Which type of insurance company is owned by shareholders?

The choice identifying a stock insurance company as one owned by shareholders is accurate because stock insurance companies are indeed structured around shareholders who invest capital into the company in exchange for shares of stock. These shareholders have a financial interest in the company's profits and are entitled to dividends, depending on the company’s performance. The company is managed by a board of directors elected by the shareholders, and any profit made can be distributed to them.

In contrast, a mutual insurance company is owned by its policyholders, who participate in earnings based on their contributions rather than by ownership stakes in the form of stock. A reciprocal exchange involves members exchanging insurance contracts among themselves, which does not include shareholders in the traditional sense. Lastly, a fraternal benefit society is a nonprofit organization that provides insurance to its members, typically through a membership-based model rather than through shareholders. Understanding these distinctions is essential for recognizing how the ownership structure influences the management and distribution of profits within these insurance entities.