Regarding the calculation of investment income
If you look at question 22 from Fall 2015. It asks for calculating ROE in the second question. In the tables, they provided information regarding the income per calendar year (along with equity and MCT). These values can be used to derive the net income (which is made up of U/W inc, Inv inc, and Other inc).
In the P&C return, total net investment income comes from page 20.30 line 39. This includes the following items (income, gains (losses) from FVO or FVTPL, Realized Gains (losses), and expenses). In the question from the example, they included an item for Realized Gains (losses). I am wondering, if they added another lines which was for Gains (losses) from FVO or FVTPL would I be including that in my considering of net investment income?
From a "Bloom's taxonomy" perspective, I'm interested in this because they may ask to calculate the realized gains from a bunch of bonds and have to include that in the calculation of net income, and subsequently ROE.
Also, another question. When we say "Other Income" in the formula for net income - this does not include OCI. correct? OCI is used when calculating equity or comprehensive income.
Comments
To answer your first question, yes -- as per 20.30 of the return, these items are all included when computing total net investment income.
To answer your second question, OCI will not be included in the formula for NI. If you would like some more context on OCI in general, I've found this site useful: https://www.accountingtools.com/articles/what-is-other-comprehensive-income.html.
thank you