Actuaries (at least in Europe) are frequently severily lacking in quant finance topics. At best they are familiar with B&S model.
People going into quant finane or striving to become a quant on the other hand are often not aware that their knowledge could also be applied in an insurance context.
Classic quant-work-related topics are: options pricing, portfolio optimisation, credit risk. This topics are also ery relevant to insurers. The example below shows why. I will also add more examples later on.
Example (portfolio optimization) Consider a car insurer's portfolio. Such a portfolio consists of many individual contracts. Premium calculation is based on the equivalence principle. Premiums paid by the insured must at least cover the losses. Thus such a portfolio can generate positive or negative annual returns. Positive if premiums paid > losses, Negatative if premiums paid < losses. Also these returns change over time and are volatile. The portfolio also has a market value - even though the market is not nearly as liquid as the one for standard derivatives and the bid/ask spreads can be huge. Still, one can interpret one such portfolio as a stock with possible negative dividend.
A reinsurance company often holds fractions of such portfolios. Thus to optimize the potfolio structure they can apply portfolio-optimization theory. As far as I know there are even a couple of reinsurers out there that actually do that.
Literature: (some books and papers to showcase the interfacing of actuarial evaluation and derivatives pricing techniques)
- On Valuation and Risk Management at the Interface of Insurance and Finance (suggested in the comments)
- Pricing and Hedging Variable Annuities (because of the comprehensive list of references)
- ON THE RISK-NEUTRAL VALUATION OF LIFE INSURANCE CONTRACTS WITH NUMERICAL METHODS IN VIEW (application of monte carlo least squares to the pricing of early ecercise features inbedded in in life insurance contracts)
- Literature suggestions on the application of option pricing, portfolio optimization etc. to insurance related topics
- Further examples as the one above
- What could quants working for banks/funds learn from actuaries ?