Adjusted Net Worth

Like when you lie about how much money you have when you go out for an evening and then end up having to borrow from a buddy when it's your turn to buy a round of drinks. It's also a way to measure the value of insurance companies.

Certain businesses are hard to value. Financial institutions, like banks and brokerages, present some problems. Insurance companies even more so. That's because the whole business of an insurance company is to take on other people's risk, meaning they have a large amount of potential future obligations that are complicated to define in present-day dollar terms.

The details of figuring out adjusted net worth are something only an accountant could love. Just to paraphrase the formula provided by an industry organization called the Institutional Risk Management Institute:

Adjusted Net Worth = estimated value for a book of business + unrealized capital gains - (less potential income tax on the gains) + (capital surplus + voluntary reserves of an insurer). The IRMI then adds "other adjustments are frequently made as well." So best get your big boy (or big girl) accounting pants on before figuring that one.