Archived Version of Other Income Formula

These were the original income statement formulas presented in the wiki. Note that U/W income and net investment income are the same. The difference is in how other income is defined:

• original version (see below): I was using the term other income in a generic sense to mean everything other than U/W income and net investment income. In other words, I was including the the terms for dividends to policyholders and fed/foreign taxes incurred in other income
• new version (see current wiki): I separated dividends to policyholders and fed/foreign taxes incurred from other income. This treatment is more consistent with how the term other income is used in the source text and in the exam problems.

item	formula
U/W income	= EP – (current AY loss) – (change in prior years' AY loss) – LAE – (other U/W expense) 1
net investment income	= (investment revenue) – (investment expenses) 2 = (net investment income earned) + (net realized capital gains) 2a
other income	= SUM(agents' balances charged off, service fees, aggregate write-ins) – (dividends to policyholders) – (fed/foreign taxes incurred)3

¹ SAP uses incurred expenses (not paid expenses because incurred is more accurate than paid)

² investment revenue includes realized capital gains but excludes unrealized capital gains

^2a by definition: (net investment income earned) is already net of expenses and in this problem also net of taxes

³ If you look at the given information in the exam problem, all of the little items in the bottom box (below unrealized capital gains) are included in the income calculation except dividends to stockholders. Normally you would also have to subtract federal & foreign income taxes, but this is not provided in the given information.