What does the term "statutory surplus" refer to?

The term "statutory surplus" refers to the excess of an insurer's assets over its liabilities and minimum capital requirements. This concept is crucial in the insurance industry as it represents the financial reserve that an insurer has available beyond what is necessary to meet its obligations.

Statutory surplus is an important indicator of an insurer's financial health and stability, as it shows the capacity of the company to cover unexpected losses or fluctuations in claims. It is mandated by regulatory authorities that insurance companies maintain a healthy surplus to ensure they can fulfill their contractual obligations to policyholders.

In contrast, the other options describe different financial metrics or elements, such as cash on hand, total premiums, or profits, which do not specifically encompass the regulatory focus on surplus as a measure of an insurer's financial stability and its compliance with capital requirements.