Which type of insurance company is owned by policyholders and offers participating policies?

A mutual company is a type of insurance company that is owned by its policyholders. This structure allows policyholders to have a say in the management and decisions of the company, often voting on key issues and electing the board of directors. With mutual companies, the profits generated are typically reinvested back into the company or distributed to policyholders in the form of dividends, which is why they offer participating policies. Participating policies allow policyholders to share in the company's surplus through dividends based on the company's financial performance.

In contrast, stock companies are owned by shareholders who invest in the company and seek to earn a return on their investments, without providing the same participatory benefits to policyholders. Insurance syndicates consist of groups of underwriters who come together to provide insurance coverage but do not operate based on mutual ownership principles. Risk retention groups are formed to provide liability insurance primarily for their members, but they do not fit the model of ownership typical of mutual companies. Thus, mutual companies stand out as the type that embodies ownership by policyholders and offers the advantages associated with participating policies.