Adjusted Net Worth

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DEFINITION of 'Adjusted Net Worth'

A method for valuing an insurance company using capital values, surplus values, and an estimated value for business on the company's books. You start with the estimated value for business and add unrealized capital gains, the capital surplus and the voluntary reserves.

BREAKING DOWN 'Adjusted Net Worth'

As the adjusted net worth represents a measure of value of an insurance company, it is a useful way to compare the company's relative value to other insurance companies. The word "adjusted" in the phrase is a clue that it is meant to reflect economic value which can be compared between multiple firms. It is common to standardize values that are generated from the financial statements to use in analyzing an industry. Then a particular company's relative value can be compared within that industry.

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