• Kalpesh Agrawal

A Brief Introduction & Tips of CM1 syllabus & Excel

CM1 is one of the core series paper that is very important if you are going to work in a Life Insurance Company. This subject gives the knowledge of Principles of Modelling as applied to Actuarial work. CM1 is the combination of CT1 & CT5, so obviously this contains more chapters than other subjects in core series.

Along with theory paper, the practical paper is also included in CM1, so you require Excel knowledge to clear this exam. I am giving a brief introduction of chapters so that you can clear the exam in the first attempt.

Related: How I cleared Actuarial Exams in First the Attempt

Syllabus and brief Introduction

Ch.1- Data analysis: Related with Data analysis & knowledge of tools of Data analysis included. This chapter shifted to CS1 from the 2020 exams.

Three forms of Data analysis, Data analysis process, Data resources included in this chapter.

Ch.2- Principles of actuarial modeling: This chapter is very important as this includes the knowledge of Modelling. Includes the knowledge of Stochastic & Deterministic models. You will get the answers to why we want model, how to model, benefits, and limitation of the model.

Ch.3- Cashflow models: Describes the use of the generalized cashflow model to describe financial transactions.

Ch.4- The time value of money: In this chapter, you will learn the time value of money which is so much helpful in real life. You will learn compound interesting, discounting and many more.

"If you have 100rs. now, It will not have the same value tomorrow,
The person who understand this, never face financial problem in life" 

Ch.5- Interest rates: This chapter is related to Ch.4. You will learn Effective, Nominal, and Force of Interest.

Ch.6- Real and money interest rates: Real and Money (Nominal) interest rates knowledge can be learned from this chapter. Small but important chapter.

Ch.7- Discounting and accumulating: Calculating the present value and accumulated value of cash flow of the same amount or different amount and equal time period and different time periods.

Ch.8 & 9- Level annuities, Increasing annuities: You will learn many actuarial functions in this chapter. The most important chapter contains different terms and formulas.

Ch.10- Equations of value: This chapter is based on the rule that " PV of Income = PV of Outgo".

Ch.11- Loan schedules: In this chapter, you will use the methods you have been learned in Ch.11, to solve the problems.

Ch.12- Project appraisal: Contains how discounted cashflow and equation of value techniques can be used in project appraisal.

The criteria used in this chapter are Net present value, Accumulated profit, Internal rate of return, Payback period, Discounted payback period.

Ch.13- Bonds, equity, and property: Fixed interest securities and Uncertain income securities are included in this chapter. There are some additional knowledge of Real and money interest rates in this chapter.

Ch.14- Term structure of interest rates: Understanding of the term structure of interest rates and main factors influencing the term structure. The meaning of discrete spot & forward rates & continuous spot & forward rates. Duration, Convexity, and immunization of cashflows.

Ch.15- The life table: How to use life table & Force of mortality, UDD, CFM.

Ch.16 & 17- Life assurance contracts, Life annuity contracts: Types of Life assurance contract and their information, the difference between those contracts. The next chapter contains annuity contracts. The difference between assurance and annuity contract.

Ch.18- Evaluation of assurances and annuities: Evaluate the assurance contracts, Premium conversion formulae, and advanced cases.

Ch.19- Variable benefits and conventional with-profits policies: Various assurance and annuity contracts are defined. Conventional with-profits policies and finding the mean and variance of various assurance and annuity contracts.

Ch.20 & 21- Gross premiums, Gross premiums reserves: Topics covered in these chapters are the principle of equivalence, calculation of gross premiums, and reserves of assurance and annuity contracts.

Ch.22- Joint life and last survivor functions: Defining assurance and annuity functions involving two lives.

Ch.23- Contingent and reversionary benefits: Here lives are dependent on someone, and Contingent assurance and reversionary benefits included.

Ch.24- Mortality profit: Topics covered in this chapter are Death strain risk, expected death strain, actual death strain, and mortality profit.

Ch.25- Competing risks: Methods of valuing cash flows that are contingent upon multiple transition events.

Ch.26- Unit-linked and accumulating with-profits contracts: Some concepts of previous chapters will be used, Make sure that you are familiar with those concepts.

Ch.27- Profit testing: Techniques of profit testing. This chapter helps to understand the premium for a life policy that will give us life insurance companies the required level of profitability.

Ch.28- Reserving aspects of profit testing: In the last chapter, you understand how to set up premium so that company can maintain the required level of profitability, now in this chapter, you will learn how gross premium reserves calculated using cash flow projection model.

I gave exam tips in the previous article, you can read that.

**You will get Excel information and All shortcuts in the next article.

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Thanks for reading.