Return On Assets (ROA)
Definition - What does Return On Assets (ROA) mean?
Return on assets (ROA) is a value that lets you know what earnings were generated from a certain amount of capital that was invested.
In the context of insurance, many insurance companies invest money that they accumulate in assets in order to grow the overall profitability of the business. This can help the company to grow and become more valuable.
Insuranceopedia explains Return On Assets (ROA)
The mathematical equation used to calculate the value of returns on assets is the net income divided by the total assets. If an insurance company wants to know how well its investments are performing, it can use this equation to know how much return its assets are generating. If the number is too low, then the insurance company will know that it may need to make some changes in order to get better results.