Definition of Mutual company:
A mutual company is a private firm that is owned by its customers or policyholders. The company's customers are also its owners. As such, they are entitled to receive a share of the profits generated by the mutual company.
The distribution of profits is typically made in the form of dividends paid on a pro rata basis, based on the amount of business each customer conducts with the mutual company. Alternately, some mutual companies choose to use their profits to reduce members' premiums.
Firm (such as a mutual insurance company) established for the benefit of its shareholders who are called members, and receive the firms profits as dividends in proportion to the amount of business they do with the firm.
How to use Mutual company in a sentence?
- A mutual company is owned by its customers, who share in the profits.
- Each policyholder is entitled to a share of the profits, paid as a dividend or a reduced premium price.
- They are most often insurance companies.
Meaning of Mutual company & Mutual company Definition