Investigate the relationship among Economic Value Added, Return on Equity and Return on Investments in Insurance companies.

There are several criticisms of traditional performance appraisal criterions since of not considering “Cost of Capital” and using traditional accounting methods and roles. Alternatively, economicvalue added and other modern performance appraisal criterions imply cost of capital to provide a better estimation of added values. The relationship between these traditional criterions such as “Returnon Investments” and “Return on Equity” with “Economic Value Added” as a modern criterion has been evaluated through out this research. In addition, it has been discussed how traditionalmeasurements can adapt with economic value added and how their developments can augment economic value added. As a result of the few numbers of Iranian insurance companies wehave exploited society and assessed eighteen active insurance companies of Iran during 2006-2009 Also we used “Rate of Return on Capital” instead of economic value added. Economic value addedis based on the excess amount of money that a company earns on the capital employed. Therefore, comparing it with relative ratios is not reliable. Adjustments of economic value added have been applied based on standard adjustment of economic value added and Iranian insurance companies accounting principles. Research finds that there is a significant relationship between return on investment and economic valued added. Also there is a significant relationship between return on equity and return on economic value added. In addition the relationship between ROE-RROC is moresignificant than ROI-RROC.