SOA Exam ALTAM – Advanced Long-Term Actuarial Mathematics

Develop Advanced Expertise in Life Insurance, Annuities, Pension Valuation and Long-Term Actuarial Modelling

Exam ALTAM – Advanced Long-Term Actuarial Mathematics is an actuarial examination conducted by the Society of Actuaries (SOA), USA, and forms part of the pathway towards the Associate of the Society of Actuaries (ASA) designation.

The examination focuses on applying advanced actuarial techniques to the valuation, pricing and management of long-term insurance and financial obligations.

ALTAM builds upon concepts developed in Fundamentals of Actuarial Mathematics (FAM), Probability (P) and Financial Mathematics (FM).

The subject combines survival models, life contingencies, premium and policy valuation, profit testing, pension benefits, universal life insurance and embedded financial guarantees, developing technical and analytical skills for actuarial applications in life insurance, pensions and long-term financial risk management.

Course Structure & Syllabus

Exam ALTAM covers advanced actuarial methods used in modelling and valuing long-term insurance and retirement products.

Key Topics Covered:

1. Survival Models & Multiple-State Modelling:
   Mortality and morbidity models, multiple-state Markov models, transition probabilities, multiple decrements and applications to life and long-term health insurance.
2. Premium & Policy Valuation:
   Actuarial present values, premium calculations, policy values, Woolhouse approximations, Thiele’s differential equation and valuation of state-dependent insurance benefits.
3. Joint-Life Insurance & Annuities:
   Joint-life and last-survivor contracts, dependent future lifetimes, joint-life mortality models, premiums and policy reserves.
4. Profit Testing & Financial Analysis:
   Profit signatures, emerging surplus, profit margins, internal rate of return, net present value, premium setting and reserving based on profitability objectives.
5. Pension Plans & Retirement Benefits:
   Defined Benefit (DB) and Defined Contribution (DC) schemes, pension funding, accrued benefits, retirement income, normal costs and actuarial liabilities.
6. Universal Life Insurance:
   Universal life product structures, policy account values, death benefits, premium calculations, no-lapse guarantees, reserves and profit testing.
7. Embedded Options & Financial Guarantees:
   Guaranteed minimum benefits, equity-linked insurance products, Black-Scholes valuation, option pricing, hedging techniques and management of financial guarantees.

The ALTAM syllabus focuses on advanced life contingency modelling, actuarial valuation, profit analysis, pension funding and financial risk management.

Syllabus Topics & Weightages

The SOA ALTAM syllabus comprises seven principal areas:

These are indicative ranges rather than fixed percentages. Actual question distribution may vary between examination sittings.

Examination Structure

Exam ALTAM is a written-response actuarial examination administered at authorised Prometric testing centres, combining theoretical, numerical and Excel-based assessments.

Important Examination Guidelines

• Written-Response Questions:
  Five questions require detailed written solutions, calculations, explanations and actuarial reasoning in the provided answer booklets.
• Excel-Based Question:
  One question must be answered in the provided Excel workbook, testing practical actuarial calculations and modelling techniques.
• Question Structure:
  Each question may contain multiple parts, assessing different actuarial concepts and applications.
• Partial Credit:
  Candidates may receive partial marks for correct methods, calculations and explanations even if the final answer is incomplete.
• Examination Resources:
  Relevant tables, formula sheets and Excel resources are provided according to SOA examination instructions.
• Calculators:
  Only calculators approved under SOA examination rules are permitted.
• Examination Booking:
  Candidates must register through the SOA and schedule their examination appointment within the applicable examination window.
• Examination Conduct:
  Candidates must follow SOA and Prometric regulations regarding identification, permitted materials, answer submissions and examination security.

Eligibility Criteria

Exam ALTAM is an advanced actuarial examination suitable for students specialising in long-term insurance and actuarial valuation.

• No prior examination pass is required solely to register for ALTAM, subject to SOA’s applicable examination entry requirements.
• A strong understanding of Exam FAM – Fundamentals of Actuarial Mathematics is highly recommended.
• Knowledge of Exam P – Probability, Exam FM – Financial Mathematics and mathematical statistics is assumed.
• Familiarity with survival models, life contingencies, premiums, policy values and actuarial mathematics is beneficial.
• Candidates must comply with SOA’s applicable registration, identification and examination requirements.

Learning Objectives

Studying Exam ALTAM develops the ability to:

• Apply advanced survival and multiple-state models.
• Calculate premiums and reserves for long-term insurance products.
• Evaluate joint-life insurance and annuity contracts.
• Apply profit testing to insurance products.
• Analyse emerging surplus and financial performance.
• Value pension benefits and retirement obligations.
• Model universal life insurance products.
• Evaluate embedded financial guarantees and options.
• Apply actuarial modelling techniques using Microsoft Excel.
• Develop advanced actuarial reasoning and financial risk assessment skills.

Practical Applications of Exam ALTAM

The knowledge gained in Exam ALTAM is applicable across several actuarial and financial disciplines:

1. Life Insurance:
   Valuing insurance liabilities, calculating premiums, developing reserves and assessing long-term insurance risks.
2. Pensions & Retirement Benefits:
   Valuing pension obligations, determining funding requirements and evaluating retirement benefit schemes.
3. Health & Long-Term Care Insurance:
   Modelling morbidity, disability and long-term care benefits using multiple-state actuarial models.
4. Actuarial Valuation & Financial Reporting:
   Assessing policy values, profit emergence, insurance liabilities and financial performance.
5. Financial Guarantees & Risk Management:
   Valuing embedded guarantees, assessing option-related risks and developing hedging strategies.

ALTAM develops advanced actuarial knowledge in life insurance, pensions, financial guarantees and long-term actuarial modelling, supporting professional actuarial applications and progression towards the ASA designation.

Technical Requirements – AEI Learning Application

To access online classes, recorded lectures and digital study resources, students must ensure their devices meet the following minimum technical requirements of the Actuators Educational Institute (AEI) Learning Application.