A cash flow surplus occurs when an insurance company accumulates an amount of cash during a specific period that exceeds the amount of money it needs to pay for its expenses. If an insurance company has a cash flow surplus, it can make investments with the money, reinvest it in the business, or save it for a later date.
A cash flow surplus is usually a good indication that an insurance company is performing well and that its statistical calculations are on point. In other words, it means that the insurance company is taking in more from its premiums and other income sources than it is spending.
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