YOU ASK:
What is the definition of Mutual Holding Company?
WE ANSWER:
A Mutual Holding Company refers to a company that is a hybrid of a mutual company and a pure stock company. It has the characteristics of a mutual company since its customers have control over the company (such as the right to vote its board of directors). But here, the company holds a majority of the stocks and control.
For a mutual holding insurance company, the policyholders are the ones that own the company, but the company also holds a major stake in its stocks.
Policyholders are given part of the profits of the company through dividends. The rest of the company's assets is used as a surplus cushion in case there are unexpected or large claims.
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