15, 2009. We will release materials as they are available so that schools may start the application process earlier. Applications will be due on Aug. 1, 2009. Schools will be notified if they are selected for a site visit in early September, and site visits will be arranged for the end of September/early October (we will pre‑schedule potential site visit dates and allow schools to review the potential site visit team during August). Schools will be given the site visit report no later than Nov. 1, and will have a minimum of two weeks to review the report and return comments to the evaluation committee. Final decisions for CAE status are targeted to be announced around Dec. 15, 2009. Please note that all dates referenced in this paragraph are preliminary; final program details are in development but we will keep you posted as they are finalized.

There will be two CAE cycles in 2010 and thereafter. The timing for future cycles (application due dates, site visit dates, etc.) will be announced later.

The first CAE grants would be awarded in 2010. The application process and timeline has not been determined; we anticipate announcing this information in autumn 2009.

The rest of the article will provide detail on the CAE criteria, site visit fee, and assignment of CAE status.


Schools must pass each A‑level criterion, either by meeting the quantitative guidelines provided below or by providing their argument as to how they meet the criterion on a facts and circumstances basis. Please note that for purposes of this article, we are using a new criteria numbering system (which is different from the numbering system used in the survey).

  • Criterion A.1: The school must offer a program with an identifiable major or track in actuarial science (the term “major” will henceforth be used to refer to all actuarial programs). There must be a clear set of courses and other requirements and it must be clear which students have earned the actuarial science major.

Students earning the actuarial science major can do so as part of a bachelors, masters, or doctoral degree program. Course catalog or other materials must clearly identify what is associated with a major in actuarial science, and the school should recognize the actuarial science major in the same way as it recognizes other majors.

  • Criterion A.2: The curriculum must cover at least 80 percent of the learning objectives in four of the five preliminary examinations (currently P/1, FM/2, MFE/3F, MLC, and C; the FAP modules are not included). The 80 percent threshold is per examination. The school must offer courses that have been approved by the SOA for all VEE subjects.

Schools must show how the program’s syllabus and examinations tie to the SOA learning objectives (the SOA will provide a list of learning objectives). Schools will be required to submit supporting documents, for example, course syllabus and mid‑term/final exams. Schools that use SOA course materials may show how course requirements tie to the exams.

  • Criterion A.3: The school must have produced an average of at least 10 graduates per year over the previous four years across all identifiable actuarial science majors.

Schools must provide a count of students graduating with an actuarial science major over the past four years. Listings showing names of students are preferred but not required; listings can also come from the department itself or could be listings published in another venue (e.g., graduation booklet or student newspaper). A year is an academic year as defined by the institution.

  • Criterion A.4: The faculty responsible for teaching actuarial courses and other program involvement must be sufficient in both quantity and quality. At least one faculty member must be full‑time tenured or tenure‑track and must be an actuary or pursuing actuarial credentials (Associate or Fellow).

Schools will be deemed to meet this criterion if they meet either A1 and B or A2 and B:
A1. They have two faculty members who are PhD and Fellows
A2. They have three faculty members who demonstrate a “substantial commitment to actuarial science.” Of these three faculty members, at least one must be a PhD and either one must be a Fellow or two must be Associates. The “substantial commitment to actuarial science” will be evidenced by teaching, research, and service.

  • At least one of the individual faculty members described in A1 or A2 above must be a) an actuary or pursuing actuarial credentials (Associate or Fellow), b) full‑time and c) tenured or tenure‑track.

Note that “Associate” or “Fellow” apply broadly to designations bestowed by the SOA, CAS, CIA, IA, FA and IAAust. Schools will be asked to provide a list of faculty in actuarial science with their degree, actuarial credentials, CV and typical teaching load. Schools must indicate for each faculty the amount of time and nature of activities that support the actuarial science program. The school must show in its demonstration how it meets A1 and B or A2 and B.

We made several changes to the A‑level criteria based on survey results:

  • Rewrote criterion A.1 wording to properly recognize that you have a major in actuarial science (not a degree).
  • Rewrote criterion A.2 to clear up confusion regarding the role of the VEE courses in the actuarial science curriculum (we did not intend that VEE courses be part of the actuarial science curriculum) and to confirm that examinations could be used as supporting materials.
  • Rewrote criterion A.3 to note that a listing of graduates, while preferred, is not required, and to note that a listing provided by the department will suffice as sufficient documentation.
  • Rewrote criterion A.4 to eliminate the “full‑time equivalent” language, clarify that the same individuals could count in meeting category A1 and B or A2 and B, and put in a new provision that allows faculty who are pursuing an actuarial credential to be counted as an actuary for the purpose of category B.

We heard many concerns about the potential complexity of demonstrating how the school meets the curriculum criterion (A.2). We will be preparing materials over the next few months for schools to use in demonstrating compliance. We will actively try to balance a need for demonstrable rigor with minimum time commitment on the part of the university applying for CAE status.

The most significant change for the A‑level criteria was to permit a facts and circumstances demonstration. The basis by which facts and circumstances will be considered is still being drafted for each criterion, but this sample is what it likely will look like for criterion A.4.

Schools that do not meet A1 and B or A2 and B as described may demonstrate how their program faculty is sufficient in quantity and quality on a facts and circumstances basis. Factors to be considered include number of faculty, faculty CV (including terminal degrees, actuarial credentials, commitment to actuarial science, involvement with program, employment status), how the composition of faculty for the actuarial science program compares to other similarly situated programs at the university, and school’s existing hiring/tenure practices.

For example, we heard from several survey respondents that their school did not make many tenure‑track appointments; it was common for faculty to have permanent appointments, but not be tenured. In this case, this school could apply facts and circumstances to argue that other similarly situated programs (e.g., the business school) did not have tenured faculty so the lack of tenured faculty for the actuarial science department was reasonable given other similar programs within the university.

Please note that facts and circumstances arguments cannot be used to nullify a criterion. For example, a school cannot use facts and circumstances to argue that it does not need to have an average of 10 graduates per year (criterion A.3) because it is a small university; the criteria for sufficient quantity of graduates is there to ensure the program is of sufficient size to ensure sufficient depth. A reasonable facts and circumstances case for criterion A.3 would be that due the effects of a natural event (e.g., hurricane), enrollment (and graduate) numbers at the school dropped, leading to a temporary drop in the number of graduates from the program.

CAE Criteria—B-Level

The B‑level criteria are considered as a whole. The criteria are evaluated by the CAE Site Visit team (CSV). The CSV team will provide its assessment of each of the four B‑level criteria using the following rankings:

  • Not in evidence
  • Inadequate but repairable
  • Adequate
  • Strong
  • Exceptional

The CSV team will provide their assessment separately for each of the four B‑level criteria. (Each B‑level criterion will receive a rating of “not in evidence,” “inadequate but repairable,” “adequate,” “strong,” or “exceptional.”) The CAE Evaluation Committee (CEC) will take the CSV team’s assessment and compare that to assessments made by other teams at other universities (including during prior CAE designation cycles) to ensure consistency of rankings.

To pass the B‑level criteria, the school must receive ratings of “adequate” or better in three categories and “strong” or better in at least one category. Schools will be given examples of “inadequate” “adequate” and “strong/exceptional” narrative statements to illustrate the differences.

  • Criterion B.1: The program produces high quality graduates who are in demand by employers.

Schools will provide a narrative demonstrating that their school provides high quality graduates. The school can include any factors in its narrative, including but not limited to job placement data, success in examinations, company attendance at career fairs or recruiting events, proportion of graduates who become credentialed actuaries, testimonials from employers and/or graduates.

  • Criterion B.2: There must be an appropriate integration with other relevant fields, particularly those developing business skills and communication.

Schools will provide a narrative showing how they integrate business skills and communications into the curriculum. Factors that will be considered include but are not limited to whether business courses are offered or integrated into the program (particularly courses focusing on strategy, leadership and organization), the presence of co‑op or internship programs (including whether current students are in demand as summer interns), and the extent to which the curriculum includes teamwork and/or case studies. Courses do not have to be a degree requirement to be considered appropriate integration.

  • Criterion B.3: There is a connection to industry through activities such as an advisory board, campus speakers, career center, internship program, and others.

Schools will provide a narrative showing how their program connects to industry, through an advisory board, campus speakers, career center, internship program, actuarial club, etc.

  • Criterion B.4: The program should be producing research and other scholarship that contributes to the profession, such as publishing research in academic journals and other professional publications, speaking at meetings, writing textbooks and serving on professional committees. The criterion will be applied at the program level, not per faculty member.

Schools will provide a narrative demonstrating commitment to research and scholarship. We expect most schools would demonstrate commitment through some combination of A and B:

  • Publication in a refereed academic journal in the last four years or publication of a textbook through a qualified publishing house or
  • Demonstrated continuing involvement in professional activities (e.g. serving on committees/task forces, speaking at meetings, writing for non‑refereed journals).

For this purpose, faculty considered are anyone who is listed as a member of the faculty in criterion A.4.

Several specific changes were made to the B‑level criteria

  • Rewrote criterion B.1 to reflect the fact that many measures we had hoped would be available simply are not. The criterion definition was revised to stresses that it is a narrative, removed the GPA example and added testimonials as another example.
  • Rewrote criterion B.4 to clarify that that academic journals included refereed journals and adding examples of scholarship. The KMSAT made minor changes to the definition.

There were no significant changes made to criteria B.2 or B.3.

Survey respondents expressed many concerns about what they would need to do to show they met the B‑level criteria.  We recognize that it is difficult for schools to understand how qualitative criteria are met until there are examples of how this is done.  We will provide sample narratives and demonstrations for schools to reference as they complete their application.

Site Visit

Site visits are to take two days and are conducted by a three‑person site visit team, accompanied by SOA staff.  One role of the site visit is to assess the B‑level criteria.  The site visit team may also be asked to gather additional information about A‑level criteria (if the CAE Evaluation Committee has any outstanding questions).  Finally, the site visit team spends time meeting with students, faculty and administration to ensure that the standards of excellence evidenced on paper are reflected in the experience at the school.  One benefit to the site visit for the CAE process is to uncover best practices that can be shared with all universities.  In addition to making recommendations about the B‑level criteria, the site visit team will provide an overall recommendation as to whether the school should be given CAE status. 

Site visit team members will include one member of the committee that is making the determination of CAE status and one member with academic experience.  The site visit team will submit a report on the site visit to the school and the evaluation committee.  The school may submit comments on the site visit report for the evaluation committee’s consideration.

Site Visit Fee

There is no fee to apply for CAE status. However, if the school is selected for a site visit, the school must pay a fee; the final fee is to be determined, but would be in the range of $1500.  The fee is in lieu of charging travel costs and expenses for the site visit team, and represents a portion of that expected cost.  Please note that schools are only selected for a site visit after a review of the A‑level criteria and a (very preliminary) review of the B‑level criteria.   If a school is clearly unable to meet the A‑level criteria or the application shows clearly insufficient evidence that the site visit team would find the school to meet the B‑level criteria, no site visit is scheduled. 

Assignment of CAE Status

Once a school has attained CAE status, the school may keep that status for five years, assuming no significant changes in the program.  The school will file an annual report with the SOA noting where there were significant changes to the actuarial program.  If the program changed in a negative way (such that, on new application, the school would not meet the requirements for CAE status), the school will be asked to provide a plan for how it will remedy the situation within a reasonable time frame (e.g., 1 year).  The annual report is not meant to replicate the CAE application; it is only to note significant changes in the program over the past year.