Statutory income (potential typo?)
I believe footnote 2 of the statutory income table ("2 Investment revenue excludes realized capital gains AND excludes unrealized capital gains") is inconsistent with infinite problem battle card Trick 2: "investment revenue includes realized capital gains but excludes unrealized capital gains". I believe the battlecard is correct, and realized capital gains are INCLUDED? Thanks!
Comments
We will fix this. Investment income excludes realized capital gains. These 2 paragraphs from the COPLFR source text may be helpful:
Net investment income earned is primarily related to interest and dividends received on investment assets held over the course of the year. **Net investment income earned does not include changes to the prices in assets that are held (those are included in net realized capital gain described below). **Furthermore, it is recorded on an accrual basis, meaning that it is reflected in the year in which it is earned and not necessarily the year in which the actual cash related to the income is received. The amount of this income is shown net of investment expenses and other costs, but gross of federal income taxes, on the income statement.
Net realized capital gain (loss) generally results from the sale of investments for more or less than original cost, adjusted for the amortization of premiums or accretion of discounts (amortized cost). Realized losses also result from impairment adjustments. Certain investments (primarily common stock) are recorded at fair value. The changes in the value of these investments (unrealized gains (losses)) are not included as income and instead reflected as direct adjustments to surplus. These direct adjustments to surplus are necessary because these items do not flow through net income for the current period, but the surplus must still be adjusted to maintain the assets equal liabilities plus surplus relationship.