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 ?
Keyport's position in the Liberty Mutual organization is considered strategic.
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 prior Rating Watch on ALLIED Life was due to generally uncertainty as the future role of the company in either the ALLIED Group or Nationwide Mutual organization.
Blue Cross and Blue Shield of New Jersey said it will continue its efforts to mutualize the company under existing legislation enacted in 1995 to allow the health insurer to become a mutual 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.
NEW YORK, July 1 /PRNewswire/ -- In a new report published Friday, June 18, Fitch Investors Service says Yorkshire Building Society's decision to remain a mutual organization will not damage the society's credit profile despite the significant impact on some financial ratios.
Insurers' decisions regarding the adoption of GAAP accounting may impose broad and significant consequences upon the entire mutual organization, beyond the context of accounting," said Derrick Vializ, a financial analyst with A.
During his 10 years of chairmanship, the company converted from a mutual organization to a stock company (1986), and completed a successful merger with Capital Federal Savings of Sacramento (1987).
John Hancock announced a plan in May 1998, to convert from a mutual organization owned by its policyholders to a publicly owned company.

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