Stock insurance company

A stock insurance company is a corporation owned by stockholders. Its shares may trade publicly, as with Prudential Financial or MetLife, or be held by a parent company, a foreign insurer or a private equity firm. Profits belong to shareholders, paid as stock dividends or retained to grow the business, and the board answers to them.

That contrasts with a mutual insurance company, which is owned by its policyholders and typically shares surplus through policy dividends. Stock companies mostly sell non-participating policies, with guaranteed premiums and values but no policy dividends, though some sell participating whole life. Some mutuals have converted to stock companies through demutualization, and others use a mutual holding company structure that combines features of both. Hypothetically, if a stock insurer's mortality results beat expectations, the gain flows to shareholders, while at a mutual it might support higher policyholder dividends.

Ownership form alone doesn't tell you whether a company is strong or a policy is a good value. Stock insurers can raise capital by issuing shares but face pressure for quarterly earnings; mutuals can't issue stock but answer to policyholders. Judge an insurer by its financial strength ratings, complaint record and product terms. See mutual vs stock life insurance companies and demutualization: when a mutual insurer goes public.