Mutual Company

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Mutual Company

A corporation in which members are the exclusive shareholders and the recipients of profits distributed as dividends in proportion to the business that such members did with the company.

The most common kind of mutual company is a mutual insurance company. In this type of organization, which is a cooperative association, the members are both the insurers and the insured. Such companies exist for the purpose of satisfying the insurance needs of their members at a minimal cost. The members contribute through a system of premiums or assessments, forming a fund from which all losses and liabilities are paid. Any profits are divided among the members of the company in amounts proportionate to their individual interests.

The members of a mutual company choose the management. Professional associations that offer their members insurance coverage often form mutual insurance companies.

See: partnership
References in periodicals archive ?
As stock companies we invest like this, and as mutual companies we invest like this.
The association maintained that Belgian rules gave an advantage to mutual companies over insurers, even though in some cases they offer very close services.
banks, brokerages, mutual companies and other financial services companies are planning to relocate 500,000 jobs offshore, or 8 percent of their work force, over the next five years.
In mutual companies, a portion of profits (divisible surplus) gets returned to the policyholder as dividends, but the amount paid varies from company to company.
Nearly half of Britons think mutual companies offer better value for money than ones owned by shareholders, new research says.
It shows that nearly half of adults believe they are worse off because there are now fewer mutual companies owned by their customers.
Around 45pc said they thought the UK was worse off as a nation with fewer mutual companies owned by customers.
How do you think the market's view of mutual companies has changed in recent years?
The current trend of mutual companies converting to stock companies may soon stop or reverse, according to a recent report by Swiss Re in New York.
It also can be said that mutual companies can focus their resources on their current customers (through participating dividends) rather than focusing primarily on acquiring new business--a concern of stock companies in order to generate ongoing growth of revenue.
Life Insurers 1995 2005 Mutual Companies 39% 16% Stock Companies 61% 84% Net Premiums Written, U.
The Mutuelle generale de l'Education nationale (MGEN), responsible for compulsory and optional welfare benefits for civil servants, has just published a study conducted by the Group of European political studies on "the missions of general economic interest achieved by mutual companies in Europe" in six European countries (Germany, Belgium, Spain, France, Poland, Slovenia).