Which of the following is NOT a characteristic of mutual companies?

The concept of mutual companies is centered around the idea that they are owned by their policyholders, who are essentially the members of the company. This ownership structure fundamentally distinguishes mutual companies from stock companies, which are owned by shareholders. In mutual companies, profits generated are typically returned to the policyholders in the form of dividends, ensuring that the focus is on the members' benefits rather than on distributing profits to external shareholders.

By being "owned by policyholders," mutual companies ensure that their operations are aligned with the interests of those who utilize their services. Any profits made by the company are indeed distributed among members, reinforcing a strong commitment to benefiting those who participate in the company.

Regarding the issuance of stock shares, mutual companies do not have the capacity to issue stock shares like stock companies do. This is key in understanding their structure; being unable to issue stock means there is no external capital from investors aiming for a return on investment, which contrasts with the corporate nature of stock companies where profit goes to external shareholders rather than back to the policyholders.

So, the correct choice highlights that mutual companies do not issue stock shares, maintaining their model focused on policyholder interests rather than external investment. This characteristic aligns with the core principles of mutual ownership and shared benefits among