Mutual company (redirected from Mutual organization)
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that is owned by a group of members and that distributes
income in proportion to the amount of business that members do with the company
A company structure in which the company's owners
are also its clients. That is, the mutual company's profits
are distributed to its participating customers each year in proportion to their individual exposures to the company. Many insurance
companies are structured as mutual companies, meaning that policyholders
have the right to receive portions of the company's profits, and often may elect the company's management. Savings & loan associations are also common structured as mutual companies.
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A company owned by its customers rather than by a separate group of stockholders. Many thrifts and insurance companies (for example, Metropolitan and Prudential) are mutual companies. Compare stock company
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
A mutual company is a privately held company owned by its policyholders, depositors, or other customers. A share of the profits is distributed as dividends, allocated in proportion to the amount of business each customer does with the company.
Insurance companies, federal savings and loan associations, and savings banks are examples of mutual companies, although each type operates somewhat differently.