Investment Return on Assets
Insurance – investment income as a percentage of average invested assets
What is Investment Return on Assets?
Investment return on assets is the income an insurer earns on its investments as a percentage of the average assets it invests. It shows how well the investment portfolio performs.
Insurers hold premiums until claims are paid, and investment income is a major part of their profit.
How this KPI is measured
- Function
- Finance
- Sub-function
- Investment
- Industry
- Insurance
- Type
- Lagging
- Impact
- Financial control
- Unit
- %
- Measurement frequency
- Quarterly / Annual
- Formula
- (Total investment income / Average invested assets) × 100
How to calculate it
Divide total investment income by average invested assets, and multiply by 100.
For example, if investment income is 40,000,000 and average invested assets are 1,000,000,000, the return is 4%.
Use the average of opening and closing assets, and consider risk and the match between assets and liabilities, not just return.
Where it is used
Judging investment performance
Track portfolio income.
Balancing underwriting and investment
See both profit sources.
Managing risk
Compare with risk taken.
How to improve it
Tips and common mistakes
- Higher returns often mean higher risk.
- Insurers must meet solvency requirements.
- Separate income from unrealised gains.
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