Capital and Surplus
Capital and surplus are, in essence, the net worth of the insurance company. Generally speaking, they are the assets of the insurer minus its liabilities. To maintain the integrity of the reserve system, companies may periodically increase reserves in recognition of losses or potential losses in their investment portfolios. Also, the company uses capital and surplus to invest in the writing of new business and relies on them as a safety buffer for emergencies.
Last Updated: 9/23/2012 10:05:00 PM