Whats the difference between a stock company and a mutual company?
The term “stock company” usually refers to a company that is publicly traded and therefore owned by its stockholders. Because it is owned by stockholders, profits are usually distributed among its stockholders. The term “mutual company,” on the other hand, refers to a company with no capital stock. Mutual companies are instead owned by their policyholders. The profits earned by mutual companies are usually distributed among their policyholders in the form of dividends. Mutual companies are not obligated to pay dividends, and some do not. Furthermore, dividends are never guaranteed. MTL Insurance Company, however, has a distinguished history of paying dividends every year for the past 97 years.
