August 2012

How Did I Get to Where I am Today? My 50-Plus Years of Being an Entrepreneur - Part I


by Larry Stern

My career began innocently on a winter’s day in 1959. The evening newspaper delivery boy had broken his leg and The Indianapolis Times needed someone from the neighborhood to pitch in while he recovered. I raised my hand, and in an instant I had 80 customers expecting no disruption in the delivery of their evening newspaper.

What was to be only a few months’ work turned into a permanent gig lasting five years until the paper folded. Paperboys had ticket books for each week and would go to each household, collect the week’s subscription fees, and give the subscribers a ticket from the book, with follow-up work to count the money and keep a record of who was current or behind in their payments. The area distribution manager would then meet the paperboys on Saturday at the local drugstore to collect the proceeds.

As I got older, I offered to cut grass for my newspaper customer base during the summer months, which proved to be a lucrative endeavor with tips often received and greatly appreciated. As I approached driving age, my business profits proved to be a good source for movie and date money. The lawn service continued through my junior year in high school.

Next, off to college to become an actuary. Yes, at the tender age of 16, I knew I wanted to become an actuary. I was always good in math and my father was an accountant. My high school guidance counselor gave me a booklet that listed math careers in alphabetical order. First was “accountant”; next was “actuary”; I don’t know what was next. The actuarial career interested me. In the 1960s, actuaries were the focal point of insurance companies and their management teams. It took 10 exams to become part of the insurance world. I was fortunate to live in a city with access to many actuaries working for life insurance companies. Through connections, I talked to a few and became convinced that this was the career for me, and so I was off to college to become an actuary.

I learned that actuaries were primarily math majors who usually found their way into the profession via insurance companies. This path was not for me. Actuarial science is applied mathematics. At the time I entered college, math was geared toward theory. Back then, actuarial exams didn’t necessarily care how you got the answer, only that you got the correct answer quickly. My own collegiate path was to obtain a business degree from Indiana University (IU) with math electives to prepare for actuarial exams, a somewhat unorthodox approach for the late 1960s but a precursor of how students would become actuaries in the future. If the business school also included insurance and risk management courses, even better.

Local actuaries had mentioned the possibility of working as a summer student while in college. A week before classes finished during my junior year, I received a call asking if I was interested in summer work. I was. The caller asked, “Do you play golf?” I said “yes.” He explained that he needed a student to keep the stats for the company’s golf league, and invited me to come to work the Monday that classes were over. He also mentioned that the golf league met Tuesday nights after work.

It proved to be a great summer. I did nothing but work on whole life products. First I calculated asset shares on an existing product. The company was a mutual insurer and the actuaries wanted to propose a change to the dividend scale. The calculator was a Smith-Corona Marchant (SCM), big, clumsy and noisy. You entered numbers by pushing buttons and then hit a key. The SCM would spin like a one-armed-bandit. After a few seconds the answer would appear. No computers in those days. This went on day after day for a month. Under the careful eye of my boss, the VP and chief actuary, I learned about the principles of mutuality. The results of the asset share calculations led to how much surplus could be allocated to dividends. The actual dividends were derived from a three-factor formula to which I could apply my knowledge of calculus.

The remaining two months of the summer were spent calculating cash values and reserves for a new whole life product. This was invaluable experience as the iterative calculations were self-checking, and I learned how to determine if answers were reasonable. Cash values and reserves were listed on paper worksheets, which were handed over to the IT department to prepare punch cards for the huge in-house computer. At that point, the work that took me two months to complete could now be done in less than a nanosecond. This work involved evaluating business risk and required organization and management skills. Not only did I do exceptionally well in keeping the golf league stats, but my partner and I came in first place.

Once the values were all prepared, they were displayed in the company rate manual for the agents to market the product. I received a copy of this “behemoth” manual as a token of my work that summer. The work came in handy during my senior year at IU, when I took a course in math models and had to prepare a paper on how to develop a mathematical model that could be applied to a practical problem. I used asset shares to determine cash values and reserves.

During my senior year, I was also invited to participate in two special honors seminars on management and entrepreneurship. Both lecture series were taken by fewer than 20 students, and we met in the professors’ homes during the evening, with more great stuff on managing risk.

The company that employed me during the summer offered me a full-time position upon graduation. Being lucky by not being drafted to the Vietnam War, I accepted and also kept the golf league stats.

The actuarial department upgraded to obtain one programmable calculator, which resided on my desk. The machine remembered up to 25 steps, and all you had to do was enter the formula into memory and then key in numbers to generate answers. During the first summer, I was able to calculate cash values and reserves plus dividends for three new products.

Outside the actuarial department, I also learned how to be an entrepreneur within the company. During the first week of my employment, my boss took me aside and gave me advice that has remained with me ever since: “Actuaries automatically have two strikes against them when they walk into a room with other company staff, especially the marketing department. First strike: People assume you are better educated than they are. Second strike: You are paid more than most people in the company because you are an actuary. Your objective is not to get the third strike. Otherwise you will lose all creditability and people will never want to work with you again.” He also advised: “There is always an adversarial relationship between actuarial science and marketing. You have to overcome this obstacle. You have to become a good listener.”

My career success can be traced back to this advice that I took to heart over 40 years ago. Until next time, may all your experiences be profitable ones.

Note from the Editors: Look for Part II of this article in the next issue of The Independent Consultant.

Larry N. Stern, FSA, MAAA, is president of Canterbury Consulting, LLC, a sole practitioner providing life insurance and annuity actuarial consulting and reinsurance intermediary services located in Charlotte, N.C. He can be reached at