Archived Version of Other Income Formula

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.