Investment Income

FREE Car Insurance Comparison

Compare quotes from the top car insurance companies and save!

Secured with SHA-256 Encryption

Rachel Bodine graduated from college with a BA in English. She works as an associate editor and writer for 4autoinsurancequote.com for over a year and enjoys creating content that offers expert advice on car insurance topics.

Full Bio →

Written by

Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs...

Full Bio →

Reviewed byLeslie Kasperowicz
Former Farmers Insurance CSRhttps://res.cloudinary.com/quotellc/image/upload/insurance-site-images/4autoins-live/6ea5d860-leslie-kasperowicz.jpg

UPDATED: Mar 13, 2020

Advertiser Disclosure

It’s all about you. We want to help you make the right coverage choices.

Advertiser Disclosure: We strive to help you make confident insurance decisions. Comparison shopping should be easy. We partner with top insurance providers. This doesn't influence our content. Our opinions are our own.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.

For an insurance company their investment income is the amount of money earned from premiums and any other investments they hold after the deduction of claims and benefits paid out to their policy holders.investment income

Investment income is thus a representation of the profitability of an insurance company, the higher the level of investment income the higher the profitability of the insurer.

Is investment income the same as profit for an insurance company?

Yes and no, a snapshot at any one instance of a company’s investment income can be considered to represent the profitability of an insurer. But because insurance companies carry a level of risk exposure this measure is capable of experiencing extreme and even seasonal variations depending on the types of risk that an insurance company is issuing policies against.

The other reason that it is not the same as the profit for an insurance company is that it does not take into account the operating expenses of the business. So items such as building rental (in terms of fees paid to a landlord), heating, lighting, wage bill, IT infrastructure, etc. are not covered in the calculation.

It is possible for two insurance companies to report the same level of investment income but to have wildly different levels of profit resulting from this income. This is because each company will have a different level of overhead, and this will be reflected in their profitability.

Investment income cannot be used in isolation to assess the financial health of an insurer, it needs to be take into account with other financial metrics to give a reasonable understanding of the insurer’s financial circumstances.

A large insurer that is not managing its exposure to risk as well as a smaller insurer may still report a larger level of investment income based on the overall size of its business but may not be as financially stable as the smaller company.

Enter your zip code below to view companies that have cheap auto insurance rates.

 Secured with SHA-256 Encryption

What is net investment income?

Net investment income is the amount of income left from the investment income after the operating expenses have been deducted. This information is often reported as net investment income per share which is taken by dividing the total amount of net investment income by the number of outstanding shares in the insurance company itself. This figure represents the amount of money available to shareholders in the form of share dividend payments.

Additional Investment Income Explanations

Are you looking for free insurance quotes?

Your one-stop online Car Insurance guide. Get a Free Quote Now!

(855) 898-5028