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 ?
However, earnings will not match those of some competitors, partly because management of this mutual organization will continue pricing to higher loss ratios for the benefit of its policyholders, who are considered members of the company, as long as it believes such a policy to be warranted by the financial strength of the organization.
The affirmations follow Standard & Poor's annual review of the Liberty Mutual organization and reflect Standard & Poor's opinion that favorable pricing trends in the commercial lines market -- combined with management's efforts to re-underwrite or exit unprofitable business lines -- could increase the profitability and ultimate capitalization of the organization to a level supportive of the ratings.
Standard & Poor's is in the process of finalizing its annual review of the entire Liberty Mutual organization -- including LFC -- and expects to publicly announce its conclusions shortly.
John Hancock announced a plan in May 1998, to convert from a mutual organization owned by its policyholders to a publicly owned company.
The strategic combination of two mutual organizations and long-standing members of the New Jersey financial institution community will create a mutual savings bank with assets in excess of USD 257m, deposits of USD 205m, loans of USD 139m, total capital expected to exceed USD 34m and seven banking locations.
The agreement between State Farm and Desjardins, combined with the support of our long-term French partner, CrA(c)dit Mutuel, brings together three financial cooperative and mutual organizations to create an insurance leader in Canada," Leroux continued.

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