What type of insurance company operates without capital stock and is owned exclusively by policyholders?

Mutual companies are defined as insurance organizations that operate without capital stock and are owned entirely by their policyholders. This structure means that any profits generated by the company are typically returned to the policyholders in the form of dividends or reduced future premiums, aligning the interests of the company with those of its members.

In contrast, stock companies are owned by shareholders who may or may not be policyholders, and profits are distributed based on stock ownership rather than policyholder benefits. Fraternal organizations, while similar to mutual companies in that they may also be member-owned and provide insurance benefits, typically focus on social, charitable, and mutual aid aspects alongside insurance. Reinsurance companies, on the other hand, provide insurance to other insurance companies and do not operate in the same direct consumer relationship as mutual companies.