[amp_mcq option1=”Excess value of assets over liabilities” option2=”When turnover of the insurer is high” option3=”Excess value of liabilities over assets” option4=”Excess of liabilities” correct=”option1″]
The correct answer is A. Excess value of assets over liabilities.
Surplus is the excess of assets over liabilities. It is a measure of the financial strength of an insurance company. A high surplus indicates that the company is financially healthy and has the resources to pay its claims.
Option B is incorrect because turnover is not a measure of financial strength. Turnover is the rate at which a company’s assets are converted into cash. A high turnover can be a sign of a healthy company, but it can also be a sign of a company that is selling its assets too quickly.
Option C is incorrect because liabilities are the debts of a company. An excess of liabilities over assets indicates that the company is in financial trouble.
Option D is incorrect because liabilities are the debts of a company, not the assets.