Companies with no capital stock and owned by policyholders are termed as mutual insurance companies. The earnings of the company--over and above the payments of the losses, operating expenses and reserves--are the property of the policyholders. There are two types of mutual insurance companies. Non-assessable mutual charges, a fixed premium and the policyholders cannot be assessed further. Legal reserves and surplus are maintained to provide payment of all claims. Assessable mutuals are companies that charge an initial fixed premium and if that is not sufficient, it might assess the policyholders to meet losses in excess of the premiums that have been charged.
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