Which type of insurance company is owned by its policyholders?

A mutual company is an insurance company that is owned by its policyholders. This structure means that policyholders not only have a stake in the company but also have a say in how it operates and a share in its profits, which may be distributed as dividends. In a mutual company, the primary objective is to provide insurance coverage to its members rather than to generate profit for shareholders, as is the case with stock companies.

In a mutual company, since policyholders are considered part-owners, they are directly affected by the company's financial performance and decision-making processes. This feature fosters a sense of community and shared purpose among the members, aligning the interests of the policyholders with the company's goals of financial stability and customer satisfaction.

Other types of companies mentioned in the options have different ownership structures. A stock company is owned by shareholders and operates for profit. A captive insurance company is formed by a parent company primarily to insure its own risks. A fraternal organization, while it may provide insurance benefits to its members, operates more like a mutual benefit society and is not structured in the exact same way as a mutual insurance company.