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Intermediate Accounting14th EditionDonald E. Kieso, Jerry J. Weygandt, Terry D. Warfield 1,471 solutions Business Math17th EditionMary Hansen 3,598 solutions Business Math17th EditionMary Hansen 3,598 solutions What is the major difference between a stock company and a mutual company?The main difference between stock and mutual insurance companies is ownership. A stock insurer is a corporation owned by its shareholders. They're either publicly listed or privately held. On the other hand, mutual insurance companies are owned by the policyholders.
What does a mutual company do?What Is a Mutual Company? A mutual company is a private firm that is owned by its customers or policyholders. The company's customers are also its owners. As such, they are entitled to receive a share of the profits generated by the mutual company.
What are the benefits of a mutual company?Mutual companies often distribute dividends or premium reductions to their members. It allows for a strategic focus within the company that is more vested in the customer/member rather than a traditional company that is more vested in the shareholder.
What is it called when a mutual insurer becomes a stock company?Demutualization is a process by which a private, member-owned company, such as a co-op, or a mutual life insurance company, legally changes its structure, in order to become a public-traded company owned by shareholders.
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