Average pre-tax returns
on equity declined again for a fourth straight year, to 7.0 percent in 2018.
Also, though the risks of implementation are likely higher, another alternative would be to set rates based on pre-tax returns
that implicitly account for a reasonable tax burden.
These schemes have provided 2.75 percent to 3.00 percent higher pre-tax returns
, on an annualized basis, than savings accounts," said Karthik Srinivasan, senior vice president and group head - Financial Sector Ratings, ICRA Limited.
The Court stopped short of ordering FERC to adopt a specific policy modification and instead ordered FERC to (i) demonstrate that the income tax allowance does not permit partnership pipelines to "double recover" taxes, (ii) remove any duplicative tax recovery for partnership pipelines by adjusting the discounted cash flow return on equity, or (iii) eliminate income tax allowances and set rates based on pre-tax returns
The report illustrates historical and projected pre-tax returns
on equity (ROE) by business line.
While earnings were still excellent with overall double digit pre-tax returns
on revenue and operating ratios at 80 or below, the number of companies in the MPL sector reporting pre-policyholders' dividend underwriting losses is increasing.
But such strategies could theoretically come at a cost: Funds seeking to avoid tax burdens might constrain their investment opportunities and thus potentially reduce their pre-tax returns
After-tax returns can give a materially different view of the real value that managers deliver to clients and the ranking of these managers, compared to assessments made using pre-tax returns
Investors can also consider NCDs issued by companies that offer pre-tax returns
of up to 11.5%, experts said.
Knowing this distinction will prove essential in realizing the potential high pre-tax returns
available in the secondary mortgage market.