Stock insurers are characterized by which statement?

• A. For profit and owned by shareholders
• B. Not for profit and owned by policyowners
• C. Sell par value policies
• D. Non assessable

Answer: (A)

Stock insurers are for-profit and owned by shareholders. They raise capital by selling stock, and the profits from the business belong to those who hold the shares. This ownership structure drives the company’s primary goal of earning returns for shareholders, even though some stock companies may offer participating policies that provide dividends to policyholders—those dividends are not the ownership of the company by policyowners, but a return on profits to the investors. This setup contrasts with mutual insurers, which are owned by the policyowners and operate on a not-for-profit basis, returning any savings or profits to policyowners through dividends or reduced premiums. The other statements don’t capture what defines stock insurers: the par value of stock or the ability to levy assessments aren’t the defining features.