What type of insurance company is owned by stockholders who invest capital and share in profits and losses?

The correct answer is stock companies. In a stock company, ownership is held by stockholders who have invested their capital into the company. These stockholders are entitled to a share of the company's profits in the form of dividends and also bear the risk of losses. This structure allows stock companies to raise capital more easily compared to other types of insurance organizations, as they can issue shares to the public.

In contrast, mutual companies are owned by the policyholders, who share in the company's profits through dividends or reduced premiums rather than stockholders. Reciprocal companies operate through members who exchange insurance contracts with each other, while fraternal organizations are nonprofit societies that provide insurance benefits to their members, focusing on social activities and camaraderie among members rather than profit generation for stockholders.