What distinguishes a mutual company?

A mutual company is characterized by its ownership structure, which is held by its policyholders rather than by shareholders. This means that individuals who purchase insurance from a mutual company effectively become members and have a say in the company's operations and decisions. Each policyholder has a claim on the company’s assets and may even receive dividends based on the company’s profits, as they are essentially co-owners.

In a mutual company, the focus is typically more on serving the interests of its policyholders rather than maximizing profit for shareholders, which is more common in stock companies. While mutual companies can generate profit, the primary goal is to provide insurance coverage effectively and potentially return surplus funds to policyholders.

The other options refer to aspects that are characteristic of different types of companies or structures. Shareholder ownership and profit maximization do not apply to mutual companies, and the term "unincorporated association" does not accurately describe mutual companies as they are usually incorporated entities. Understanding these distinctions helps clarify the nature and functioning of mutual insurance companies in the broader context of the insurance industry.