CM 1 - Actuarial Mathematics
Why you are studying this subject
The aim of the Actuarial Mathematics subject is to provide a grounding in the principles of modelling as applied to actuarial work – focusing particularly on deterministic models which can be used to model and value known cashflows as well as those which are dependent on death, survival or other uncertain risks.
Syllabus
1. Data and basics of modelling (10%)
2. Theory of interest rates (20%)
3. Equation of value and its applications (15%)
4. Single decrement models (10%)
5. Multiple decrement and multiple life models (10%)
6. Pricing and reserving (35%)
The weightings are indicative of the approximate balance of the assessment of this subject between the main syllabus topics, averaged over a number of examination sessions.
The weightings also have a correspondence with the amount of learning material underlying each syllabus topic. However, this will also reflect aspects such as:
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the relative complexity of each topic, and hence the amount of explanation and support required for it
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the need to provide thorough foundation understanding on which to build the other objectives
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the extent of prior knowledge which is expected
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the degree to which each topic area is more knowledge or application based.
Learning Pattern
We suggest that you work through each of the chapters in turn. To get the maximum benefit from each chapter you should proceed in the following order:
1. Read the Syllabus Objectives. These are set out in the box at the start of each chapter.
2. Read the Chapter Summary at the end of each chapter. This will give you a useful overview of the material that you are about to study and help you to appreciate the context of the ideas that you meet.
3. Study the Course Notes in detail, annotating them and possibly making your own notes. Try the self-assessment questions as you come to them. As you study, pay particular attention to the listing of the Syllabus Objectives and to the Core Reading.
4. Read the Chapter Summary again carefully. If there are any ideas that you can’t remember covering in the Course Notes, read the relevant section of the notes again to refresh your memory.
5. Attempt (at least some of) the Practice Questions that appear at the end of the chapter.
6. Where relevant, work through the relevant Paper B Online Resources for the chapter(s). You will need to have a good understanding of the relevant section of the paper-based course before you attempt the corresponding section of PBOR.
Actuarial Exams
IAI Actuarial Exams are divided into 2 types namely, Written and Practical examinations.
Stage 1: CORE PRINCIPLES
n the Core Principles stage there are three main modules: Actuarial Statistics (CS), Actuarial Mathematics (CM), and Business (CB). All of these modules need to be passed to be able to qualify as an Associate or a Fellow.
CS and CM modules consists of two subjects each. Each subject consist of two examinations. One is a three hour and fifteen minutes paper-based exam and the other is a one hour and forty five minutes computer based exam.
CB module consists of three subjects. CB1 and CB2 are written examinations of three hours fifteen minutes each, whereas CB3 is an online examination of 2 hours duration.
Subject Code Subject detail
CS1 Actuarial Statistics
CS2 Risk Modelling and Survival Analysis
CM1 Actuarial Mathematics
CM2 Financial Engineering and Loss Reserving
CB1 Business Finance
CB2 Business Economics
CB3 Business Management
Stage 2: CORE PRACTICES
You are required to pass all 3 subjects at this stage and these are as follows: CP1 and CP3 are written examinations of three hours and fifteen minutes each. CP2 is an online examination consisting of two papers of duration three hours fifteen minutes each conducted on the same day.
Subject Code
Subject detail
CP1 Actuarial Practice
CP2 Modelling Practice
CP3 Communications Practice
CP1- Actuarial Practice
In the Core practices stage actuarial concepts are covered. Actuarial Practice (CP1) is assessed by 2 papers each of three hours duration 15 minutes time. The marks of the two papers are added together to give a single mark for CP1 Actuarial Practice.
CP2 Modelling Practice
This online exam aims to ensure that you understand how to model data, document the work which also includes maintaining an audit trail, analyse the methods used and results generated, and communicate these along with your conclusions to an actuarial audience. You will need a working knowledge of spreadsheets and word.
The Format of CP2
The online exam will comprise of two papers of duration three hours fifteen minutes each conducted on the same day. Both the papers will be computer based using Microsoft Office 2007.
In Paper 1, students will be given a problem to model, including data to analyse and audit trail. In Paper 2, students will be presenting summary outlining: description, approach, results and conclusions.
This will not be presented to an audience.
The relevant core reading will be available as soft copy on your computers.
CP2 examination will be conducted in a classroom environment under the supervision of an invigilator.
CP2 examination will be conducted twice a year along with the Regular Examination at Indian centres only. These will be visible to students while registering for the exam. There is no batch size limit for registration.
Study material will have to be purchased separately.
Students will need to sit and clear both parts of the examination to gain a pass, and if a student is absent from one part they will receive an overall absent grade.
There will be no pre-requisite of passing other papers in order to register for CP2.
CP3- Communication Practices
CP3 subject aims to test your skills at effective communication to both technical and non-technical audiences. It is based on the concepts in the Core principle subjects and in CP1 - Actuarial Practice and questions are set within a financial framework. The examination will be conducted as a single written examination along with the regular exams twice in a year. There will be no pre-requisite of passing other papers in order to register for CP3. There is no batch size limit for registration. Study material will have to be purchased separately.
Stage 3: SPECIALIST PRINCIPLES
This stage builds on the Core Principles Stage but in individual specialism (non-jurisdiction specific). Choice is introduced at this stage. The student will choose 2 subjects from the 8 subjects offered :
Subject Code
Subject detail
SP1 Health and Care
SP2 Life Insurance
SP4 Pension and Other Benefits
SP5 Investment and Finance
SP6 Financial Derivatives
SP7 General Insurance Reserving and Capital Modelling
SP8 General Insurance – Pricing
Stage 4: SPECIALIST ADVANCED
The final stage of the examinations is one specialist (India-specific or other jurisdiction specific to be allowed from a later date) subject chosen from:
Subject Code
Subject detail
SA1 Health and Care
SA2 Life Insurance
SA3 General Insurance
SA4 Pensions and Other Benefits
SA7 Investment and Finance
There is no requirement to have passed the corresponding specialist Principle subject, however, the Specialist Advanced subjects will typically assume knowledge of the corresponding Specialist Principles subject (SA1 may assume knowledge of SP1).