IAI CM2 case studies
IAI CM2 · Put your knowledge to work in context.
CM2, Actuarial Mathematics Core Practices, is one of the Core Practice subjects in the Institute of Actuaries of India (IAI) actuarial examination pathway. It sits after the Core Principles subjects and is aimed at candidates who already know the fundamentals of probability, interest theory and life contingencies and now need to apply them with professional judgement. The IAI CM2 case studies are 5 cases and about 4,743 words.
1The 0.90 Multiplier: Graduating an Annuitant Portfolio
An Indian life insurer is reviewing the mortality basis for its immediate annuity book. During calendar year 2023 about 8,500 pensioner annuities were in force at some point, contributing 7,150 life-years of central exposed to risk, and 396 deaths were reported.
979 words, about 5 min2Pricing a Reversionary Joint-Life Annuity Against a Rival Quote
A provider is quoting for a single-life immediate annuity written on a male aged exactly 66 whose wife is aged exactly 62. The contract pays a level income annually in advance for as long as the man lives, then 50% of that income to the widow for her lifetime, and it carries a five-year guaranteed period.
1,016 words, about 5 min3Policy Values, Asset Shares and the Cost of Not Declaring a Bonus
A with-profit fund contains 12,000 in-force 20-year endowment assurances sold to lives then aged 45, each with a sum assured of ₹1,000,000 and annual premiums payable in advance. The premium basis was 6% interest, mortality at 90% of the standard table, expenses of 40% of the first premium plus ₹1,500 per policy initially, 5% of each renewal premium plus ₹300 per policy, and ₹1,000 per claim.
892 words, about 4 min4Free Surplus as Brownian Motion: Ruin Probability and a Reinsurance Decision
A general insurer models its free surplus, in ₹ crore, as X(t) = 800 + 60t + 200W(t), where t is in years and W is standard Brownian motion under the real-world measure, after allowing for premium growth, claims and investment return. Ruin occurs when the surplus first reaches zero.
907 words, about 5 min5Pricing and Hedging the Guarantee in an Equity-Linked Policy
An Indian insurer has launched a five-year single-premium equity-linked policy. The ₹100,000 premium is notionally invested in the Nifty 50 index, and the maturity benefit is the greater of the premium and 100% of the index return applied to the premium; there is no other benefit and no early surrender value.
949 words, about 5 min