TD Bank 2011 Annual Report Download - page 131

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TD BANK GROUP ANNUAL REPORT 2011 FINANCIAL RESULTS 129
TRADING-RELATED INCOME
NOTE 20
Trading assets and liabilities, including trading derivatives, certain loans
held within a trading portfolio that are designated as trading under
the fair value option, trading loans and trading deposits, 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 assets and liabilities. Real-
ized
and unrealized gains and losses on loans designated as trading
under the fair value option are included in non-interest 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
(millions of Canadian dollars) 2011 2010 2009
Net interest income (loss) $ 842 $ 827 $ 1,210
Trading income (loss) 43 484 685
Loans designated as trading under the fair value option1 4 21 47
Total $ 889 $ 1,332 $ 1,942
By product
Interest rate and credit portfolios $ 403 $ 896 $ 1,292
Foreign exchange portfolios 432 418 573
Equity and other portfolios 50 (3) 30
Loans designated as trading under the fair value option1 4 21 47
Total $ 889 $ 1,332 $ 1,942
1 Excludes 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.
INSURANCE
NOTE 21
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 poli-
cies. 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 deter-
mined 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 repre-
sent estimated provisions for reported and unreported claims. Claims
relating to property and casualty insurance are expensed as incurred.
Insurance Income, Net of Claims
(millions of Canadian dollars) 2011 2010 2009
Net earned premiums and fees $ 3,346 $ 3,102 $ 2,802
Claims and related expenses, net of reinsurance 2,173 2,074 1,889
Total $ 1,173 $ 1,028 $ 913