CB1 —Business Finance

CB1 provides a grounding in how businesses are financed, governed, and accounted for — the practical business literacy behind every actuarial career, whether you end up pricing products, managing investments, or advising a board.

Under the pre-2019 exam structure, CB1 replaces the old CT2 (Finance and Financial Reporting) subject. The content and skills are largely the same — just restructured and renamed under the current curriculum.

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Chapter List (Predecessor: CT2 — Finance and Financial Reporting)

  • 1. Key principles of finance
  • 2.Key principles of corporate governance and ethics
  • 3. Business ownership
  • 4. Taxation
  • 5. Long-term finance
  • 6. Issue of shares
  • 7. Short- and medium-term finance
  • 8. Alternative sources of finance
  • 9. Introduction to accounts
  • 10. The main accounts
  • 11. Constructing accounts
  • 12. Accounts for groups, insurance companies and banks
  • 13. Interpreting accounts (1)
  • 14. Interpreting accounts (2)
  • 15. Derivatives
  • 16. Growth and restructuring of companies
  • 17. Weighted average cost of capital
  • 18. Capital structure and dividend policy
  • 19. Capital project appraisal (1)
  • 20. Capital project appraisal (2)

PART 1 : —Foundations of Finance and Governance (Chapters 1–4)

This opening block sets up the basic vocabulary of finance — the time value of money, the riskreturn trade-off, and why every financial decision is really a trade-off between the two. Key principles of corporate governance and ethics then covers how companies are actually run: the role of the board, shareholder rights, and the conflicts of interest that governance structures exist to manage — directly relevant to actuaries who go on to serve in oversight roles like Appointed Actuary. Business ownership covers the practical differences between a sole trader, partnership, and limited company (why most insurers are structured as companies with limited liability), while taxation introduces personal and corporate tax basics — the same logic behind why life insurance maturity proceeds get particular tax treatment in India.

PART 2 : — Sources of Business Finance (Chapters 5–8)

This block covers how a company actually raises money. Long-term finance and issue of shares cover equity and debt at the corporate level — the same mechanics behind an insurer raising capital through an IPO or a corporate bond issue. Short- and medium-term finance covers the day-to-day treasury tools (working capital, trade credit, bank overdrafts) that keep a business running between long-term financing rounds, while alternative sources of finance covers routes like leasing and venture capital — increasingly relevant given how many Indian insurtech startups are funded.

PART 3 : —Building Financial Statements (Chapters 9–11)

Here you learn to actually construct a company’s core financial statements from scratch — the income statement, balance sheet, and cash flow statement. This is a foundational skill for any actuary who needs to read a company’s annual report and understand what’s actually being reported, not just take the summary numbers at face value.

PART 4 : — Reading and Interpreting Accounts (Chapters 12–14)

Accounts for groups, insurance companies and banks applies the general accounting principles from Part 3 to the specialised, technical-reserve-heavy financial statements that insurers and banks actually publish — directly relevant, since most actuaries will spend their career reading exactly this kind of account. Interpreting accounts (1) and (2) then teach ratio analysis — profitability, liquidity, and solvency ratios used to assess a company’s financial health, whether that’s your own employer, a reinsurance counterparty, or an investment target.

PART 5 : — Corporate Finance Decision Tools (Chapters 15–17)

Derivatives covers options, futures, and forwards — the instruments insurers use to hedge interest rate and equity risk within their investment portfolios. Growth and restructuring of companies covers mergers, acquisitions, and demergers, relevant to the wave of consolidation and bancassurance tie-ups in the Indian insurance sector. Weighted average cost of capital (WACC) then teaches you how to blend the cost of debt and equity into a single discount rate — the rate a company uses to judge whether a new investment (like a new IT system or a new product line) actually creates value.

PART 6 : — Financing and Investment Decisions (Chapters 18–20)

Capital structure and dividend policy covers how a company decides on its mix of debt versus equity and how much profit to pay out versus retain — decisions that directly affect an insurer’s solvency capital position. Capital project appraisal (1) and (2) then extend the NPV and IRR techniques first introduced in CM1 into full real-world investment decisions, complete with sensitivity analysis — the exact toolkit used to decide whether a company should open a new branch, launch a new product, or invest in new infrastructure.

Exam Format

CB1 is assessed by a single written examination of varying-mark questions, covering the full breadth of the syllabus.

Prerequisites

No prior actuarial exams are required.