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This question goes to the issue of solvency of an insurer. Solvency (claims-paying ability) is just about the primary concern of any state insurance regulator.
The Insurance Code of each state prescribes the level of surplus that an insurer must maintain. The amount depends upon a number of factors, including the nature of the risk(s) underwritten, and the outstanding premium (because it correlates with the amount of risk that the insurer has assumed).
Insurance Codes prescribe procedures by and circumstances under which surplus may be reduced. The only universal statement that can be made concerning this is that each state has a procedure by which application must be made to the state insurance regulator for permission to reduce surplus. Whether or nor the permission is granted will be based upon whether, after the reduction, there will remain sufficient surplus to maintain compliance with the surplus requirements of the law.
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What is the acronym of surplus?
surplus
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surplus Quantify the surplus amount as in March 2011
