What is the major difference between a stock company and a mutual company quizlet?

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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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