Which of the following best describes a characteristic of mutual insurance companies?

A mutual insurance company is characterized by its ownership structure. Specifically, it is owned by its policyholders, meaning that individuals who purchase insurance policies from the mutual company are also its owners. This structure allows policyholders to have a vested interest in the operations of the company, as they can benefit from any profits generated through dividends or reduced premiums. The mutual company's primary goal is to serve the interests of its policyholders, rather than to maximize profits for stockholders, which is the case for stock insurance companies.

The ownership by policyholders also means that any surplus earnings can be returned to them, rather than distributed as dividends to external shareholders. This creates a unique alignment of interests between the company and those who rely on its insurance products, fostering a sense of community and mutual benefit among policyholders. Additionally, mutual insurance companies may have certain tax structures that differ from stock companies, but their primary distinction lies in their ownership by the policyholders.