TD Bank 2009 Annual Report Download - page 126

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TD BANK FINANCIAL GROUP ANNUAL REPORT 2009 FINANCIAL RESULTS122
Trading assets and liabilities, including derivatives, certain loans held
within a trading portfolio that are designated as trading under the fair
value option, and trading loans are measured at fair value, with gains
and losses recognized in the Consolidated Statement of Income.
Trading-related income comprises net interest income, trading income
,
and income from loans designated as trading under the fair value option
that are managed within a trading portfolio. Net interest income arises
from interest and dividends related to trading assets and liabilities,
and is reported net of interest expense and income associated with
funding these assets and liabilities. Trading income includes realized
and unrealized gains and losses on trading securities, trading deriva-
tives and trading loans. Realized and unrealized gains and losses on
loans designated as trading under the fair value option are included
in other income in the Consolidated Statement of Income.
Trading-related income excludes underwriting fees and commissions
on securities transactions, which are shown separately in the Consoli-
dated Statement of Income.
Trading-related income by product line depicts trading income for
each major trading category.
TRADING-RELATED INCOME
NOTE 21
Trading-Related Income
(millions of Canadian dollars) 2009 2008 2007
Net interest income (loss) $ 1,210 $ 379 $ (55)
Trading income (loss) 685 (794) 591
Loans designated as trading under the fair value option147 (165) (38)
Total trading-related income (loss) $ 1,942 $ (580) $ 498
By product
Interest rate and credit portfolios $ 1,292 $ (663) $ 239
Foreign exchange portfolios 573 481 312
Equity and other portfolios 30 (233) (15)
Loans designated as trading under the fair value option 47 (165) (38)
Total trading-related income (loss) $ 1,942 $ (580) $ 498
1Excludes amounts related to securities designated as trading under the fair
value option that are not managed within a trading portfolio, but which have
been combined with derivatives to form economic hedging relationships.
The Bank is engaged in insurance businesses relating to property and
casualty insurance, life and health insurance and reinsurance.
Premiums, net of reinsurance, for short-duration contracts, primarily
property and casualty, are deferred as unearned premiums and
recog-
nized in other income on a pro rata basis over the terms of the policies.
Unearned premiums and ceded unearned premiums, representing the
portion of net written premiums that pertain to the unexpired term of
the policies in force, are recorded in other liabilities. Premiums, net of
reinsurance, from long-duration contracts, primarily life insurance, are
recognized when due in other income.
Insurance claims and policy benefit liabilities represent current claims
and estimates for future insurance policy benefits, as determined by
the appointed actuary in accordance with accepted actuarial practice,
and are included in other liabilities. The effect of changes in actuarial
assumptions on policy benefit liabilities was not material during the
year. Liabilities for property and casualty insurance represent estimated
provisions for reported and unreported claims. Claims relating to prop-
erty and casualty insurance are expensed as incurred.
Insurance, Net of Claims
(millions of Canadian dollars) 2009 2008 2007
Net earned premiums and fees $ 2,802 $ 2,701 $ 2,538
Claims and related expenses,
net of reinsurance 1,889 1,774 1,533
$ 913 $ 927 $ 1,005
INSURANCE
NOTE 22
Non-interest income – other income includes the following:
i) Non-trading foreign exchange income of $201 million (2008 –
$206 million; 2007 – $172 million).
ii) Gain of $163 million in 2007 relating to restructuring of Visa.
As part of the global restructuring of Visa USA Inc., Visa Canada
Association and Visa International Service Association, which closed
on October 3, 2007, the Bank received shares of the new global
entity (Visa Inc.) in exchange for the Bank’s membership interest in
Visa Canada Association.
iii) Loss of $564 million relating to the change in fair value of deriva-
tives hedging the reclassified available-for-sale debt securities
portfolio (2008 – $(141) million; 2007 – nil).
iv) Loss of $196 million relating to the change in fair value of CDS
hedging the corporate loan book, net of provision for credit losses
(2008 – $(186) million; 2007 – $(46) million).
OTHER NON-INTEREST INCOME
NOTE 23