The correct answer is: C. A portion of the surplus would be left for distribution to shareholders.
A surplus is the amount of money that a company has left over after it has paid all of its expenses. In the case of an insurance company, the surplus is the amount of money that is left over after it has paid all of its claims.
The surplus can be distributed to policyholders in the form of dividends, or it can be left for distribution to shareholders. If the surplus is distributed to policyholders, it will increase the value of their policies. If the surplus is left for distribution to shareholders, it will increase the value of their shares.
In general, the surplus is distributed to policyholders and shareholders in proportion to their ownership of the company. However, the board of directors of the company has the discretion to decide how the surplus should be distributed.
Option A is incorrect because it states that the entire surplus would be distributed to policyholders. This is not always the case, as the board of directors may decide to leave some of the surplus for distribution to shareholders.
Option B is incorrect because it states that the entire surplus would be distributed to shareholders. This is not always the case, as the board of directors may decide to leave some of the surplus for distribution to policyholders.
Option D is incorrect because it states that all of the above are correct. This is not necessarily the case, as the board of directors may decide to distribute the surplus in a different way.