Associate of the Society of Actuaries (ASA/FSA) FSA Modules and Capstone Requirements Syllabus

What does the Individual Life and Annuities (ILA) FSA track cover?

Design, pricing, valuation, reserving, and risk management of individual life insurance and annuity products, including financial reporting, regulation, and product-specific risks (mortality, lapse, longevity).

Write the standard net single premium for a fully discrete whole life insurance on $(x)$, foundational for ILA pricing.

$$A_{x}=\sum_{k=0}^{\infty} v^{k+1}\,{}_{k|}q_{x}=\sum_{k=0}^{\infty} v^{k+1}\,{}_{k}p_{x}\,q_{x+k},$$ where $v=\frac{1}{1+i}$.

What is the focus of the Group and Health (GH) FSA track?

Pricing, valuation, plan design, and management of group and individual health and disability coverage: medical, dental, long-term care, disability income, and related regulatory and reserving topics.

Define the medical loss ratio (MLR), a key Group and Health metric.

$$\text{MLR}=\frac{\text{Incurred claims}+\text{Quality improvement expenses}}{\text{Earned premium}-\text{Taxes and fees}}.$$ Under the ACA, large group plans must generally meet an 85% minimum MLR (80% for small group/individual).

What does the Retirement Benefits (RET) FSA track cover?

Design, funding, valuation, accounting, and regulation of retirement programs: defined benefit and defined contribution plans, pension funding methods, actuarial cost methods, and post-retirement benefits.

Distinguish a Defined Benefit (DB) plan from a Defined Contribution (DC) plan, a core RET classification.

In a DB plan the employer promises a specified benefit (e.g., a formula based on salary and service) and bears investment/longevity risk. In a DC plan contributions are defined, the account value depends on contributions and returns, and the employee bears the investment risk.

Write the projected unit credit (PUC) normal cost concept used in pension valuation (RET).

PUC allocates the projected benefit to each year of service. The normal cost for a year equals the present value of the benefit attributed to that year's service: $$NC_{t}=\text{PV of benefit accrued during year } t.$$ The accrued liability is the PV of benefits attributed to past service.

What does the Corporate Finance and Enterprise Risk Management (CFE) FSA track cover?

Corporate finance, capital management, financial decision-making, and enterprise risk management (ERM): risk identification, measurement, economic capital, risk appetite, and value creation for financial institutions.

Define Value at Risk (VaR), a central ERM/CFE risk measure.

VaR at confidence level $\alpha$ over horizon $T$ is the loss threshold not exceeded with probability $\alpha$: $$\text{VaR}_{\alpha}(L)=\inf\{l:\ P(L\le l)\ge \alpha\}.$$ It is the $\alpha$-quantile of the loss distribution.

Define Tail Value at Risk (TVaR/CTE) and state how it differs from VaR.

TVaR (a.k.a. CTE/Expected Shortfall) is the average loss beyond the VaR: $$\text{TVaR}_{\alpha}(L)=E[L\mid L\ge \text{VaR}_{\alpha}(L)].$$ Unlike VaR, TVaR is a coherent risk measure (it is subadditive) and captures tail severity.

What is the DMAC module, and where does it fall in the FSA pathway?

DMAC is the Decision Making and Communication module — an FSA-level e-learning module taken in each specialty track. It develops business communication and decision-making skills and includes an end-of-module project assessment.

What is the typical deliverable for the DMAC module assessment?

A project-based written assessment in which the candidate analyzes a business problem in their specialty and produces professional communications (e.g., a report or memo to a stakeholder) demonstrating decision-making and communication skills.

What is the FSA Capstone-style requirement within each FSA track (the project/assessment that integrates the track)?

Each FSA track requires completing the track's modules (DMAC plus exams) and culminates in track-specific project assessments; the FAP Final Assessment serves as the ASA-level capstone integrating the control cycle across practice areas.

What is the Fellowship Admission Course (FAC), and when is it taken?

FAC is the final required seminar before the FSA designation is awarded. It is an in-person professionalism and leadership course covering professionalism, ethics, communication, and the responsibilities of a Fellow, taken after all other FSA requirements are complete.

What are the high-level requirements to attain the ASA designation?

Pass the preliminary exams (P, FM, FAM, ALTAM/ASTAM, SRM, PA), complete all three VEE requirements, complete the FAP modules and assessments, complete the predictive analytics requirement, and complete the Associateship Professionalism Course (APC).

What are the high-level requirements to attain the FSA designation (beyond ASA)?

Complete a chosen specialty track's two FSA exams, the DMAC module, the track's modules, the ATPA assessment (Advanced Topics in Predictive Analytics), and attend the Fellowship Admission Course (FAC).

In VEE Accounting and Finance, write the formula for the Weighted Average Cost of Capital (WACC).

$$\text{WACC}=\frac{E}{V}r_{E}+\frac{D}{V}r_{D}(1-T_{c}),$$ where $E$=equity, $D$=debt, $V=E+D$, $r_{E}$ and $r_{D}$ are costs of equity and debt, and $T_{c}$ is the corporate tax rate.

State the Net Present Value (NPV) decision rule from VEE corporate finance.

$$\text{NPV}=\sum_{t=0}^{n}\frac{CF_{t}}{(1+r)^{t}}.$$ Accept the project if $\text{NPV}>0$; among mutually exclusive projects, choose the highest positive NPV.

In VEE Mathematical Statistics, state the Central Limit Theorem result for the sample mean.

For i.i.d. observations with mean $\mu$ and finite variance $\sigma^{2}$, $$\frac{\bar{X}_{n}-\mu}{\sigma/\sqrt{n}}\ \xrightarrow{d}\ N(0,1)\quad\text{as } n\to\infty.$$

What is a Type I versus a Type II error in hypothesis testing (VEE Mathematical Statistics)?

A Type I error rejects a true null hypothesis (probability $\alpha$, the significance level). A Type II error fails to reject a false null hypothesis (probability $\beta$); the power of the test is $1-\beta$.

In the ILA/RET context, define the actuarial present value (APV) of a life annuity-due $\ddot{a}_{x}$.

$$\ddot{a}_{x}=\sum_{k=0}^{\infty} v^{k}\,{}_{k}p_{x},$$ the expected present value of payments of 1 at the start of each year while $(x)$ survives, with $v=\frac{1}{1+i}$.

State the fundamental relationship linking whole life insurance $A_{x}$ and the annuity-due $\ddot{a}_{x}$ (ILA reserving).

$$A_{x}=1-d\,\ddot{a}_{x},\qquad d=\frac{i}{1+i}.$$ Equivalently $\ddot{a}_{x}=\dfrac{1-A_{x}}{d}$.

In ERM/CFE, what property makes a risk measure "coherent," and which four axioms must it satisfy?

Coherence requires: 1) monotonicity, 2) subadditivity ($\rho(X+Y)\le\rho(X)+\rho(Y)$), 3) positive homogeneity ($\rho(\lambda X)=\lambda\rho(X)$ for $\lambda\ge0$), and 4) translation invariance. VaR fails subadditivity in general; TVaR satisfies all four.

In the Group and Health track, distinguish "incurred" claims from "paid" claims.

Incurred claims are those arising from events that occurred in the period, regardless of when paid (including IBNR — incurred but not reported). Paid claims are amounts actually disbursed in the period. Reserves bridge the two: $$\text{Incurred}=\text{Paid}+\Delta\text{Reserves}.$$

In QFI, define convexity and state the second-order price-change approximation for a bond.

Convexity $C$ measures curvature of the price-yield relationship. The price change is approximated by $$\frac{\Delta P}{P}\approx -D_{\text{mod}}\,\Delta y+\tfrac{1}{2}C\,(\Delta y)^{2}.$$

What is "economic capital" in the CFE/ERM framework?

Economic capital is the amount of capital a firm needs to hold to remain solvent over a given time horizon at a chosen confidence level, typically measured as VaR or TVaR of the change in economic value (assets minus liabilities) over that horizon.

In RET pension accounting, what are the main components of net periodic pension cost?

Service cost, interest cost on the projected benefit obligation, expected return on plan assets (a credit), amortization of prior service cost, and amortization of actuarial gains/losses.

In predictive analytics (ATPA/PA), explain the bias-variance tradeoff.

Expected prediction error decomposes as $$E[(y-\hat{f})^{2}]=\text{Bias}(\hat{f})^{2}+\text{Var}(\hat{f})+\sigma^{2}.$$ Simple models have high bias/low variance (underfit); complex models have low bias/high variance (overfit). The goal is to minimize total error.

What is cross-validation, and why is it used in predictive-analytics assessments?

Cross-validation (e.g., k-fold) partitions data into folds, trains on k-1 folds and validates on the held-out fold, rotating through all folds. It provides a more robust estimate of out-of-sample performance and helps tune hyperparameters and prevent overfitting.

In the ILA/RET context, define the prospective reserve and state its formula for a fully discrete whole life policy.

The prospective reserve is the expected present value of future benefits minus future net premiums: $$_{t}V_{x}=A_{x+t}-P_{x}\,\ddot{a}_{x+t},$$ where $P_{x}=\dfrac{A_{x}}{\ddot{a}_{x}}$ is the net level annual premium.

What distinguishes the General Insurance (GI) FSA track from the other specialty tracks?

The GI track focuses on property and casualty (non-life) insurance — ratemaking, loss reserving, reinsurance, and regulation — whereas QFI, ILA, GH, RET, and CFE focus on investments, life/annuities, health, retirement, and corporate finance/ERM respectively.